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Fairfax 2020


wondering

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I listend to Blackberry AGM today.

https://www.blackberry.com/content/dam/blackberry-com/Documents/pdf/investors/Blackberry-AGM-2020-Presentation.pdf

 

They did a good job to capture the size of the market for s/w security. Unfortunately, but funny enough, they screwed up their Q&A session by getting only one question, some system issue about the work-from-home-AGM or whatever. I didn't like the optics. A software company shouldn't screw up the AGM by not getting the system right.

 

Interestingly enough, the one question that did get through was about Fairfax, where someone asked if a low-ball bid by FFH can be prevented by a poison pill.

To me that tells me that there is a interest from BB shareholder base in the long term potential of BB, and that there would be push back on any low-ball bid that would undervalue that potential.

 

Quarterly results are tomorrow, so perhaps we can get more on the Q&A session that didn't happen today.

 

BlackBerry Fiscal Year 2021 First Quarter Results Conference Call

Date: Wednesday, June 24, 2020

Time: 05:30 PM Eastern Daylight Time

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Listening to quarterly results now.

 

BB confirmed that they are redeeming the convertible when it comes due.

Cash released for FFH, i guess ...

 

 

I will believe it when I see it.  But, all in all, It's perfectly fine for FFH to find some other place to invest $500m, if they actually do get to November without rolling it.

 

 

SJ

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Not sure if this was already posted about Ensign Energy Services Inc. and FFH's swap contract on it.

I guess by mid-June, when FFH entered this agreement the broader market was at all time high, so FFH went back to picking the weird apples.

 

https://www.globenewswire.com/news-release/2020/06/15/2047994/0/en/Fairfax-Announces-Entering-Into-Swap-Contracts-in-Respect-of-Common-Shares-of-Ensign.html

 

Q2 results should be interesting not only for FFH, but also for the triple-Bs: Brookfield, Berkshire and Blackstone.

You get to see what this class of institutional investors actually did in terms of market participation in Q2, yes they all talked about it in April and hinted their views.

 

But the "walk" ought to be more interesting than the "talk".

 

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Back to the other bidders.....why not Fairfax itself.

 

;D

 

Dear lord can you imagine the reaction on this board if Fairfax took Torstar private?! Prem can't admit mistakes! Declining industries! Good money after bad! Liquidity! Leverage! AAAAAAAAAARRRRRRGGGGGHHHHH.

 

Couple of (serious!) points:

1) What makes you believe Torstar did not test the market before agreeing this deal?

2) If there was a better deal to be had, why would Fairfax not have taken it?

 

3) Anyone can still make a bid.  The break-fee seems to be only $2+1.5m on a deal that is currently valued at $52m.  If somebody figures that this is a bargain and comes in and offers, say, $75m later this week Torstar BoD wouldn't have much choice but to recommend that the offer be accepted and simply pay the break-fee.  Any offer above $55.5m ($52+3.5) would be a no-brainer for shareholders, right?  Probably not going to happen...

 

 

 

Looks like there might be a slightly richer bid for Torstar:  https://www.cbc.ca/news/business/torstar-tsx-bid-1.5643172

 

 

SJ

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Seriously, I have never seen anyone dodging the question as much as Acker on FFH. Ok, at the end he says that if it goes a lot cheaper he would consider buying, but other than that, I didn't learn anything from his intervention on BNN.

 

We don't have much to focus on these days, so here is the interview:

 

https://www.bnnbloomberg.ca/market-call/brian-acker-discusses-fairfax-financial~1993367

 

PS: I guess at around $400 CDN, we could get a better deal than Prem!

 

 

 

 

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Back to the other bidders.....why not Fairfax itself.

 

;D

 

Dear lord can you imagine the reaction on this board if Fairfax took Torstar private?! Prem can't admit mistakes! Declining industries! Good money after bad! Liquidity! Leverage! AAAAAAAAAARRRRRRGGGGGHHHHH.

 

Couple of (serious!) points:

1) What makes you believe Torstar did not test the market before agreeing this deal?

2) If there was a better deal to be had, why would Fairfax not have taken it?

 

3) Anyone can still make a bid.  The break-fee seems to be only $2+1.5m on a deal that is currently valued at $52m.  If somebody figures that this is a bargain and comes in and offers, say, $75m later this week Torstar BoD wouldn't have much choice but to recommend that the offer be accepted and simply pay the break-fee.  Any offer above $55.5m ($52+3.5) would be a no-brainer for shareholders, right?  Probably not going to happen...

 

 

 

Looks like there might be a slightly richer bid for Torstar:  https://www.cbc.ca/news/business/torstar-tsx-bid-1.5643172

 

 

SJ

 

 

Yet another richer bid for Torstar:  https://www.theglobeandmail.com/business/article-nordstar-ups-torstar-offer-in-what-could-end-bidding-war/

 

The market seems to agree with BearProwler!

 

 

SJ

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There was an article in today's Globe which was even more disturbing.  https://www.theglobeandmail.com/business/article-nordstar-ups-torstar-offer-in-what-could-end-bidding-war/

 

It would seem that the alternate bid might be superior because the proponents are suggesting that they are prepared to both bid higher in a cash-up-front perspective PLUS they have suggested that they would include contingent value rights to Torstar shareholders.  Despite that, it seems like Prem has locked up our Torstar shares for the lower valued bid.  I think that Prem might have a bit of explaining to do during the next quarterly teleconference if he is truly accepting an inferior bid from a former FFH executive.

 

It's looking more and more like BearProwler called this one correctly...

 

SJ

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There was an article in today's Globe which was even more disturbing.  https://www.theglobeandmail.com/business/article-nordstar-ups-torstar-offer-in-what-could-end-bidding-war/

 

It would seem that the alternate bid might be superior because the proponents are suggesting that they are prepared to both bid higher in a cash-up-front perspective PLUS they have suggested that they would include contingent value rights to Torstar shareholders.  Despite that, it seems like Prem has locked up our Torstar shares for the lower valued bid.  I think that Prem might have a bit of explaining to do during the next quarterly teleconference if he is truly accepting an inferior bid from a former FFH executive.

 

It's looking more and more like BearProwler called this one correctly...

 

SJ

 

https://www.bnnbloomberg.ca/torstar-bid-raises-shareholders-ire-sparking-calls-for-osc-probe-1.1466294

 

From the BNNBloomberg article:

 

"It's hard to understand the [families’] actions," said Groia, who worked at the OSC as associate general counsel and director of enforcement from 1985 to 1990.

 

"My experience as a former regulator is any time you can't understand why people are reacting the way they are, the general answer is that there's something motivating them that we don't know about. That's what an investigation is for."

 

Fair and friendly....hardly.....

 

 

 

 

 

 

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There was an article in today's Globe which was even more disturbing.  https://www.theglobeandmail.com/business/article-nordstar-ups-torstar-offer-in-what-could-end-bidding-war/

 

It would seem that the alternate bid might be superior because the proponents are suggesting that they are prepared to both bid higher in a cash-up-front perspective PLUS they have suggested that they would include contingent value rights to Torstar shareholders.  Despite that, it seems like Prem has locked up our Torstar shares for the lower valued bid.  I think that Prem might have a bit of explaining to do during the next quarterly teleconference if he is truly accepting an inferior bid from a former FFH executive.

 

It's looking more and more like BearProwler called this one correctly...

 

SJ

 

https://www.bnnbloomberg.ca/torstar-bid-raises-shareholders-ire-sparking-calls-for-osc-probe-1.1466294

 

From the BNNBloomberg article:

 

"It's hard to understand the [families’] actions," said Groia, who worked at the OSC as associate general counsel and director of enforcement from 1985 to 1990.

 

"My experience as a former regulator is any time you can't understand why people are reacting the way they are, the general answer is that there's something motivating them that we don't know about. That's what an investigation is for."

 

Fair and friendly....hardly.....

 

 

 

It's puzzling how often FFH ends up being involved in transactions that have a bad smell to them.

 

 

SJ

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There was an article in today's Globe which was even more disturbing.  https://www.theglobeandmail.com/business/article-nordstar-ups-torstar-offer-in-what-could-end-bidding-war/

 

It would seem that the alternate bid might be superior because the proponents are suggesting that they are prepared to both bid higher in a cash-up-front perspective PLUS they have suggested that they would include contingent value rights to Torstar shareholders.  Despite that, it seems like Prem has locked up our Torstar shares for the lower valued bid.  I think that Prem might have a bit of explaining to do during the next quarterly teleconference if he is truly accepting an inferior bid from a former FFH executive.

 

It's looking more and more like BearProwler called this one correctly...

 

SJ

 

https://www.bnnbloomberg.ca/torstar-bid-raises-shareholders-ire-sparking-calls-for-osc-probe-1.1466294

 

From the BNNBloomberg article:

 

"It's hard to understand the [families’] actions," said Groia, who worked at the OSC as associate general counsel and director of enforcement from 1985 to 1990.

 

"My experience as a former regulator is any time you can't understand why people are reacting the way they are, the general answer is that there's something motivating them that we don't know about. That's what an investigation is for."

 

Fair and friendly....hardly.....

 

 

 

It's puzzling how often FFH ends up being involved in transactions that have a bad smell to them.

 

 

SJ

 

It's not that puzzling anymore, imo. I think when you have a large enough sample of actions, Occam's razor applies.

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I read the competing bid by Modern Media Holdings Inc's to be more likely to break up the company since the future asset contigency sales is in their deal.  I read the Nordstar bid  as committing to keep the paper intact.

 

Isn't the seller within the right to choose which company to sell to based on the way the new buyer will run the business?  In this case keeping the business operating and not stripping it was part of the reason why Nordstar was chosen.

 

I might be misunderstanding but I dont see the egregious action by the owners for their baby to be in the hands of like minded buyers.

 

 

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And my question on that deal and issues raised is from a FFH shareholders' perspective, are we winning or losing?

 

Can someone explain.

 

FFH is a shareholder of Torstar and could have gotten more, but refused to allowing Rivett to succeed in his bid?

 

?

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And my question on that deal and issues raised is from a FFH shareholders' perspective, are we winning or losing?

 

Can someone explain.

 

FFH is a shareholder of Torstar and could have gotten more, but refused to allowing Rivett to succeed in his bid?

 

?

 

Furthermore, Rivett/Botove were on the record as saying that their group will begin to sell off many if not all of the investments (Vertical Scope, Blue Ant, Black Press, Nest Wealth etc) that Torstar currently owns and expects to raise at least $100 million from these sales.

 

By any measure this deal stinks. There is no justification for Fairfax supporting the Rivett/Bitove bid!

 

 

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And my question on that deal and issues raised is from a FFH shareholders' perspective, are we winning or losing?

 

Can someone explain.

 

FFH is a shareholder of Torstar and could have gotten more, but refused to allowing Rivett to succeed in his bid?

 

?

 

Furthermore, Rivett/Botove were on the record as saying that their group will begin to sell off many if not all of the investments (Vertical Scope, Blue Ant, Black Press, Nest Wealth etc) that Torstar currently owns and expects to raise at least $100 million from these sales.

 

By any measure this deal stinks. There is no justification for Fairfax supporting the Rivett/Bitove bid!

 

https://www.theglobeandmail.com/business/article-torstar-buyer-expects-to-raise-100-million-selling-minority-stakes/#comments

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I read the competing bid by Modern Media Holdings Inc's to be more likely to break up the company since the future asset contigency sales is in their deal.  I read the Nordstar bid  as committing to keep the paper intact.

 

Isn't the seller within the right to choose which company to sell to based on the way the new buyer will run the business?  In this case keeping the business operating and not stripping it was part of the reason why Nordstar was chosen.

 

I might be misunderstanding but I dont see the egregious action by the owners for their baby to be in the hands of like minded buyers.

 

 

Yes, the seller of an asset can sell to whomever he wants.  But, in this case, we have a number of management teams involved who are supposed to be acting as fiduciaries for the actual owners (shareholders) of their firm. 

 

The first such management team is Torstar management who should be recommending that its shareholders adopt the objectively most favourable offer, and then holding a shareholder vote to approve or deny the takeover.  During that vote, the *actual owners* of TS can make their individual decision of whether they view the offer as desirable.  The families can vote against the best financial offer if they want, but to fulfill its fiduciary responsibility, TS should be recommending the better offer and should organize a vote.

 

The second such management team is FFH management, who should be pursuing the best financial offer on behalf of its shareholders (including those of us in this forum).  If the FFH management team is knowingly accepting an inferior financial offer for those TS shares which *we* own, they have some explaining to do.  If the decision was actually taken or if it appears to have been taken simply to help their buddy, Paul Rivett, then they really have some explaining to do.  I have nothing against Paul Rivett, but I do not at all want any portion of my financial interest in FFH to be expropriated just because he's a nice guy.

 

In the case of FFH, the company has had recurring governance failures.  This looks like it might just be one more abuse of minority (majority!) shareholders.

 

 

SJ

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Prem is all about establishing and growing relationships.  This sometimes goes against immediate optimization of every deal.

 

This is pocket change for Fairfax and the benefit from supporting allies is much greater for their reputation.

 

It is a matter of judgment.  It is not a simple screw everyone and take as much profit as you can.

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Prem is all about establishing and growing relationships.  This sometimes goes against immediate optimization of every deal.

 

This is pocket change for Fairfax and the benefit from supporting allies is much greater for their reputation.

 

It is a matter of judgment.  It is not a simple screw everyone and take as much profit as you can.

 

Stop defending him....this one is not even close....

 

The revised Rivett/Bitove bid works out for something like $60 million in total to acquire a company that has $70 million CASH on its books and NO DEBT and no unfunded pension liability plus it has various minority investments that conservatively will raise a further $100 million when they are sold.

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Prem is all about establishing and growing relationships.  This sometimes goes against immediate optimization of every deal.

 

This is pocket change for Fairfax and the benefit from supporting allies is much greater for their reputation.

 

It is a matter of judgment.  It is not a simple screw everyone and take as much profit as you can.

 

Do you think continually acting against the best interests of their own investors (and those of their subs) will enhance their reputation?

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