Fairfax stock positions

[Viking]

22 minutes ago, StubbleJumper said:

 

Agreed.  Q2 numbers will be superficially bad.  The realised gains will not appear until Q3 or maybe even q4 for RFP.  But, will Mr. Market understand this, or will the stock price slide when the Q2 EPS number is released in 4 weeks?  I sniff the possibility of an opportunity...

 

SJ

We can only hope. There have been many times in the past where Fairfax has been sitting on big gains and Mr Market has been completely asleep at the wheel… for a quarter or two. And then the shares pop

[Daphne]

Can’t stop smiling today.  Sold my 8$ BB when it hit $31 and bought in RFP at 11$. Life is good.

[Xerxes]

1 hour ago, Daphne said:

Can’t stop smiling today.  Sold my 8$ BB when it hit $31 and bought in RFP at 11$. Life is good.

Similar story but with a different ending. 
 

bought BB between $3 to $10. CAD. 
Sold on that fateful Monday at exactly $24.99. CAD

 

And then blew it over the next 1.5 year on things I don’t remember anymore. 

[Parsad]

1 hour ago, Xerxes said:

Similar story but with a different ending. 
 

bought BB between $3 to $10. CAD. 
Sold on that fateful Monday at exactly $24.99. CAD

 

And then blew it over the next 1.5 year on things I don’t remember anymore. 

 

What do you mean like cocaine???    Cheers!

[Parsad]

2 hours ago, Daphne said:

Can’t stop smiling today.  Sold my 8$ BB when it hit $31 and bought in RFP at 11$. Life is good.

 

Way to go Daphne!  Nice.  Cheers!

[Xerxes]

12 hours ago, Parsad said:

 

What do you mean like cocaine???    Cheers!

Haha

no IAC and Mercadolibre I think. Money is fungible so may have gone to something else. 

[Crip1]

21 hours ago, Daphne said:

Can’t stop smiling today.  Sold my 8$ BB when it hit $31 and bought in RFP at 11$. Life is good.

Wonderful.

 

Me, I'm sitting on ATCO with an average cost of $13.27 (trading at $10.42) and FFI with an average cost of $12.12 (trading at $11.00). I have a full position in both but I may try to average down some on the ATCO. I still believe both investments are good, but just wish I'd have been able to get in at better levels.

 

-Crip

[Daphne]

I am eyeing Atco at these levels recognizing it may take a year or so for it to take off. 

[lessthaniv]

Bought into ATCO yesterday.  Attractive against the backdrop of FCF that it could spin in a few years. 

[Crip1]

58 minutes ago, lessthaniv said:

Bought into ATCO yesterday.  Attractive against the backdrop of FCF that it could spin in a few years. 

 

1 hour ago, Daphne said:

I am eyeing Atco at these levels recognizing it may take a year or so for it to take off. 

 

And you're getting nearly a 5% yield to wait.

[Daphne]

1 hour ago, Crip1 said:

 

 

And you're getting nearly a 5% yield to wait.

[ourkid8]

On 7/6/2022 at 1:45 PM, Daphne said:

Can’t stop smiling today.  Sold my 8$ BB when it hit $31 and bought in RFP at 11$. Life is good.

 

Did you copy my portfolio or did I copy you? hahaha... congrats    

[Viking]

Stelco has just announced a massive SIB (see below). What Fairfax does will be super interesting. My guess is they tender. The reason? The 30 million share number from Stelco (+40% of shares outstanding) is too convenient: it allows Stelco to take out both large shareholders. At a low price. But we are in a bear market… Fairfax likely has lots of other great opportunities they can flip the proceeds into.

My guess is Fairfax will be happy to take a low price for Stelco because they can flip the proceeds into another investment they have more control over, better understand, that carries less risk and that is much cheaper than Stelco at C$35.

 

- buy another $1 billion Fairfax stock back at wicked low valuation

- buy out minority partners in Allied World

- buy outstanding stake of Fairfax India back at wicked low price

 

IF Fairfax tenders they could have +$2 billion in proceeds coming in from recent sales: pet insurance, Resolute Forest Products and Stelco.
 

EXCO is another resource position to watch. Is Fairfax unloading most of its resource holdings? 
—————

As a reminder, Fairfax is the largest holder of Stelco with 13 million shares = 17% of shares outstanding. Proceeds would be C$455 million.
—————

HAMILTON, Ontario--(BUSINESS WIRE)-- Stelco Holdings Inc. (TSX: STLC) (“Stelco” or the “Company”) announced today its intention to commence a substantial issuer bid (the “Offer”) pursuant to which the Company will offer to purchase up to30,000,000 of its outstanding common shares (the “Shares”) from holders of Shares (the “Shareholders”) for cash at a price of $35.00 per Share (the “Purchase Price”) for an aggregate maximum purchase amount of $1,050,000,000.

- https://investors.stelco.com/news/news-details/2022/Stelco-Holdings-Inc.-Announces-Intention-to-Commence-Substantial-Issuer-Bid/default.aspx

—————

TORONTO, Nov. 19, 2018 (GLOBE NEWSWIRE) -- Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U) announces that it has acquired, through its subsidiaries and by way of a private share purchase agreement, a total of 12,200,000 common shares (“Common Shares”) of Stelco Holdings Inc. (“Stelco”), representing approximately 13.7% of the issued and outstanding Common Shares, at a price of C$20.50 per Common Share. The acquisition represents Fairfax’s entire interest in Stelco. (Total cost was C$250 million.)

- https://www.fairfax.ca/news/press-releases/press-release-details/2018/Fairfax-Announces-Acquisition-of-Shares-of-Stelco/default.aspx

 

Edited July 27, 2022 by Viking

[newtovalue]

I dont know if I've seen a SIB this big. This is around 43% of the company being bough back. Holy guacamole 

[Xerxes]

Offer expires Aug 31, so likely that Prem will be quizzed on this at the cc in early august. 
 

it is a very large SIB for Stelco. (Or any company for that matter). Whoever is sniffing around for Stelco as a strategic buyer is being put on notice. : “if you don’t buy, I buy myself” 

[Xerxes]

If FFH sells the whole lot at $35 for about holding period of 4 years, that comes to ~14% compounded growth rate. 
 

S&P500 approximately yields a CAGR of ~9% over the same period. 
 

That is one measure of success. But if he is going to hold, than he needs to be in for the long haul, to see it on the other side. Resolute style ! But not quite 

[StubbleJumper]

8 hours ago, Xerxes said:

If FFH sells the whole lot at $35 for about holding period of 4 years, that comes to ~14% compounded growth rate. 
 

S&P500 approximately yields a CAGR of ~9% over the same period. 
 

That is one measure of success. But if he is going to hold, than he needs to be in for the long haul, to see it on the other side. Resolute style ! But not quite 

 

If FFH tenders the whole thing at $35/sh, we might do well to ask Prem what he was doing last summer when the prevailing market price was dependably higher.  FFH could have trickled out their shares over 8 or 9 months and done better than $35.

 

 

SJ

Edited July 27, 2022 by StubbleJumper

[Xerxes]

2 hours ago, StubbleJumper said:

 

If FFH tenders the whole thing at $35/sh, we might do well to ask Prem what he was doing last summer when the prevailing market price was dependably higher.  FFH could have trickled out their shares over 8 or 9 months and done better than $35.

 

 

SJ

that wouldn’t be Fair & Friendly, now would it ?

[Viking]

2 hours ago, StubbleJumper said:

 

If FFH tenders the whole thing at $35/sh, we might do well to ask Prem what he was doing last summer when the prevailing market price was dependably higher.  FFH could have trickled out their shares over 8 or 9 months and done better than $35.

 

SJ

The world was very different 8 or 9 months ago. Looking though the rear view mirror Fairfax should have sold pretty much every equity holding 8 or 9 months ago. They would be in a much better position financially today. Of course that is not realistic.

 

Rather, you make decisions based on the facts as they exist today. Fairfax has an opportunity to get taken out of its Stelco stake at $35/share. Simple, clean and timely. If Fairfax tenders shares i think it will be to re-deploy the proceeds into something else that is a much opportunity.

 

It would also be very rational for Fairfax to sit tight. If 30 million shares get tendered (doubtful if Fairfax does not tender theirs) then total share count would fall to 42 million. Fairfax owns 13 million = 31% ownership. In a few short years Fairfax would have doubled its ownership of a business with a very bright future. Steel is trading at US$850 which is still a very high price historically. So maybe with the tender Kestenbaum is trying to bottom fish Fairfax’s shares… and perhaps Fairfax does not bite. I will not be disappointed in Fairfax does not tender all (or a portion) of their shares.

Edited July 27, 2022 by Viking

[Crip1]

41 minutes ago, Xerxes said:

that wouldn’t be Fair & Friendly, now would it ?

The difference is that this was an investment, not an acquisition. It is a fair question to ask if it makes sense to sell a holding at $35/share, why did it not make sense to sell a year ago at $50+/Share.

 

FFH is my #2 holding but I have to admit one of the things I don’t like about it is, when questions like this are asked, the answers are more song-and-dance as opposed to “Yeah, we screwed up”. I respect the latter far more than the former.

 

-Crip
 

[Xerxes]

17 minutes ago, Crip1 said:

The difference is that this was an investment, not an acquisition. It is a fair question to ask if it makes sense to sell a holding at $35/share, why did it not make sense to sell a year ago at $50+/Share.

 

FFH is my #2 holding but I have to admit one of the things I don’t like about it is, when questions like this are asked, the answers are more song-and-dance as opposed to “Yeah, we screwed up”. I respect the latter far more than the former.

 

-Crip
 

my wild guess would be that FFH won’t tender its shares. 

[MMM20]

1 hour ago, Crip1 said:

The difference is that this was an investment, not an acquisition. It is a fair question to ask if it makes sense to sell a holding at $35/share, why did it not make sense to sell a year ago at $50+/Share.

 

FFH is my #2 holding but I have to admit one of the things I don’t like about it is, when questions like this are asked, the answers are more song-and-dance as opposed to “Yeah, we screwed up”. I respect the latter far more than the former.

 

-Crip
 

 

The fun part about investing is you can't really judge the decision from the outcome, especially between two arbitrary specific points in time. Maybe the process was sound and the odds were in their favor to hold at the time. This is not a Fairfax issue, this is an every-investment-always issue.

 

Anyway, here's hoping they punch out and launch a $2B SIB @ $600 USD

 

Share count remains on its way to 10M  

 

 

Edited July 27, 2022 by MMM20

[TwoCitiesCapital]

2 hours ago, MMM20 said:

 

The fun part about investing is you can't really judge the decision from the outcome, especially between two arbitrary specific points in time. Maybe the process was sound and the odds were in their favor to hold at the time. This is not a Fairfax issue, this is an every-investment-always issue.

 

Anyway, here's hoping they punch out and launch a $2B SIB @ $600 USD

 

Share count remains on its way to 10M  

 

 

 

I think the upside to Stelco is likely higher than FFH shares - but less certain. Fairfax has the privilege of being able to wait. 

 

As a shareholder in both, I'd hope they do NOT participate in the tender and rather remain aligned with management's position here which is to be buying/holding the shares. 

 

Commodity names will be killed in a recession, as always, and may trade lower in the near term. But the recession will do very little  to change the fundamental shortages from a decade of under investment OR the themes of electrification, clean steal, peak oil supply,new electric vehicles, etc. 

 

I hope Fairfax holds these at least for another 2-3 years to see how it plays out. They're already repurchasing a ton of shares without the stock price reacting - methinks they'll have more opportunities to accumulate even without letting go of these cheap assets. 

[StubbleJumper]

3 hours ago, Viking said:

The world was very different 8 or 9 months ago. Looking though the rear view mirror Fairfax should have sold pretty much every equity holding 8 or 9 months ago. They would be in a much better position financially today. Of course that is not realistic.

 

 

Yeah, except there were plenty of us banging away on them last summer to sell RFP, BB and Stelco while the price was high.  At least they managed to get a control premium from RFP by waiting a year, which worked out well, but it doesn't look too good for the other two.

 

 

SJ

[ourkid8]

4 hours ago, MMM20 said:

 

Anyway, here's hoping they punch out and launch a $2B SIB @ $600 USD

 

 

I bet they unwind the TRS so 1.4M shares @ $344.45   How beautiful would that be with the stock trading at $537.61?