Name The Biggest Losing Investments By Fairfax In Their History

[ERICOPOLY]

How does the Blackberry investment (and others) occur when they've already stated that they've finally learned that it's better to hold investments in high quality companies like WFC, KFT, JNJ, USB for the long term.  Those "high quality" companies are the ones they bought to show us that they've learned.

 

Oh, wait, where are those companies in the portfolio now?  What the heck happened to them?   Did they ever state that they've tossed that strategy out the window?

Edited August 27, 2021 by ERICOPOLY

[DooDiligence]

2 hours ago, John Hjorth said:

Jeff,

 

It's not totally intellectually honest to post a link to an interview with Mr. Munger in a Fairfax topic here on CoBF, for obvious reasons.

Sorry. It’s kind of like rubbing salt in a wound.

[Parsad]

10 hours ago, StubbleJumper said:

 

 

Sanj, stop apologizing for these guys.

 

Torstar was not going to be a home run under any circumstance.  FFH was piling capital into TS in 2006.  We are now in 2021, for Christ's sake, and the S&P has tripled over those 15 years.  You can't put lipstick on that pig.  It's a similar problem with Abitibi and BB.  If all of the moons and stars align, FFH might actually get a return *of* its original capital, but there has been a grossly inadequate return *on* that capital for the past decade.

 

But the bigger problem with your view on this is that you seem as if you are satisfied if FFH is rescued by exceptionally good luck.  Seriously, when FFH piled ungodly amounts of capital into BB nearly a decade ago the investment thesis was NOT that the company might eventually make scads of money on security software for cars.  Their original thesis was clearly ill-conceived, and if by some miracle FFH is able to recuperate its capital from BB that will be mostly the result of good fortune, not good analysis.  Similarly, I would also be particularly disturbed if "commodity bets" were the theses behind Resolute and Stelco.  Can you just imagine Prem saying to Brian, "Hey I have an idea.  Let's buy a commodity producer because once every 25 years or so, the market goes completely nuts and maybe we will have record prices for a few months and will be able to find a great fool to take the position off our hands."  Whatever thesis originally drove the debt issuance to Abitibi was proven ill-conceived a decade ago, irrespective of the possibility that FFH might get lucky enough to at least get its capital back (but again, return *of* capital after a decade is not compelling because we expect a return *on* capital).

 

As for the other fuck-ups, they are much more difficult to track and evaluate because FFH restructures them into oblivion.  The purchase of TIG was clearly a fuck-up, but they broke it into pieces and contributed a chunk to the creation of ORH, moved a couple of chunks into other subs, and ran-off a considerable chunk.  It would take a forensic accountant months to figure out whether shareholders obtained an acceptable return on that purchase of TIG from 20 years ago.  And that strategy of restructuring fuck-ups is still being employed today.  Does anyone really believe that Seaspan management desperately wanted to acquire APR?  It seems to me that Prem basically handed Bing a steaming bag of shit.  It's a similar deal with Helios, and also with Gravalia and Eurobank, where FFH restructured its fuck-ups by dumping the problem on somebody else.

 

Okay, well that's life.  Not every investment is going to work out.  Not every thesis will be correct.  So let's not pretend that these guys bat anywhere close to 1.000.  At least in recent years, they've been seemingly trying to move on from the worst of the losers, but the attachment to BB has been baffling and the failure to dump Resolute earlier this year strikes me as a major error of omission.  With FFH, you need to accept that there will be home runs and there will be fuck-ups, but let's not pretend that the fuck-ups are anything other than what they are.

 

 

SJ

 

 

I'm neither apologizing for them, nor am I touting their investment prowess...via skill or luck.  My point is that the biggest turds that you guys can think of is BB, Abitibi and Torstar...which whether you like it or not, has just made Paul and Jordan a ton of money.

 

Regarding TIG...well there would be no Odyssey America Re without TIG Re.  At this point, I think TIG Re has proven to be a valuable part of the Fairfax insurance group and provided commensurate returns that no one would have predicted when TIG was acquired.  

 

Lastly, on the topic of APR...it was not simply heaped on Atlas.  They wanted it.  It has the same leasing ability and capital requirements that shipping or fractional jet ownership has...and guess who gets to run it...the guy who built one of the best energy businesses in America, turned around a shipping business and restored a fractional jet business.  To suggest it was forced on Sokol or Chen is just silly!  Cheers!

[Parsad]

7 hours ago, bearprowler6 said:

Very well written SJ!

 

As for a list of Fairfax's biggest loser investments (many have been mentioned already):

 

Still Holding:

 

Blackberry

Resolute Forest Products

Eurobank

Recipe

Farmers Edge

Boat Rocker (Fairfax had to buy more to get the IPO done at a reduced price)

AGT (had to take it private because the market was "unwilling" to see the value)

Deflation hedges

Fairfax Africa

 

Sold/Closed Out but not forgotten:

 

Torstar

Canwest Global

Various short bets

 

How could this happen?

 

My best guess: Poor investment analysis, incorrect position sizing, a CEO with massive ego and an unwillingness/inability to admit mistakes! Or maybe....the Hamblyn Watsa guys are just not very good investors??? 

 

 

 

 

 

 

 

 

 

Yes, finally someone who put together a list!  

 

Of those, of any significant size and scale...BB, Recipe, Farmer's Edge, Fairfax Africa, Canwest Global

 

Of those that have/will turn into winners...Resolute, Eurobank, Torstar.

 

Of those that were macro bets...whether right or wrong...Deflation hedges, shorts.

 

So of the tens of billions they've invested...these are their mistakes...about $2.5B...certainly significant, and not Buffett or Munger-like, but certainly not the fuckups that you guys make them out to be.

 

Probably the biggest mistake is really their errors of omission...not participating in one of the biggest bull markets...too much cash sitting on the sidelines.  Cheers!

[Spekulatius]

1 hour ago, Parsad said:

 

Yes, finally someone who put together a list!  

 

Of those, of any significant size and scale...BB, Recipe, Farmer's Edge, Fairfax Africa, Canwest Global

 

Of those that have/will turn into winners...Resolute, Eurobank, Torstar.

 

Of those that were macro bets...whether right or wrong...Deflation hedges, shorts.

 

So of the tens of billions they've invested...these are their mistakes...about $2.5B...certainly significant, and not Buffett or Munger-like, but certainly not the fuckups that you guys make them out to be.

 

Probably the biggest mistake is really their errors of omission...not participating in one of the biggest bull markets...too much cash sitting on the sidelines.  Cheers!

Did they have any home runs after their 2008/2009 that were Material? Perhaps the lack of any investment that really moved the needle for them in more than 10 years in great bull market is as much of an issue than the  $2.5B lost in bad bets.

 

Warren Buffet had plenty of mistakes as well: IBM, Precision Castparts, Wells Fargo, perhaps even Lubrizol. But then he led his compounders in his portfolio alone, bet big on BofA, BHE energy and the insurance ops worked well and took a big swing at Apple that worked out.

Edited August 27, 2021 by Spekulatius

[Gregmal]

If I had to spend even a fraction of this much time analyzing, let alone excusing this many blunders from a team I think I'd just immediately move on. Maybe I'd stick around for a little bit, if only to find out why that group/team hadn't yet been removed. 

 

There is an appeal to FFH now as kind of a product. I suppose if you wanted to put on a trade to capitalize on inflation and a commodity supercycle, this is potentially appealing as a basket/etf substitute type of thing. 

[Parsad]

18 minutes ago, Gregmal said:

If I had to spend even a fraction of this much time analyzing, let alone excusing this many blunders from a team I think I'd just immediately move on. Maybe I'd stick around for a little bit, if only to find out why that group/team hadn't yet been removed. 

 

There is an appeal to FFH now as kind of a product. I suppose if you wanted to put on a trade to capitalize on inflation and a commodity supercycle, this is potentially appealing as a basket/etf substitute type of thing. 

 

Again, that's the whole point of this exercise (post) as you've wildly generalized about how many blunders have occurred by Fairfax.  Have mistakes happened...yes.  Have they hurt results over the last decade...yes.  Does that equate to a poor management team and poor results going forward?  I think the masses are wrong here.  Cheers!

[Gregmal]

Thats the beauty of the market. If you are right, you will be rewarded. If you are really right, you will be really rewarded. 

 

 

[Viking]

3 hours ago, Gregmal said:

If I had to spend even a fraction of this much time analyzing, let alone excusing this many blunders from a team I think I'd just immediately move on. Maybe I'd stick around for a little bit, if only to find out why that group/team hadn't yet been removed. 

 

There is an appeal to FFH now as kind of a product. I suppose if you wanted to put on a trade to capitalize on inflation and a commodity supercycle, this is potentially appealing as a basket/etf substitute type of thing. 

The investment thesis for Fairfax today is actually pretty simply: has Fairfax management learned from their mistakes of the past 7 or 8 years? 
1.) shorting individual stocks and indices cost them billions (was it as much as $3 or $4 billion?).
Today: Fairfax has closed out all short positions. And they have stated repeatedly and written it into their investment policy that they will not short individual stocks and indices moving forward. 
2.) large insurance acquisitions - Brit and Allied - also cost billions at the time. These purchases were funded largely through equity raises which diluted existing shareholders. In addition Allied had one terrible year of underwriting (largely out of its control but it happened). And Brit has had multiple poor years of underwriting. 
Today: Fairfax has repeatedly stated that they are done with large insurance acquisitions. They have a global platform they are happy with. Growth in insurance moving forward will be primarily organic with smaller bold on acquisitions. Allied World is performing very well (fixed). Brit is a work in progress.

 

I think Fairfax has also learned some other important lessons when it comes to how they invest. They are partnering more with what look to be strong management teams that have good long term track records. We see this with recent investments they have made and also with some of the fixes they are executing. 
 

My view is i think Fairfax HAS learned some valuable lessons. I come to this view from listening to what the management team has to say and reading what they write (the past couple of years). Fairfax has been under-earning for 7-8 years. Once they stop making the big mistakes (and a few of the smaller ones as well) i expect earnings to improve and perhaps dramatically. And if this happens, sentiment will also improve and the PE multiple will improve (likely 1xBV). We will see.

 

Now if investors think nothing has changed at Fairfax (over the past 7-8 years) and think Fairfax will continue to have $1 billion blunders every year or two then, yes, it would be pretty dumb to put any money in the stock. Fairfax stock today is priced for this outcome today (more billion $ losses continuing into the future). 
 

Fairfax made billions with their CDS bet back in 2007-09. Was it repeatable? No. Fairfax lost billions with their short bet in 2003-2020. Is it repeatable? No. The past is useful only in how it informs you about what may happen in future. 
———————————-

Another important part of the investing decision is fit. Between investor and company. Fairfax has its own unique style when it comes to how it choses its equity investments. With some positions it likes to swing for the fence so volatility will be extreme. And there will be very visible strike outs (with the pitches apparently way out of the strike zone.) Fairfax also has a controlling shareholder and CEO who is not the best communicator. Prepare yourself accordingly  

Edited August 28, 2021 by Viking

[Xerxes]

To summarize, (as I see it) we are betting that the business is moving from “empire-building mode” to “harvesting mode” and later as earnings (real earning not paper earning) builds up in some years “to shrink the equity base mode”. 
 

We are very much done with the “empire building cycle” stage in the life cycle. There was an intermission (short thesis gone wrong) between that an the next stage, but that is largely over as well.   
 

The chairman was obviaouly aware of all the levers he had available to pull when he made the $130 million bet. 
 

 

 

[Xerxes]

On 8/26/2021 at 8:21 PM, Viking said:

Xerxes, i actually followed Fairfax into Blackberry (RIM) when they made their initial purchase. By the third RIM conference call i could tell the two people running RIM were in over their heads. I sold my position at a loss (about 15% if i remember correctly). RIM turned out to be one of my best investment decisions ever  i mean this seriously). Because it taught me about the cell phone industry. I think it was 12 months later that Apple got dirt cheap and i backed up the truck. Apple became by biggest winner ever with currency tailwinds also helping (Can was mid to low $0.90’s when i bought). From Apple (in terms of concentrated position) i toggled to the big US banks, initially JPM and then BAC. If you read the old BAC threads (2016/17?) i was beating the drum back then for BAC just like i am now for Fairfax today. 
 

To answer your question directly, yes, i would have been much better off holding my Apple position and pulling a Rip Van Winkle  However, i do not look at things that way. When i make investment decisions i try and learn and flush. And move on. I don’t spend much time thinking about what could have been. When i sell out of positions i tend to move on (can’t remember the last time i posted on BAC). My portfolio has done very well over the years (average return has been about 15%) so my returns after selling my Apple position has still been solid. That is all i care about.
 

The big move in Apple shares the past 2 years is primarily multiple explosion. So when i hear people talk about Fairfax and how its crazy low multiple today is permanent i am not so sure  Definitely one of a few learnings taken from my experience with Apple shares.

fair enough. 
I am watching this show called “what if” on Disney+. Sometimes it is worth looking at that. 

[glider3834]

9 hours ago, Spekulatius said:

Did they have any home runs after their 2008/2009 that were Material? Perhaps the lack of any investment that really moved the needle for them in more than 10 years in great bull market is as much of an issue than the  $2.5B lost in bad bets.

Yep - here are some home runs since 2008/09 

 

First Capital

‘By the way, Mr. Athappan has had an incredible record with us in building First Capital. We provided $35 million in 2002 to let him establish First Capital; 15 years later, with no additional capital having been added, he had grown First Capital to be the largest P&C company in Singapore and with the Mitsui Sumitomo deal, gave us back $1.7 billion. That’s a compound rate of return of approximately 30% annually.’ (AR 2017)

 

ICICI Lombard

‘ICICI Lombard is an Indian insurance company that we began in 2001 from scratch as a minority partner with ICICI Bank. Over the following 16 years, ICICI Lombard went on to become the largest non-government-owned property and casualty insurance company in India.

The reduction in our equity interest in ICICI Lombard from 35% to 9.9% resulted in cash proceeds of $909 million plus our continuing to own 45 million shares of ICICI Lombard worth $450 million at the IPO (now worth about $550 million) resulting in an after-tax gain of $930 million.’ (AR 2017)

 

Digit insurance

US $154 million cost basis in 2017 & current valuation $2.3 bil (subject to closing & Indian Govt approval expected in Q3’21) (198% compounded annual return)

 

Ridley

‘We had acquired 73.6% of Ridley, mostly in November 2008 at the bottom of the great recession, at Cdn$8.44 per share and over the years received Cdn$5.50 per share in dividends. Since that time, Steve Van Roekel, Ridley’s CEO, and his management team, without interference from us but under the oversight of Brad Martin as Chairman, did an outstanding job building Ridley and hugely increasing its profits and cash flow. In 2015, Pearce Lyons, the founder of Alltech, made an offer for all of the shares of Ridley at Cdn$40.75 per share. Under Alltech’s ownership, Steve and his team will continue to run the company. This was a win-win transaction for Ridley, Alltech and Fairfax. Our total realized gain was Cdn$304.1 million, representing a compound annual return of 31% including dividends’ (AR 2015)

 

Kennedy Wilson

‘We have an outstanding partnership with Kennedy Wilson, led by its founder and CEO Bill McMorrow and Bill’s partners, Mary Ricks and Matt Windisch. Since we met them in 2010 we have invested $1,130 million in real estate, received cash proceeds of $1,054 million and still have real estate worth about $582 million. Our average annual realized return on completed projects is approximately 20%. We also own 9% of the company’ (AR 2020)

 

Bank of Ireland

‘We purchased 2.8 billion shares of Bank of Ireland stock in late 2011 at 10 euro cents per share. As of today, we have sold 85% of our position at 32 euro cents per share, for a total realized and unrealized gain of approximately $806 million. Richie has produced outstanding results for us and we are fortunate that he consented to join the Eurobank Board. Bank of Ireland is expected to announce its first dividend in the last eight years in 2017!’ (AR 2016)

 

Bangalore International Airport (via Fairfax India)

Bangalore International Airport March 2017 54.0% (ownership) 653.0 cost (Mar-17) 1,396.1 Fair value (31 Dec-20) 23.8% CAGR

 

Quess

Thomas Cook India invested $47 million in Quess in 2013, sold a 5.4% interest in 2017 for $97 million and retained a 49% interest. We have had a phenomenal run with Quess and because of Quess’ great success, Thomas Cook India decided during 2018 to spin its holding in Quess out to its shareholders so that Quess could be run independently as a public company under the leadership of Ajit Isaac. The spinoff took place in December 2019 and Fairfax now directly owns 33% of Quess with a market value of $332 million (AR2019)

 

recent one looking like a home run is Stelco ‘We purchased 12.2 million shares (13.7%) of Stelco in 2018 at Cdn$20.50 per share’ (AR 2019)  (current share price C $49.52)

 

& one on the fixed income side

 

Muni bond bets during GFC

‘…in the midst of the great financial crisis, Brian Bradstreet purchased California taxable bonds in 2009 when the state was on the brink of being downgraded to ‘‘junk’’ status, and was able to acquire a very large position (in excess of $1 billion at cost) at a cash coupon annual yield in excess of 7.3%. Fast forward seven years: the net capital gain on that position is approximately $490 million, with about 45% of that realized and the balance significantly protected with a treasury lock at year-end (the balance has since been sold and the treasury lock removed). Also during the crisis, a large position in Berkshire Hathaway-insured long dated tax exempt bonds was purchased as numerous leveraged muni funds were subject to adverse margin calls in a very illiquid environment. We jumped at the opportunity when such insured bonds became available, investing approximately $3.6 billion at significant discounts to par and very attractive after-tax-equivalent yields. The net capital gain on these bonds is approximately $550 million, with 49% of that realized and the balance either pre-refunded or significantly protected with the treasury lock.’ (AR 2016)

 

 

Edited August 28, 2021 by glider3834

[glider3834]

20 hours ago, nwoodman said:

They are all to ready to take a +ve mark.  I actually hope they take hits to BV commensurate with the Digit accretion or more.  I think this would speak volumes to the market who are non-believers in the current BV anyway.  An inflated BV impairs their ROE going forward unless everyone is a true believer in their past misallocations. I thought this years reports were the most clear and concise ever. Take the hit and move forward.  If it was a new CEO he would take the hit then turn around and say what a legend he was in a few years anyway.  Don’t live in the past Prem we actually think from this point forward the company is well positioned but take the hit on the legacy crap.

Yes totally agree - I believe they have an accounting impairment test process which they would need to follow & gets audited

Edited August 28, 2021 by glider3834

[Spekulatius]

@glider3834 Thanks for the list of winners for FFH. it looks to me that if they can eliminate the drag from the losing micro bets, they should be able to do better.

 

As for the Indian bets, one needs to account for the currency headwind for the rupee.  But even with that, the performance looks good.

[Viking]

Glider, great list.
 

Where the Fairfax story gets more interesting for current investors is identifying where the new home runs are going to come from. 
1.) at the top of the list is Digit. Both in terms of size and timing. The bizarre thing about this gain is the market is ignoring it (for now). It reminds me of when Fairfax was sitting on their CDS gains at the beginning of the GFC and the stock was going nowhere and we were all scratching our heads as to why. 

“When the new equity issuances by Digit Insurance close, the increased valuation of Digit Insurance will result in Fairfax recording a net unrealized gain on investments of approximately $1.4 billion on its investment in Digit compulsorily convertible preference shares (an increase of approximately $47 in book value per basic share). In addition at that time, the pre-tax excess of fair value over carrying value of Fairfax’s equity accounted interest in Digit will increase by approximately $0.4 billion (an increase of a further approximately $14 in book value per basic share), which will not be reflected in Fairfax’s consolidated net earnings or in the calculation of book value per share until the Indian government gives final approval of its announced intention to increase foreign ownership limits in the insurance sector from 49.0% to 74.0% and Fairfax obtains regulatory approval specific to its holdings in Digit.”

- https://www.fairfax.ca/news/press-releases/press-release-details/2021/Fairfax-Announces-Potential-Gains-on-Its-Investment-in-Digit/default.aspx

 

2.) Atlas should be another +$1 perhaps even $2 billion dollar win for Fairfax. They own 99.9 million shares and 25 million warrants = 125 million.  Shares are carried on the books at $10/share (at Dec 31). My guess is Atlas shares will hit $20 in the next 24 months. And it has a long growth runway. 
 

And if i had to chose a single sleeper pick it would be Eurobank. They have methodically been repairing their balance sheet for three years. Another tranche of non-performing loans will be carved out later this year. The pro-business government is very supportive. And my guess is Eurobank is not done with its transformation. Fairfax owns 1,130 million shares. Shares are trading at 0.80 Euro today. A move to 1.20 Euro in the next 24 months looks pretty doable. 

A second sleeper pick would be their collection of assets in India. Lots to like about the current holdings. Anchorage will be something to watch. Fairfax has a pretty good track record with its investments in the country. If emerging markets do well moving forward this bucket of assets could continue to surprise to the upside.

 

Fairfax also what i would call ‘layup’ type investments in their portfolio. I put the 1.95 million TRS on Fairfax shares in this bucket. Stelco as well.
 

Buying back 1 million (or more) Fairfax shares is another no brainer (at 0.70 x BV). Cost today would be US $450 million - very doable.
 

And it is funny to talk about home runs for Fairfax and not mention their how their insurance businesses are performing today (top line growth and underwriting). With their significant growth it is like they are adding a business about the size of Northbridge every year (this is how Fairfax has tried to explain the significance of their growth). Is Northbridge worth $1 billlion? We have been in a hard market for about 2.5 years and it is not over yet…

——————————

Should inflation NOT be transitory Fairfax has positioned their bond portfolio perfectly. If interest rates ever start to move higher Fairfax is well positioned. 

Edited August 28, 2021 by Viking

[glider3834]

6 hours ago, Viking said:

Glider, great list.
 

Where the Fairfax story gets more interesting for current investors is identifying where the new home runs are going to come from. 
1.) at the top of the list is Digit. Both in terms of size and timing. The bizarre thing about this gain is the market is ignoring it (for now). It reminds me of when Fairfax was sitting on their CDS gains at the beginning of the GFC and the stock was going nowhere and we were all scratching our heads as to why. 

“When the new equity issuances by Digit Insurance close, the increased valuation of Digit Insurance will result in Fairfax recording a net unrealized gain on investments of approximately $1.4 billion on its investment in Digit compulsorily convertible preference shares (an increase of approximately $47 in book value per basic share). In addition at that time, the pre-tax excess of fair value over carrying value of Fairfax’s equity accounted interest in Digit will increase by approximately $0.4 billion (an increase of a further approximately $14 in book value per basic share), which will not be reflected in Fairfax’s consolidated net earnings or in the calculation of book value per share until the Indian government gives final approval of its announced intention to increase foreign ownership limits in the insurance sector from 49.0% to 74.0% and Fairfax obtains regulatory approval specific to its holdings in Digit.”

- https://www.fairfax.ca/news/press-releases/press-release-details/2021/Fairfax-Announces-Potential-Gains-on-Its-Investment-in-Digit/default.aspx

 

2.) Atlas should be another +$1 perhaps even $2 billion dollar win for Fairfax. They own 99.9 million shares and 25 million warrants = 125 million.  Shares are carried on the books at $10/share (at Dec 31). My guess is Atlas shares will hit $20 in the next 24 months. And it has a long growth runway. 
 

And if i had to chose a single sleeper pick it would be Eurobank. They have methodically been repairing their balance sheet for three years. Another tranche of non-performing loans will be carved out later this year. The pro-business government is very supportive. And my guess is Eurobank is not done with its transformation. Fairfax owns 1,130 million shares. Shares are trading at 0.80 Euro today. A move to 1.20 Euro in the next 24 months looks pretty doable. 

A second sleeper pick would be their collection of assets in India. Lots to like about the current holdings. Anchorage will be something to watch. Fairfax has a pretty good track record with its investments in the country. If emerging markets do well moving forward this bucket of assets could continue to surprise to the upside.

 

Fairfax also what i would call ‘layup’ type investments in their portfolio. I put the 1.95 million TRS on Fairfax shares in this bucket. Stelco as well.
 

Buying back 1 million (or more) Fairfax shares is another no brainer (at 0.70 x BV). Cost today would be US $450 million - very doable.
 

And it is funny to talk about home runs for Fairfax and not mention their how their insurance businesses are performing today (top line growth and underwriting). With their significant growth it is like they are adding a business about the size of Northbridge every year (this is how Fairfax has tried to explain the significance of their growth). Is Northbridge worth $1 billlion? We have been in a hard market for about 2.5 years and it is not over yet…

——————————

Should inflation NOT be transitory Fairfax has positioned their bond portfolio perfectly. If interest rates ever start to move higher Fairfax is well positioned. 

Yes I agree Viking - they have been buying back in both Q1 & Q2, they could increase the size of these buybacks  whilst still keeping well in excess of US$1 bil at holdco. I am not surethe $ buyback amount but the insurance subs are travelling well & have been sending divs to the holdco. They will want to balance these buybacks with lowering their leverage ratios at holdco & we have hurricane season underway obviously with Hurricane Ida & others I am sure to come - but this is all part of the business. Still I think Fairfax will look to be opportunistic and their shares are trading at a historically low P/B ratio - its an easy choice in my view.

 

 

 

[FairFacts]

1 hour ago, glider3834 said:

Yes I agree Viking - they have been buying back in both Q1 & Q2, they could increase the size of these buybacks  whilst still keeping well in excess of US$1 bil at holdco. I am not surethe $ buyback amount but the insurance subs are travelling well & have been sending divs to the holdco. They will want to balance these buybacks with lowering their leverage ratios at holdco & we have hurricane season underway obviously with Hurricane Ida & others I am sure to come - but this is all part of the business. Still I think Fairfax will look to be opportunistic and their shares are trading at a historically low P/B ratio - its an easy choice in my view.

 

 

 

I wouldn’t be surprised if they are not considering a 5% buyback similar to the Fairfax India offer. The only issue would be at what price they could expect it to be a success. An offer of $480 per share might get them there.

[Xerxes]

I don’t think we will see any buyback (ala FIH tender offer). Not that they cannot do it but with the framework of having certain net cash on balance sheet that means that they cannot borrow the fund to do a large buyback.

 

also buyback (a large one) will re-lever the company as it shrinks the equity base. 
 

I think large buybacks will come eventually but will be through excess free cash flow and not at the expense of re-levering the business. I think this clear through *signalling* they have done.
 

The comment about Teledyne few years ago was just Prem looking ahead into the next decade as the business moves from an asset gatherer machine into working value per share. He sent the wrong signal as he didn’t put timetable on it. But I truly believe he means going there.

 

A business that has been sending frequent *signals* about large buyback has been IAC, that has made frequent scripted comment on CNBC, earning calls etc that they had bought half of their shares post-quad split 10 years ago. And surprise surprise the post-Vimeo spin news flow is close to zero with drips, which to me it says they are content with their share price dropping. Who knows maybe they ll buy back ANGI. 

[A_Hamilton]

Sandridge
Exco

Long GGB's prior to Greek default

Eurobank (1st tranche)

Blackberry

RFP

Sale of JNJ, USB, WFC to fund some of these.