Parsad Posted March 5, 2010 Posted March 5, 2010 Here is this year's report. Enjoy! Cheers! http://www.fairfax.ca/Assets/Downloads/AR2009.pdf
Parsad Posted March 5, 2010 Author Posted March 5, 2010 I always jump to the investment section of the letter first to see what Prem has to say...he believes the next decade could be treacherous...but he's very optimistic of the opportunities he may get presented with as well. Cheers!
UhuruPeak Posted March 5, 2010 Posted March 5, 2010 I always jump to the investment section of the letter first to see what Prem has to say LOL! "I always eat my chocolate ice cream before the vegetables" ;)
Parsad Posted March 5, 2010 Author Posted March 5, 2010 As long as you don't eat it with the vegetables Uhuru! That would be kind of gross. ;D Cheers!
JAllen Posted March 5, 2010 Posted March 5, 2010 I really enjoyed his and Buffett's letters this year. Really great stuff. I Wish it would go cheaper. We barely own any right now.
ERICOPOLY Posted March 6, 2010 Posted March 6, 2010 I'm not sure what else to draw from that comment. He says it's unlike the rate will be maintained. Does he mean it's unlikely they'll pay as much as $10 again, or unlikely it will keep growing at the rapid pace of the last 3 years? Given our results for 2009, our significant holding company cash and marketable securities position, the availability to us of the free cash flow of our insurance companies now that our three largest companies are 100% owned, and our very strong and conservative balance sheet, we paid a dividend of $10 per share (an extra $8 per share in excess of our nominal $2 per share). It is unlikely that this rate will be maintained.
oldye Posted March 6, 2010 Posted March 6, 2010 I'm not sure what else to draw from that comment. He says it's unlike the rate will be maintained. Does he mean it's unlikely they'll pay as much as $10 again, or unlikely it will keep growing at the rapid pace of the last 3 years? I don't think he means that they won't pay a 10$ dividend again, they will probably continue to issue a high dividend during years when Fairfax earns a very satisfactory return on equity.
shalab Posted March 6, 2010 Posted March 6, 2010 Interesting comments below: Last year gave us an outstanding opportunity to add to our investment holdings of excellent companies with fine long term track records. All things being equal, we expect to hold these common stocks for the very long term. Shares owned (millions) Cost per share Amount invested Market value As of December 31, 2009 Wells Fargo 20.0 $19.36 388 540 Johnson & Johnson 7.6 61.00 463 488 US Bancorp 15.9 16.27 258 356 Kraft Foods 10.7 26.55 285 291 Wells Fargo, as you know, is a wonderful bank in the U.S. with an outstanding long term track record. In the financial crisis of 2008/2009, it seized the opportunity to double its size (without much overlap) through the purchase of Wachovia Corporation, while increasing its shares outstanding by only about a quarter. Today it has more than 70 million customers in the U.S. with a net interest margin of 4.3%, the highest among the major U.S. banks. With 80+ separate businesses, cross selling at least six products per customer and a funding base of $800 billion in deposits at a cost of 40 basis points – all embedded in a risk averse culture under John Stumpf’s leadership –Wells Fargo is well positioned for strong growth over the next decade and we expect to be a major beneficiary. US Bancorp is, similar toWells Fargo, an outstanding bank with a great track record. LikeWells Fargo, it has benefited from the financial crisis by making many tuck-in acquisitions (FDIC assisted). It also has a very profitable payments processing division with worldwide expansion prospects. Under Richard Davis’ leadership and with its risk averse culture, we expect to be a major beneficiary in the next decade. We continue to like Johnson & Johnson and we believe that Kraft Foods will, over time, benefit greatly from its purchase of Cadbury’s (one example – Cadbury’s has a distribution network of over 1 million stores in India!). All these are very high quality companies selling at modest multiples compared to their past and relative to the S&P500! We expect to hold these investments for a long period and if we are right, unrealized gains will become a significant portion of our equity base (at year-end 2009 it was already significant at $747 million after tax). A side benefit will be a smaller tax bill (until we sell), since gains generally compound tax free while we hold the investments
Zorrofan Posted March 6, 2010 Posted March 6, 2010 Have to like the sound of that! Starting to sound a little like BRK in a way, long-term holding of blue-chip stocks with solid moats...... cheers Zorro Interesting comments below: Last year gave us an outstanding opportunity to add to our investment holdings of excellent companies with fine long term track records. All things being equal, we expect to hold these common stocks for the very long term. Shares owned (millions) Cost per share Amount invested Market value As of December 31, 2009 Wells Fargo 20.0 $19.36 388 540 Johnson & Johnson 7.6 61.00 463 488 US Bancorp 15.9 16.27 258 356 Kraft Foods 10.7 26.55 285 291 Wells Fargo, as you know, is a wonderful bank in the U.S. with an outstanding long term track record. In the financial crisis of 2008/2009, it seized the opportunity to double its size (without much overlap) through the purchase of Wachovia Corporation, while increasing its shares outstanding by only about a quarter. Today it has more than 70 million customers in the U.S. with a net interest margin of 4.3%, the highest among the major U.S. banks. With 80+ separate businesses, cross selling at least six products per customer and a funding base of $800 billion in deposits at a cost of 40 basis points – all embedded in a risk averse culture under John Stumpf’s leadership –Wells Fargo is well positioned for strong growth over the next decade and we expect to be a major beneficiary. US Bancorp is, similar toWells Fargo, an outstanding bank with a great track record. LikeWells Fargo, it has benefited from the financial crisis by making many tuck-in acquisitions (FDIC assisted). It also has a very profitable payments processing division with worldwide expansion prospects. Under Richard Davis’ leadership and with its risk averse culture, we expect to be a major beneficiary in the next decade. We continue to like Johnson & Johnson and we believe that Kraft Foods will, over time, benefit greatly from its purchase of Cadbury’s (one example – Cadbury’s has a distribution network of over 1 million stores in India!). All these are very high quality companies selling at modest multiples compared to their past and relative to the S&P500! We expect to hold these investments for a long period and if we are right, unrealized gains will become a significant portion of our equity base (at year-end 2009 it was already significant at $747 million after tax). A side benefit will be a smaller tax bill (until we sell), since gains generally compound tax free while we hold the investments
shalab Posted March 6, 2010 Posted March 6, 2010 The mini-me comment may not be that off the mark - the BRK/FFH portfolios have a lot of stuff in common. For the four majors that Watsa mentioned ~1.7 billion on FFH accounts, BRK has 16 billion of the same.
rszutu604 Posted March 9, 2010 Posted March 9, 2010 From pg. 9: "At the end of 2009, we have approximately $579 per share in insurance and reinsurance float. Together with our book value of $370 per share and $115 per share in net debt, you have approximately $1,064 in investments per share working for your long term benefit." That is a strong value proposition. Then there's the future underwriting profits to throw on top of all that.
StubbleJumper Posted March 9, 2010 Posted March 9, 2010 The part of the AR that I always love the most is to look at the "loss triangles" that describe how reserves evolve over time. The reason for this is that the easiest way for an insurer to screw an investor is to lie about underestimate its reserves. When you look at the triangles that were constructed on an accident year basis, FFH's underwriting discipline is obvious and compelling. I sleep well at night, with no worries about adverse development! SJ
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