Fairfax stock positions

[glider3834]

1 hour ago, nwoodman said:

Thanks @glider3834.  Paywalled for me but available here https://archive.is/wOcd6

 

Key points

 

- Seaspan is reportedly returning to ordering container ship newbuildings after nearly a 3 year pause. The orders are said to be worth $1.58 billion in total.

- Seaspan has allegedly ordered 6 LNG dual-fueled 13,000 TEU ships from Chinese state-owned shipyard Hudong-Zhonghua, likely against charters to Ocean Network Express (ONE). The price is said to be at least $180 million per ship.

 

- Seaspan has also reportedly ordered 4 methanol dual-fueled 9,000 TEU ships from private Chinese yard Yangzijiang Shipbuilding for about $125 million each, likely against charters to AP Moller-Maersk. The design is said to be the same as 6 Maersk methanol-fueled ships ordered from the same yard last year.

 

- Deliveries of the 13,000 TEU ships are expected between early 2027-2028, while the 9,000 TEU vessels are due between late 2027-2028. 

 

- Seaspan did not order any container ships in 2022-2023 as liner companies were ordering ships directly themselves during that period. 

 

- In 2023, Seaspan made its first orders for 8 LNG-fueled car carriers from Chinese yards against 20-year charters to Hyundai Glovis, marking Seaspan's entry into the car carrier sector.

 

- Seaspan has a current fleet of 176 container ships with more newbuilds delivering soon, many against charters to major liners like MSC, ONE and ZIM.

 

It would be interesting to know the terms for the associated debt but good to see them locking in future growth.  

cheers @nwoodman

 

here is their their weighted avg interest rate at Mar-24 

 

'The weighted average interest rate for March 31, 2024 was 6.83% compared to 6.19% at March 31, 2023.'

 

noticed they declared a 52M div on common shares in Q1, a 38.1M div paid Mar & 13.9M div paid in Apr - not sure if 13.9M was a special div ie a once-off or whether they have lifted their dividend rate from 37M per qtr in 2023 to 52M per qtr - we will have to wait & see over next few qtrs

 

 

 

 

 

 

[nwoodman]

22 minutes ago, glider3834 said:

cheers @nwoodman

 

here is their their weighted avg interest rate at Mar-24 

 

'The weighted average interest rate for March 31, 2024 was 6.83% compared to 6.19% at March 31, 2023.'

 

noticed they declared a 52M div on common shares in Q1, a 38.1M div paid Mar & 13.9M div paid in Apr - not sure if 13.9M was a special div ie a once-off or whether they have lifted their dividend rate from 37M per qtr in 2023 to 52M per qtr - we will have to wait & see over next few qtrs

 

 

 

 

 

 

Thanks,  have you seen anything with respect to them gaining investment grade?  I recall unencumbered vessels is part of the criteria.  The summary I provided to the ATCO thread had this quote “Growing the Company's base of unencumbered assets is a fundamental objective in order to achieve an investment grade credit rating, as well as a potential source of liquidity through secured financing or asset sales”.  
 

I guess at this stage there would only be a deposit due to secure the build slot, so hopefully they gain an upgrade or two before having to finance another 1bn+
 

This game is economies of scale so once their borrowing cost is competitive coupled with their operational expertise, it gets very interesting. 

[petec]

On 5/30/2024 at 1:46 AM, nwoodman said:

It would be interesting to know the terms for the associated debt but good to see them locking in future growth.  

 

The debt may not be arranged yet - in the last newbuild binge it was quite often finalised after the deals were announced.

[glider3834]

On 5/30/2024 at 4:13 PM, nwoodman said:

Thanks,  have you seen anything with respect to them gaining investment grade?  I recall unencumbered vessels is part of the criteria.  The summary I provided to the ATCO thread had this quote “Growing the Company's base of unencumbered assets is a fundamental objective in order to achieve an investment grade credit rating, as well as a potential source of liquidity through secured financing or asset sales”.  
 

I guess at this stage there would only be a deposit due to secure the build slot, so hopefully they gain an upgrade or two before having to finance another 1bn+
 

This game is economies of scale so once their borrowing cost is competitive coupled with their operational expertise, it gets very interesting. 

no - most recent KBRA report below - but I do notice their secured vessel financing program has BBB rating

 

'On August 23, 2023, KBRA affirmed the BB+ issuer rating of Atlas Corp. (Atlas), a global asset management company based in Vancouver, BC with focuses on assets in the maritime sector, energy sector and other infrastructure verticals. KBRA also affirmed Atlas' wholly-owned subsidiary Seaspan Corporation’s (Seaspan) BB+ issuer rating, the BB+ rating on Seaspan’s $750 million senior unsecured notes due August 2029, as well as the BBB ratings of Seaspan’s $1.1 billion Term Loan due March 2028, $410 million Term Loan due March 2029, and $400 million Revolving Credit Facility due March 2028 comprising the secured Vessel Portfolio Financing Program. The ratings Outlook is Stable.'

 

https://www.kbra.com/publications/rrpFtbKq/kbra-releases-surveillance-report-for-atlas-corporation-and-seaspan-corporation

[glider3834]

Eurobank S.A. has now secured 55.3% (~228M shares) of Hellenic and submitted mandatory takeover bid for remaining shares 44.7% (~184M) at  €2.56  per share 

 

https://cyprus-mail.com/2024/06/04/eurobank-now-holds-55-3-per-cent-stake-in-hellenic-bank/

https://www.eurobank.gr/en/group/grafeio-tupou/etairiki-anakoinosi-04-06-24

Edited June 4, 2024 by glider3834

[SafetyinNumbers]

40 minutes ago, glider3834 said:

Eurobank S.A. has now secured 55.3% (~228M shares) of Hellenic and submitted mandatory takeover bid for remaining shares 44.7% (~184M) at  €2.56  per share 

 

https://cyprus-mail.com/2024/06/04/eurobank-now-holds-55-3-per-cent-stake-in-hellenic-bank/

https://www.eurobank.gr/en/group/grafeio-tupou/etairiki-anakoinosi-04-06-24

Terrific news, thanks for sharing. The stock seems to be trading above the tender price so I assume there will be a bump at some point. Did you see an expiry date on the offer?

[nwoodman]

@glider3834 that is good news.  Importantly is there any provision to shake out Demetra Holdings  and Logicom (25% between them)? I am reading between the lines but it almost appears to be an ideological reticence to sell.  I guess everyone has their price but hopefully €2.56 is getting close.

Edited June 5, 2024 by nwoodman

[SafetyinNumbers]

3 minutes ago, nwoodman said:

@glider3834 that is good news.  Importantly is there any provision to shake out Demetria Holdings  and Logicom (25% between them)? I am reading between the lines but it almost appears to be an ideological reticence to sell.  I guess everyone has their price but hopefully €2.56 is getting close.

I got the impression at the AGM that the resistance is a negotiating tactic. I’m not sure how much is necessary to close the deal or if they have to make whole the previous sellers on a bump.

[glider3834]

6 hours ago, nwoodman said:

@glider3834 that is good news.  Importantly is there any provision to shake out Demetra Holdings  and Logicom (25% between them)? I am reading between the lines but it almost appears to be an ideological reticence to sell.  I guess everyone has their price but hopefully €2.56 is getting close.

I believe they can't do a minority  'squeeze out' as they would need to reach a 90% shareholding first & issue is as you point out Demetra is sitting on over 20% 

 

They originally offered EUR 2.35 to Poppy S.a.r.l & others and that was raised to EUR 2.56 in line with mandatory bid - hopefully they can reach agreement but if not,  this article tables some different scenarios if Demetra/Dimitra & ETYK don't participate in public offer

https://www.philenews.com/oikonomia/kypros/article/1476226/theli-100-tis-ellinikis-trapezas-i-eurobank/ (might need google translate)

 

one takeaway from article - Eurobank I believe would need around 75% of votes to approve merger of Hellenic with Eurobank Cyprus - so 75% would be key initial target with their public offer.

 

Edited June 5, 2024 by glider3834

[glider3834]

6 hours ago, SafetyinNumbers said:

Terrific news, thanks for sharing. The stock seems to be trading above the tender price so I assume there will be a bump at some point. Did you see an expiry date on the offer?

not sure but should be in public offer document - I did find this also

 

'the acceptance period starts (between 30 and 55 days, although it can be extended to 75 days) and “within 3 months of the end of the time allowed for acceptance of the bid”, the offeror has the right to “squeeze-out” (section 36(2) of the Takeover Bids Law).'

https://www.globallegalinsights.com/practice-areas/mergers-and-acquisitions-laws-and-regulations/cyprus/

 

[Viking]

1 hour ago, glider3834 said:

I believe they can't do a minority  'squeeze out' as they would need to reach a 90% shareholding first & issue is as you point out Demetra is sitting on over 20% 

 

They originally offered EUR 2.35 to Poppy S.a.r.l & others and that was raised to EUR 2.56 in line with mandatory bid - hopefully they can reach agreement but if not,  this article tables some different scenarios if Demetra/Dimitra & ETYK don't participate in public offer

https://www.philenews.com/oikonomia/kypros/article/1476226/theli-100-tis-ellinikis-trapezas-i-eurobank/ (might need google translate)

 

one takeaway from article - Eurobank I believe would need around 75% of votes to approve merger of Hellenic with Eurobank Cyprus - so 75% would be key initial target with their public offer.

 

@glider3834 thanks for bringing this forward and for providing so much detail. 

 

The first step was getting approval from regulators. Getting that done and this quickly is a big deal. The Hellenic Bank acquisition is shaping up to be a significant near-term catalyst for Eurobank’s business and earnings. Hellenic Bank’s pending big move into insurance adds another really interesting layer to this story.
 

Step 2 is proceeding with a mandatory offer and that is where we are today. The article you linked to says this process should be completed by the end of July. It will be interesting to see what quantity of shares get tendered at EUR 2.56. 
 

I have no idea how this plays out. I am confident Eurobank has a plan. Their Q2 earnings call should be interesting. Perhaps a few of the research houses (like Morgan Stanley) shed some light on how things might unfold.

Edited June 5, 2024 by Viking

[Xerxes]

On 5/25/2024 at 12:43 PM, Thrifty3000 said:

Thanks to this great forum and our worldly friends at FFH, I now know where Cyprus is (here I was thinking it was in Texas). Investing is the gift that keeps on giving.

 

name me an African country whose name starts with a “D” but it is silent when pronounced. 
 

it is also the only country in the world that simultaneously hosts a Chinese, a French, an Italian, Japanese and American military base. Which in case of Japan is its ONLY foreign military base. 

[Alekbaylee]

Djibouti

[Xerxes]

45 minutes ago, Alekbaylee said:

Djibouti

100% 

[glider3834]

17 hours ago, Viking said:

@glider3834 thanks for bringing this forward and for providing so much detail. 

 

The first step was getting approval from regulators. Getting that done and this quickly is a big deal. The Hellenic Bank acquisition is shaping up to be a significant near-term catalyst for Eurobank’s business and earnings. Hellenic Bank’s pending big move into insurance adds another really interesting layer to this story.
 

Step 2 is proceeding with a mandatory offer and that is where we are today. The article you linked to says this process should be completed by the end of July. It will be interesting to see what quantity of shares get tendered at EUR 2.56. 
 

I have no idea how this plays out. I am confident Eurobank has a plan. Their Q2 earnings call should be interesting. Perhaps a few of the research houses (like Morgan Stanley) shed some light on how things might unfold.

no worries @Viking- definitely lot of moving parts with this deal

[glider3834]

Fairfax's dividend from Eurobank should be close to EUR 116M based on 34% reported stake

 

https://www.bloomberg.com/news/articles/2024-06-06/greek-banks-get-ecb-approval-for-first-payouts-since-2008-crisis?utm_source=google&utm_medium=bd&cmpId=google

 

 

[glider3834]

Grivalia Hospitality news article - looks like One & Only Aesthesis off to a solid start this summer

https://www.ekathimerini.com/economy/1240403/grivalia-hospitality-continues-to-expand-offerings/

 

 

Edited June 10, 2024 by glider3834

[Viking]

Parts of the Phelan family still own 16% of Recipe (Fairfax owns the other 84%). Interesting story / bit of Canadiana...

 

The food fight for Swiss Chalet’s owner is a lesson for all family companies

 

Hopefully the link below works (the article is behind a paywall):

https://www.theglobeandmail.com/gift/ec504d70a4c6763bef7b3e7b87d07bf3bdfd3e8486a41630e08b66b2b94a0e29/UMHHEN6ZJZBDZO5SDLUVLKDVXU/

 

"In the 1990s, the Phelan family ranked among the country’s wealthiest clans.

Their restaurant chains – including Swiss Chalet and Harvey’s – served millions of meals and cranked out millions in profits for parent company Cara Operations Ltd., now known as Recipe Unlimited Corp. Patriarch Paul James Phelan – PJ to those who knew him – wanted the 100-year-old business to remain in family hands for another century. It wasn’t to be.

 

"A bruising, years-long battle for control of the company pitted PJ Phelan and his son against two of his daughters, Gail and Rosemary. It ended in 2003 with the women winning control through a debt-funded buyout, then eventually handing the reins to insurer and asset manager Fairfax Financial Holdings Ltd. 

 

"Author Stephen Kimber captures the bitter fight for Cara in The Phelan Feud, published on Friday. Working with surviving family members – PJ Phelan died in 2002 – and with full access to court documents and private family records, he has written a book filled with intrigue, betrayal and high-living, including family-backed yachts vying for the America’s Cup. It’s a story with poignant lessons for any family, with special relevance to the privately owned businesses that are major contributors to the country’s economy."

[nwoodman]

Thomas Cook India and SOTC Travel see significant growth in DomesticTravel demand

 

Impressive stuff.

 

All filings for future reference

[Viking]

10 hours ago, nwoodman said:

Thomas Cook India and SOTC Travel see significant growth in DomesticTravel demand

 

Impressive stuff.

 

All filings for future reference

 

@nwoodman , thanks for the info. I was wondering what was spiking the share price of Thomas Cook India higher.

 

Fairfax's stake in Thomas Cook India now has a market value of $868 million. It is up 74% YTD. TCI is now Fairfax's 5th largest equity holdings (after Eurobank, Poseidon, FFH-TRS and Fairfax India). 

 

Excess of market value to carrying value is about $654 million. Fairfax is getting so far offside with this holding (FV is so much higher CV) somebody better let Muddy Waters know because Fairfax is probably doing something terribly wrong with how they are marking this position on their books!

 

Why is Thomas Cook India headed higher? Surpassing CY 2023 domestic travel numbers in the first 6 months of CY 2024. The runway looks very long for this holding.

 

 

----------

 

Edited June 19, 2024 by Viking

[dartmonkey]

Yes, it's nice to see a company go from 8 to 19 to 56 to 73b INR, although most of this is a rebound from COVID - it was 68b in 2019-2020, before dropping to 8b. And at 241 INR, the stock price is also just back to where it was 5 years ago. Odd that the share price drop seemed to slightly precede when you might have expected it to happen - it started in June 2019, before anyone had heard of SARS-CoV-2 dropping to 160 in December, and then went as low as 22 INR! Please remind me of this next time the world has a global anxiety attack!

 

 

 

 

[Viking]

On 6/6/2024 at 12:24 AM, glider3834 said:

Fairfax's dividend from Eurobank should be close to EUR 116M based on 34% reported stake

 

https://www.bloomberg.com/news/articles/2024-06-06/greek-banks-get-ecb-approval-for-first-payouts-since-2008-crisis?utm_source=google&utm_medium=bd&cmpId=google

 

 

 

@glider3834 Thanks for posting this. 

 

On June 6, 2024, Eurobank announced it had received approval from the ECB to pay a dividend equal to 30% of Net Profit for 2023. The final distribution will be approved at Eurobank’s annual meeting on July 23 2024, with the cash likely to be distributed in August. 

 

Fairfax is expected to receive a payment of about $126 million. Because Eurobank is an associate holding the dividend payment will not show up in Fairfax’s reported results in ‘interest and dividend income’ – that bucket is for mark-to-market holdings. 

 

Eurobank paying an annual dividend is another new and meaningful income stream for Fairfax. 

 

For context, in 2023 Fairfax reported total dividends received (on common and preferred stock) of $134 million. Eurobank’s expected dividend payout almost doubles this amount. 

 

 

This is a watershed moment for both Eurobank and Fairfax. For Eurobank, the dividend payout is the final confirmation their turnaround has been successfully completed. Eurobank’s goal is to increase the payout ratio to 40% in 2025 (Net Profit for 2024) and 50% in 2026 (Net Profit for 2025). 

 

For Fairfax, Eurobank is a great example of the significant turnaround that they have been able to execute with their many poorly performing legacy equity holdings from 2014-2017. Hundreds of million is losses every year (write downs, capital infusions etc) from that collection of holdings has now been replaced with hundreds of millions in gains – the ‘swing’ might be as high as $500 million per year. A significant headwind to reported results has now become a significant tailwind. 

 

The turnaround at Eurobank the past 3 years has been epic. And now Fairfax is getting paid. It highlights why Fairfax is such a good partner: patient, demanding, loyal, long term. But this doesn’t mean Fairfax is a push-over… Eurobank had to do its part – its management team has executed exceptionally well, especially over the past 5 years. 

 

Importantly, Eurobank looks exceptionally well positioned with lots of solid opportunities to continue building shareholder value. 

 

Eurobank's Announcement

• https://www.eurobank.gr/en/group/grafeio-tupou/etairiki-anakoinosi-06-06-24#:~:text=million-,Eurobank announces ECB's approval for €342 million dividend payment,first payout in 16 years&text=Eurobank Ergasias Services and Holdings,or €0.0933 per share.

 

Edited June 20, 2024 by Viking

[Ross812]

44 minutes ago, Viking said:

 

@glider3834 Thanks for posting this. 

 

On June 6, 2024, Eurobank announced it had received approval from the ECB to pay a dividend equal to 30% of Net Profit for 2023. The final distribution will be approved at Eurobank’s annual meeting on July 23 2024, with the cash likely to be distributed in August. 

 

Fairfax is expected to receive a payment of about $126 million. Because Eurobank is an associate holding the dividend payment will not show up in Fairfax’s reported results in ‘interest and dividend income’ – that bucket is for mark-to-market holdings. 

 

Eurobank paying an annual dividend is another new and meaningful income stream for Fairfax. 

 

For context, in 2023 Fairfax reported total dividends received (on common and preferred stock) of $134 million. Eurobank’s expected dividend payout almost doubles this amount. 

 

 

This is a watershed moment for both Eurobank and Fairfax. For Eurobank, the dividend payout is the final confirmation their turnaround has been successfully completed. Eurobank’s goal is to increase the payout ratio to 40% in 2025 (Net Profit for 2024) and 50% in 2026 (Net Profit for 2025). 

 

For Fairfax, Eurobank is a great example of the significant turnaround that they have been able to execute with their many poorly performing legacy equity holdings from 2014-2017. Hundreds of million is losses every year (write downs, capital infusions etc) from that collection of holdings has now been replaced with hundreds of millions in gains – the ‘swing’ might be as high as $500 million per year. A significant headwind to reported results has now become a significant tailwind. 

 

The turnaround at Eurobank the past 3 years has been epic. And now Fairfax is getting paid. It highlights why Fairfax is such a good partner: patient, demanding, loyal, long term. But this doesn’t mean Fairfax is a push-over… Eurobank had to do its part – its management team has executed exceptionally well, especially over the past 5 years. 

 

Importantly, Eurobank looks exceptionally well positioned with lots of solid opportunities to continue building shareholder value. 

 

Eurobank's Announcement

• https://www.eurobank.gr/en/group/grafeio-tupou/etairiki-anakoinosi-06-06-24#:~:text=million-,Eurobank announces ECB's approval for €342 million dividend payment,first payout in 16 years&text=Eurobank Ergasias Services and Holdings,or €0.0933 per share.

 

So looks to be about ($126M/25M shares) $5 per share pre-tax.

[petec]

On 6/20/2024 at 6:33 PM, Viking said:

[Eurobank's] management team has executed exceptionally well, especially over the past 5 years. 

 

In fairness I think they have been executing exceptionally well for much longer. It's just that the *results* have come through in the last 5 years, partly because 10 years of sorting out the capital base have paid off and partly because higher interest rates boosted revenue.

[gary17]

On 6/20/2024 at 11:18 AM, Ross812 said:

So looks to be about ($126M/25M shares) $5 per share pre-tax.

$5 USD / share nice!