Fairfax 2023

[giulio]

https://www.prnewswire.com/news-releases/concerned-shareholder-urges-blackberry-board-to-guard-against-unfair-buyout-bids-and-oppose-watsa-as-director-as-board-considers-strategic-alternatives-301858167.html

 

He is concerned, shareholders on this board are 3x more concerned! 

 

No opinion on BB,  I just find this funny.

 

G

[Parsad]

3 hours ago, giulio said:

https://www.prnewswire.com/news-releases/concerned-shareholder-urges-blackberry-board-to-guard-against-unfair-buyout-bids-and-oppose-watsa-as-director-as-board-considers-strategic-alternatives-301858167.html

 

He is concerned, shareholders on this board are 3x more concerned! 

 

No opinion on BB,  I just find this funny.

 

G

 

Could this be the same ethical Dorsey R. Gardner?

 

https://www.nytimes.com/1991/01/27/business/fidelity-s-secret-agent-man.html

 

If I was BB, I would be worried too!  But not about Prem.  Cheers!

[Viking]

As expected. 4 more years. This should allow conservatives/New Democracy to make significant further progress in reforming the Greek economy. Very good news for Fairfax’s significant Greek holdings (Eurobank, Mytilineous, Grivalia Hospitality, Praktiker and Eurolife).
—————

Greek conservatives storm to victory in repeat election

- https://www.reuters.com/world/europe/greeks-vote-repeat-election-likely-return-conservatives-office-2023-06-24/
 

ATHENS, June 25 (Reuters) - Greece's conservative New Democracy party stormed to victory in a parliamentary election on Sunday with voters giving reformist Kyriakos Mitsotakis another four-year term as prime minister.

 

With most votes counted, centre-right New Democracy was leading with 40.5% of the vote and 158 seats in the 300-seat parliament, interior ministry figures showed.

 

It was more than 20 points clear of Syriza, a radical leftist party that won elections in 2015 at the peak of a debilitating debt crisis and ran the country until 2019, when it lost to New Democracy.

[SafetyinNumbers]

1 hour ago, Viking said:

As expected. 4 more years. This should allow conservatives/New Democracy to make significant further progress in reforming the Greek economy. Very good news for Fairfax’s significant Greek holdings (Eurobank, Mytilineous, Grivalia Hospitality, Praktiker and Eurolife).
—————

Greek conservatives storm to victory in repeat election

- https://www.reuters.com/world/europe/greeks-vote-repeat-election-likely-return-conservatives-office-2023-06-24/
 

ATHENS, June 25 (Reuters) - Greece's conservative New Democracy party stormed to victory in a parliamentary election on Sunday with voters giving reformist Kyriakos Mitsotakis another four-year term as prime minister.

 

With most votes counted, centre-right New Democracy was leading with 40.5% of the vote and 158 seats in the 300-seat parliament, interior ministry figures showed.

 

It was more than 20 points clear of Syriza, a radical leftist party that won elections in 2015 at the peak of a debilitating debt crisis and ran the country until 2019, when it lost to New Democracy.

Thanks for highlighting Viking!

Do you have the current $/share invested in Greece? I think it’s a pretty decenf percentage of the market cap even though a small percentage of assets given the float leverage.

[Viking]

11 minutes ago, SafetyinNumbers said:

Thanks for highlighting Viking!

Do you have the current $/share invested in Greece? I think it’s a pretty decenf percentage of the market cap even though a small percentage of assets given the float leverage.

@SafetyinNumbers here are some approximate numbers:

- Eurobank $1.9 billion

- Grivalia Hospitality $400 million

- Mytilineous $300 (including exchangable bonds)

- Pratkiter? (Paid $29 million in 2014 - Home Depot type business)
- Eurolife? (Paid about $360 million for 80%; Eurobank owns 20%)

 

Fairfax’s equity holdings total around $15.7 billion, so their Greek equity holdings of $2.6 billion are about 17% of the total... a significant number. 

[thowed]

Thanks, Viking, very interesting.  Quite extraordinary the changing fortunes of Greece and e.g. the UK since 2011.  In particular when one remembers that Greece has had an extreme Far-Left prime minister in the meantime.  Perhaps that was necessary to shock people into voting for somebody fairly Centrist and sensible (which I think many other countries could benefit from doing...) though of course it could have had the opposite outcome, which doesn't bear thinking about.

 

Anyway, it was impossible to predict, but a reminder that buying things very cheap when everyone is panicking can work nicely!

 

 

 

[SafetyinNumbers]

9 hours ago, Viking said:

@SafetyinNumbers here are some approximate numbers:

- Eurobank $1.9 billion

- Grivalia Hospitality $400 million

- Mytilineous $300 (including exchangable bonds)

- Pratkiter? (Paid $29 million in 2014 - Home Depot type business)
- Eurolife? (Paid about $360 million for 80%; Eurobank owns 20%)

 

Fairfax’s equity holdings total around $15.7 billion, so their Greek equity holdings of $2.6 billion are about 17% of the total... a significant number. 

 Thanks Viking. I find it easier to think in per share terms or about US$110/share vs the US$745 share price. The big holdings with decent capital gains potential really seem to add up although arguably less than zero priced in for any appreciation at this valuation.

[giulio]

https://otp.tools.investis.com/clients/uk/hostelworld1/rns/regulatory-story.aspx?cid=1218&newsid=1697817

 

FFH stake in HostelWorld is above 5%. 

[Thrifty3000]

On 6/19/2023 at 11:27 AM, This2ShallPass said:

To the insurance experts on the board, can you pls suggest 2-3  companies that are close to Fairfax from hurricane exposure standpoint? 

 

I'm giddy about Fairfax prospects over the next few years as well. But it's ~30% of my pf and I want to be prudent, so planning to take small otm hedge to reduce my losses in a worst case event.

 

 

FWIW here is how FFH models/considers aggregate catastrophe risk (from the annual report):

 

"Currently the company’s objective is to limit its company-wide catastrophe loss exposure such that one year’s aggregate pre-tax net catastrophe losses would not exceed one year’s normalized net earnings before income taxes. The company takes a long term view and generally considers a 15% return on common shareholders’ equity, adjusted to a pre-tax basis, to be representative of one year’s normalized net earnings. The modeled probability of aggregate catastrophe losses in any one year exceeding this amount is generally more than once in every 250 years."

[Dynamic]

More than once in every 250 years?

 

Presumably they mean once in every 250+ years, i.e. less than 0.4% chance per year.

 

It reads as though they mean greater than one event in 250 years, which would be greater than 0.4% chance per year with no upper limit.

[dartmonkey]

The modeled probability of aggregate catastrophe losses in any one year exceeding this amount is generally more than once in every 250 years."

 

It reads as though they mean greater than one event in 250 years, which would be greater than 0.4% chance per year with no upper limit.

 

Yes, I'm sure from the context that they meant that the modeled probability of losing 15% of equity in any one year is LESS than 0.4%, not more, which would not be reassuring!

[Munger_Disciple]

"The modeled probability of aggregate catastrophe losses in any one year exceeding this amount is generally more than once in every 250 years."

 

Very weird sentence. So they will lose 15% of their book value for catastrophic events that can occur with > 0.4% probability with no upper limit. That's how I read it. 

 

I agree, not very reassuring. At best, very clumsy wording. 

Edited June 28, 2023 by Munger_Disciple

[TwoCitiesCapital]

Clumsy wording, but mayhaps correct given that the industry has been underestimating the frequency and/or cost of extreme events for the last 20+ years. 

 

Perhaps this is an admission that 0.4% is what the models predict, but that it will be MORE frequent than that given the increasing frequency of large scale disasters relative to the insurance industry history 

[glider3834]

Just on cat risk exposure its worth considering Fairfax's corporate structure.

 

Fairfax subs have historically had different levels of risk exposure to different types of cat events - for example when Hurricane Ian occured, Brit bore 50% of the overall losses sustained by Fairfax. With the recent earthquake in Turkey, Odyssey Group sustained most of the losses from that event.

 

And intuitively it makes sense to do this rather than spreading the risk exposure equally. If you intentionally write more risk exposure to a particular type of risk/s/event through one sub ( and also managing risk exposure at an aggregate level), you are ring fencing most of the losses from the rest of your business (ie the other subs) through your corporate structure. 

 

 

Edited June 30, 2023 by glider3834

[Saluki]

On 6/27/2023 at 4:37 PM, giulio said:

https://otp.tools.investis.com/clients/uk/hostelworld1/rns/regulatory-story.aspx?cid=1218&newsid=1697817

 

FFH stake in HostelWorld is above 5%. 

I don't see this holding in Dataroma. Does Hamblin Watsa have different holdings to than FFH? 

[gfp]

3 hours ago, Saluki said:

I don't see this holding in Dataroma. Does Hamblin Watsa have different holdings to than FFH? 

 

HostelWorld is not listed in the USA.  Dataroma and the other 13F trackers will not show non-US listed securities, OTC securities, short positions, etc.  That's why Berkshire's dataroma / 13F doesn't show Airbus, BASF, BYD, Munich Re, Insurance Australia Group or the 5 Japanese companies.

[Saluki]

2 hours ago, gfp said:

 

HostelWorld is not listed in the USA.  Dataroma and the other 13F trackers will not show non-US listed securities, OTC securities, short positions, etc.  That's why Berkshire's dataroma / 13F doesn't show Airbus, BASF, BYD, Munich Re, Insurance Australia Group or the 5 Japanese companies.

Ah! Got it, thanks.

[Haryana]

Despite the so called lost decade and current undervaluation, Fairfax seem to outperform Berkshire so far this millennium.

[treasurehunt]

17 hours ago, Haryana said:

Despite the so called lost decade and current undervaluation, Fairfax seem to outperform Berkshire so far this millennium.

 

What is the source for this chart? It doesn't look right to me.

 

BRK.A closed at $56,100 on 12/31/1999 and at $519,460 today. That's a return of +826%.

 

FFH.TO closed at $245.50 CAD on 12/31/1999 and at $992.29 CAD today. Ignoring dividends, that's a return of +304% in CAD. The return in USD is close to +350%. I don't think Fairfax has paid enough dividends to bring the total return in USD anywhere close to +826%, let alone exceed it.

 

[Parsad]

32 minutes ago, treasurehunt said:

 

What is the source for this chart? It doesn't look right to me.

 

BRK.A closed at $56,100 on 12/31/1999 and at $519,460 today. That's a return of +826%.

 

FFH.TO closed at $245.50 CAD on 12/31/1999 and at $992.29 CAD today. Ignoring dividends, that's a return of +304% in CAD. The return in USD is close to +350%. I don't think Fairfax has paid enough dividends to bring the total return in USD anywhere close to +826%, let alone exceed it.

 

 

I thought it was wrong too!  But take a look on Yahoo Finance as well...without dividends...last 20 years ending around May 2023.

 

 

I think FFH critics about performance relative to BRK may have to do a double-take...FFH's returns are now comparable to BRK over the last 20 years and probably will continue to surpass them in the next 20 years simply due to size!  Cheers!

[gfp]

Without dividends included gets you this, as mentioned by treasurehunt above:

 

 

 

The US dollar OTC ticker didn't come along until a bit later but produces a result closer to tied somehow:

 

Edited July 3, 2023 by gfp

[Haryana]

 

Not including dividends when comparing Berkshire to anything is the biggest brainwash folks have been falling for decades.

 

 

[treasurehunt]

20 minutes ago, Parsad said:

 

I thought it was wrong too!  But take a look on Yahoo Finance as well...without dividends...last 20 years ending around May 2023.

 

 

I think FFH critics about performance relative to BRK may have to do a double-take...FFH's returns are now comparable to BRK over the last 20 years and probably will continue to surpass them in the next 20 years simply due to size!  Cheers!

 

Not sure what's going on with the yahoo charts, but they don't match up with yahoo's own historical price data. FFH.TO closed at 200.50 CAD on July 3, 2003. Thus the price return over the past 20 years is about +395% in CAD. The USD-CAD exchange rate was almost exactly the same 20 years ago as it is today, so that doesn't make a difference either. Maybe the chart has a starting date of March 2003; FFH.TO traded at below 80 CAD then according to yahoo's historical data.

 

[Parsad]

18 minutes ago, gfp said:

Without dividends included gets you this, as mentioned by treasurehunt above:

 

 

 

The US dollar OTC ticker didn't come along until a bit later but produces a result closer to tied somehow:

 

 

It's because of what date you use. 

 

If you adjust the CDN date to mid-May 2023 the stock was at a lower price, thus from that point it outperformed BRK over 20 years.  You can play with it and change the starting date to see the differences in performance. 

 

I think mine used around May 19, 2023 ending June 29th, 2023...with no dividends included!  Add the dividends and the return is higher during that exact period.  Cheers!

[sleepydragon]

8 minutes ago, Haryana said:

 

https://www.morningstar.com/stocks/pinx/frfhf/chart

 

 

 

it’s not just returns . It’s also about risk adjusted returns, the sharpe ratio and maximum drawdowns. Brk is much better in that sense. Smaller drawdowns needs to longer holding periods. One is less likely to sell when the stock is down.

Edited July 3, 2023 by sleepydragon