Fairfax stock positions

[Hoodlum]

14 minutes ago, Viking said:

I think it is hard to pin down an exact number. Underwriting will likely be a headwind (given the LA fires) but hard to know how much. And yes, there will be tailwinds:

• Investment gains - mark to market stocks
• Investment gains - fixed income (offset somewhat by IFRS 17)
• Currency (strong euro) - which will be a small tailwind to book value

The big gains from Eurobank will boost excess of FV over CV but this will not impact EPS or BV. 
 

Bottom line, my guess is we see a solid quarter (but I am not expecting a blowout quarter). 

 

There is also the $15 dividend this past qtr, so I am expecting well under $60 EPS.  But both the wildfires and dividend impact were known from Year End results, while the investments gains are likely less well known. 

 

So the results may still be looked at as very positive, especially in comparison to other in the industry such as BRK that will will post a loss on their mark to market stocks.

Edited April 3, 2025 by Hoodlum

[gfp]

The dividend comes out of book value but why would it effect EPS?

[Hoodlum]

4 minutes ago, gfp said:

The dividend comes out of book value but why would it effect EPS?

 

My error.

[TwoCitiesCapital]

2 hours ago, Haryana said:

And while they have locked in interest rates for the next four years, they remain vulnerable to unrealized losses on bonds due volatility of interest rates. 

 

Rates would have to rise SIGNIFICANTLY for this to be of large impact to Fairfax. We're not starting from 0% like 2021. We're starting from 4-5% which dramatically changes the underlying math. 

 

Fairfax earned $630 million in interest and dividend in Q4. What move in rates does it take to offset that? It took a 0.9% rise in rates in Q4 to result in the $730 million loss. So you'd need rates to rise ~0.75-0.90% every quarter for Fairfax to lose enough money on their bonds to offset the interest income made in a year. 

 

And if that happens? Then Fairfax is able to reinvest the $2.5 billion of interest and dividends plus any insurance profits at 8-9% rates which is REALLY going to juice future earnings.

 

And as of right now, rates are falling! The 5-year treasury rate peaked in 2023! While rates have re-approached those highs on a handful of occasions since, they haven't taken them out and there's a trend of lower lows in in place each time they've fallen. 

 

2 hours ago, Haryana said:

And while the IFRS discounting cushions the blow of losses or gains on bonds, it remains far from enough to mitigate that volatility completely as we saw at the end of financial year 24. 

 

Now that the bond duration is near that of their liabilities, I would expect the two should move quite a bit more in lock-step. Realistically, what the adoption of the new rule does is essentially dulls the impact of interest rates on stated book value/earnings if you're positioned similarly to your liabilities as both are roughly the same size, impacted by the same rate moves, and moving in opposite directions. 

 

[yesman182]

On 3/31/2025 at 6:24 AM, nwoodman said:

Thanks, fingers crossed they did. Given the volatility and uncertainty it’s a good time for patient long term capital to be consolidating these types of assets.  I liked his analogy too:

 

“WEF is acquiring oil sands properties at a time when foreign energy companies continue to exit the region and smaller private players are selling rather than trying to raise the money needed to build a producing property. The dominant oil sands companies, including Canadian Natural Resources Ltd. , Cenovus and Suncor, are also bulking up.

“If we were real estate investors, we would be the folks who buy one house in a great neighbourhood full of elderly homeowners, then keep buying great houses as they come to market,” said Mr. Waterous, managing partner and chief executive officer at WEF, in an interview.”

Energy investor Waterous closes $1.4-billion oil and gas fund - The Globe and Ma.pdf 1.67 MB · 16 downloads

 

Here is another article with a few more quotes in WSJ PRO.

 

https://archive.is/5w47u

 

As an aside does anyone know how to read WSJ PRO Private Equity for free? Can you get a library login, or is it available from any brokerage accounts?  

[hardcorevalue]

Anybody looked at Greenfire? Won't this be taken out by them eventually?

[yesman182]

23 minutes ago, hardcorevalue said:

Anybody looked at Greenfire? Won't this be taken out by them eventually?

He seems to hint in the articles that he don't want to take GFR private because then WEF would need to find a buyer of the company in order to get the cash to return to his fund investors. As WEF did with Strathcona, if GFR remains public, WEF can return GFR shares to WEF investors. Others have speculated that GFR might be rolled into Strathcona.  

[TwoCitiesCapital]

10 hours ago, Haryana said:

AGT Foods has a Clic brand can of Fava beans showing 22g of tasty ready to eat plant-based protein in a serving of 125ml. Even after draining the water, this likely implies ~80g of protein in the whole can of 540ml selling for total of $2 at Freshco. I think label is wrong. 

 

Based on generic macro stats on fava beans, the protein/carbs/fat all appear to be for the entire can and not per serving. 

[This2ShallPass]

Our fav bank seems to be on fire sale these last couple of days. Eurobank is already a 7% position for me but thinking of adding more, they seem to be firing on all cylinders and executing brilliantly. @nwoodman as our resident expert, would be curious to get your thoughts. Would a recession impact them so much that this selloff is warranted?

 

[nwoodman]

42 minutes ago, This2ShallPass said:

Our fav bank seems to be on fire sale these last couple of days. Eurobank is already a 7% position for me but thinking of adding more, they seem to be firing on all cylinders and executing brilliantly. @nwoodman as our resident expert, would be curious to get your thoughts. Would a recession impact them so much that this selloff is warranted?

 

I think you are being a bit kind in terms of “resident expert” but I agree it’s cheap.  Hopefully we may learn a bit more about how they are seeing things later this week if they have some representation at Fairfax’s AGM.  I still think they are worth between €3.5-4 and the MS analyst who I think is one of the better ones out there has her target at €3.18. Attached is her latest weekly comps, it’s looking like an outlier at these levels and was around the price I bought it a few months back.  I think the future still looks very bright.

EEMEA_20250407_0857.pdf

[TwoCitiesCapital]

5 hours ago, This2ShallPass said:

Our fav bank seems to be on fire sale these last couple of days. Eurobank is already a 7% position for me but thinking of adding more, they seem to be firing on all cylinders and executing brilliantly. @nwoodman as our resident expert, would be curious to get your thoughts. Would a recession impact them so much that this selloff is warranted?

 

 

It is cheap, but illiquid, and gets creamed EVERY time there is a market pullback as a result. Anyone forced sellers/motivated sellers drive the price through the floor. Same thing on the upside though - buyers drive the name up bigly because so few shares are for sale each day. 

 

I had a few stink bids out to rebuilt the position I sold between $1 - 1.15 last year. Got a decent fill today to get a slug of it back and have more outstanding if we keep going down from here. 

[nwoodman]

53 minutes ago, TwoCitiesCapital said:

 

It is cheap, but illiquid, and gets creamed EVERY time there is a market pullback as a result. Anyone forced sellers/motivated sellers drive the price through the floor. Same thing on the upside though - buyers drive the name up bigly because so few shares are for sale each day. 

 

I had a few stink bids out to rebuilt the position I sold between $1 - 1.15 last year. Got a decent fill today to get a slug of it back and have more outstanding if we keep going down from here. 

Take it that is EGFEY? To add to your points the margin ratios I am offered are crap too, no doubt due to liquidity and market cap.  Unfortunately I can’t buy it directly on the Greek exchange thru my fleecer of choice.

[This2ShallPass]

8 hours ago, nwoodman said:

I think you are being a bit kind in terms of “resident expert” but I agree it’s cheap.  Hopefully we may learn a bit more about how they are seeing things later this week if they have some representation at Fairfax’s AGM.  I still think they are worth between €3.5-4 and the MS analyst who I think is one of the better ones out there has her target at €3.18. Attached is her latest weekly comps, it’s looking like an outlier at these levels and was around the price I bought it a few months back.  I think the future still looks very bright.

EEMEA_20250407_0857.pdf 620.17 kB · 16 downloads

I think most of us will agree you are our EB expert:) Thanks for your posts on this name, much appreciated.

 

I built my initial position in the $.4-0.6 cent range, did a top up ~$0.85 but haven't done anything for a long time. Today added 5% and will add more at these levels.

 

4 hours ago, TwoCitiesCapital said:

I had a few stink bids out to rebuilt the position I sold between $1 - 1.15 last year. Got a decent fill today to get a slug of it back and have more outstanding if we keep going down from here. 

Stink bids, first time hearing that I was thinking the same and have put some of my own tonight! Let's see which one of us is the stinkier..

 

[nwoodman]

15 hours ago, This2ShallPass said:

I think most of us will agree you are our EB expert:) Thanks for your posts on this name, much appreciated.

 

I built my initial position in the $.4-0.6 cent range, did a top up ~$0.85 but haven't done anything for a long time. Today added 5% and will add more at these levels.

 

Stink bids, first time hearing that I was thinking the same and have put some of my own tonight! Let's see which one of us is the stinkier..

 

Just a quick follow up.  MS ran a sensitivity study on the implied pricing at ~€2.05

———————

Cost of Risk is a key profitability metric for banks. It measures how much the bank sets aside for potential loan losses, expressed as a percentage of total loans.

Formula:

CoR = Loan loss provisions / Total loans

It reflects credit quality. A higher CoR means the bank expects more loans to go bad, so it sets aside more in provisions. A lower CoR signals stronger asset quality and fewer expected defaults.

——————

1. Base Case (Morgan Stanley’s Official Valuation)

 

Fair value: €3.18

Implied upside: ~55%

 

• Loan growth (2025–27): ~7% CAGR

• Fee & commission growth: +7%

• Net interest margin: ~2.4%

• Cost of risk (CoR): ~0.5%

• Return on equity (ROE 2027): 14.6%

• Valuation multiple: 1.23x P/BV on 2027e book

• Dividend payout: ≥50%

 

Morgan Stanley’s view: Solid balance sheet, decent growth, improving returns. They expect normalization—not acceleration—and still see strong returns and capital return to shareholders.

 

2. Stress Case (What the Market May Be Pricing In)

 

Fair value: ~€2.07

Implied ROE: ~10.1%

Stock price: matches this scenario

 

• Loan growth (2026–27): ~4–5%

• Fee growth: ~4%

• NIM: 2.25%-2.3% (implied)

• CoR: Raised to 0.9%

• Rate sensitivity: ECB rates cut by 50bps

• EPS hit: -30% by 2027 vs base

• ROE (2027): Falls to 10.1%

• Valuation multiple: 0.73x P/BV on 2027e Book

• Dividend payout: Still assumed ≥50%

 

Morgan Stanley’s view: This is a conservative macro view—slower growth, higher risk, and softer margins. But crucially, this already appears priced in at a €2.05 share price.  It comes down to how hard we think Europe slows, however there seems a decent  margin of safety IMHO

 

EEMEA_20250408_1454.pdf BANKS_20250407_0330.pdf

[SafetyinNumbers]

Adam Waterous presented at the Ben Graham Conference today. He was introduced by Wade Burton who was very complementary and described Adam as their partner in all things energy or something to that effect. It was pretty clear that the crowd was impressed with the presentation. I’m not sure if institutions will buy Strathcona SCR.TO before it goes in the S&P/TSX Composite but the set up looks very good for contrarian investors despite the recent plunge in oil prices.

[nwoodman]

7 hours ago, SafetyinNumbers said:

Adam Waterous presented at the Ben Graham Conference today. He was introduced by Wade Burton who was very complementary and described Adam as their partner in all things energy or something to that effect. It was pretty clear that the crowd was impressed with the presentation. I’m not sure if institutions will buy Strathcona SCR.TO before it goes in the S&P/TSX Composite but the set up looks very good for contrarian investors despite the recent plunge in oil prices.

Awesome.  Anything stand out compared to what we have discussed here? Any thoughts on the “interesting time” in which live? I.e. tariffs, $<60 oil etc
 

[Aurelius]

@yesman182 could you please link the mentioned article? 

[Viking]

Driven by uncertainty and inflation fears, gold continues its improbably run higher. Who was smart enough to buy gold stocks 2 years ago? Yes, Fairfax was. Their stake in Orla is now up +US$500 million YTD-2025. Yes, not too shabby.

 

Orla now has a market value of $1.136 billion. My guess is their cost basis is a little over $500 million. This puts the total return on this investment at about $600 million in less than 2 years (+119%). See the second chart below. That is nuts. 

 

They sold Resolute Forest Products in 2022 at the top of the last lumber cycle at a premium valuation. They sold Stelco in late 2024 at a bubble-high price. Their recent investment in Orla (they started building out their stake in 2023), a gold producer, has more than doubled in value in less than 2 years. They own a large piece of a copper mine that will begin production later in 2025. 

 

Active management is back. And Fairfax has been putting on a clinic the past 5 years. Can't wait to see what they do in the coming years. $ORLA $OLA.TO

 

 

----------

 

 

-----------

 

What is going on with gold today makes me think back to a Conan skit... Raffi knows - Gold is best!

 

 

Edited April 15, 2025 by Viking

[Viking]

Orla Mining - OLA.TO - Planting a Seed

 

Below is an update on Orla Mining. At $1.2 billion, this holding has quickly become Fairfax's 4th largest equity holding. What can we learn about Fairfax from this investment? That is one of the things we will explore in this post.

 

—————

 

Orla’s share price has been on fire over the past 6 months. What is going on? 

 

Gold is viewed as being a hedge against two things:

• Uncertainty
• Inflation

Today, we have both. So, it is not surprising that the price of gold prices has been ripping higher. And we should not be surprised that the share price of Orla has also been ripping higher.

 

Where do we go from here?

 

President Trump is just beginning his second term. My guess is high uncertainty will likely be with us for at least the next 3.5 years. Tariffs are a central part of President Trump’s economic plan. Tariffs are inflationary. My guess is inflation will continue to be elevated (around 3%?) for the next few years. 

 

Bottom line, the bull market in gold we are currently experiencing could continue to run for a couple more years. If this happens, Fairfax’s investment in Orla could just be getting started. 

 

—————

 

Experience matters

 

Yes, Orla is looking like a terrific investment for Fairfax. But there is a bigger lesson to be learned from Orla. 

 

Fairfax has a very seasoned investment team at their corporate office and at Hamblin Watsa. Some on the team were around in the 1970’s and 1980’s – the last time we were in a protracted inflationary environment like today. That experience likely led Fairfax to initiate their investment in Orla back in late 2022.

 

In the current environment (high uncertainty and persistent inflation), experience matters more than ever. Fairfax looks very well positioned to not only survive – but also to be able to thrive in the current environment. Having that experience/capability is a big benefit for Fairfax (and its shareholders). Investments like Orla are real-life examples of this capability and the benefit it provides. 

 

—————

 

Orla Mining is Fairfax’s newest large resource/commodity type of investment. Shares were acquired from Q3-2022 to Q3-2024. In November of 2024, Fairfax purchased $150 million in convertible bonds (with warrants) as part of Orla’s acquisition of the Musselwhite mine. 

 

Orla is a gold miner and gold prices have been moving higher over the past year (spiking higher in recent months). Orla’s share price has also spiked higher from C$7.96 at December 31, 2024 to C$16.00 at April 16, 2025 (intraday, as I update this post).  

 

How has Fairfax’s investment performed YTD in 2025?

 

YTD 2025, Fairfax’s position in Orla has increased in value by about $546 million. The convertible bond investment is looking especially well timed (made in November 2024). Including the convertible bonds and warrants, Fairfax has exposure to 101.9 million shares of Orla. At April 16, 2025, this holding had a market value of $1.176 billion. Orla has become Fairfax’s 4th largest equity holding.  

 

 

How has Fairfax’s investment in Orla performed since inception?

 

At April 16, 2025, Fairfax’s investment in Orla is up about $656 million, or 125%. That is a pretty crazy return given:

• Fairfax only started building a position in Orla in Q3, 2022. 
• Fairfax materially added to their position in November 2024 (6 months ago).

 

The play with this investment:

• That gold prices stay higher for longer.
• That the management team at Orla is above average. And will be able to expand the company from a single asset producer to a multi asset intermediate-sized gold producer.
• That the strong ownership structure (Fairfax, Newmont, Pierre Lassonde, Agnico Eagle) will be a competitive advantage. This allows the management team at Orla to be strategic and think long-term with its decisions. This should help ensure that the capital allocation decisions made by the management team at Orla are rational and shareholder friendly. 

With its investment in Orla, Fairfax has planted another seed in its large equity portfolio. In a very short time period this investment has already turned into another home run for Fairfax. It will be interesting to see in the coming years if the price of gold can continue its improbable march higher. 

 

—————

 

On November 18, 2024, Orla made a large acquisition – they purchased the Musselwhite gold mine in Canada from Newmont Mining. As part of the financing, Fairfax invested US$150 million in convertible bonds:

• Coupon: 4.5%; Term: 5 years
• Convertible at C$7.90
• 18-month non-call, callable at 130% of strike thereafter
• Warrant: 0.66x warrant exercisable at C$11.50 – Five-year term from closing

The purchase of Musselwhite looks like another solid move by the Orla management team. There appears to be significant optionality to the purchase (significant opportunity for resource growth, which is part of the Pierre Lasonde playbook).

 

At November 18, 2024, Orla’s stock closed at C$5.99/share. At April 16, 2025, Orla’s stock traded at C$16.00/share. Orla’s share price is higher than both the conversion price for the convertible bonds (C$7.90/share) and the exercise price for the warrants ($11.50/share).

 

Who is Orla Mining?

 

Orla Mining Ltd. is a Vancouver-based company that acquires, explores, develops, and operates mineral properties to produce gold, silver, zinc, lead, and copper.

 

Company’s website: 

• https://orlamining.com/investors/

Company Presentation (March 2025): 

• https://wp-orlamining-2024.s3.ca-central-1.amazonaws.com/media/2025/03/Orla-Corporate-Presentation-March-2025.pdf

Orla Mining's projects include:

• Camino Rojo: A 100% owned, operating oxide heap leach mine in Zacatecas, Mexico 
• South Railroad: A feasibility-stage heap leach project in Nevada 
• Cerro Quema: A pre-feasibility-stage heap leach project in Panama 
• Musselwhite Gold Mine: An acquired project in Ontario, Canada

 

CEO: is Jason Simpson, who has over 27 years of experience in mining engineering, project construction, and operations leadership. 

 

Non-Executive Chairman, Director: Mr. Jeannes served as President and Chief Executive Officer of Goldcorp Inc. from 2009 until April 2016.

 

—————

 

Bet on the jockey/partnering with outstanding investors

 

It should be noted that Fairfax is not blindly throwing darts with their resource/commodity investments. They are partnering with other highly successful people / investors - some of whom have extraordinary long term track records.

 

With Orla, Fairfax is partnering with Pierre Lassonde who is ‘recognized as one of Canada’s foremost experts in the area of mining and precious metals.’ Lassonde co-founded Franco-Nevada in 1985. Fairfax is also partnered with Pierre Lassonde and Agnico Eagle with its investment in Foran Mining, a copper mining project in Canada.

 

Jurisdiction: The vast majority of the production for Fairfax’s resource/commodity investments is located in North America. This is a much lower risk jurisdiction than other parts of the world. My guess is this is not a fluke. All of Orla’s mines are located in North America.

 

 

—————

 

Comments from Prem about Orla Mining from Fairfax’s 2024AR.

 

"Orla Mining, run by Jason Simpson and his exceptional team, had a transformative 2024. In November, Orla announced the acquisition of the Musselwhite gold mine in Ontario from Newmont. Fairfax participated via a $150 million investment in convertible bonds (4.5% coupon, Cdn$7.90 conversion price and 0.66 of a warrant with a Cdn$11.50 per share exercise price). Musselwhite is a low-cost, long-life asset in one of the best mining jurisdictions in the world. The addition of Musselwhite will more than double Orla’s annual gold production to approximately 300,000 ounces a year. Orla’s Camino Rojo open pit mine in Mexico continues to perform extremely well, producing approximately 137,000 ounces of gold in 2024. Exploration activity at Camino is indicating the viability of an underground mine at the site with attractive economics. Lastly, progress continues to be made in permitting their South Railroad mine in Nevada.South Railroad is likely to be a low-cost mine with high free-cash flow. Orla generates attractive levels of free cash flow and has ample liquidity to fund its development and exploration activity. Orla is carried at its listed price of $5.47 per share (Cdn$7.87) or $311 million." Prem Watsa – Fairfax 2024AR

Edited April 16, 2025 by Viking

[mananainvesting]

Anyone looked at the Raymond James report on $FFH.TO? Looks like they initiated coverage, can anyone share here/email me ([email protected])

[Hoodlum]

9 hours ago, mananainvesting said:

Anyone looked at the Raymond James report on $FFH.TO? Looks like they initiated coverage, can anyone share here/email me ([email protected])

 

It was posted here.

 

 

[Txvestor]

Anyone with detailed thoughts on how tariffs and the plunging container shipping volumes will affect Seaspan and how the terms of their LT contracts affect or not their revenues and profitability? Counterparty customer risk? I remember they didn't necessary benefit much when spot shipping rates spiked post covid but trying to understand if there's downside here. 
 

i know everyone was gushing about valuation after the AGM, but wonder if any of this discussion came up with its leadership at the meeting up?

 

Overall I feel like the trade war will impact Fairfax's private equity investments even if less so that the overall stock market. Their hedges with commodity producers and insurance etc should keep them moving along though. 
 

 

[Viking]

55 minutes ago, Txvestor said:

Anyone with detailed thoughts on how tariffs and the plunging container shipping volumes will affect Seaspan and how the terms of their LT contracts affect or not their revenues and profitability? Counterparty customer risk? I remember they didn't necessary benefit much when spot shipping rates spiked post covid but trying to understand if there's downside here. 
 

i know everyone was gushing about valuation after the AGM, but wonder if any of this discussion came up with its leadership at the meeting up?

 

Overall I feel like the trade war will impact Fairfax's private equity investments even if less so that the overall stock market. Their hedges with commodity producers and insurance etc should keep them moving along though. 

I don’t have any specific insight into how Seaspan will be impacted by what Trump is doing. There are too many unknowns. So the analysis tends to be garbage in - garbage out. 

• Private: I like the fact that Seaspan is private and not publicly traded - this lets the management team think long term with their decisions. 
• Strong ownership group: I think the ownership group is very strong (financially etc). This is especially important in times like today (lots of uncertainty).
• Track record: at the beginning of Covid there was a lot of handwringing about how Covid would impact the shipping industry. Seaspan’s business performed better than expected. 

I will be closely monitoring the situation. Bottom line, we need (much) more information. 
 

Covid completely snarled supply chains. The current situation looks pretty nuts (in terms of messing up global logistics). As everyone tries to reroute etc, perhaps demand for containerships will increase (like what happened with Covid). That scenario might be bullish for Seaspan.

Edited April 17, 2025 by Viking

[bluedevil]

Seaspan is not directly affected in a material way.

Sokol said:  "Our long-term charters with our -- with the major shipping companies . .  today, that long-term cash flow under contract is about $30.5 billion, and we burn about $2.3 billion a year."

 

They have 13 years of cash flow locked in. 

If shipping rates drop dramatically, then they can't keep renewing this pipeline at attractive rates, but they can weather a lot with that much locked in until conditions improve, then they will refresh at that time. 

 

The concern becomes if any of their customers go belly up - then it reduces their contracted number while still leaving them with the assets that they need to attempt to recontract.  Sokol has worked hard at diversifying the customer base, but it is still a very concentrated group, so this a potential risk.  It helps that shipping companies had hugely profitable times during covid.  But obviously if there is some gigantic crash in world trade, the shipping companies will not do well and if they go bankrupt, then it will hurt Seaspan.  But the world will probably have much bigger problems at that point!

 

 

[Hoodlum]

2 hours ago, bluedevil said:

Seaspan is not directly affected in a material way.

Sokol said:  "Our long-term charters with our -- with the major shipping companies . .  today, that long-term cash flow under contract is about $30.5 billion, and we burn about $2.3 billion a year."

 

They have 13 years of cash flow locked in. 

If shipping rates drop dramatically, then they can't keep renewing this pipeline at attractive rates, but they can weather a lot with that much locked in until conditions improve, then they will refresh at that time. 

 

The concern becomes if any of their customers go belly up - then it reduces their contracted number while still leaving them with the assets that they need to attempt to recontract.  Sokol has worked hard at diversifying the customer base, but it is still a very concentrated group, so this a potential risk.  It helps that shipping companies had hugely profitable times during covid.  But obviously if there is some gigantic crash in world trade, the shipping companies will not do well and if they go bankrupt, then it will hurt Seaspan.  But the world will probably have much bigger problems at that point!

 

 

if shipping companies start struggling, that could provide an opportunity for Seaspan.  As a private company with access to funds, they would be able take advantage of the situation and possibly pick up ships at below the current build cost.