Fairfax 2021

[Daphne]

[Daphne]

We’ll and thoughtfully stated X

[petec]

1 hour ago, ERICOPOLY said:

 

Nor could he buy MSFT at 40x.  And one can equally point out how fast the PE comes down when a company is growing at 30%. 

 

It's not like it's growing earnings at 5% with a 40x PE.

 

Context.

Quite.

[Xerxes]

30 minutes ago, Daphne said:

 

29 minutes ago, Daphne said:

We’ll and thoughtfully stated X

 

Thank you Daphne.

Well that's it for me folks, I am going to leave on a high note !

 

 

 

[ERICOPOLY]

54 minutes ago, Xerxes said:

Folks,

Not to repeat myself from a month ago or so:

On comments on why he didnt buy AAPL/MSFT but bought this. etc. why Quess as high p/e. etc.

 

Prem (i believe) is first and foremost a businessman and then an investor.

 

The AAPL/MSFT examples come from his own punditry on tech bubbles (he keeps seeing tech bubbles).  FAANG for example, is where mention of Apple comes from, and MSFT was mentioned by Prem in this year's letter to the shareholders where he seems especially impressed that it has a 40x PE.

 

So this is an analysis on what the fuck is he doing that for, and if he's building businesses then this is a side conversation about his punditry that he engages in when penning his letters.

 

As I mentioned, I have a fear that he's not going to be able to help himself and will start shorting them again.

Edited July 29, 2021 by ERICOPOLY

[Xerxes]

Ericopoly
I am with you 100% on how i feel about Shaming of the Big Tech on his annual letter. I usually skip that page anyways because it irritates me (it actually does). But, i believe what he writes (as an opinion) and what he does, are often not the same thing.

 

Except for the mystery short last year (people say it was Tesla), I don't believe we have any proof that he went out there and shorted FANGS. We make that connection, but there is no hard evidence.

 

Said, differently, even if FANGs were to get cut in half today, you will not see him investing in them in a huge way, even knowing what he knows. He wants to own businesses from the ground up, and not ride someone else' glory.

 

This is my perception

Edited July 29, 2021 by Xerxes

[ERICOPOLY]

2 minutes ago, Xerxes said:

Ericopoly
I am with you 100% on how i feel about Shaming of the Big Tech on his annual letter. I usually skip that page anyways because it irritates me (it actually does). But, i believe what he writes (as an opinion) and what he does, are often not the same thing.

 

Except for the mystery short last year (people say it was Tesla), I don't believe we have any proof that he went out there and shorted FANGS. We make that connection, but there is no hard evidence.

 

Why is this for him to know and for us to find out?  Is he embarrassed to tell us what kicked his ass so badly?

[Parsad]

2 hours ago, ERICOPOLY said:

Sanjeev and I both agreed we don't know if the probability is 30% or 60%.

 

However (and I haven't gone to see Warren and Charlie 40 times), it is plain as day that Warren has increased his odds by keeping it simple -- investing in boring industries and boring companies, with long histories, and high quality franchises, with capable managers, all of which put together increase his odds of knowing when it's really and truly 90%.

 

That's his wisdom that he repeats and repeats ad nauseum.

 

I think Warren realized a long time ago that margin of safety is ephemeral because it is subject to bias.  And he has these mechanisms to help him improve his success at calculating the odds, and no matter how many times he repeats himself people still don't listen.

 

I fully agree with this.  I wish Fairfax was capable of this...but they aren't.  Doesn't mean it isn't a great investment from time to time.  Nor does it warrant the denigrating comments by many about Prem. 

 

He's built a friggin' empire from nothing...copying Buffett's wheel to the best of his abilities...at 18% compounded since the beginning.  If he can do it at 15% for another 25 years...it may not be Berkshire, but it would be closer than almost anyone else.  That deserves a bit of respect in my opinion!  Cheers!

[Xerxes]

re: ERIC

 

I wouldn't know.

 

But I will say this:   Berkshire considers its equity portfolio composition as a propriety information. I have heard Buffett on one his AGM (perhaps 2018) where he said that as an answer to a question that inquired about his Asian holdings. He added (IIRC) that if it was up to him, you wont see much U.S.-based holdings either, but that 13F filing force him to make U.S. holdings public. These days he is showing BYD because it is a large holding.

 

Nothing to do with FFH, but I don't think we will ever get to see the composition of those shorts and what drove them. 

  

Edited July 29, 2021 by Xerxes

[Gregmal]

^Because he views this as "his" company and not that of the shareholder. Thus he doesnt owe anyone any disclosure other than what they are burdened to disclose by regulators. This is also consistent with capital allocation, nepotism/favoritism, and his cavalier attitude toward those who rightfully criticize what he's doing. 

[Parsad]

16 minutes ago, ERICOPOLY said:

 

Why is this for him to know and for us to find out?  Is he embarrassed to tell us what kicked his ass so badly?

 

Eric & Greg, do you guys own Shopify?  

[Gregmal]

I would actually love to hear what people here think of David Einhorn? Birds of a feather. Perhaps its easier to see when reading the Einhorn letters, but the arrogance is unrivaled and the insistence upon being right rather than making money is ungodly. 

Edited July 29, 2021 by Gregmal

[Gregmal]

2 minutes ago, Parsad said:

 

Eric & Greg, do you guys own Shopify?  

Never have. Dont understand it. I try not to invest in things I dont understand. And regardless of what I think I understand, if I get my fingers burnt enough on something, I back off because I dont like losing money. 

[ERICOPOLY]

Berkshire I think doesn't like to buy alongside the copycat buyers because it can lift prices when he still wants to buy more.  I'm not sure how that argument applies to Prem who is NEVER going to short again and therefore shouldn't care how many short sellers know what specific stocks he shorted in the past.  

 

Example:

"At this present time I'm pledging that I'm never going to short again, but I won't tell you what I lost money shorting last year because when I short it again I don't want other short sellers competing against me for buyers".

 

 

Edited July 29, 2021 by ERICOPOLY

[ERICOPOLY]

15 minutes ago, Parsad said:

 

Eric & Greg, do you guys own Shopify?  

 

No. 

[Candyman1]

Never get why people get so riled up about other investors. Nor do I look up to other investors. What Einhorn does is not my issue, arrogance or not. I have always thought Prem was not as good as at times in the past people professed, but he surely ain't that bad as some on this site make it out to be. (Comparing him to Buffett is also stupid. No investor should be compared to Buffett ever. Buffett is an insane talent that others do not have. Just reading about his lessons doesn't make you as great.) Anyway, Prem is surely good enough of a CEO to be buying FFH at about 0.70 times 2021 end year book value per share.

My rule is that you own FFH when everyone thinks Prem sucks and make sure you don't own it anymore when his status is that of a deity. I would not be surprised that his public status completely changes again after Digit files for IPO. Given the amount of frustration professed on this board about Prem I feel encouraged owning FFH.

Edited July 29, 2021 by Candyman1

[Parsad]

13 minutes ago, Gregmal said:

Never have. Dont understand it. I try not to invest in things I dont understand. And regardless of what I think I understand, if I get my fingers burnt enough on something, I back off because I dont like losing money. 

 

Ok, my friend Andrew Wilkinson was an early investor in Shopify...so I've known about Shopify for a long time and followed it.  But the valuation was always a huge problem for me.  I wasn't making fun of it or anything, but I couldn't and still can't accept the probabilities that it can continue growing at the rate it does and that any investment will be worth that risk. 

 

This is the problem Prem has...and to a lesser extent Buffett has.  Prem was happy to buy a mature GOOG, as did Buffett with AAPL.  I had no problem buying AAPL shortly before Buffett did.  So that's the first problem.

 

Second, whether it's Shopify, AAPL or as I did with OSTK, if the P/E jumps over 40...I'm out!  That's just my nature, and I find it distressing to hold onto positions that become fundamentally expensive.  

 

Meanwhile, my friend Andrew keeps increasing his net worth by the ten's of millions every quarter.  He's built that way!  I'm not.  Incidentally, Andrew is a keen student of value investing, owns Fairfax and Berkshire...but he's built differently...maybe he's the next evolutionary step for the value manager of the future!    Cheers!

[Parsad]

6 minutes ago, Candyman1 said:

Never get why people get so riled up about other investors. Nor do I look up to other investors. What Einhorn does is not my issue, arrogance or not. I have always thought Prem was not as good as at times in the past people professed, but he surely ain't that bad as some on this site make it out to be. (Comparing him to Buffett is also stupid. No investor should be compared to Buffett ever. Buffett is an insane talent that others do not have. Just reading about his lessons doesn't make you as great.) Anyway, Prem is surely good enough of a CEO to be buying FFH at about 0.70 times 2021 end year book value per share.

My rule is that you own FFH when everyone thinks Prem sucks and make sure you don't own it anymore when his status is that of a deity. I would not be surprised that his public status completely changes again after Digit files for IPO. Given the amount of frustration professed on this board about Prem I feel encouraged owning FFH.

 

+1!  Cheers!

[FairFacts]

This is a fantastic thread, lots of differing opinions, I like it a lot.

 

On Fairfax overall I often ask myself is it just a bit too complicated.

 

On Blackberry I often give up trying to understand what is the thinking behind holding on to it for so long.

 

On Prem I think we have a talented leader who's demonstrated talents far outweigh any weaknesses.

 

I find it a little ironic that one of the big 'hopefuls' for a big gain is a Unicorn (Indian digital insurance startup DIGIT).

 

Great stuff I look forward to reading the commentary after the results release.

[petec]

38 minutes ago, Candyman1 said:

Never get why people get so riled up about other investors. Nor do I look up to other investors. What Einhorn does is not my issue, arrogance or not. I have always thought Prem was not as good as at times in the past people professed, but he surely ain't that bad as some on this site make it out to be. (Comparing him to Buffett is also stupid. No investor should be compared to Buffett ever. Buffett is an insane talent that others do not have. Just reading about his lessons doesn't make you as great.) Anyway, Prem is surely good enough of a CEO to be buying FFH at about 0.70 times 2021 end year book value per share.

My rule is that you own FFH when everyone thinks Prem sucks and make sure you don't own it anymore when his status is that of a deity. I would not be surprised that his public status completely changes again after Digit files for IPO. Given the amount of frustration professed on this board about Prem I feel encouraged owning FFH.

Yes!!!

[ERICOPOLY]

I wish I could remember his name but it's maybe better that I don't.  At Microsoft in 1998 there was a development lead on the browser UI team with an office down the hall from me.  He shorted Yahoo! and told everyone about it. He lost a ton of money in 1999 and closed it out.  He did NOT want to talk about it.  A dev named Edward who was one of his reports would raz him about it often.

[Xerxes]

It is possible that he closed his Yahoo shorts by buying some of the shares from Mark Cuban as the latter was exited his long.

[gfp]

Earnings announcement here:

https://s1.q4cdn.com/579586326/files/doc_news/2021/July/FFH-2021-Q2-Press-Release-(Final).pdf

[petec]

Does anyone know what happened to the investment in Quantum? I seem to remember it was going to become the Vanguard of India but I am guessing that didn't happen. Is there a story here?

 

Quantum Mutual Fund - Online Mutual Fund Investment (quantumamc.com)

[Viking]

RBC just released their Q2 update/report for Fairfax. Price target was raised to US $600 (from $550). Commentary/outlook is the most effusive i can remember. Looks to me like analysts are finally recognizing the stellar results and all of the significant tailwinds. If we see this from other analysts we should see the shares move solidly higher in the near term.
 

Perhaps 2021 is also the beginning of the next chapter of Fairfax’s corporate history with shareholders… i like how the first couple of pages are being written  
————————————-

RBC Q2 report headline: “The best value opportunity in the P&C space right now”

 

“Our view: Across the board premium growth and improving margins led to a very strong 2Q result. With good visibility to nearly another 10% book value growth as a result of a pending transaction together with a company generating underwriting profits and favorable reserve development in the middle of a hard market, we think there is significant room for multiple expansion. With shares currently trading at about 0.75x, Fairfax shares in our view are one of last true values in the P&C space.”

———————-

“The excess of estimated fair value over carrying value of all Fairfax non-insurance associates including Fairfax India associates is about $1.9B or more than $57/share after-tax (not included in book value).”

Edited July 30, 2021 by Viking