Fairfax stock positions

[Viking]

6 minutes ago, nwoodman said:

Looking at this more closely, I don't think the sale gives them the ability to mark to market because of the rules around equity method accounting:

 

"To capture the excess of fair value on their balance sheet, Fairfax would need to:

1. Reclassify the Eurobank stake as a financial asset (FVTPL or FVOCI).

2. Lose significant influence over Eurobank (e.g., reduce stake or governance involvement).

3. Take an impairment reversal under IFRS if applicable.

 

Absent these changes, the excess fair value can only be disclosed but not formally reflected in the balance sheet under the equity method."

 

However, the gain on sale of the 80m shares does flow the P&L.  Roughly (2.4-0.92)*80m/0.96=123.3 m =123.3/22=5.6 per share 

 

@nwoodman , got it! Thanks for the explanation. 

 

In terms of how much of Eurobank that Fairfax owns, perhaps we can use the dividend payment as a guide. Fairfax received 34.6% of the total dividend payment ($128/370).

 

From Fairfax's Q3 earnings report.

 

"On July 31, 2024 Eurobank paid a dividend of approximately $370 (€342). The company’s share of that dividend was approximately $128 (€118), which will be recorded in the company's consolidated financial reporting in the third quarter of 2024 as a reduction of Eurobank's carrying value under the equity method of accounting."

[nwoodman]

@Viking, when this came up a while back there was a view that they were over the reported 33.29%.  That div calculation suggests the same

[Hoodlum]

1 hour ago, nwoodman said:

That sounds more like they are taking money off the table to me than compliance.  The upside is that that it will free up Eurobank to repurchase shares.  

 

Definitely closer to FV than it was but still cheap. Should give Fairfax around 80mx€2.40/.96=$USD200m pre-tax 

 

Edit: it gives them a mark too

 

https://www.eurobankholdings.gr/en/investor-relations/shareholders/shareholding-structure

 

It certainly looks like this was driven by compliance.  The link I provided specifically mentioned that the exemption to hold over 33.3% was recently rescinded.  The link you referenced displays the current voting rights for Fairfax, not the ownership of shares. 

 

This was how the regulators allowed Fairfax to own over 33.3%, by limiting their voting right.  This sale will now bring their shares ownership in line with their voting rights, meeting the regulator requirements.

[Hoodlum]

1 hour ago, Viking said:

 

@nwoodman , got it! Thanks for the explanation. 

 

In terms of how much of Eurobank that Fairfax owns, perhaps we can use the dividend payment as a guide. Fairfax received 34.6% of the total dividend payment ($128/370).

 

From Fairfax's Q3 earnings report.

 

"On July 31, 2024 Eurobank paid a dividend of approximately $370 (€342). The company’s share of that dividend was approximately $128 (€118), which will be recorded in the company's consolidated financial reporting in the third quarter of 2024 as a reduction of Eurobank's carrying value under the equity method of accounting."

That would suggest their shares would be brought down  to 32.4% (34.6-2.2).  Fairfax may have decided to bring their ownership to below 33.3%, so they would not need to immediately adjust after any Eurobank buybacks. 
 

 

Edited 2 hours ago by Hoodlum

[SafetyinNumbers]

1 hour ago, Hoodlum said:

That would suggest their shares would be brought down  to 32.4% (34.6-2.2).  Fairfax may have decided to bring their ownership to below 33.3%, so they would not need to immediately adjust after any Eurobank buybacks. 
 

 

They could participate pro rata in buybacks much like Exxon does when imperial Oil does buybacks.