Fairfax stock positions

[petec]

On 4/25/2024 at 12:26 AM, Viking said:

 

@nwoodman What Sokol said at Fairfax's AGM was, IMHO, one of the most important pieces of new information to come out of the entire event. 

 

Poseidon is Fairfax's third largest equity holding (with a value of +$2 billion), after Eurobank and FFH-TRS. Poseidon's performance in 2023 was disappointing (share of profit of associates of $150 million), compared to the guidance Atlas provided in their investor day back in March of 2022. However, it appears performance should improve markedly in 2024 and the coming years.

 

"So the ships we're delivering this year, if you wanted to duplicate them, a, it would take you 2 years, but also you'd pay a 30% premium. So we have a build-in margin that is purely good fortune from our perspective, but nonetheless, you take it when it comes along. So that's where we are. Now that's going to show some pretty dramatic improvement in economics this year. We'll probably see revenues up around 25%, EBITDA north of 35% and net income above 20% growth from '23 through '24, but that's just a function of these ships coming on." David Sokol

 

"...your investment should go up about 50% this year just based on the increased cash flow of the business" David Sokol

 

This is big news. And something to monitor moving forward as Fairfax reports quarterly results.

----------

Below is the guidance Atlas provided in March of 2022. 

 

 

 

Why is the investment up 50% on net income growth of 20%, which would still put them way behind the guidance in that table? Did I miss something?

[nwoodman]

15 hours ago, petec said:

 

Why is the investment up 50% on net income growth of 20%, which would still put them way behind the guidance in that table? Did I miss something?

I figured he was basing the statement on on the 35% increase in “bullshit earnings” i.e EBITDA.  Unfortunately not at the AGM so missed the tone.  
 

As inferred above, I will be happy if this thing can be accretive and not some capital sink hole. Flipping APR sounds good.  Given Sokol’s background if he can’t make it work (scale it) then ditch it.  I get the impression it was forced upon them anyway.

 

Edit: clarification

Edited May 2 by nwoodman

[Parsad]

54 minutes ago, nwoodman said:

I figured he was basing it on “bullshit earnings” i.e EBITDA.  Unfortunately not there so missed the tone.  
 

As inferred above, I will be happy if this thing can be accretive and not some capital sink hole. Flipping APR sounds good.  Given Sokol’s background if he can’t make it work (scale it) then ditch it.  I get the impression it was forced upon them anyway.

 

If you look at Maersk's results for Q1, their guidance has jumped leaps and bounds from $1B-$6B in EBITDA to $4B-$6B.  That's one hell of a jump on the low side!  I would imagine that Poseidon will hit the targets Sokol has talked about.  Cheers!

 

https://finance.yahoo.com/news/maersk-posts-q1-profits-above-060706435.html

[Haryana]

 

Quess stock is up > 20% since end of March.

 

(Q4FY24 Proft After Tax) "PAT at ₹98 cr up by 226% YoY and 54% QoQ"

 

Press-Release-Q4FY24.pdf Investor-Presentation-Q4FY24.pdf

[gfp]

Here is the Atlas Q1 report -

https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&ref=318311121&type=HTML&symbol=ATCO&cdn=724594abd25878a3690de8060552477c&companyName=Atlas+Corp.&formType=6-K&dateFiled=2024-05-10

[nwoodman]

2 hours ago, gfp said:

Here is the Atlas Q1 report -

https://app.quotemedia.com/data/downloadFiling?webmasterId=101533&ref=318311121&type=HTML&symbol=ATCO&cdn=724594abd25878a3690de8060552477c&companyName=Atlas+Corp.&formType=6-K&dateFiled=2024-05-10

Thanks for this.  Summary in the ATCO thread

https://thecobf.com/forum/topic/1691-atco-atlas-corp/?do=findComment&comment=563864

 

Edited May 11 by nwoodman

[SafetyinNumbers]

4 hours ago, nwoodman said:

Thanks for this.  Summary in the ATCO thread

https://thecobf.com/forum/topic/1691-atco-atlas-corp/?do=findComment&comment=563864

 

I guess we can assume FFH reports ATCO earnings on a one quarter delay? That should be a big help to Associates income in Q2.

[nwoodman]

3 hours ago, SafetyinNumbers said:

I guess we can assume FFH reports ATCO earnings on a one quarter delay? That should be a big help to Associates income in Q2.

I actually thought it was on the current quarter.  Hadn’t got as far as reconciling the numbers across to Fairfax to check.  

[SafetyinNumbers]

4 hours ago, nwoodman said:

I actually thought it was on the current quarter.  Hadn’t got as far as reconciling the numbers across to Fairfax to check.  

Q124 showed only $34.8m of income from Poseidon and that’s much closer to 43% of Q423 reported income (just eyeballing the difference between 2023FS and Q323 reported income).
 

I assume the same is true for Eurobank which doesn’t report Q1 until next week and Helios which also hasn’t reported Q1 yet.

 

Edited May 11 by SafetyinNumbers

[Viking]

Change in value of Fairfax’s equity portfolio in Q1 - 2024

 

Fairfax’s equity portfolio (that I track) had a total value of about $20.4 billion at May 10, 2024. So far in Q2 it is up about $700 million (pre-tax) or 3.5%, which is a solid start to Q2-2024.

 

As per usual, please let me know if you see any errors  FYI, I include the warrant and debentures in the total. The Excel file is attached at the bottom of the post.

 

 

I include the FFH-TRS position in the mark to market bucket and at its notional value. I also include warrants and debentures that Fairfax holds in the mark to market bucket.

 

My tracker portfolio is not an exact match to Fairfax’s actual holdings. My summary has been updated to include information from Fairfax’s Q1-2024 earnings report.

 

My tracker portfolio is useful only as a tool to perhaps understand the rough change in Fairfax’s equity portfolio (and not the precise change).

 

Split of total holdings by accounting treatment

 

About 49% of Fairfax’s equity holdings are mark to market - and will fluctuate each quarter with changes in equity markets. The other 51% are Associate and Consolidated holdings.

 

Over the past couple of years, the share of the mark to market portfolio has been shrinking. This means Fairfax's quarterly results will be less impacted by volatility in equity markets.

 

 

Split of total gains by accounting treatment

• The total change is an increase of about $700 million = $30.64/share
• The mark to market change is an increase of $184 million = $8.08/share. The change in this bucket of holdings will show up in ‘net gains (losses) on investments’ (along with changes in the value of the fixed income portfolio) when Fairfax reports results each quarter.

 

What were the big movers in the equity portfolio Q1-YTD?

• Eurobank is up $399 million and it is Fairfax’s largest equity holding at $2.84 billion.
• The FFH-TRS is up $139 million and is Fairfax’s second largest holding at $2.26 billion. 
• Thomas Cook India is up $108 million. TCIC continues its strong performance. 
• Quess is up $73 million. Market value is $393 million (carrying value is $432 million).

 

Excess of fair value over carrying value (not captured in book value)

 

For Associate and Consolidated holdings, the excess of fair value to carrying value is about $1.676 billion or $73/share (pre-tax). Book value at Fairfax is understated by about this amount.

• Associates:       $1,052 million = $46/share
• Consolidated:      $624 million = $27/share

Equity Tracker Spreadsheet explained:

 

We have separated holdings by accounting treatment: mark to market, associates – equity accounted, consolidated, other Holdings – total return swaps.

 

We come up with the value of each holding by multiplying the share price by the number of shares. Are holdings are tracked in US$, so non-US holdings have their values adjusted for currency. 

 

This spreadsheet contains errors. It is updates as new and better information becomes available.

 

 

 

 

Fairfax May 10 2024.xlsx

Edited May 11 by Viking

[nwoodman]

8 hours ago, SafetyinNumbers said:

Q124 showed only $34.8m of income from Poseidon and that’s much closer to 43% of Q423 reported income (just eyeballing the difference between 2023FS and Q323 reported income).
 

I assume the same is true for Eurobank which doesn’t report Q1 until next week and Helios which also hasn’t reported Q1 yet.

 

Thanks that seems to work.  I might try some further back testing when I have a spare moment.  Now that these entities are making decent money it's a bit more important to understand any timing differences  

[nwoodman]

On 5/12/2024 at 2:43 AM, Viking said:

Eurobank is up $399 million and it is Fairfax’s largest equity holding at $2.84 billion.

Thanks @Viking.  There seems an inevitability that Eurobank pushes beyond the $3bn mark.  It feels like yesterday that the whole of FFH could be bought for $10 bn.  Unreal. 
 

A reminder Eurobank reports Thursday 16th May

 

https://www.eurobankholdings.gr/en/grafeio-tupou/etairiki-anakoinosi-29-04-24

Edited May 13 by nwoodman

[nwoodman]

Eurobank reported some impressive results.  MS report on earnings attached.  Key take aways:

• Eurobank beat MSe and consensus by 22% and 19%, respectively, when adjusting for one-offs (VES costs). Reported net income was 17% ahead of MSe.
• The beat was largely driven by better non-interest income and provisions.
• Provisions were 8% lower than MSe and consensus, with a CoR of 68bps (down 20bps QoQ), driven by an improvement in Greece provisioning.
• Eurobank has sent an official application to the SSM with a proposed payout of 30%, corresponding to a dividend higher than EUR9 cents per share.
• This implies a dividend yield of 4.3%. Eurobank expects a (potential) approval to come in June, and dividend distribution in late July.

 

EUROBANK_20240516_1722.PDF

Edited May 16 by nwoodman

[nwoodman]

A brief summary of the Q&A section of the Eurobank CC.  Transcript attached

 

1. Loan growth: Eurobank delivered loan growth in Q1 driven by corporate loans in Greece and retail in Bulgaria. The pipeline looks good and the bank is confident it will reach its full year targets.

 

Quote: "Overall, we are quite confident that will reach our target for the year that it is a net credit growth of EUR 1.3 billion in Greece and EUR 1 billion in Southeastern Europe, overall EUR 2.3 billion for the group..."

2. Net interest income: NII was strong in Q1, flat q/q but up 13.7% y/y, driven by loan and bond growth offsetting higher deposit costs. Q1 NII points to potentially beating full year guidance but it's too early to revise targets.

 

Quote: "Overall, the big picture for NII is that Q1 was better than our expectation... Q1 actually points to a better than budget performance. However, it is quite early in the year and at the moment we are not revising our forecast."

 

3. Asset quality: NPE ratio is expected to remain around 3% for 2024 with potential for cost of risk to come in lower than the <80bps guidance. 

 

Quote: "Overall, we expect that the NPE ratio for the full year 2024 to remain at the current levels. So circa 3%... As you can see on Page 32, the first quarter, cost of risk decrease to 68 basis points from 85 basis points in 2023... We may move lower than this initial guidance, but as Harris mentioned, we will provide you a full update."

 

4. Hellenic Bank: Eurobank expects to get regulatory approvals and close the increase to a 55% stake in Hellenic in the coming weeks. Hellenic's results will be consolidated from Q3.

Quote: "Over the next few weeks, we should receive the pending approvals and we should be able to close the outstanding transactions driving our percentage at 55%... subject to the regulatory approvals in the second quarter, we should also record any negative goodwill that we may have from the pending transactions."

5. Capital return: The proposed dividend payout ratio for 2023 profits is 30% all in cash, targeting 40% in 2024 potentially via a mix of cash dividends and buybacks.

 

Quote: "For the shareholder reward of this year out of 2023 financial results, as I mentioned in my introduction, we have proposed 30% payout ratio all in cash dividend... for next year, we envisage a higher payout ratio towards 40%. And in 2026, this may reach towards 50%... for next year and the following, we may consider a mix of cash dividend and share buyback."

EUROB - Transcripts.pdf

[Viking]

8 hours ago, nwoodman said:

A brief summary of the Q&A section of the Eurobank CC.  Transcript attached

 

1. Loan growth: Eurobank delivered loan growth in Q1 driven by corporate loans in Greece and retail in Bulgaria. The pipeline looks good and the bank is confident it will reach its full year targets.

 

Quote: "Overall, we are quite confident that will reach our target for the year that it is a net credit growth of EUR 1.3 billion in Greece and EUR 1 billion in Southeastern Europe, overall EUR 2.3 billion for the group..."

2. Net interest income: NII was strong in Q1, flat q/q but up 13.7% y/y, driven by loan and bond growth offsetting higher deposit costs. Q1 NII points to potentially beating full year guidance but it's too early to revise targets.

 

Quote: "Overall, the big picture for NII is that Q1 was better than our expectation... Q1 actually points to a better than budget performance. However, it is quite early in the year and at the moment we are not revising our forecast."

 

3. Asset quality: NPE ratio is expected to remain around 3% for 2024 with potential for cost of risk to come in lower than the <80bps guidance. 

 

Quote: "Overall, we expect that the NPE ratio for the full year 2024 to remain at the current levels. So circa 3%... As you can see on Page 32, the first quarter, cost of risk decrease to 68 basis points from 85 basis points in 2023... We may move lower than this initial guidance, but as Harris mentioned, we will provide you a full update."

 

4. Hellenic Bank: Eurobank expects to get regulatory approvals and close the increase to a 55% stake in Hellenic in the coming weeks. Hellenic's results will be consolidated from Q3.

Quote: "Over the next few weeks, we should receive the pending approvals and we should be able to close the outstanding transactions driving our percentage at 55%... subject to the regulatory approvals in the second quarter, we should also record any negative goodwill that we may have from the pending transactions."

5. Capital return: The proposed dividend payout ratio for 2023 profits is 30% all in cash, targeting 40% in 2024 potentially via a mix of cash dividends and buybacks.

 

Quote: "For the shareholder reward of this year out of 2023 financial results, as I mentioned in my introduction, we have proposed 30% payout ratio all in cash dividend... for next year, we envisage a higher payout ratio towards 40%. And in 2026, this may reach towards 50%... for next year and the following, we may consider a mix of cash dividend and share buyback."

EUROB - Transcripts.pdf 99.78 kB · 7 downloads

@nwoodman thanks for the updates. Much appreciated. I am liking this company more and more (and i already liked it a lot). Underpromise and overdeliver. Very well run. Continie to execute exceptionally well. 

Edited May 17 by Viking

[nwoodman]

3 hours ago, Viking said:

@nwoodman thanks for the updates. Much appreciated. I am liking this company more and more (and i already liked it a lot). Underpromise and overdeliver. Very well run. Continie to execute exceptionally well. 

I just hope they hang in there.  The flipping of Micron and leaving coin on the table while hanging onto BlackBerry is a head scratcher.  Hopefully they flipped into the recent strength.

 

Eurobank open was a little insipid but starting to reflect the good results.  A couple of points away from crossing over the $3bn mark

 

 

[gary17]

maybe they are still dreaming to see bb reinventing itself like motorola did…

[sleepydragon]

2 hours ago, gary17 said:

maybe they are still dreaming to see bb reinventing itself like motorola did…

 

BB is an interesting company. There's only a handful (maybe 3?) vendor of embedded software platform. Embedded software are real time operating systems that run on time-critical stuffs (such as missile guidance, cars, or small devices). I used to work a lot with vxWorks, which was the gold standard. vxWorks were bought by Intel many years ago. What's left is Linux Embedded systems and QNX (BB).  QNX could be an acquisition target -- But I am sure previous CEO has tried hard to sell it and somehow it didn't get sold.   Probably it's because Linux (which is free) is already been integrated by many hardware vendors so nobody needs vxWorks/QNX anymore.

 

 

 

 

[Viking]

A Review of Fairfax’s Resource/Commodity Holdings

 

Fairfax holds a number of different resource/commodity stocks in its equity portfolio. Let’s do a review of this interesting and important collection of holdings.

 

Fairfax holds a total of 10 positions (that we have been able to identify) with a market value of about $2.5 billion. The largest weighting is oil and gas, at about 45%. The remaining 55% is diversified across copper, gold, other metals, energy and potash.

 

 

Context

 

Fairfax has a total investment portfolio of about $65 billion. Its resource/commodity holdings represent about 3.8% of the total.

 

Fairfax’s has an equity portfolio that is about $20 billion in size. Resource/commodity holdings represent about 12.5% of the equity portfolio. Bottom line, Fairfax’s has a modest weighting to resource/commodity stocks.

 

 

Why hold resource/commodities stocks?

 

1.) As an investment

• Fairfax is a value investor.
• Their style of value investing is pretty broad - they go to where they find the most value.

2.) As a hedge

• Inflation: When inflation is rising commodity prices usually also go up. As a result, commodities can serve as a good inflation hedge.

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

• Stelco - Alan Kestenbaum (CEO)
• Occidental Petroleum - Warren Buffett (largest shareholder)
• Foran Mining and Orla Mining - Pierre Lassonde - ‘recognized as one of Canada’s foremost experts in the area of mining and precious metals.’  Co-founded Franco-Nevada in 1985.

Jurisdiction

 

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

 

Fairfax detractors

 

Lots of investors will look at Fairfax’s resource/commodity holdings and quickly conclude that they are terrible investments.

 

Why are they terrible investments?

 

Because they are resource/commodity investments. And everyone knows resource/commodities are terrible investments.

 

The interesting thing is critics don’t actually follow the specific companies that Fairfax has invested in. They don’t know who Fairfax is partnered with. And they don’t know how the holdings have been performing for Fairfax.

 

So their opinion is not based on any of the pertinent facts. It is primarily based on emotion. And that gets to the crux of why consensus opinion has been so wrong on Fairfax over the past 4 years. Investment ‘analysis’ and decisions that are based primarily on emotion rarely work out well - especially over time.

 

What are the facts?

 

How have Fairfax’s commodity holdings been performing in recent years?

 

Very well. Sorry detractors… but the facts are the facts.

 

In recent years, Fairfax’s various resource/commodity holdings have generated a total return of over $1 billion. And a number of the holdings have been home run investments. This group of holdings has been a strong tailwind to Fairfax’s reported results over the past 2.5 years.

 

Of interest, the $1 billion total return does not include Resolute Forest products. In 2022 Fairfax sold Resolute Forest Products at the top of the lumber cycle for $626 million (plus $183 million CVR - tied to potential refund of lumber duties on deposit). At December 31, 2021 Fairfax had a carrying value for RFP of only $276 million - the sale resulted in a significant gain for Fairfax.

 

Importantly, each of Fairfax's resource/commodity holdings are well managed and very well positioned for the future.   

 

Bottom line, Fairfax owns resource/commodity holdings as a part of a larger strategy to build long term value for shareholders.

 

"In this business, if you're good, you're right six times out of ten. You're never going to be right nine times out of ten." Peter Lynch

 

Well, based on Peter Lynch's rule of thumb, the team at Fairfax

looking pretty good with its execution in recent years. 

 

==========

 

Let’s review each of the individual holdings in a little more detail.

 

EXCO Resources

 

EXCO Resources is a privately held investment. The company emerged from bankruptcy in 2019. At December 31, 2019, EXCO had a carrying value of $243 million at Fairfax. From 2019 to Q1 2024, Fairfax’s ‘share of profit’ from EXCO has been $223 million. As a result, at Q1 2024, the carrying value EXCO has increased to $454 million, an increase of $211 million or 87% from 2019.

 

 

Stelco

 

In November 2018, Fairfax invested US$193 million for a 14.7% stake in Stelco. Fairfax’s investment has increased in value by $335 million or 174% over the past 5.5 years.

 

Fairfax’s ownership stake in Stelco has also increased from 14.7% to 23.6%. This has happened despite the fact Fairfax has not purchased any additional shares. Stelco has repurchased 38% of shares outstanding over the past 3.5 years. The CEO of Stelco, Alan Kestenbaum, is a rock star.

 

M&A activity looks to be heating up in the North American steel sector: Japanese steelmaker, Nippon, agreed in December 2023 to acquire US Steel - offering a 40% premium.

 

 

 

Mytilineos

 

Fairfax first invested in Mytilineos in 2012 and 2013. In December 2022 they significantly increased the size of their position (more than doubled it).

 

We will look at Fairfax’s return since they added to their position. In December 2022, Fairfax’s investment in Mytilineos had a market value of about $188 million. Fairfax’s investment has increased $210 million or 112% over the past 18 months.

 

 

Occidental Petroleum

 

Fairfax built out the majority of their position in Occidental Petroleum in Q1 and Q2 and 2023. Using the average prices supplied in the 13F releases as a guide, my guess is Fairfax’s built out its position in OXY at a total cost of about $367 million ($61.00/share). Since Q2 of 2023, Fairfax’s investment has increased in value by about $18.7 million or 5.1%.

 

 

Foran Mining

 

Beginning in Aug 2021, Fairfax has invested a total of $112 million in Foran Mining. The investment today has a market value of $248 million. Fairfax’s position has increased in value by $136 million or 122% over the past 33 months.

 

This investment is a play on copper. And it is still in the very early innings (their copper mine has not yet begun production). The set-up for this investment looks excellent.

 

 

Orla Mining

 

Orlas is Fairfax’s newest resource/commodity investment. Fairfax built up their position in Orla from Q3 2022 to Q1 2024, spending about $204 million. The investment today has a market value of $245 million. The return on Fairfax’s investment has been about $41 million or 20%.

 

 

Limited Partnership

 

In their 2023AR, Fairfax reported limited partnerships - oil and gas extraction - with a value of $235.3 million.

 

During the 2023 year-end conference call Fairfax also mentioned they had an investment in Waterous Energy. The fact Fairfax mentioned Waterous suggests it is a sizeable holding. Waterous Energy holds a big position in - and is the engine behind - Strathcona Resources, the 5th largest oil and gas producer in Canada.

 

Connecting the dots, there is speculation that Strathcona is the mystery ‘oil and gas extraction’ holding with a value at Dec 31, 2023 of $235.3 million. Perhaps we get clarity from Fairfax on this holding in the future.

 

Altius Minerals - a royalty company

 

In April 2017, Fairfax invested C$100 in preferred securities in Altius Minerals. In 2022, Fairfax exercised the warrants and Altius redeemed the preferred securities. The investment today has a market value of $111 million. Fairfax has also received $21 million in interest and dividend payments. The total return on Fairfax’s investment  has been $53 million or 67% over the past 7 years.

 

===========

 

Company Presentations / Overviews

 

Stelco: Q1 2024 Earnings Call Presentation

• https://s201.q4cdn.com/143749161/files/doc_earnings/2024/q1/presentation/Q1-2024-Earnings-Presentation-FINAL.pdf

Mytilineos: Corporate Presentation October 2023

• https://www.mytilineos.com/media/fpxfna55/mytilineos_corporate_presentation_october_2023.pdf

Occidental Petroleum: Q1 2024 Earnings Call Presentation

• https://www.oxy.com/siteassets/documents/investors/quarterly-earnings/oxy1q24conferencecallslides.pdf

Foran Mining: Corporate Presentation May 2024

• https://foranmining.com/wp-content/uploads/2022/09/Foran-Corporate-Presentation.pdf

Orla Mining: Q1 2024 Update

• https://orlamining.com/site/assets/files/6008/ola_may_q1_2024.pdf

Altius Minerals: Corporate Presentation April 2024

• https://altiusminerals.com/_resources/presentations/corporate-presentation.pdf?v=0.510

Strathcona Resources: Corporate Presentation May 2024

• https://www.strathconaresources.com/wp-content/uploads/2024/05/Strathcona-Corporate-Presentation_May_vFF.pdf

EXCO Resources

• this is a private holding so there is limited public information available on the company.

—————

Pierre Lassonde: The Founding of Franco-Nevada with James Connor

• https://youtu.be/YMWeAbZQSEE?si=H7ZshbgglmKxycTF
• At 2 minute mark, Pierre talks about optionality. Price optionality is well understood. Land optionality is not understood and not calculated. Source of enormous wealth creation for investors.

Edited May 23 by Viking

[nwoodman]

@Viking another great post.  I am firmly in the camp of high prices solves the issue of high prices when it comes to commodities.  However, as you point out, there is money to be made with the right investing framework and patience.  The thing that strikes me about these recent investments is that they are very supportive of the view that Fairfax’s network and deal flow is in very good shape.  
 

I find it quite interesting that along with their investment in Altius came a board seat for Roger Lace. The board seat in itself is not that big a deal but for a relatively small investment they chose Roger for that gig.  It might be bit of a stretch but do you get the meadow foods idea from an interest in a potash royalty company. It’s probably more of a case of “opportunities come to a prepared mind’ but it’s truly fascinating to watch it all unfold.  As you have been saying,  the investment model has evolved from the crappy turnaround to those more consistent with idea of the  “100 year company’’.

 

The recent copper thread got me watching a few of the recent interviews with Brian Dalton, Altius’ CEO/President.  A fascinating guy and I can see why he would resonate with the team at Fairfax.
 

 

[Viking]

1 hour ago, nwoodman said:

@Viking another great post.  I am firmly in the camp of high prices solves the issue of high prices when it comes to commodities.  However, as you point out, there is money to be made with the right investing framework and patience.  The thing that strikes me about these recent investments is that they are very supportive of the view that Fairfax’s network and deal flow is in very good shape.  
 

I find it quite interesting that along with their investment in Altius came a board seat for Roger Lace. The board seat in itself is not that big a deal but for a relatively small investment they chose Roger for that gig.  It might be bit of a stretch but do you get the meadow foods idea from an interest in a potash royalty company. It’s probably more of a case of “opportunities come to a prepared mind’ but it’s truly fascinating to watch it all unfold.  As you have been saying,  the investment model has evolved from the crappy turnaround to those more consistent with idea of the  “100 year company’’.

 

The recent copper thread got me watching a few of the recent interviews with Brian Dalton, Altius’ CEO/President.  A fascinating guy and I can see why he would resonate with the team at Fairfax.

 

@nwoodman you nailed so many important points in your post:

• 'right investing framework'
• 'patience'
• the incredible value of Fairfax's 'network' - slowly built up over decades
• 'deal flow is in very good shape' - despite what detractors think, Prem's phone is ringing
• luck is when preparation meets opportunity - Roman philosopher Seneca

And yes, it has been fascinating to watch everything play out over the past 3 years. Almost bizarrely so.

 

But i think you last point is the best:

• 'the investment model has evolved from the crappy turnaround to those more consistent with idea of the  “100 year company’’.

Your point gets to the core of how Fairfax should be valued today - and what its intrinsic value is. 

 

I don't think this point is fully understood or recognized by most investors, including a large swath who currently own the shares (I don't mean to be disrespectful when I say this). So I will continue to bang on the drum  

 

PS: But just to show a little humility, I am still trying to figure out what Fairfax's intrinsic value actually is. The problem is the story just keeps getting better. The past three years, I feel a little bit like a dog chasing his tail. Although I will say I have been having a lot of fun!

Edited May 23 by Viking

[wondering]

For those who couldn't attend the various meetings before Fairfax's AGM, below is a recent video of Fakion Karavias CEO of Eurobank

 

 

[petec]

Controversially perhaps, I would not actually characterise Stelco as a commodity play. It is a processor. When there is a fat spread between inputs and outputs it does well, when there isn't it does not. It's not a producer, with relatively fixed costs and variable revenues.

 

I also own Ensign. Phenomenal levered exposure to the slow tightening of the north American land driller market (driven by wear and tear and rigs going overseas), trading at a 50% free cash flow yield.

[Viking]

On 5/23/2024 at 5:51 AM, wondering said:

For those who couldn't attend the various meetings before Fairfax's AGM, below is a recent video of Fakion Karavias CEO of Eurobank

 

 

 

@wondering thank you for posting the link. Fokion provides an excellent and concise summary of Eurobank: past, present and future. 

 

There is also a link to his presentation in the notes: 

• https://www.ivey.uwo.ca/media/hznli5um/keynote-fokion-karavias.pdf

[Thrifty3000]

3 hours ago, Viking said:

 

@wondering thank you for posting the link. Fokion provides an excellent and concise summary of Eurobank: past, present and future. 

 

There is also a link to his presentation in the notes: 

• https://www.ivey.uwo.ca/media/hznli5um/keynote-fokion-karavias.pdf

 

I just back-of-the enveloped the potential per-FFH-share impact of Eurobank’s projections between now and 2026. Am I missing something? These numbers almost seem too good to be true.

Looks to me like FFH currently owns $2.8 billion worth of Eurobank. 
 

If the stock price simply follows Eurobank’s projected TBV per share then FFH’s ownership will be worth $3.7 billion in 2026.

 

If the stock price grows to 12x projected 2026 earnings then FFH’s ownership will be worth $5.7 billion.

 

Following the above logic FFH’s per share pre-tax gains from Eurobank will be somewhere between $45 and $136 per share between now and 2026. (That’s pretty material since FFH doesn’t include investment gains in projected earnings estimates.)

 

*On top of the capital gains, in 2026 Eurobank anticipates paying dividends of $.19 per share. For FFH’s 1,266,000,000 shares, the dividends will equate to approx $240 million! Or, approx $11 per FFH share!