Fairfax stock positions

[StubbleJumper]

@Viking Now you've done it.  I was happily sitting on my ass thinking about making some supper before Monday Night Football and now my curiosity has gotten the better of me.  So, I did a half-assed estimate of the change in fixed income based on a rough guess about the duration of the various fixed income maturity groups and the prevailing treasury rates for those groups:

 

	Assumed Duration	Fair Value Sept 30		Interest Rates as at:		Delta Y	Delta V
				12/09/22	09/30/22
Due in 1 year or less	1	7,571.80		0.0472	0.0405	0.0067	-50.73
Due after 1 year through 3 years	2	13,749.10		0.0433	0.0422	0.0011	-30.25
Due 3 though 5 years	5	5,335.30		0.0375	0.0406	-0.0031	82.70
Due 5 through 10 years	7	610.70		0.0369	0.0397	-0.0028	11.97
Due after 10 years	10	613.90		0.0357	0.0383	-0.0026	15.96
					Total portfolio change		29.65

 

 

So, that's a shitty estimate of the change in the fixed income portfolio value based on a half-assed guess about the duration, and under the assumption of an instantaneous interest rate change (I've not considered Delta-t).  The duration estimates for 3 through 5 years and for the after 10 years group are extra shitty, but that's life.  The result of that shitty calculation would lead me to call it a M2M gain of ~$30m plus a bit of delta-t?  

 

Half-baked analysis like this is why they promoted me into management where I could do less harm....

 

 

SJ

[Viking]

@StubbleJumper thanks for taking a stab at the math. What a crazy (good) year for Fairfax. I hope Fairfax continued to add to the duration of the bond portfolio in Q4. Duration increased from 1.2 years in Q2 to 1.6 years in Q3. 

[Maxwave28]

agreed, thank you Viking for sharing your work with the board. It is highly appreciated.  

 

[glider3834]

https://www.mytilineos.gr/news/company-news/fairfax-becomes-the-2nd-largest-shareholder-in-mytilineos/

 

 

MYTILINEOS:

MYTILINEOS S.A. is a leading Greek industry active in Metallurgy, Power & Gas, Renewables & Storage and Sustainable Engineering Solutions. Established in Greece in 1990, the company is listed on the Athens Exchange, has a consolidated turnover of €4.5 billion (9M 2022) and employs directly or indirectly more than 4,820 people in Greece and abroad.

[glider3834]

14 minutes ago, glider3834 said:

https://www.mytilineos.gr/news/company-news/fairfax-becomes-the-2nd-largest-shareholder-in-mytilineos/

 

 

MYTILINEOS:

MYTILINEOS S.A. is a leading Greek industry active in Metallurgy, Power & Gas, Renewables & Storage and Sustainable Engineering Solutions. Established in Greece in 1990, the company is listed on the Athens Exchange, has a consolidated turnover of €4.5 billion (9M 2022) and employs directly or indirectly more than 4,820 people in Greece and abroad.

 

 

S+B: How does the future look?
MYTILINEOS: We completed 2021 with record-high profitability and used it to prepare for the transition to higher levels of financial performance and value creation for our shareholders in the following years. In a year full of significant challenges, we demonstrated our capability to adapt in difficult conditions, with good planning and hard work, and will continue to do so in the years to come. I think 2022 and 2023 are going to be record years for us. Our Renewables and Storage business unit is doing well, and prevailing trends are in its favor. In the metallurgy sector, we have enjoyed bumper years, and that’s part of a ten-year cycle. And in power and gas, we are establishing ourselves as the number one private utility in Greece, as our major investments in power and renewables are now maturing and starting to pay back. Considering all of this makes me very hopeful for the next two years.

https://www.strategy-business.com/article/Powering-the-net-zero-transition-at-Greeces-Mytilineos

[wondering]

the story of Grivalia.  The audio is crap unfortunately.  For the power point slide of the presentation, see Ben Graham Centre for Value Investing https://www.ivey.uwo.ca/bengrahaminvesting/resources/video-library/

 

[glider3834]

On 12/19/2022 at 1:45 AM, wondering said:

the story of Grivalia.  The audio is crap unfortunately.  For the power point slide of the presentation, see Ben Graham Centre for Value Investing https://www.ivey.uwo.ca/bengrahaminvesting/resources/video-library/

 

fun fact - the new 'Glass Onion' release in Netflix was filmed at Amanzoe resort owned by Grivalia 

https://www.housebeautiful.com/lifestyle/entertainment/a42268845/glass-onion-knives-out-2-filming-locations/

https://www.aman.com/resorts/amanzoe/accommodation/villas/villa-20

 

Edited December 24, 2022 by glider3834

[Viking]

1 hour ago, glider3834 said:

fun fact - the new 'Glass Onion' release in Netflix was filmed at Amanzoe resort owned by Grivalia 

https://www.housebeautiful.com/lifestyle/entertainment/a42268845/glass-onion-knives-out-2-filming-locations/

 

https://www.aman.com/resorts/amanzoe/accommodation/villas/villa-20

Rooms starting from 1,500 euro per night… pretty spectacular place. Definitely a trophy property. It would be interesting to understand the economics of catering to the ultra-rich.

[gfp]

Looks like Resolute Forest Products is a done deal -

https://decisions.ct-tc.gc.ca/ct-tc/cdo/en/item/521162/index.do

[Viking]

I wondered why Resolute shares were up 5% today. Great news. The sooner Fairfax gets the cash from this deal the better. With stocks aggressively selling off again there are lots of other great opportunities for Fairfax to redeploy the proceeds into other solid equity opportunities that should compound nicely for shareholders in the coming years. 

[Viking]

I have updated my equity spreadsheet for Fairfax to Dec 30. The equity portfolio that I track is up about $1 billion in Q4. Of the total, about $380 million is mark to market (about $17/share pre-tax).

 

Bottom line, Fairfax's equity portfolio has held up much better in the bear market of 2022 compared to what happened in the bear market of 2020.  

 

Big movers:

1.) FFH TRS        +$250 million

2.) Eurobank      +$331 million

3.) Atlas             +$181 million

4.) Fairfax India +$150 million

5.) Quess           - $130 million

-----------

For board members who might not know... my spreadsheet attached below has a number of tabs you might find useful:

Tab 1: 2022 = where I track Fairfax's various equity holdings

Tab 2: Moves = various purchases Fairfax has made going back to 2010

Tab 3: 2022 Estimated Earnings = with history back to 2016

Tab 4: Premiums = net premiums written going back to 2014

- also includes losses from equity hedges and CPI positions (2010 to 2020)

Tab 5: Interest = interest and dividends going back to 2010

Tab 6: Associates = Associate holdings going back to 2017

Tab 8: Fairfax India holdings - my contain errors

 

Fairfax Equity Holdings Dec 30 2022.xlsx

Edited December 31, 2022 by Viking

[Luca]

4 hours ago, Viking said:

I have updated my equity spreadsheet for Fairfax to Dec 30. The equity portfolio that I track is up about $1 billion in Q4. Of the total, about $380 million is mark to market (about $17/share pre-tax).

 

Bottom line, Fairfax's equity portfolio has held up much better in the bear market of 2022 compared to what happened in the bear market of 2020.  

 

Big movers:

1.) FFH TRS        +$250 million

2.) Eurobank      +$331 million

3.) Atlas             +$181 million

4.) Fairfax India +$150 million

5.) Quess           - $130 million

-----------

For board members who might not know... my spreadsheet attached below has a number of tabs you might find useful:

Tab 1: 2022 = where I track Fairfax's various equity holdings

Tab 2: Moves = various purchases Fairfax has made going back to 2010

Tab 3: 2022 Estimated Earnings = with history back to 2016

Tab 4: Premiums = net premiums written going back to 2014

- also includes losses from equity hedges and CPI positions (2010 to 2020)

Tab 5: Interest = interest and dividends going back to 2010

Tab 6: Associates = Associate holdings going back to 2017

Tab 8: Fairfax India holdings - my contain errors

 

Fairfax Equity Holdings Dec 30 2022.xlsx 218.84 kB · 1 download

Amazing, thank you!

[glider3834]

https://cyprus-mail.com/2022/12/30/greek-eurobank-further-increases-its-stake-in-hellenic-bank/

 

Assuming regulatory approvals given, Eurobank stake will be 29.2%, if it decides to move to 30% or above it could launch a takeover of Hellenic.

 

 

Edited January 1, 2023 by glider3834

[Viking]

Given all the positive press India is getting these days (fastest growing major economy in 2023 and over next decade) I thought it might be interesting to provide an update on Fairfax's ownership position in Fairfax India. 

 

If there is one thing we can say with certainty... Fairfax knows how to invest in India. On the insurance side of things, Fairfax started with ICICI-Lombard back in 2000 and then pivoted to Digit in 2017. They realized $1.1 billion in gains on their 18 year investment in ICICI-Lombard. Digit is shaping up to be an even bigger winner for Fairfax - especially if we see a Digit IPO in 2023. 

 

On the equity side of things, Fairfax's first big investment in India was Thomas Cook in 2012. Thomas Cook in 2013 then bought 75% of IKYA Human Capital Solutions for $47 million (re-named Quess). Quess was eventually spun out as a separate company and has been a huge winner for Fairfax (although not as much was we initially thought in 2019). Thomas Cook was to be Fairfax's investment vehicle in India, but that all changed in 2014. 

 

In 2014 Modi, with a pro-business agenda, was elected Prime Minister of India. As a direct result of Modi's election win, Fairfax launched Fairfax India in 2015. Fairfax wanted to accelerate their growth in India. And accelerate it they have. Fairfax India has invested in more than 10 difference companies. However, the 'crown jewel' was its investment in Bangalore International Airport (BIAL) in 2016.  

 

When Fairfax India was started back in 2015, Fairfax owned a 28.1% interest. As of Sept 30, 2022, Fairfax owned 42.1% = 50% increase over 7 years. This is great news for Fairfax shareholders. 

 

Fairfax India management has done an outstanding job over the past 7 years. Book value has increased from $9.50/share in 2015 to $18.75/share at Sept 30, 2022. 

 

What about Fairfax India's share price? it closed at $13.26 on Friday. Is 2023 the year where investors finally give Fairfax India some love?

 

Edited January 15, 2023 by Viking

[Viking]

Fairfax has been simplifying the ownership structure of its assets in India. It owned IIFL Finance and IIFL Wealth both directly and via Fairfax India. Late in 2021 it sold its direct holdings in IIFL Finance and IIFL Wealth. 
 

In 2022, Fairfax India sold its holding of IIFL Wealth down to a 3.8% positio. Why? It appears at least one reason was to get their ownership of various assets in India compliant with regulators to allow a Digit IPO. 
—————-

Fairfax bought 49.2% ownership position in Quantum Mutual Funds for $43 million in 2015. It would be interesting to know what the position is worth today…

- https://www.business-standard.com/article/markets/fairfax-to-buy-49-2-stake-in-quantum-advisors-115110600879_1.html

—————-

Fairfax looks to settle mutual fund cross-holding norms case with Sebi 
- https://economictimes.indiatimes.com/markets/stocks/news/fairfax-looks-to-settle-mutual-fund-cross-holding-norms-case-with-sebi/articleshow/93883299.cms?from=mdr

—————-

“The Securities and Exchange Board of India (Sebi) rules do not allow any entity to hold more than a 10 per cent stake in more than one mutual fund house. Fairfax has more than 10 per cent shareholding in two mutual fund houses - Quantum Mutual Fund and IIFL Mutual Fund.” 

“HWIC Asia, an affiliate of Fairfax Financial Holdings, has a 49.2 per cent stake in Quantum Advisors, the sponsor of Quantum Asset Management Company and Quantum Mutual Fund.”

 

“Similarly, FIH Mauritius Investments, an entity of Fairfax Group, owns a 13.62 per cent stake in IIFL Wealth Management, which is the sponsor of IIFL AMC and IIFL Mutual Fund, the latest shareholding data with BSE showed.”

 

“The capital markets regulator, in October 2021, issued a show cause notice against Fairfax Financial Holdings Limited (FFHL), the ultimate parent entity of Fairfax Group, alleging a violation of mutual fund rules by FFHL, according to the draft IPO documents of Go Digit General Insurance Limited.”

“Go Digit, a firm backed by Canada-based Fairfax Group, filed preliminary papers with Sebi on August 14 to raise funds through an initial public offering (IPO).”

“FFHL had filed a settlement application dated June 3, 2022, with Sebi under the Sebi (Settlement Proceedings) Regulation, 2018," the company disclosed in the draft IPO documents. 

“The company further said that FIH Mauritius Investments, in which FFHL indirectly holds shares, has since entered into a binding agreement for the sale of certain of its shareholding in IIFL Wealth Management, the sponsor of IIFL Asset Management and IIFL Trustee.”

 

Edited January 15, 2023 by Viking

[Viking]

On 12/30/2022 at 10:43 PM, Viking said:

I have updated my equity spreadsheet for Fairfax to Dec 30. The equity portfolio that I track is up about $1 billion in Q4. Of the total, about $380 million is mark to market (about $17/share pre-tax).

 

Bottom line, Fairfax's equity portfolio has held up much better in the bear market of 2022 compared to what happened in the bear market of 2020.  

 

Big movers:

1.) FFH TRS        +$250 million

2.) Eurobank      +$331 million

3.) Atlas             +$181 million

4.) Fairfax India +$150 million

5.) Quess           - $130 million

-----------

For board members who might not know... my spreadsheet attached below has a number of tabs you might find useful:

Tab 1: 2022 = where I track Fairfax's various equity holdings

Tab 2: Moves = various purchases Fairfax has made going back to 2010

Tab 3: 2022 Estimated Earnings = with history back to 2016

Tab 4: Premiums = net premiums written going back to 2014

- also includes losses from equity hedges and CPI positions (2010 to 2020)

Tab 5: Interest = interest and dividends going back to 2010

Tab 6: Associates = Associate holdings going back to 2017

Tab 8: Fairfax India holdings - my contain errors

 

Fairfax Equity Holdings Dec 30 2022.xlsx 218.84 kB · 28 downloads

 

I estimated Fairfax's equity portfolio increased about $1 billion in Q4. Of the total, about $380 million was mark to market (about $17/share pre-tax). My numbers are usually decent directional guides. 

 

Given the hot start in equity markets in January, I thought it would be interesting to see how Fairfax's portfolio is doing YTD in Q1. My spreadsheet estimates Fairfax's portfolio is up about $640 million so far in Q1. About $225 million is mark to market ($10/share). Not too shabby. 

 

Big movers:

1.) Eurobank        +$212 million

2.) Fairfax India   +$134

3.) Stelco               +$75

4.) Blackberry       +$47

5.) FFH TRS          +$43

6.) Micron              +$41

Fairfax Equity Holdings Jan 23 2022.xlsx

Edited January 24, 2023 by Viking

[glider3834]

Fairfax recently raised its position in Mytilineos - MYTIL.AT - on fully converted basis they will have around 9.2M shares = approx $230M position

 

https://www.mytilineos.gr/news/company-news/fairfax-becomes-the-2nd-largest-shareholder-in-mytilineos/

 

And their reported results look decent 

 

https://www.ekathimerini.com/economy/1190127/mytilineos-sees-net-profit-turnover-more-than-double/

 

 

[Viking]

Atlas is Fairfax's largest equity holding. It appears Fairfax has exercised the remaining 6 million warrants it held in Atlas around Jan 12 (see note 2 below). After exercise, my math says Fairfax holds 130.9 million shares (excluding those held directly by Prem and the charity controlled by Fairfax) = 45.8% of total shares outstanding (287.565 million - including 6 million FFH warrants). The value of Fairfax's holding in Atlas = $2.0 billion. 

 

[nwoodman]

 

On 1/30/2023 at 8:54 AM, Viking said:

Atlas is Fairfax's largest equity holding.

 

For the moment .  Eurobank is on a tear, +17% for the month or looking at it another way, +$400m to FFH.   

Fitch recently upgraded them saying

 

"The upgrades reflect the structural improvements to Eurobank's profitability as a result of its successful de-risking and restructuring, supported by rising interest rates and economic growth in Greece. Buffers over regulatory capital requirement have strengthened and we expect internal capital generation to continue supporting metrics. The upgrade also reflects that Eurobank's funding stability and diversification have improved following consistent deposit growth and recent wholesale debt issuances. The expected resilience of the Greek economy in 2023, even in light of prevailing uncertainty, further underpin the upgrade."

 

Fitch Upgrades Eurobank to 'BB-'; Outlook Stable (fitchratings.com)

[Viking]

4 hours ago, nwoodman said:

 

 

For the moment .  Eurobank is on a tear, +17% for the month or looking at it another way, +$400m to FFH.   

Fitch recently upgraded them saying

 

"The upgrades reflect the structural improvements to Eurobank's profitability as a result of its successful de-risking and restructuring, supported by rising interest rates and economic growth in Greece. Buffers over regulatory capital requirement have strengthened and we expect internal capital generation to continue supporting metrics. The upgrade also reflects that Eurobank's funding stability and diversification have improved following consistent deposit growth and recent wholesale debt issuances. The expected resilience of the Greek economy in 2023, even in light of prevailing uncertainty, further underpin the upgrade."

 

Fitch Upgrades Eurobank to 'BB-'; Outlook Stable (fitchratings.com)

 

@nwoodman Yes, Eurobank certainly has been on the move. They were dealt a pretty shitty hand for many years... The management team there certainly has been executing well for years. The bank sure looks well positioned. If the Atlas go-private is rejected (and the stock sells off) then Eurobank could well pass Atlas and become Fairfax's largest equity holding. The FFH total return swaps have also been spiking higher the past 4 months. Those three holdings are much larger than any other single equities that  Fairfax owns. 

 

                 US$ Market Value of FFH stake

                           Jan 31           change from Dec 31, 2022

1.) Atlas           $1.94 billion      -$69

2.) Eurobank   $1.57 billion     +$264

3.) FFH TRS    $1.31 billion      +$141

 

Of interest, these three positions represent about 30% of Fairfax's total equity exposure. And about 9.5% of Fairfax's total investment portfolio. 

----------

Another tailwind for Fairfax is currency (US$ weakness). Fairfax has significant international holdings. 

[nwoodman]

54 minutes ago, Viking said:

2.) Eurobank   $1.57 billion     +$264

Thanks for correcting this, I should have gross error checked from first principles. I Fat-fingered and edited the currency conversion on your spreadsheet mistaking it for the share price.   The good thing is the share price is rapidly moving away from the FX rate   

[glider3834]

article on the Keg

 

https://www.richmond-news.com/hospitality-marketing-tourism/dine-out-vancouvers-business-bump-helps-wary-restaurant-owners-6500823

 

'Fairfax Financial fully owns the Keg restaurant chain thanks to it buying Recipe Unlimited Corp. in a deal that closed in October.

"These days you're inundated with cautious news," Aisenstat said. 

"There's inflation, interest rates – all that stuff. If you're looking for something to be nervous about, in the restaurant business it's pretty easy to find it, but so far nothing [bad] has materialized, really. Fall was great. January is better than we would have expected."

Aisenstat said things are also going very well at other restaurants, where he has ownership stakes.'

[Parsad]

On 2/7/2023 at 4:49 PM, glider3834 said:

article on the Keg

 

https://www.richmond-news.com/hospitality-marketing-tourism/dine-out-vancouvers-business-bump-helps-wary-restaurant-owners-6500823

 

'Fairfax Financial fully owns the Keg restaurant chain thanks to it buying Recipe Unlimited Corp. in a deal that closed in October.

"These days you're inundated with cautious news," Aisenstat said. 

"There's inflation, interest rates – all that stuff. If you're looking for something to be nervous about, in the restaurant business it's pretty easy to find it, but so far nothing [bad] has materialized, really. Fall was great. January is better than we would have expected."

Aisenstat said things are also going very well at other restaurants, where he has ownership stakes.'

 

Apparently, David owns a stake in Mick Fleetwood's restaurant, Fleetwoods, in Lahaina, Maui.  I was there and had no idea David was a part owner.  David also owns Joe Fortes in Vancouver, which is a local landmark, named after a famous, local beach lifeguard.  If you ever come to Vancouver, make sure you eat there...the vibe is very similar to Joe's Steak and Seafood in Chicago.  Cheers!

[jbwent63]

13-F for year end is out. Only significant transactions reported is the sale of all the shares of HRB and INSW. All other moves pretty small. Value of reported portfolio up to $3.69 billion USD from $3.54 billion USD in prior quarter.

[glider3834]

ATCO merger approved by shareholders 

https://ir.atlascorporation.com/2023-02-24-Atlas-Shareholders-Approve-Merger-with-Poseidon-Acquisition-Corp