Fairfax 2020

[Bryggen]

A quick google search would provide your answer.

 

https://www.theglobeandmail.com/globe-investor/investment-ideas/why-does-the-sptsx-60-exclude-some-of-canadas-biggest-stocks/article19057449/#:~:text=Twelve%20of%20the%2060%20biggest,company%20in%20the%20TSX%20composite.

 

Unrelated question: was FFH ever part of the TSX 60 and recently removed?

Thanks

 

...not if you don't have a Globe and Mail account! I cannot read the article.

So, the answer is no and never was on the TSX60?

[ourkid8]

Correct. 

 

A quick google search would provide your answer.

 

https://www.theglobeandmail.com/globe-investor/investment-ideas/why-does-the-sptsx-60-exclude-some-of-canadas-biggest-stocks/article19057449/#:~:text=Twelve%20of%20the%2060%20biggest,company%20in%20the%20TSX%20composite.

 

Unrelated question: was FFH ever part of the TSX 60 and recently removed?

Thanks

 

...not if you don't have a Globe and Mail account! I cannot read the article.

So, the answer is no and never was on the TSX60?

[petec]

I don't want to create a jinx or anything, but Blackberry shares are trading at US$6.18 this morning.  The conversion privilege of the $330m debentures is at least temporarily in-the-money.  Lots of small pieces of good news over the past three weeks.

 

 

SJ

 

Shhhhh! Have you learned nothing?! ;)

[Xerxes]

Can’t wait to dump the rest of my BB shares once it crosses 10 CAD or more, to cover my cost.

Small position but eager to clean it up.

[Viking]

Can’t wait to dump the rest of my BB shares once it crosses 10 CAD or more, to cover my cost.

Small position but eager to clean it up.

 

I wonder if Fairfax may not put BB on the auction block in 2021. To extract maximum value and facilitate a sale perhaps step 1 is to monetize the patents. Would it make sense to split the car software business from cybersecurity?

[Xerxes]

That is why I want to own BB through the asset manager than directly as a normal common shareholder.

 

The reality is that BB has just less optionality today when it used its cash pile to buy Cylient and now even less with the liquidation of IP portfolio. I don’t know what will happen, but that is my perception, at least the stock grinding higher as the pendulum is swinging toward sum-of-parts valuation.

 

What FFH needs though is not a pendulum swing that just goes back and undo the mark-to-market gain. It needs a strategic exit.

[Viking]

That is why I want to own BB through the asset manager than directly as a normal common shareholder.

 

The reality is that BB has just less optionality today when it used its cash pile to buy Cylient and now even less with the liquidation of IP portfolio. I don’t know what will happen, but that is my perception, at least the stock grinding higher as the pendulum is swinging toward sum-of-parts valuation.

 

What FFH needs though is not a pendulum swing that just goes back and undo the mark-to-market gain. It needs a strategic exit.

 

I agree. I hope Fairfax is learning that their head office is not equipped to manage healthy non-insurance businesses let alone turnarounds like Blackberry. Flipping APR to Atlas looks like a useful example of what a focussed management team can do to an underperforming business. Hopefully Fairfax Africa finds success merged with Helios.

 

Dexterra is perhaps a slightly different situation with their reverse takeover of Horizon North.

 

It will be interesting to see what Fairfax does over the next year with the various companies they control. I am getting more optimistic with their collection of assets as we exit the pandemic.

[Xerxes]

In fact to partially answer Petec’ question APR, I would to say at the very least APR had a much higher discount rate as a business within the walls of Fairfax than it has now within the walls of Atlas.

 

Part of that is explained by what you said, giving control of the asset to someone that incrementally knows more than you. That ought to lower the discount rate by a few basis point.

 

Imagine if the small team in Omaha was making all the capital allocation decision within MidAmerican.

[wondering]

https://simplywall.st/stocks/ca/insurance/tsx-ffh/fairfax-financial-holdings-shares/news/insider-buying-the-fairfax-financial-holdings-limited-tseffh

 

insider buying by Christine MacLean $105k Cdn worth of FFH at $441 Cdn/share

[bearprowler6]

Further news:

 

http://www.gulfinsgroup.com/Renderers/Showmedia.ashx?Id=dbc9fdcb-3bfc-4344-b1fe-58301ca2a6fb&download=false

 

 

[petec]

Further news:

 

http://www.gulfinsgroup.com/Renderers/Showmedia.ashx?Id=dbc9fdcb-3bfc-4344-b1fe-58301ca2a6fb&download=false

 

That’s quite sizeable!

[Gregmal]

The blind squirrel found a nut! BB partnership with AMZN, shares back up to....where they were a few years ago. Recouping losses is better than adding to them though.

[wisowis]

https://www.businesswire.com/news/home/20201201005424/en/AWS-and-BlackBerry-Join-Forces-to-Accelerate-Innovation-with-New-Intelligent-Vehicle-Data-Platform

 

AWS and BlackBerry Join Forces to Accelerate Innovation with New Intelligent Vehicle Data Platform

[petec]

The blind squirrel found a nut! BB partnership with AMZN, shares back up to....where they were a few years ago. Recouping losses is better than adding to them though.

 

Especially when you rewrote your convert.

[TwoCitiesCapital]

The blind squirrel found a nut! BB partnership with AMZN, shares back up to....where they were a few years ago. Recouping losses is better than adding to them though.

 

Especially when you rewrote your convert.

 

This....

 

7$/share wouldn't have been anything previously with Fairfax's ability to convert to 50 million shares @ $10.

 

But now Fairfax gets to convert into 55 million shares @ $6 - meaning they're ~$100 million in the money for bonds that wouldn't have been worth more than par back in September.

[Xerxes]

Jeez

What happened.

Did John Chen buy some bitcoin instead of treasury bond for its balance sheet

[Daphne]

Check out the blackberry Amazon deal!!!

[petec]

The blind squirrel found a nut! BB partnership with AMZN, shares back up to....where they were a few years ago.

 

This post has brightened my afternoon.

[StubbleJumper]

The blind squirrel found a nut! BB partnership with AMZN, shares back up to....where they were a few years ago. Recouping losses is better than adding to them though.

 

Especially when you rewrote your convert.

 

This....

 

7$/share wouldn't have been anything previously with Fairfax's ability to convert to 50 million shares @ $10.

 

But now Fairfax gets to convert into 55 million shares @ $6 - meaning they're ~$100 million in the money for bonds that wouldn't have been worth more than par back in September.

 

 

Have you (or has any board participant) calculated FFH's break-even on its full investment in BB?  It's mostly irrelevant because you cannot change your entry price, you can only choose whether to exit, but I am a bit curious.  My mental guess would be about $10/sh, but that's just the result of faint memories of past discussions and accounting for the new conversion privilege for 55m shares.  The prospect of exiting the BB position on a break-even basis (or gasp! a profitable basis) is encouraging.  It's been a long ten years.

 

<EDIT>

Answering my own question, here's a bit of work that Valuehalla did a few years ago:

 

https://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/fairfax-2017-15646/msg320753/#msg320753

 

 

 

SJ

[A_Hamilton]

The blind squirrel found a nut! BB partnership with AMZN, shares back up to....where they were a few years ago. Recouping losses is better than adding to them though.

 

Especially when you rewrote your convert.

 

This....

 

7$/share wouldn't have been anything previously with Fairfax's ability to convert to 50 million shares @ $10.

 

But now Fairfax gets to convert into 55 million shares @ $6 - meaning they're ~$100 million in the money for bonds that wouldn't have been worth more than par back in September.

 

 

Have you (or has any board participant) calculated FFH's break-even on its full investment in BB?  It's mostly irrelevant because you cannot change your entry price, you can only choose whether to exit, but I am a bit curious.  My mental guess would be about $10/sh, but that's just the result of faint memories of past discussions and accounting for the new conversion privilege for 55m shares.  The prospect of exiting the BB position on a break-even basis (or gasp! a profitable basis) is encouraging.  It's been a long ten years.

 

<EDIT>

Answering my own question, here's a bit of work that Valuehalla did a few years ago:

 

https://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/fairfax-2017-15646/msg320753/#msg320753

 

 

 

SJ

 

It's much higher than this. You'd have to look at old NAIC filings, but FFH didn't only own common equity it bought in the high $40's and low $50's, but also owned total return swaps long in RIMM / Blackberry. Glad there is the potential for a positive result form here.

[petec]

I vaguely recall that the average cost is in the $17's. I think they disclosed this a few years ago. If you convert the bond at $6 you get something like $12.

[cwericb]

Yup $17 is the number I remember.

[Pedro]

Anyone else  a bit suprised FFH hasn't moved more on this BB news?

One of their major holdings up almost 60% and FFH moving less than 2% seems odd.

 

 

[cwericb]

Perhaps another situation of delayed reaction which often accompanies FFH good results?

[StubbleJumper]

I vaguely recall that the average cost is in the $17's. I think they disclosed this a few years ago. If you convert the bond at $6 you get something like $12.

 

 

Thanks, Pete.  So the total position is still deeply under water, to say nothing of the time value of money.  Oh well, at least it's moving in the right direction.

 

 

SJ