Fairfax stock positions

nwoodman · August 2, 2025

Some key quotes from the Eurobank call (attached). A pleasure to listen to these guys, the CC always gives color that the interim report lacks

Financial Performance Highlights

CEO Fokion Karavias on strong results:

“Eurobank reported robust financial performance in the first half of 2025, achieving an adjusted net profit of EUR 711 million and a return on tangible book value of 16.6%.”

— Fokion Karavias, CEO

On revised loan growth and return targets:

“The strong pipeline allows us to revise upwards our full year loan growth target from EUR 3.5 billion to EUR 4 billion.”

— Fokion Karavias, CEO

“Consequently, we anticipate that the return on tangible book value will exceed the initial annual target of 15%.”

— Fokion Karavias, CEO

Dividend and Capital Strategy

First-time interim dividend:

“The strong first half performance allows us to align with other European banks policy by introducing for the first time a 2025 interim cash dividend of EUR 170 million. This is EUR 0.047 per share to be distributed in the fourth quarter.”

— Fokion Karavias, CEO

On payout ratio guidance:

“We reiterate our commitment for a payout ratio of more than 50%.”

— Fokion Karavias, CEO

Net Interest Income Guidance

Maintaining targets despite ECB rate cuts:

“For NII, we have run a top-down exercise some weeks ago. And based on that, we reaffirm our initial target of EUR 2.5 billion, even assuming the ECB terminal rate reaching 1.5%.”

— Harris Kokologiannis, CFO

Regional Growth Commentary

Greece’s lending momentum:

“Let me remind you, I’m sure you have seen the data based on the ECB 2025 – May 2025 data, the credit growth in Greece and the private sector has been the fourth highest in the euro area.”

— Fokion Karavias

Bulgaria euro adoption and NII impact:

“In Bulgaria, we expect about – if I recall correctly, roughly EUR 1 billion of liquidity to be released because of the reserve requirements. So this is going to boost the NII ’26 onwards.”

— Fokion Karavias

Asset Quality and Cost of Risk

Stable credit environment:

“Asset quality remained resilient for another quarter with the NPE ratio decreasing to 2.8% and coverage exceeding 90%.”

— Fokion Karavias

No change in provisioning guidance:

“We do not expect any changes to the cost of risk guidance of 60 basis points for 2025.”

— Fokion Karavias, CEO

Q2 25 EGFEY - Transcripts.pdf

Edited August 2, 2025 by nwoodman

SafetyinNumbers · August 2, 2025

8 minutes ago, nwoodman said:

Some key quotes from the Eurobank call (attached). A pleasure to listen to these guys, the CC always gives color that the interim report lacks

Financial Performance Highlights

CEO Fokion Karavias on strong results:

“Eurobank reported robust financial performance in the first half of 2025, achieving an adjusted net profit of EUR 711 million and a return on tangible book value of 16.6%.”

— Fokion Karavias, CEO

On revised loan growth and return targets:

“The strong pipeline allows us to revise upwards our full year loan growth target from EUR 3.5 billion to EUR 4 billion.”

— Fokion Karavias, CEO

“Consequently, we anticipate that the return on tangible book value will exceed the initial annual target of 15%.”

— Fokion Karavias, CEO

Dividend and Capital Strategy

First-time interim dividend:

“The strong first half performance allows us to align with other European banks policy by introducing for the first time a 2025 interim cash dividend of EUR 170 million. This is EUR 0.047 per share to be distributed in the fourth quarter.”

— Fokion Karavias, CEO

On payout ratio guidance:

“We reiterate our commitment for a payout ratio of more than 50%.”

— Fokion Karavias, CEO

Net Interest Income Guidance

Maintaining targets despite ECB rate cuts:

“For NII, we have run a top-down exercise some weeks ago. And based on that, we reaffirm our initial target of EUR 2.5 billion, even assuming the ECB terminal rate reaching 1.5%.”

— Harris Kokologiannis, CFO

Regional Growth Commentary

Greece’s lending momentum:

“Let me remind you, I’m sure you have seen the data based on the ECB 2025 – May 2025 data, the credit growth in Greece and the private sector has been the fourth highest in the euro area.”

— Fokion Karavias

Bulgaria euro adoption and NII impact:

“In Bulgaria, we expect about – if I recall correctly, roughly EUR 1 billion of liquidity to be released because of the reserve requirements. So this is going to boost the NII ’26 onwards.”

— Fokion Karavias

Asset Quality and Cost of Risk

Stable credit environment:

“Asset quality remained resilient for another quarter with the NPE ratio decreasing to 2.8% and coverage exceeding 90%.”

— Fokion Karavias

No change in provisioning guidance:

“We do not expect any changes to the cost of risk guidance of 60 basis points for 2025.”

— Fokion Karavias, CEO (Page 9)

Q2 25 EGFEY - Transcripts.pdf 80.42 kB · 0 downloads

Fairfax is extracting quite a bit of cash between dividends and selling their proportionate share of the buybacks. It’s an exceptional seemingly reliable return especially when levered almost 3:1 in the investment portfolio.

I think about Recipe that way too. They levered up in 2021, paid down the debt, levered up again in 2025 and perhaps in 2029, they will lever up again and pay Fairfax a big special dividend. IPO is an option but market likes growth and they don’t have to grow to provide great returns for Fairfax.

Crip1 · August 2, 2025

14 hours ago, nwoodman said:

Eurobank reported Q2.

https://www.eurobankholdings.gr/-/media/holding/omilos/grafeio-tupou/etairikes-anakoinoseis/2025/2q2025/2q-2025-results-presentation.pdf

A quick round up:
The Good

TBV/share €2.38 (+7.6% YTD, post-dividend)

SEE diversification paying off: 53% of adjusted net profit now from international ops (€374m), with Cyprus +42% YoY and Bulgaria +10.6%

Fee income acceleration: Commission income surged 28.9% YoY to €364m, driven by wealth management and CNP Insurance acquisition

Credit quality momentum: NPE ratio improved to 2.8%, coverage at 92.8%, net NPEs down to just €0.1bn

Strong capital position: CET1 15.5%, CAD 19.8%, MREL buffer of 290bps above target

Organic loan growth: €2.2bn in 1H25, with strong pipeline across all markets

Shareholder returns: 2025 interim dividend of €170m (~4.7 cent/share) declared, following 2024 DPS of 10.6 cent/share

Bargain acquisition: €38m negative goodwill from CNP Cyprus deal - got assets for less than fair value (but one off, so kind of bad in terms of masking earnings)

The Bad

Profitability decline: Adjusted net profit down 2.9% YoY to €711m; EPS fell to €0.19 vs €0.20

NIM compression accelerating: Down 32bps YoY to 2.51% as deposit repricing outpaces loan adjustments

Cost inflation biting: OpEx up 34.3% YoY (6% like-for-like); cost/income ratio deteriorated to 37%

Margin defense struggling: Deposit betas remain elevated while loan repricing lags ECB cuts

Things that make you go hmmm

Cyprus profit pressure: Core PPI down 19.5% YoY despite strong market position - rate sensitivity higher than expected

Operating leverage reversing: Revenue growth (+13.8%) not keeping pace with cost growth (+34.3%)

Bottom line: Still a well-capitalised, geographically balanced bank with strong recurring earnings, but the operating leverage is heading the wrong way for now. Management execution in 2H25 (on cost control and margin defence) will be key.

Many thanks for the Viking-esque review of Eurobank. I really appreciate the balance of your observations, and I'll bet others on the board feel the same way.

-Crip

nwoodman · August 2, 2025

34 minutes ago, SafetyinNumbers said:

Fairfax is extracting quite a bit of cash between dividends and selling their proportionate share of the buybacks. It’s an exceptional seemingly reliable return especially when levered almost 3:1 in the investment portfolio.

I think about Recipe that way too. They levered up in 2021, paid down the debt, levered up again in 2025 and perhaps in 2029, they will lever up again and pay Fairfax a big special dividend. IPO is an option but market likes growth and they don’t have to grow to provide great returns for Fairfax.

Agree, quality/reliable recurring is the next step in this dance.

Viking · August 2, 2025

@nwoodman, thanks for the detailed update on Eurobank. And the detailed analysis. I think it's great to get different takes on topics. Below is a summary of my current take on the company followed by a summary of quotes from the Q2 earnings call transcript.

---------

Eurobank is Fairfax’s largest equity holding (by far). With Q2 results, the company continues its exceptional performance. It continues to be positioned exceptionally well. Below is the link to all the material supplied by Eurobank (including the link to listen to the earnings call).

https://www.eurobankholdings.gr/en/investor-relations/financial-results-pages/first-half-2025

Eurobank is an exceptionally well run bank. Why do I keep saying this?

1.) They underpromise and over deliver. Over and over.

2.) Their communication is very good.

Their disclosures are detailed and transparent.
Their answers on the Q&A actually answer the questions being asked - it is clear they understand their business inside out.

3.) Capital allocation is exceptionally rational (see points 4 and 5 below)

4.) They have a multi-year strategic plan and they are executing it superbly.

Exiting Serbia in 2023.
Aggessively growing in Cypress (banking and insurance) in 2023 and 2024.
Aggressively growing the asset management business in 2024 and 2025 (fee income is spiking).
Investing in technology/systems (yes, this has a short term cost... but it is necessary, especially in today's environment).

5.) They are extremely shareholder friendly.

Small stock buyback was done in late 2023.
Dividend was reinstated in 2024.
Dividend and buybacks are being done in 2025.
Second dividend will be paid in Q4.
Payout ratio (dividend + Share buybacks) in 2025 will be more than 50% of earnings.

6.) The future is bright. Lots of opportunities to grow the top line and also bring down expenses.

The integration of the Cypress businesses (Hellenic Bank, Eurobank and CNP) will get going in 2H. This should deliver significant cost savings.
Bulgaria adopting the Euro will be a big tailwind for banks beginning in 2026 (boost to NII and the economy).
The growth of the asset management business is likely still in its early days.
More acquisitions are likely to happen in the coming years.

----------

The new dividend payment in Q4 will be about $65 million for Fairfax. Eurobank has been significant 'source of cash' for Fairfax in 2H 2024 and 2025.

-----------

Below are some highlights from the Q2 conference call. My comments are underlined. What follows are comments that were made by either Fokion (CEO) or Harris (CFO).

Summary

Eurobank reported robust financial performance in the first half of 2025, achieving an adjusted net profit of EUR 711 million and a return on tangible book value of 16.6%.

In more detail, net interest income rose 12% year-on-year as the quarter-on-quarter drop decelerated to less than 1%. Fees and commissions were up by 29% year-on-year, supported by a strong second quarter. As a result, corporate provision income was up by 7% year-on-year to over EUR 1 billion.

The cost of risk ratio remained at 60 basis points, in line with our full year guidance. Asset quality remained resilient for another quarter with the NPE ratio decreasing to 2.8% and coverage exceeding 90%. As a result, core operating profit reached EUR 866 million. This is more than 6% higher year-on-year.

In conclusion, the first half results were in line with our plan, notwithstanding a more

rapid decline in ECB interest rates. Consequently, we anticipate that the return on tangible book value will exceed the initial annual target of 15%. The strong first half performance allows us to align with other European banks policy by introducing for the first time a 2025 interim cash dividend of EUR 170 million. This is EUR 0.047 per share to be distributed in the fourth quarter.

An update on cost optimization (brining down expenses)

Cost optimization efforts continued. Indicatively, in Bulgaria, staff decreased by more than 400 FTEs year-on-year and branch network reduced by 34 branches. This rationalization improved Bulgaria's cost-to-income ratio from 40% to 37.8% despite a declining interest rate environment. In Cyprus, the scheduled legal merger between Hellenic Bank and Eurobank Cyprus is set for September, expecting to accelerate cost synergies.

An increase in lending is mitigating decline in NII (lower interest rates)

Overall, in the second quarter, the group delivered accelerated performance, supported by robust

lending expansion, increased deposit volumes and strong underlying core proitability indicators. The decline in net interest income was moderated as loan growth helped offset the adverse effect of decreasing rates.

The consolidation of CNP Insurance had a positive impact of fee income, which remained solid overall, while strategic cost optimization initiatives continue to be implemented across all regions.

Now expects to exceed 15% ROTBV target for 2025

Looking ahead, based on the first half performance, along with projected loan and bond volumes, anticipated lower MREL costs and solid fee income, the group expects to exceed its 15% return on tangible book value target for 2025.

Net Interest Income (NII)

For NII, we have run a top-down exercise some weeks ago. And based on that, we reaffirm our initial target of EUR 2.5 billion, even assuming the ECB terminal rate reaching 1.5%. That was the assumption when we run this top-down exercise. This implies that the expected average DFR for the year to be 35 basis points lower than our initial expectation, i.e., at 2.19% versus 2.53%.

So the EUR 2.5 billion NII guidance is maintained as a result of higher loan deposits and bond volumes and better MREL management.

Capital Allocation

What is next? We have stated before that we are interesting not only for nonorganic growth in banking, but also in insurance and asset management in any of the 3 countries that we have a presence. So Bulgaria could be a possibility if there is the right opportunity.

And again, the interest may be not only in banking, but also in insurance and asset management.

At the moment, there is nothing that is advanced in terms of discussions. There is no specific target. But these opportunities may come at the time that we don't expect. For this reason, we would like to keep an amount of excess capital for potential inorganic growth opportunities.

And based on these facts, so the fact of a strong loan growth and our desire to keep an amount of excess capital, we reiterate our commitment for a payout ratio of more than 50%.

Initiates interim dividend and still has lots of firepower left in share buyback program

Now our decision to initiate an interim dividend distribution of EUR 170 million or EUR 0.047 per share to our shareholders underscores also our commitment to shareholders' reward. And let me also remind everybody that our share buyback program, which is the largest as we speak, in the Athens Stock Exchange remains active. Out of the EUR 288 million of the program, so far, EUR 80 million have been used, which corresponds to an acquisition of 28 million shares, which is 0.77% of the share capital. And as we have stated in the past, any shares acquired through the program will be canceled out.

Bulgaria Euro Adoption

In Bulgaria, we expect about… EUR 1 billion of liquidity to be released because of the reserve requirements. So this is going to boost the NII 2026 onwards. The euro adoption is going to have definitely positive consequences for the economy overall.

And this is good for the banking sector. The 4 largest banks control about -- and Eurobank is one of them, control about 75% of the banking sector. So there is still some room for further consolidation, which we monitor very closely.

Change in Guidance for 2025

There are 3 items.

In terms of (loan) volumes, we said we update our guidance from EUR 3.5 billion to EUR 4 billion for the full year 2025.
In terms of fees, the guidance that we have provided before is the minimum that we should expect. There is upside potential there given the second quarter results in terms of fees that were quite encouraging.
And overall, in terms of return on tangible book value, we said that they're going to be higher than the 15% initial target.

Edited August 2, 2025 by Viking

nwoodman · August 3, 2025

MS with a short note (attached) on Eurobank’s Q2. They maintained both their recommendation “overweight” and PT €3.53. Note attached.

@Viking thanks for the very thoughtful post above. Eurobank has a very bright future

EUROBANK_20250731_1633.pdf

mananainvesting · August 3, 2025

Thanks for sharing your thoughts @Viking @nwoodman

Viking · August 4, 2025

23 hours ago, nwoodman said:

MS with a short note (attached) on Eurobank’s Q2. They maintained both their recommendation “overweight” and PT €3.53. Note attached.

@Viking thanks for the very thoughtful post above. Eurobank has a very bright future

EUROBANK_20250731_1633.pdf 269.54 kB · 18 downloads

@nwoodman, thanks for posting these reports. They have help me a lot over the past 3 years to better understand what is happening at Eurobank (and there had been a ton of things going on).

nwoodman · August 4, 2025

19 minutes ago, Viking said:

@nwoodman, thanks for posting these reports. They have help me a lot over the past 3 years to better understand what is happening at Eurobank (and there had been a ton of things going on).

Easy, Nidar Iqbal does a pretty good job even if she has been a bit conservative. I know there is a reticence among some board members to consider analyst reports. I certainly don’t rely on them, but I find them helpful as prompts for further primary research.

What’s been particularly useful is comparing her projections to actuals over time, it gives a sense of how Eurobank’s management guides versus what actually transpires. She’s not infallible, but as a sanity check or to highlight blind spots, she’s more useful than most.

Eurobank is still optically cheap, so even if there is some further NIM compression it’s priced in.

I think many of us are also watching the evolving tie-up between Eurobank, LTIMindtree, and Fairfax Digital Services. What began as a multi-year IT transformation contract now looks more like the early scaffolding of a deeper strategic alignment. Eurobank is leveraging LTIMindtree’s Temenos expertise and India-based delivery capacity to overhaul its digital backbone, modernizing core banking systems, boosting efficiency, and accelerating product innovation across Greece, Cyprus, and other European operations.

“Temenos, for context, is a leading global provider of core banking software used by over 3,000 financial institutions worldwide. It powers everything from account management and payments to digital channels and compliance. Implementing Temenos allows Eurobank to consolidate legacy systems and operate on a modern, scalable platform that supports real-time banking, faster time-to-market, and a far more agile digital experience.”

What’s more intriguing is the role of Fairfax Digital Services. This isn’t just a back-end integrator or passive stakeholder, it’s functioning as a strategic enabler, effectively bridging India’s digital delivery capabilities with Europe’s banking modernization needs. The establishment of a dedicated Global Delivery Center in Pune and the launch of a digital innovation hub in Cyprus suggest this isn’t a one-off project, but a long-term platform.

Early days, but reminds me that I need to to do a deeper dive into Fairfax Digital Services

nwoodman · August 4, 2025

Some coverage of Metlen’s opening on the LSE

https://www.londonstockexchange.com/stock/MTLN/metlen-energy-metals-plc/company-page

Viking · August 4, 2025

Sky-high energy prices destroying European industry, warns metal giant

https://ca.finance.yahoo.com/news/sky-high-energy-prices-destroying-080000103.html

“Metlen’s core business is metal refining. It produces bauxite ore from its own mines in Greece where it also has a refinery and smelter. They annually produce 190,000 tonnes of aluminium and 860,000 tonnes of alumina, a vital ingredient in advanced ceramics.

“From the same ore it is now also extracting gallium, a strategically vital metal where China has long dominated global markets. Metlen is also increasingly involved in metal recycling, melting down scrap and targeting valuable metals like zinc and lead.

“The company has managed to avoid energy-induced shutdowns because its other key business is energy production: it owns around 14 wind farms, three solar farms and four hydroelectric plants, mostly in Greece, plus several gas-fired power stations.

“It uses those generators to power its metal refining, giving it a near-unique level of immunity from the high energy prices that are wiping out energy-intensive industries across the UK and Europe.”

Edited August 4, 2025 by Viking

nwoodman · August 7, 2025

Not really a Fairfax "position" but attached are some notes on Fairfax Digital Services run by Sanjay Tugnait. Prem had this to say in the 2024 AR:

In only the third year of its existence, Fairfax Digital, led by Sanjay Tugnait, continues to make great progress working with our companies building digital solutions throughout the group. In 2024, working with Eurolife and Colonnade, in partnership with a leader in global visa and consular services, we have launched a pioneering Gen AI platform for embedded travel insurance, starting with travelers to Schengen countries. Working with Eurolife and LTIMindtree the team developed AI-driven tools like “Ask Me Anything” and “Case Summarization” improving customer and employee experiences. Fairfax Digital also facilitated cross border digital payments working with Eurobank, revolutionizing the process of international money transfers from Greece to India. In 2024 Sanjay was also appointed co-chair for the Sustainability Task Force at the G20, Startup 20 in India. Another great year establishing digital solutions throughout Fairfax, with many other initiatives in the pipeline we are very excited about the future of Fairfax Digital.

While it’s an internal division, it reminds me of what we tell our Scouts, you learn by doing. Fairfax Digital Services feels like more than just a support unit; it’s quietly becoming an incubator. At the very least, they’re solving real-world problems that plague financial services globally. And in some cases, like the launch of what they claim is Europe’s first agentic AI platform, they’re not merely catching up; they’re pushing into territory with a genuine competitive edge and business potential.

It must be breaking Fairfax’s capital allocation heart to sell down Eurobank into the buyback just to stay under regulatory thresholds.

Fairfax Digital Services.pdf

Hoodlum · August 8, 2025

Fairfax now owns 11.9M shares of Metlen (9.25%). I looks like this was reported by Fairfax on Aug 1st but there was a delay in Metlen getting this out. So these shares were added before this week and the latest 10% runup.

https://www.mononews.gr/business/metlen-sto-925-i-symmetochi-tou-prem-watsa-pano-apo-119-ekat-metoches

steph · August 11, 2025

Eurobank is getting quite impressive: 1.209.000.000 shares at 3,40 euros = 4.110.600.000 or 4.784.700.000 USD!

Viking · August 11, 2025

Metlen's listing on the LSE (on Aug 4) appears to have been a catalyst for the shares. Fairfax's investment in Metlen is now valued at $762 million (making it Fairfax’s 6th largest equity holding). 2025YTD, it has increased in MV by about $324 million or 77%. Outstanding. $MTLN $MYTIL.AT

Q1 = $86 million
Q2 = $123 million
QTD-Q3 = $115 million

Edited August 11, 2025 by Viking

gfp · August 11, 2025

For the visual folks

glider3834 · August 12, 2025

On 7/27/2024 at 2:49 PM, glider3834 said:

One of Fairfax's most interesting positions, integrated energy utility and green metallurgy business Metlen (MYTIL.AT) (formerly Mytilineos) results out

https://www.ekathimerini.com/economy/1244896/metlen-registers-record-profits-in-january-june/

Edison have an analyst report on Metlen & below is a quote from this report with their take on valuation.

https://www.edisongroup.com/research/a-new-name-for-its-next-phase/33738/

'Valuation: Undervalued for a €1bn+ EBITDA business

Metlen currently trades at P/E multiples of 7.7x in FY24e and 7.2x in FY25e. It trades at EV/EBITDA ratios of 6.0x in FY24e and 5.6x in FY25e (our estimates are broadly in line with consensus), a significant discount to peers. As a comparison, its peer group trades at a range of multiples, from 5.2x for metals to 9.7x for RES, with an FY24 Metlen EBITDA-weighted average of 7.7x, a 38% premium to Metlen’s market multiple. In our view, Metlen’s multiple looks low for a business that has high-quality, low-cost assets in power generation and aluminium production, and very low for a company with a high-growth renewable energy business that accounts for almost one-third of its earnings. We value Metlen at €49/share (up from €45 in our last update). Our DCF valuation has risen to €47/share after incorporating recent results and some minor adjustments to earnings based on commodity, energy and electricity price assumptions, which are broadly in line with forward curves, and we now blend this with a peer multiple valuation of €51/share to reflect the potential of peer re-rating with an additional listing.'

a few analyst takes on Metlen

Edison https://www.tovima.com/finance/edison-upgrades-metlen-target-price/

Morgan Stanley https://www.capital.gr/epixeiriseis/3938243/morgan-stanley-sta-66-i-nea-timistoxos-gia-ti-metlen-diatirei-sustasi-overweight/

nwoodman · August 12, 2025

1 hour ago, glider3834 said:

a few analyst takes on Metlen

Edison https://www.tovima.com/finance/edison-upgrades-metlen-target-price/

Morgan Stanley https://www.capital.gr/epixeiriseis/3938243/morgan-stanley-sta-66-i-nea-timistoxos-gia-ti-metlen-diatirei-sustasi-overweight/

MS note on Metlen attached, they have a PT of €66 and forecasting:

Mid-term EBITDA target €1.9–2.1bn (up from €1.1bn in 2024).
~60% of growth from core Energy, Metals, and Infrastructure/Concessions.
~40% from new ventures – Defence, Circular Metals (recycling), and Critical Metals (gallium).

“Our new mid-term EBITDA forecasts of €1.8-1.9bn for 2028-2030, imply a solid 3-yr EBITDA CAGR

(2025-28) of 16% and offer 11% average upside to consensus. We incorporate growth initiatives such as the €150mn/yr EBITDA target in Defence, but are more conservative on: (1) Circular Metals as we bake in ~€110mn EBITDA (50% of target), allowing good upside as more visibility emerges, and (2) Integrated Utility as we are ~€100mn below guidance in 2028-2030 (~€490mn vs €590mn) given the volatile nature of energy markets. We project ROCE (post tax) and ROE averaging 16%/20% in 2028-2030 respectively, with new initiatives such as Defence offering an impressive 70% ROCE (post tax, MSe).”

“We are Overweight with a PT at €66 on a DCF-based approach, while an illustrative peer-based SoTP yields an even higher valuation of€78-93/sh. On this basis, Metlen's Enterprise Value would roughly equal the valueof the Energy segment.”

METLEN_20250807_1545.pdf

Edited August 12, 2025 by nwoodman

Hoodlum · August 12, 2025

By coincidence, the next quarterly review of the LSE100 index will occur the first week of September. Metlen is certainly large enough to qualify. It is just a matter of when.

SafetyinNumbers · August 12, 2025

31 minutes ago, Hoodlum said:

By coincidence, the next quarterly review of the LSE100 index will occur the first week of September. Metlen is certainly large enough to qualify. It is just a matter of when.

I’m not sure it’s a coincidence

Viking · August 12, 2025

It appears investors liked Eurobank's Q2 results. Fairfax's investment in Eurobank is up $675m ($28/diluted FFH share) so far in Q3-2025. That is a monster move in 6 weeks.

Fairfax's investment in Eurobank is up $2 billion YTD-2025, or about 73%. This is a crazy move in 7.5 months.

Excess of FV over CV is about $2.18 billion ($92/diluted FFH share pre-tax). This is value that has been created that is not captured in EPS, ROE or BV. Also nuts.

----------

PS: The number of Eurobank shares owned by Fairfax dropped a little in Q2 due to the Eurobank stock buyback.

Edited August 12, 2025 by Viking

dartmonkey · August 12, 2025

49 minutes ago, Viking said:

It appears investors liked Eurobank's Q2 results. Fairfax's investment in Eurobank is up $675m ($28/diluted FFH share) so far in Q3-2025. That is a monster move in 6 weeks.

Fairfax's investment in Eurobank is up $2 billion YTD-2025, or about 73%. This is a crazy move in 7.5 months.

Excess of FV over CV is about $2.18 billion ($92/diluted FFH share pre-tax). This is value that has been created that is not captured in EPS, ROE or BV. Also nuts.

----------

PS: The number of Eurobank shares owned by Fairfax dropped a little in Q2 due to the Eurobank stock buyback.

As your note says, but not your table, it was 1.266b shares on Dec 31st, not 1.186b, with a forced sale of 80m shares in Q1 2025 (Jan 23, to be precise, taking them down to 1.186b) and another 8m in Q2, sor the number is now 1.178b. Does your table include the $46m gain on the sale of those 88m shares ?

The gain is smaller than I would have thought, given the impressive share price gains of Eurobank recently, but it is because of the convoluted history of Fairfax's investment in Eurobank in 2014 and 2015, with a very strange weighted average cost of 2.20 euros. They first bought shares in 2014 at E0.31, and as there was a 100:1 split later on, this actually means their initial investment was at E31 !. But then they doubled down massively in 2015 (something some investors say you should never do, but never say never, right? So they bought way more shares in 2015 at E0.01 (split adjusted E1.00). This gave them a weighted average of E0.022, or E2.20 split adjusted.

So the sales in 2025 at about E2.29 represent a surprisingly small gain. Going forward, the company will likely still have to sell small stakes to keep under 33.3%, but the gain will be far larger. For instance, at the current price of E3.44, the gain per share would be about E1.24 per share instead of E0.09.

So all in all, they made a biggish investment in 2014 (E400m, at split-adjusted E31/share), then took swhat they describe as "one of our largest unrealized losses ever" in 2015, when they participated in a refinancing at split-adjusted E1.00 per share. So this investment represents a huge strikeout on the 2014 investment (still way underwater) and then an even huger homerun from the 2015 investment, up from E1.00 to E3.44.

TwoCitiesCapital · August 12, 2025

37 minutes ago, dartmonkey said:

As your note says, but not your table, it was 1.266b shares on Dec 31st, not 1.186b, with a forced sale of 80m shares in Q1 2025 (Jan 23, to be precise, taking them down to 1.186b) and another 8m in Q2, sor the number is now 1.178b. Does your table include the $46m gain on the sale of those 88m shares ?

The gain is smaller than I would have thought, given the impressive share price gains of Eurobank recently, but it is because of the convoluted history of Fairfax's investment in Eurobank in 2014 and 2015, with a very strange weighted average cost of 2.20 euros. They first bought shares in 2014 at E0.31, and as there was a 100:1 split later on, this actually means their initial investment was at E31 !. But then they doubled down massively in 2015 (something some investors say you should never do, but never say never, right? So they bought way more shares in 2015 at E0.01 (split adjusted E1.00). This gave them a weighted average of E0.022, or E2.20 split adjusted.

So the sales in 2025 at about E2.29 represent a surprisingly small gain. Going forward, the company will likely still have to sell small stakes to keep under 33.3%, but the gain will be far larger. For instance, at the current price of E3.44, the gain per share would be about E1.24 per share instead of E0.09.

So all in all, they made a biggish investment in 2014 (E400m, at split-adjusted E31/share), then took swhat they describe as "one of our largest unrealized losses ever" in 2015, when they participated in a refinancing at split-adjusted E1.00 per share. So this investment represents a huge strikeout on the 2014 investment (still way underwater) and then an even huger homerun from the 2015 investment, up from E1.00 to E3.44.

I dunno if they'll ever make back the 2014 investment. Was effectively a wipe out of existing equity holders at 90+% dilution.

Fairfax was fortunate to have a seat at the table for the recapitalization and that did ultimately save their bacon but took the better part of a decade to play out.

Everyday holders of the ADR/shares weren't given that same option to participate at favorable terms and were left with massive losses and a whether or not to double down in open markets where the price was just a bunch of chop for 2015 - 2020 where business results really started to take off

Glad to see it turn out well for them, but hard for me to forget the near 100% loss experienced on the first chunk as I owned Eurobank directly then as well.

Edited August 12, 2025 by TwoCitiesCapital

Viking · August 12, 2025

32 minutes ago, dartmonkey said:

As your note says, but not your table, it was 1.266b shares on Dec 31st, not 1.186b, with a forced sale of 80m shares in Q1 2025 (Jan 23, to be precise, taking them down to 1.186b) and another 8m in Q2, sor the number is now 1.178b. Does your table include the $46m gain on the sale of those 88m shares ?

The gain is smaller than I would have thought, given the impressive share price gains of Eurobank recently, but it is because of the convoluted history of Fairfax's investment in Eurobank in 2014 and 2015, with a very strange weighted average cost of 2.20 euros. They first bought shares in 2014 at E0.31, and as there was a 100:1 split later on, this actually means their initial investment was at E31 !. But then they doubled down massively in 2015 (something some investors say you should never do, but never say never, right? So they bought way more shares in 2015 at E0.01 (split adjusted E1.00). This gave them a weighted average of E0.022, or E2.20 split adjusted.

So the sales in 2025 at about E2.29 represent a surprisingly small gain. Going forward, the company will likely still have to sell small stakes to keep under 33.3%, but the gain will be far larger. For instance, at the current price of E3.44, the gain per share would be about E1.24 per share instead of E0.09.

So all in all, they made a biggish investment in 2014 (E400m, at split-adjusted E31/share), then took swhat they describe as "one of our largest unrealized losses ever" in 2015, when they participated in a refinancing at split-adjusted E1.00 per share. So this investment represents a huge strikeout on the 2014 investment (still way underwater) and then an even huger homerun from the 2015 investment, up from E1.00 to E3.44.

The Eurobank investment for Fairfax has many twists and turns. There was the initial investment, which effectively went to zero. The second large investment. And the merger with Grivalia Properties. Eurolife is also an important part of the story (it was owned by Eurobank and they still own 20%). To do a proper analysis of Fairfax’s investment it needs to include Eurobank, Grivalia Properties and Eurolife.

The bottom line, since 2000 this investment has worked out fabulously well for Fairfax. And Eurobank looks very well positioned today. Which is all I really care about today (since my current position in Fairfax was established in late 2020).

Viking · August 13, 2025

@Marco Van Basten, yes, it is early days with the Caroline Shin/Blizzard Vacatia investment. As we get more information I will update my views.

Here is why I like it:

High level of confidence/trust in the management team at Fairfax: Fairfax has a very good track record over the past 7 years of partnering with very good/exceptional entrepreneurs/CEO's/founders. Not surprisingly, Fairfax's investment results have also been very good. Peter Lynch said "In this business, if you're good, you're right six times out of ten." Fairfax has been better than that.
Carolyn Shin has a very impressive resume. I like that Fairfax has partnered with a highly successful founder/entrepreneur.
As per Wade Burton's comments on Fairfax's Q2 conference call, the early results from the investment are promising/ahead of expectations.

Below is my summary of the investment (it will be in the next update to my PDF/book).

---------

Blizzard Vacatia – Partnering with an Entrepreneur / Boosting Yield of Fixed Income Portfolio

Update from Wade Burton on the investment in Blizzard Vacatia.

It’s early days in the timeshare investment, Berkeley, run by Caroline Shin, but so far, it has exceeded expectations. Berkeley has approximately 125,000 available room nights per month. They started the year at virtually nil occupancy for overnight stays. In month one, Caroline brought that number to 10%, the next month 20%, and the third month 35%. I’m happy to report year to date operating income has already reached our full year expectations. Again, outstanding and capable partners doing an excellent job for Fairfax shareholders. Wade Burton – Fairfax Q2-2025 conference call

—————

July 30, 2025

One of Fairfax’s largest investments in 2025 (January) was the purchase of the Berkley Group, one of the largest independent timeshare companies in the US. With this deal, Fairfax partnered with Caroline Shin and her team at Vacatia. The partnership is called Blizzard Vacatia. This is a private holding that is equity accounted by Fairfax.

Fairfax provided the majority of the financing to acquire the Berkley Group. Vacatia is providing the operational expertise to run and maximize the value creation from the assets of the Berkley Group.

“Blizzard Vacatia, through its subsidiaries, is engaged in the development, sales, marketing and rental of timeshare resorts.” Fairfax 2024AR

Fairfax invested a total of $835 million in Blizzard Vacatia, as follows:

Fairfax’s investment is structured in an interesting way. It is a combination of debt and equity. The annual interest income is meaningful. And there is additional upside potential with the equity.

Growing the average yield on their fixed income portfolio

This investment (along with the acquisition with Kennedy Wilson of the real estate loan portfolio/infrastructure from PacWest) provides a couple of good examples of how Fairfax is over time thoughtfully shifting some of their fixed income portfolio from government bonds to higher yielding corporate securities. This helps improve the average yield on their fixed income portfolio.

—————

Who is Vacatia?

Below is an article that discusses Vacatia’s recent purchases and emerging capabilities.

Vacatia’s Bold Move: A New Era for Independent Resorts

- https://resorttrades.com/vacatias-bold-move-a-new-era-for-independent-resorts/amp/

The timeshare industry is undergoing significant change with Vacatia’s acquisition of The Berkley Group and Daily Management, a move that strengthens its position as a key player in the independent resort sector. With the acquisition, Vacatia’s portfolio now includes 460,000 owners, 2,500 associates, and over 11,000 units across 13 states. This means Vacatia is now one of the top five vacation ownership companies in the United States.

The acquisition combines Berkley’s expertise in sales, Daily Management’s experience in resort operations, and Vacatia’s technology and rental solutions. Shin sees this integration as a way to provide independent resorts with more flexibility and support.

“Independent resorts now have a partner that has every capability of helping an independent resort, large or small,” she says. “We are celebrating the independent resorts, giving them the ability to remain independent, but at the same time leveraging the scale that comes with Vacatia having their back.”

One key area where Vacatia sees opportunity is in technology-driven efficiencies, which have historically been more difficult for independent resorts to implement. Shin points to maintenance, housekeeping, reservations, and owner services as examples of areas that can be improved with better digital tools.

Who is Caroline Shin, CEO and Co-founder of Vacatia?

Caroline co-founded Vacatia to bring innovation and new ideas to timeshares. As a seasoned technology and hospitality executive, Caroline already pioneered well-known travel programs that are now mainstays in the hospitality industry. She was a member of the founding team of Hotwire.com, where she led product and technology functions to develop one of the first online travel agencies in the world. She led CRM and revenue management for Starwood Hotels & Resorts Worldwide, launching a first-of-its-kind pricing and marketing platform that empowered hotels to make impactful, data-driven decisions. At Sentient Jet, she delivered industry-leading customer service by cultivating deep client relationships combined with algorithmic analysis of each flight plan to forecast service issues before they occur. She was also a technology and strategy consultant at Accenture and Scient, advising both Fortune 500 and startup clients to adapt their business online. Caroline is a member of the Board of Directors of the American Resort Development Association (ARDA) and holds a degree in nuclear engineering from MIT.

- https://www.vacatiapartnerservices.com/blank

—————

On Feb 13, 2025, the Fairfax’s investment in Blizzard Vacatia was discussed on the investing forum ‘Corner of Berkshire and Fairfax.’ Click the link below for more:

- https://thecobf.com/forum/topic/16427-fairfax-stock-positions/page/94/#findComment-601100

—————

Comments from Wade Burton about Blizzard Vacatia from Fairfax’s Q4-2024 conference call.

Second, I wanted to discuss an investment that closed just after year-end 2024. We invested in the largest independent timeshare company in America called the Berkeley Group. Caroline Shin and her team at Vacatia are Fairfax partners here. The investment is underpinned by asset value, where we directly own 4,950 full-service vacation units mostly located in Las Vegas, Orlando, and other high-traffic vacation areas in the U.S. The opportunity here is for Caroline and her team to generate overnight rental income from the huge stock of nightly vacancies. Her experience designing Hotwire online booking software and then as an executive at Starwood is perfect for what Vacatia is trying to do with Berkeley.

In fact, prior to this acquisition, her group at Vacatia made investments in five smaller timeshare assets from 2019 to 2024, and in each case, they were very successful at significantly growing EBITDA in a short period of time. The total deal was $835 million, which we funded with a $275 million five-year preferred note at 13.5%, a $365 million seven-year senior secured note at 9.5%, and $170 million mortgage warehouse loan with a five-year maturity at SOFR plus 400. The $50 million equity is funded 50% by Fairfax and 50% by Caroline and her partners. We are absolutely thrilled to be her partner on this. Wade Burton – Fairfax Q4-2024 Conference Call

Comments from Prem about Blizzard Vacatia from Fairfax’s 2024AR.

Early in 2025 we invested in the Berkley Group, the largest independent timeshare company in the United States. Caroline Shin and her team at Vacatia are partners with us on this investment. This investment results in us owning 4,950 full-service vacation units mostly located in Las Vegas, Orlando and other high-traffic vacation areas in the U.S. There is great opportunity for Caroline and her team to generate additional overnight rental income from the huge stock of nightly vacancies. In fact, her group at Vacatia made investments in five smaller timeshare assets from 2019 to 2024 and this strategy helped to generate strong growth in EBITDA and free cash flow. Her experience designing Hotwire online booking software and as an executive at Starwood is perfect for what Vacatia is trying to do with Berkley. Our total cash investment was $835 million comprised of a senior secured loan, preferred shares, a mortgage-backed loan and common shares. We are very excited to work together with Caroline and her team at Vacatia on this investment. Prem Watsa – Fairfax 2024AR

From Fairfax’s 2024 Annual Report

Subsequent to December 31, 2024

On January 1, 2025 the company acquired a 50.0% equity interest in Blizzard Vacatia Equity Partners LLC (“Blizzard Vacatia”). The company’s total cash investment of $835.0 was comprised of a senior secured loan of $365.0, preferred shares of $275.0, a mortgage-backed loan of $170.0 and common shares of $25.0. Blizzard Vacatia, through its subsidiaries, is engaged in the development, sales, marketing and rental of timeshare resorts. Fairfax 2024 AR

Fairfax stock positions

Recommended Posts

Top Posters In This Topic

Popular Days

Top Posters In This Topic

Popular Days

Popular Posts

Parsad

petec

lessthaniv

Posted Images

Create an account or sign in to comment

Create an account

Sign in