Fairfax 2023

[This2ShallPass]

2 hours ago, This2ShallPass said:

I'll look at Generac. Any other insurance companies?

Generac is a no go, premiums too high.

 

https://www.propertycasualty360.com/2022/03/10/naic-top-25-pc-insurance-companies-of-2021/?slreturn=20230519161646

 

I looked at premiums for some comparable companies to Fairfax in this list. Criteria - ~15-20% OTM puts, Nov 17'23 expiration (or extrapolated)

 

Generac - 7% put premium

Hartford - 1.25%

AIG - 1.5%

Markel - 1.9%

WR Berkeley - 3.2%

 

 

[gfp]

23 minutes ago, This2ShallPass said:

Generac is a no go, premiums too high.

 

https://www.propertycasualty360.com/2022/03/10/naic-top-25-pc-insurance-companies-of-2021/?slreturn=20230519161646

 

I looked at premiums for some comparable companies to Fairfax in this list. Criteria - ~15-20% OTM puts, Nov 17'23 expiration (or extrapolated)

 

Generac - 7% put premium

Hartford - 1.25%

AIG - 1.5%

Markel - 1.9%

WR Berkeley - 3.2%

 

 

 

My whole point on Generac was that the stock of a standby generator company goes up when a bad hurricane hits.  You wouldn't buy puts on it.  It's not an insurance company.

[This2ShallPass]

54 minutes ago, gfp said:

My whole point on Generac was that the stock of a standby generator company goes up when a bad hurricane hits.  

Ok, I misunderstood. When I saw the premiums I decided not to look at them further.

 

I'm only interested in buying puts on insurance companies with similar exposure to Fairfax. That's a simple and direct hedge and my goal is to limit loss exposure. To clarify further, not worried about regular hurricanes (that's part of doing business) but a once in 50 or 100 yr storm..

 

Edited June 19, 2023 by This2ShallPass

[gfp]

Today was a perfect example of the GNRC effect when hurricanes and power outages are in the news.  Up 8% on no company specific news.  

[Haryana]

Did nobody notice the new splashy website of Fairfax

with direct links to its network of companies and

easy access to its historical milestones information -

 

https://www.fairfax.ca/about-fairfax/

 

 

 

[Luke]

2 hours ago, Haryana said:

Did nobody notice the new splashy website of Fairfax

with direct links to its network of companies and

easy access to its historical milestones information -

 

https://www.fairfax.ca/about-fairfax/

 

 

 

Very nice, some fresh wind. 

[MMM20]

7 hours ago, Haryana said:

Did nobody notice the new splashy website of Fairfax

with direct links to its network of companies and

easy access to its historical milestones information -

 

https://www.fairfax.ca/about-fairfax/

 

 

 

 

Time to sell

[TwoCitiesCapital]

2 hours ago, MMM20 said:

 

Time to sell

 

[Haryana]

3 hours ago, MMM20 said:

 

Time to sell

 

Maybe time to sell Fairfax and buy FairfaxIndia because they still have the same old classic format website -

https://www.fairfaxindia.ca/news/press-releases/press-release-details/2023/Fairfax-India-Completes-Acquisition-of-an-Additional-3-Interest-in-Bangalore-International-Airport-Limited/default.aspx

 

[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.