Fairfax stock positions

[petec]

On 5/11/2023 at 6:27 AM, Viking said:

If I was Fairfax, what would be my next take-private equity purchase? Probably Dexterra.

 

Stelco is the other one that makes sense to me, but might be harder to get AK over the line.

 

Am I right that the Brit stub buyout option expires later this year? That might be the next one to go.

[Luke]

Micron now the biggest holding for Fairfax for the US in latest 13 F. Atlas was sold 100%, 220% increase for Occidental. Interesting!

[gfp]

41 minutes ago, Luca said:

Micron now the biggest holding for Fairfax for the US in latest 13 F. Atlas was sold 100%, 220% increase for Occidental. Interesting!

 

Well I'm not sure it is accurate to say "Atlas was sold 100%."

 

(if anything it was an "add" since they exercised warrants for $78.7 million in cash during the quarter)

Edited May 15, 2023 by gfp

[Daphne]

Didn’t atlas go private?

[Luke]

Ah never mind, i think you are right

[newtovalue]

Fairfax now has a larger position in ORLA ($70MM position) - junior gold producer in Nevada, Mexico and Panama.

 

I've never heard of the company - wondering if anyone on the board has?

[dartmonkey]

On 5/15/2023 at 7:54 AM, Luca said:

Micron now the biggest holding for Fairfax for the US in latest 13 F. Atlas was sold 100%, 220% increase for Occidental. Interesting!

It's interesting to see how many Berkshire picks end up in Watsa's portfolio. There was already some Occidental and Chevron, and now more Occidental, just like in Berkshire, and no additional Chevron, while Berkshire is selling Chevron. In banks, both companies used to own Wells Fargo, and now, both have big positions in Bank of America (although Fairfax also owns a bit of Citigroup and Bank of Nova Scotia). Just one car builder in both portfolios, and it's GM. Both had Taiwan Semiconductor, although Berkshire has sold its stake recently. Activision arbitrage - yes, in both cases, but both have been reduced this quarter.

 

Great minds think alike? But it seems like a bit too much overlap for it to be coincidence. 

[Luke]

9 minutes ago, dartmonkey said:

It's interesting to see how many Berkshire picks end up in Watsa's portfolio. There was already some Occidental and Chevron, and now more Occidental, just like in Berkshire, and no additional Chevron, while Berkshire is selling Chevron. In banks, both companies used to own Wells Fargo, and now, both have big positions in Bank of America (although Fairfax also owns a bit of Citigroup and Bank of Nova Scotia). Just one car builder in both portfolios, and it's GM. Both had Taiwan Semiconductor, although Berkshire has sold its stake recently. Activision arbitrage - yes, in both cases, but both have been reduced this quarter.

 

Great minds think alike? But it seems like a bit too much overlap for it to be coincidence. 

I think Fairfax is looking at 13Fs and at what others do and applies all the tools they have to create returns, probably cloning some positions, throwing in some own ideas, quite interesting.

[Saluki]

I hadn't heard of Orla before, and I hate junior miners, but it's a big position, and I remember a few years back Prem bought a rights offering for a $100mm potash company and that went from $1 -$4 in a year, so it's worth digging into the annual report to see if you can figure out what he sees in it. Even if you pass on it, and just participate indirectly through FFH, it's a good learning exercise. 

 

Since ATCO is private now, I assume there will be some discussion of how it's valued going forward when the new ships are delivered and whether that nice fat dividend will still keep coming to FFH like it was to shareholders. 

[Crip1]

2 hours ago, dartmonkey said:

It's interesting to see how many Berkshire picks end up in Watsa's portfolio. There was already some Occidental and Chevron, and now more Occidental, just like in Berkshire, and no additional Chevron, while Berkshire is selling Chevron. In banks, both companies used to own Wells Fargo, and now, both have big positions in Bank of America (although Fairfax also owns a bit of Citigroup and Bank of Nova Scotia). Just one car builder in both portfolios, and it's GM. Both had Taiwan Semiconductor, although Berkshire has sold its stake recently. Activision arbitrage - yes, in both cases, but both have been reduced this quarter.

 

Great minds think alike? But it seems like a bit too much overlap for it to be coincidence. 

Investing returns is a simple numbers game, there are no style points for leveraging the knowledge/acumen of others. 

 

-Crip

[dartmonkey]

4 hours ago, Crip1 said:

Investing returns is a simple numbers game, there are no style points for leveraging the knowledge/acumen of others. 

 

-Crip

No, I know, I didn't mean to sound critical - I think most of us would be happy if Fairfax's equity investments more closely resembled Berkshire's!

[Parsad]

9 hours ago, dartmonkey said:

It's interesting to see how many Berkshire picks end up in Watsa's portfolio. There was already some Occidental and Chevron, and now more Occidental, just like in Berkshire, and no additional Chevron, while Berkshire is selling Chevron. In banks, both companies used to own Wells Fargo, and now, both have big positions in Bank of America (although Fairfax also owns a bit of Citigroup and Bank of Nova Scotia). Just one car builder in both portfolios, and it's GM. Both had Taiwan Semiconductor, although Berkshire has sold its stake recently. Activision arbitrage - yes, in both cases, but both have been reduced this quarter.

 

Great minds think alike? But it seems like a bit too much overlap for it to be coincidence. 

 

You will probably see more similarities over time to Berkshire and Markel.  Wade and Lawrence invest more like Buffett and Gayner.  Whereas the old Hamblin-Watsa gang were more deep distressed equity/bond investors like Ben Graham or Seth Klarman.

 

As the younger guys have more influence, and the older guys less influence, you'll see the portfolio behave more like Berkshire or Markel.

 

Cheers!  

[nwoodman]

7 hours ago, Parsad said:

 

You will probably see more similarities over time to Berkshire and Markel.  Wade and Lawrence invest more like Buffett and Gayner.  Whereas the old Hamblin-Watsa gang were more deep distressed equity/bond investors like Ben Graham or Seth Klarman.

 

As the younger guys have more influence, and the older guys less influence, you'll see the portfolio behave more like Berkshire or Markel.

 

Cheers!  

I for one won’t mind in the least .  Thanks for providing a little more colour.

[petec]

On 5/16/2023 at 8:55 PM, dartmonkey said:

No, I know, I didn't mean to sound critical - I think most of us would be happy if Fairfax's equity investments more closely resembled Berkshire's!

 

Not me. I can own Berkshire and Markel myself. I far prefer Fairfax to do something different and hope they continue. 

[glider3834]

Grivalia Hospitality 

 

Grivalia appears to have had operating loss in Q1'23 but it looks like they are still in build out phase - they are aiming for completion on three projects

According to Chryssikos, the third (three?) projects under construction will open as pilot operations very soon; Avantmar in June; the Glyfada project in early August; and the Voula Project in early 2024.

 

but have additional ones planned, so I assume once they ramp up there would be revenue contribution there.

 

https://www.ekathimerini.com/economy/1210801/aiming-for-wealthy-guests/

 

'For the Grivalia CEO, there is a great market for 5- and 6-star resorts in Greece. Demand is high and, so far, supply is low. And the targeted cliented is high value: people with considerable disposable income who are going to spend large sums that will benefit the whole tourism ecosystem.'

 

 

Edited May 18, 2023 by glider3834

[gfp]

KW / PACW transaction.  Fairfax likely benefits

https://www.cnbc.com/2023/05/22/pacwest-bancorp-to-sell-real-estate-loans-to-kennedy-wilson-subsidiary.html

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001102112/000110465923062856/tm2316420d1_8k.htm

Edited May 22, 2023 by gfp

[dartmonkey]

On 5/22/2023 at 7:12 AM, gfp said:

KW / PACW transaction.  Fairfax likely benefits

https://www.cnbc.com/2023/05/22/pacwest-bancorp-to-sell-real-estate-loans-to-kennedy-wilson-subsidiary.html

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001102112/000110465923062856/tm2316420d1_8k.htm

Yes, Fairfax owns only 10% of KW but they have billions invested via KW, so KW increasing their footprint by about 10% could be very good for Fairfax, particularly if Fairfax has invested alongside KW to provide liquidity for PacWest. On the other hand, no press release from Fairfax probably means that Fairfax does not have significant financing in this deal, so while this is probably a great deal for KW, it may have limited impact on Fairfax.

[Viking]

How are Fairfax's equity holdings (that I track) doing at about the 60% mark for the quarter? They are up about $500 million = $22/share pre-tax. 

• mark to market = +$130 million
• associate =          +$370 million
• consolidated =           flat

Big movers?

1. Eurobank = +$430 million
2. FFH TRS =  +$105 million
3. Stelco =        ($88 million)

Bottom line, after a very strong Q1, the equity holdings are trending very well in Q2. Eurobank today has a market cap of $1.97 billion. Atlas is at $2.04 billion. As @glider3834 predicted not that long ago, Eurobank could shortly become Fairfax's largest equity investment. 

----------

I updated my spreadsheet to capture the changes from the Q1 13F. I also re-ordered the ranking of the holdings by size. 

Fairfax Equity Holdings May 23 2023.xlsx

[nwoodman]

30 minutes ago, Viking said:

How are Fairfax's equity holdings (that I track) doing at about the 60% mark for the quarter? They are up about $500 million = $22/share pre-tax. 

• mark to market = +$130 million
• associate =          +$370 million
• consolidated =           flat

Big movers?

1. Eurobank = +$430 million
2. FFH TRS =  +$105 million
3. Stelco =        ($88 million)

Bottom line, after a very strong Q1, the equity holdings are trending very well in Q2. Eurobank today has a market cap of $1.97 billion. Atlas is at $2.04 billion. As @glider3834 predicted not that long ago, Eurobank could shortly become Fairfax's largest equity investment. 

----------

I updated my spreadsheet to capture the changes from the Q1 13F. I also re-ordered the ranking of the holdings by size. 

Fairfax Equity Holdings May 23 2023.xlsx 279.61 kB · 5 downloads

Thanks Viking

[Viking]

On 5/17/2023 at 11:16 PM, glider3834 said:

Grivalia Hospitality 

 

Grivalia appears to have had operating loss in Q1'23 but it looks like they are still in build out phase - they are aiming for completion on three projects

According to Chryssikos, the third (three?) projects under construction will open as pilot operations very soon; Avantmar in June; the Glyfada project in early August; and the Voula Project in early 2024.

 

but have additional ones planned, so I assume once they ramp up there would be revenue contribution there.

 

https://www.ekathimerini.com/economy/1210801/aiming-for-wealthy-guests/

 

'For the Grivalia CEO, there is a great market for 5- and 6-star resorts in Greece. Demand is high and, so far, supply is low. And the targeted cliented is high value: people with considerable disposable income who are going to spend large sums that will benefit the whole tourism ecosystem.'

@glider3834 this part got my attention: “When the five planned projects are completed, Grivalia’s value, currently nearly €1 billion, will reach €1.5 billion, says Chryssikos.”

 

I am not sure what exactly Chryssikos is referencing. Fairfax owns 78% of Grivalia Hospitality with a carrying value/market value = $410 million (Dec 31, 2022).
 

The cost to develop and run these properties must be staggeringly high. Grivalia Hospitality will likely bleed significant sums of money until more locations are open and generating significant revenue. Interesting investment. Chryssikos has had the Midas touch for Fairfax when it comes to real estate in Greece. And we know Fairfax loves to bet heavily on winning horses…

 

 

Edited May 24, 2023 by Viking

[glider3834]

18 hours ago, Viking said:

@glider3834 this part got my attention: “When the five planned projects are completed, Grivalia’s value, currently nearly €1 billion, will reach €1.5 billion, says Chryssikos.”

 

I am not sure what exactly Chryssikos is referencing. Fairfax owns 78% of Grivalia Hospitality with a carrying value/market value = $410 million (Dec 31, 2022).
 

The cost to develop and run these properties must be staggeringly high. Grivalia Hospitality will likely bleed significant sums of money until more locations are open and generating significant revenue. Interesting investment. Chryssikos has had the Midas touch for Fairfax when it comes to real estate in Greece. And we know Fairfax loves to bet heavily on winning horses…

 

 

@Viking so this video below has terrible sound quality but from 27-32 min mark - George outlines their investment thesis on going after ultra luxury branded segment with Grivalia Hospitality  - he talked about (in my words from memory not his)

- Greece attractive tourist destination (natural beauty  etc)

- Greece has a shortage of genuine 5 star hotels (even though hotels might call themselves 5 star they are not genuine 5 star hotels by international standards) - a lot of hotels a family owned etc 

- lack of brand name luxury hotels in Greece like Aman, Mandarin etc

- one of reasons you would build rather than buy hotel is that for luxury hotel guests need to have space etc - so existing hotels wouldn't be suitable in most cases

- construction costs have gone up a lot but there is still attractive return even after factoring higher building costs

https://www.youtube.com/watch?v=lRuZ2HXam-A

 

Also I did some digging, according to this website https://theluxurytravelexpert.com/ the Aman Resorts are rated the number 1 luxury hotel brand in the world  (if you are an ordinary person like you me you probably never heard of them! :))

 

 

The Amanzoe Resort owned by Grivalia is run by Aman Resorts & is rated (by same website) the best hotel in Greece

https://theluxurytravelexpert.com/2020/10/12/best-hotels-greece/

& in Europe's top 10 

https://theluxurytravelexpert.com/2021/07/08/top-10-best-beach-resorts-europe/

 

Now with Amanzoe, Grivalia didn't build it, they bought it in 2018  at a total  EV (mostly consisting of debt) of 116M euro.

https://markets.ft.com/data/announce/detail?dockey=1323-13740636-74QQ05NEK6U4F5D19IU8MDVHUB

 

From what I can tell it cost the original owner over 100M euro to build it so it looks like they bought potentially close to its build price.

 

Its unclear what its current EBITDA & valuation would be now & also what GH has spent on the property but given Greece 5 star hotel room prices are up 110% over 2019 to 2022 period, you would think that would be likely positive driver of Amanzoe's valuation & another factor maybe behind GH push in the 5 star space.

 

https://greekreporter.com/2022/06/30/5-star-hotel-rooms-greece-rise/

 

 

 

 

 

Edited May 24, 2023 by glider3834

[glider3834]

17 hours ago, Viking said:

@glider3834 this part got my attention: “When the five planned projects are completed, Grivalia’s value, currently nearly €1 billion, will reach €1.5 billion, says Chryssikos.”

 

I am not sure what exactly Chryssikos is referencing. Fairfax owns 78% of Grivalia Hospitality with a carrying value/market value = $410 million (Dec 31, 2022).
 

The cost to develop and run these properties must be staggeringly high. Grivalia Hospitality will likely bleed significant sums of money until more locations are open and generating significant revenue. Interesting investment. Chryssikos has had the Midas touch for Fairfax when it comes to real estate in Greece. And we know Fairfax loves to bet heavily on winning horses…

 

 

sorry viking I am not sure what they mean by value is that the total build cost/gross asset value before factoring in debt etc?

[glider3834]

https://www.theglobeandmail.com/business/industry-news/energy-and-resources/article-canada-alberta-solar-farm-mytilineos/

 

'One of Greece’s top industrial and power companies is launching a $1.7-billion solar-energy project in Alberta that it says will be the largest of its kind in Canada.'

 

'Mytilineos is backed by Toronto’s Fairfax Financial Holdings Ltd., led by Prem Watsa, which first bought into the Greek company in 2012 and has since increased its ownership to 4.7 per cent, making it the second-biggest shareholder, after Mr. Mytilineos, who owns 27 per cent. Fairfax has an option to take its ownership to 6.4 per cent.'

[nwoodman]

9 hours ago, glider3834 said:

https://www.theglobeandmail.com/business/industry-news/energy-and-resources/article-canada-alberta-solar-farm-mytilineos/

 

'One of Greece’s top industrial and power companies is launching a $1.7-billion solar-energy project in Alberta that it says will be the largest of its kind in Canada.'

 

'Mytilineos is backed by Toronto’s Fairfax Financial Holdings Ltd., led by Prem Watsa, which first bought into the Greek company in 2012 and has since increased its ownership to 4.7 per cent, making it the second-biggest shareholder, after Mr. Mytilineos, who owns 27 per cent. Fairfax has an option to take its ownership to 6.4 per cent.'

 

Thanks for this.  I was just taking another look at the company, MYTIL.AT, impressive. While relatively small position (for now) compared with EUROB.AT.  It has been a cracker for Fairfax.  The market is taking quite a "shine" to Mytilineous, +80% or so over the last 12 months.  I found this recent interview quite informative https://www.strategy-business.com/article/Powering-the-net-zero-transition-at-Greeces-Mytilineos

 

 

[SafetyinNumbers]

10 hours ago, nwoodman said:

 

Thanks for this.  I was just taking another look at the company, MYTIL.AT, impressive. While relatively small position (for now) compared with EUROB.AT.  It has been a cracker for Fairfax.  The market is taking quite a "shine" to Mytilineous, +80% or so over the last 12 months.  I found this recent interview quite informative https://www.strategy-business.com/article/Powering-the-net-zero-transition-at-Greeces-Mytilineos

 

 

Fairfax showing some good timing. They participated in a financing in December 2022 for €50M and are up over 100% since including the warrants.