Fairfax stock positions

[SafetyinNumbers]

1 hour ago, Hoodlum said:

The call options on the minority interests in Allied and Odyssey expire in 2026 and 2029, respectively.  So there is no rush for Odyssey ($1B) and they could wait until next year (September) for Allied World (~$800M?).  
 

I think the other $400M in 2055 Notes would be used to close out additional TRS swaps by buying back those shares. 

Do we know the preferred return for Allied and Odyssey minority interests?

 

The TRS financing rate is probably floating and the cheapest but they might run into a notional size issue again and need to reduce it again. 

[gfp]

This screen shot (hope it's legible) shows Odyssey Re common stock acquisitions in the quarter.   Looks like it shows some smaller Japanese stuff.  You can also figure out the cost basis per share for the new positions.

 

 

(for instance, the addition to Cliffs was in late February at $11.15 / share - a lot higher than the current price)

Edited May 16, 2025 by gfp

[gfp]

Here is the whole filing for those that are interested in digging under the hood.  Turkish and Argentine government bonds, acquisitions and disposals of private LP interests - all kinds of little nuggets.  Investments are towards the end of the filing, to view investments it is easier to start at the bottom and scroll up.

 

 

 

23680.2025.P.Q1.P.O.1.4982859.pdf

[SafetyinNumbers]

1 hour ago, gfp said:

Here is the whole filing for those that are interested in digging under the hood.  Turkish and Argentine government bonds, acquisitions and disposals of private LP interests - all kinds of little nuggets.  Investments are towards the end of the filing, to view investments it is easier to start at the bottom and scroll up.

 

 

 

23680.2025.P.Q1.P.O.1.4982859.pdf 1.8 MB · 5 downloads

Awesome. Thanks for sharing. 

[Junior R]

2 hours ago, gfp said:

This screen shot (hope it's legible) shows Odyssey Re common stock acquisitions in the quarter.   Looks like it shows some smaller Japanese stuff.  You can also figure out the cost basis per share for the new positions.

 

 

(for instance, the addition to Cliffs was in late February at $11.15 / share - a lot higher than the current price)

Where did you find this

 

Thanks

[gfp]

8 minutes ago, Junior R said:

Where did you find this

 

Thanks

 

I linked the filing in its entirely a few posts up.  these are NAIC filings for specific insurance subsidiaries.  This one only covers Odyssey.  They aren't free so I don't download every single filing.

 

https://insdata.naic.org

Edited May 16, 2025 by gfp

[Junior R]

3 minutes ago, gfp said:

 

I linked the filing in its entirely a few posts up.  these are NAIC filings for specific insurance subsidiaries.  This one only covers Odyssey.  They aren't free so I don't download every single filing.

 

https://insdata.naic.org

Thanks

[Buckeye]

3 hours ago, gfp said:

Here is the whole filing for those that are interested in digging under the hood.  Turkish and Argentine government bonds, acquisitions and disposals of private LP interests - all kinds of little nuggets.  Investments are towards the end of the filing, to view investments it is easier to start at the bottom and scroll up.

 

 

 

23680.2025.P.Q1.P.O.1.4982859.pdf 1.8 MB · 8 downloads

It’s really cool how you find (and share) all these findings @gfp. Thanks so much. 

[Hoodlum]

Strathcona has announced a $5.9B takeover offer for MEG Energy.  This will dilute the shares that Fairfax currently owns but will be a much larger company combined.  

 

https://www.prnewswire.com/news-releases/strathcona-resources-ltd-announces-intention-to-commence-take-over-bid-to-acquire-meg-energy-corp-302457435.html

[SafetyinNumbers]

46 minutes ago, Hoodlum said:

Strathcona has announced a $5.9B takeover offer for MEG Energy.  This will dilute the shares that Fairfax currently owns but will be a much larger company combined.  

 

https://www.prnewswire.com/news-releases/strathcona-resources-ltd-announces-intention-to-commence-take-over-bid-to-acquire-meg-energy-corp-302457435.html

Actually FFH is ~75% of the committed capital at WEF 3 so they will be increasing their position dramatically if this deal gets done. 

[dartmonkey]

58 minutes ago, SafetyinNumbers said:

Actually FFH is ~75% of the committed capital at WEF 3 so they will be increasing their position dramatically if this deal gets done. 

The WEF 3 is for $1.4b CAD, right? I notice in Fairfax's annual report they already had $218m (USD) marked as being with that fund, but they may well have added more. Have the details of the subscription been publicly announced?

[Hoodlum]

4 hours ago, SafetyinNumbers said:

Actually FFH is ~75% of the committed capital at WEF 3 so they will be increasing their position dramatically if this deal gets done. 

Do we know that WEF 3 will be used for this MEG acquisition.  Strathcona also announced today the sale of their Montney assets for 2.8B, which I assume would cover the cash portion of the bid for MEG.  

[SafetyinNumbers]

7 hours ago, dartmonkey said:

The WEF 3 is for $1.4b CAD, right? I notice in Fairfax's annual report they already had $218m (USD) marked as being with that fund, but they may well have added more. Have the details of the subscription been publicly announced?

I believe there was a filing from Zenith on the commitment, a PR from WEF and the final confirmation in the annual report. 

[SafetyinNumbers]

4 hours ago, Hoodlum said:

Do we know that WEF 3 will be used for this MEG acquisition.  Strathcona also announced today the sale of their Montney assets for 2.8B, which I assume would cover the cash portion of the bid for MEG.  

In the PR, they say WEF III will be used for subscription receipts to keep WEF above 50%. I’m not sure why that’s important as they will release more shares to LPs anyway.

[nwoodman]

MS with a bullish note on Metlen. PT raised from €48 to €62

 

“PT Raised to €62 (from €48); 47% upside to current price (€42.12).

EBITDA to double to ~€2bn mid-term; driven 60% by core (Energy, Metals, Infrastructure) and 40% by new ventures (Defence, Circular Metals, Gallium).

Strong FCF: Positive even during €2.6bn capex cycle; FCF yield >13% from 2028.

Dividend yield projected to reach 7% on 35% payout.

Circular Metals & Defence highlighted as high-ROCE growth levers.

Valuation disconnect: Trades at 4.5x 2028e EV/EBITDA vs 8–10x for peers.

SOTP valuation implies €72–88/share – up to 100% upside.

Risks: Execution, commodity prices, interest rates.”

“In March 2025, Fairfax and METLEN agreed to a €110 million exchangeable bond. This gives Fairfax the option to acquire 2,750,000 METLEN treasury shares within two years at €40 per share-representing 1.92% of METLEN’s share capital.

 

Upon exercising this option, Fairfax’s total shareholding in METLEN will rise to 8.35%, up from 6.43% in February 2025. This cements Fairfax’s position as a major and long-term investor in the company.”

 

 

Another $1b+ position in the making? A billion here a billion there, pretty soon you are talking real money

METLEN_20250515_1530.pdf

Edited May 18, 2025 by nwoodman

[SafetyinNumbers]

10 hours ago, nwoodman said:

MS with a bullish note on Metlen. PT raised from €48 to €62

 

“PT Raised to €62 (from €48); 47% upside to current price (€42.12).

EBITDA to double to ~€2bn mid-term; driven 60% by core (Energy, Metals, Infrastructure) and 40% by new ventures (Defence, Circular Metals, Gallium).

Strong FCF: Positive even during €2.6bn capex cycle; FCF yield >13% from 2028.

Dividend yield projected to reach 7% on 35% payout.

Circular Metals & Defence highlighted as high-ROCE growth levers.

Valuation disconnect: Trades at 4.5x 2028e EV/EBITDA vs 8–10x for peers.

SOTP valuation implies €72–88/share – up to 100% upside.

Risks: Execution, commodity prices, interest rates.”

“In March 2025, Fairfax and METLEN agreed to a €110 million exchangeable bond. This gives Fairfax the option to acquire 2,750,000 METLEN treasury shares within two years at €40 per share-representing 1.92% of METLEN’s share capital.

 

Upon exercising this option, Fairfax’s total shareholding in METLEN will rise to 8.35%, up from 6.43% in February 2025. This cements Fairfax’s position as a major and long-term investor in the company.”

 

 

Another $1b+ position in the making? A billion here a billion there, pretty soon you are talking real money

METLEN_20250515_1530.pdf 2.03 MB · 20 downloads

Thanks for sharing.
 

Eurobank is the second biggest name in the GREK ETF and Metlen is fifth. These are big companies that are arguably comically undervalued. It’s smart for the analyst to get aggressive on Metlen before it lists on the LSE as its likely to atttact passive demand that will move the rerating along faster. 

 

The eventual LSE listing that I’m excited about is the Ki IPO. It’s got all of the characteristics to get investors very excited and perhaps award it a better than fair valuation.

[nwoodman]

48 minutes ago, SafetyinNumbers said:

Thanks for sharing.
 

Eurobank is the second biggest name in the GREK ETF and Metlen is fifth. These are big companies that are arguably comically undervalued. It’s smart for the analyst to get aggressive on Metlen before it lists on the LSE as its likely to atttact passive demand that will move the rerating along faster. 

 

The eventual LSE listing that I’m excited about is the Ki IPO. It’s got all of the characteristics to get investors very excited and perhaps award it a better than fair valuation.

Agree, I think price discovery on Ki has a lot of us intrigued.  What has me so fired up about Fairfax at the moment is there is multiple positions that are in line for material revaluations and management has consistently said this will be the case and backs it via TRS and buybacks.  
 

Will post when I can pull a thorough set of notes on Meadow but had some great conversations at the AGM.  I can see at least 3 positions joining the Fairfax billion dollar club in the foreseeable future.  

Edit: I think anyone watching the company is paying close attention to reinvestment/allocation.  Stellar so far.

 

Edited May 18, 2025 by nwoodman

[SafetyinNumbers]

1 hour ago, nwoodman said:

Agree, I think price discovery on Ki has a lot of us intrigued.  What has me so fired up about Fairfax at the moment is there is multiple positions that are in line for material revaluations and management has consistently said this will be the case and backs it via TRS and buybacks.  
 

Will post when I can pull a thorough set of notes on Meadow but had some great conversations at the AGM.  I can see at least 3 positions joining the Fairfax billion dollar club in the foreseeable future.  

Edit: I think anyone watching the company is paying close attention to reinvestment/allocation.  Stellar so far.

 

Every Canadian PM I speak to has no idea what’s going on under the hood and they don’t care. That being said, I think the Raymond James initiation opened some eyes up in the US. Combined with Berkshire being expensive and reality setting in on Buffett’s age, I can see FFH getting a steady inflow from BRK trimmers. It doesn’t take much given the relative size and buying until parity in valuation is an easy decision if based on forward returns.

[Hoodlum]

2 hours ago, SafetyinNumbers said:

Every Canadian PM I speak to has no idea what’s going on under the hood and they don’t care. That being said, I think the Raymond James initiation opened some eyes up in the US. Combined with Berkshire being expensive and reality setting in on Buffett’s age, I can see FFH getting a steady inflow from BRK trimmers. It doesn’t take much given the relative size and buying until parity in valuation is an easy decision if based on forward returns.

The Raymond James coverage peaked my interest as well.  I noticed that they had a 2026YE target of $2600/share based on a 1.4x book multiple, which seems quite low.  It looks like their book value estimates need to be updated as they are out of date.  We will see them increase their target soon. 
 

Edited May 18, 2025 by Hoodlum

[SafetyinNumbers]

5 hours ago, Hoodlum said:

The Raymond James coverage peaked my interest as well.  I noticed that they had a 2026YE target of $2600/share based on a 1.4x book multiple, which seems quite low.  It looks like their book value estimates need to be updated as they are out of date.  We will see them increase their target soon. 
 

They think they are being conservative using fully diluted share count. I think they are just wrong but it’s not a fight I wanted to have when I met with them.

[nwoodman]

 

Doubt Bradstreet’s pulse raised at all . 

[SafetyinNumbers]

James East pointed out the EUROB buybacks over on X. 
 

I appreciate the aggressiveness!

 

[dartmonkey]

On 5/18/2025 at 7:26 PM, SafetyinNumbers said:

They think they are being conservative using fully diluted share count. I think they are just wrong but it’s not a fight I wanted to have when I met with them.

I (and probably many others) would be curious to hear your reasoning. For most companies, it DOES seem like the right approach, doesn't it? These are shares which will essentially be divvying up the earnings that are coming, not just the ones that are already issued. In Fairfax's case, there are shares in treasury that are destined to be used as share compensation, but which have not yet been assigned, so these should not be used. Is it the general principle of using a diluted count that you oppose, or something specific about the Fairfax calculation of the diluted count?

 

TIA, 

[SafetyinNumbers]

42 minutes ago, dartmonkey said:

I (and probably many others) would be curious to hear your reasoning. For most companies, it DOES seem like the right approach, doesn't it? These are shares which will essentially be divvying up the earnings that are coming, not just the ones that are already issued. In Fairfax's case, there are shares in treasury that are destined to be used as share compensation, but which have not yet been assigned, so these should not be used. Is it the general principle of using a diluted count that you oppose, or something specific about the Fairfax calculation of the diluted count?

 

TIA, 

I think fully diluted shares should be used for EPS and FFH does do that.
 

For BV, it seems like double counting until they vest. Fairfax has already spent the cash which is reflected in the balance sheet and the shares don’t actually get issued until they vest. I believe the expense runs through the income statement over the vesting period.

[dartmonkey]

2 hours ago, SafetyinNumbers said:

I think fully diluted shares should be used for EPS and FFH does do that.
 

For BV, it seems like double counting until they vest. Fairfax has already spent the cash which is reflected in the balance sheet and the shares don’t actually get issued until they vest. I believe the expense runs through the income statement over the vesting period.

Hmmm, it's making my brain hurt. But how's this: The cash is already gone from the balance sheet, and they have shares instead. If you don't adjust for the future shares, it seems you would have a company which appears to have less assets than it really has. So I would have naively said you should count those new shares, even if they haven't vested, or it would be 'undercounting', no? It would give you a too low book value, and that would make the P:B seem too high.