Fairfax 2023

[sleepydragon]

What does people think of FFH’s association with Sokol? Buffett fired him but Prem welcomed him in both hands. This guy also issued a statement supporting the “female Steve job” Holmes.

[gfp]

11 minutes ago, sleepydragon said:

What does people think of FFH’s association with Sokol? Buffett fired him but Prem welcomed him in both hands. This guy also issued a statement supporting the “female Steve job” Holmes.

 

I don't think Sokol is as problematic as many seem to.  I don't even think Warren and Charlie were that upset with him.  The Holmes letter was just because he is very active in the Horatio Alger society and had gotten to know her through that group.

 

Personally I think the relationship between Fairfax and Sokol will be a big positive for Fairfax.  Aviation Gin already worked out well for them together.

[bluedevil]

It is surprising to me that the price of Fairfax or Markel has not responded more significantly to the 100bps rise in interest rates (10y) over the past 3 months.  The key asset of an insurance company is the ability to collect premiums now and pay them out later.  Given this deferral feature is now worth much more, I would have expected more of a reaction. 

[MMM20]

21 minutes ago, bluedevil said:

It is surprising to me that the price of Fairfax or Markel has not responded more significantly to the 100bps rise in interest rates (10y) over the past 3 months.  The key asset of an insurance company is the ability to collect premiums now and pay them out later.  Given this deferral feature is now worth much more, I would have expected more of a reaction. 

 

Voting machine in the short run.

[gfp]

23 minutes ago, bluedevil said:

It is surprising to me that the price of Fairfax or Markel has not responded more significantly to the 100bps rise in interest rates (10y) over the past 3 months.  The key asset of an insurance company is the ability to collect premiums now and pay them out later.  Given this deferral feature is now worth much more, I would have expected more of a reaction. 

 

Yeah, same deal with Berkshire - stock is down and hurricane season and their several billion dollar profit are pretty much locked in - plus a huge amount of cash earning 5.5% vs negative cost funding.  Sometimes it takes an earnings release to wake people up

[StubbleJumper]

29 minutes ago, bluedevil said:

It is surprising to me that the price of Fairfax or Markel has not responded more significantly to the 100bps rise in interest rates (10y) over the past 3 months.

 

There is quite often pressure on FFH's share price in September and October, which I tend to attribute to the market's fixation on hurricanes.  But, the Q3 will be released shortly, and my guess is that the market will wake up.  If you have any desire at all to add to your position, earlier this week might have been the best chance!

 

 

SJ

[sleepydragon]

32 minutes ago, bluedevil said:

It is surprising to me that the price of Fairfax or Markel has not responded more significantly to the 100bps rise in interest rates (10y) over the past 3 months.  The key asset of an insurance company is the ability to collect premiums now and pay them out later.  Given this deferral feature is now worth much more, I would have expected more of a reaction. 

I think mkl‘s bond portfolio has longer duration, something like 5 years. 
only WRB and FFH has positioned themselves in short term bills.
 

[gfp]

13 minutes ago, sleepydragon said:

only WRB and FFH has positioned themselves in short term bills.

 

And, cough, Berkshire.  Shorter than them all.

[sleepydragon]

8 minutes ago, gfp said:

 

And, cough, Berkshire.  Shorter than them all.

Indeed

[dealraker]

34 minutes ago, gfp said:

 

Yeah, same deal with Berkshire - stock is down and hurricane season and their several billion dollar profit are pretty much locked in - plus a huge amount of cash earning 5.5% vs negative cost funding.  Sometimes it takes an earnings release to wake people up

Tropical storm Tammy is headed to the US and is near certain to be a hurricane.  LOL, we are close to the end of hurricane season but it ain't locked in.

[Jaygo]

8 minutes ago, dealraker said:

Tropical storm Tammy is headed to the US and is near certain to be a hurricane.  LOL, we are close to the end of hurricane season but it ain't locked in.

It aint over till the Victoria's Secret model sings.          Ill be here all week folks

[StubbleJumper]

9 minutes ago, dealraker said:

Tropical storm Tammy is headed to the US and is near certain to be a hurricane.  LOL, we are close to the end of hurricane season but it ain't locked in.

 

In the insurance world, lots of bad things can happen.  That's a fact of life.  But, in this particular case, I don't think that Tammy looks like she will become a bad thing:  https://www.nhc.noaa.gov/refresh/graphics_at5+shtml/115804.shtml?cone#contents

 

 

SJ

[gfp]

14 minutes ago, dealraker said:

Tropical storm Tammy is headed to the US and is near certain to be a hurricane.  LOL, we are close to the end of hurricane season but it ain't locked in.

That storm ain't headed TO the US!  It is currently heading towards the US but that ain't the same thing.

[Xerxes]

3 hours ago, Luca said:

Tbh, i cant find anything that has as good a setup for the next 2-3 years as FFH. Its not only a hedge but even a compounder id gladly buy, if a recession hits, nice, if it doesnt we are also fine. Really thinking of increasing my ridiculous close to 50% position even more because if i look at everything else i can easily see how things go at least sideways or worse and FFH wont suffer under most circumstances except extreme climate events which can blow it down temporarily. 

 

Luca

i think you might enjoy this episode. Peter Keefe talks about his top three positions (decade(s) old holdings) in about 45 min into the episode. 
 

The top three (Microsoft, Markel and American Tower) are very different holdings and different history of how he got into them. There are lots of lore on American Tower.

 

At is pertains this thread and “driving FFH to the wall comment” by @StubbleJumper, Peter’s view on Markel is interesting. Calls insurance not a very good business and that he is only there because of the management as capital allocator. 
 

 

[backtothebeach]

24 minutes ago, dealraker said:

Tropical storm Tammy is headed to the US and is near certain to be a hurricane.  LOL, we are close to the end of hurricane season but it ain't locked in.

 

Seems like Tammy will make THE TURN before it reaches the US.

 

 

[dealraker]

38 minutes ago, StubbleJumper said:

 

In the insurance world, lots of bad things can happen.  That's a fact of life.  But, in this particular case, I don't think that Tammy looks like she will become a bad thing:  https://www.nhc.noaa.gov/refresh/graphics_at5+shtml/115804.shtml?cone#contents

 

 

SJ

Looks good to me!

[longlake95]

2 minutes ago, dealraker said:

Looks good to me!

bought more FFH today. Yanet made me do it.

Edited October 20, 2023 by longlake95

[LC]

2 hours ago, backtothebeach said:

 

Seems like Tammy will make THE TURN before it reaches the US.

 

 

VSCO needs to send these weather reporters some branded clothes.

[dartmonkey]

Tammy is last week's news, or rather, it didn't really make it to mainstream news because it never looked like it had much of a chance of hitting the continental USA, as it has pointed farther and farther northeast. 

 

At this point, it is expected to stay 'way off shore, with high confidence'. At the worst, for those of us in the Eastern USA and Canada, it may give us a fair amount of rain.

 

Looking this up, it is interesting that, although this is an El Niño year meaning we expect less hurricane activity, 2023 has turned out to be a fairly active tropical storm season, Tammy being #20 this year (T being the 20th letter in the alphabet). But fortunately for us and for Fairfax, most of them, except for Idalia, stayed where they belong, well offshore.

[MMM20]

I added ~10% to my already way too big position today and about ready to pound the table again to friends in the industry. No one will listen this time too 

 

Edited October 20, 2023 by MMM20

[OCLMTL]

6 minutes ago, MMM20 said:

I added ~10% to my already way too big position today and about ready to pound the table again to friends in the industry. No one will listen this time too 

 

I’m at 75% of the book and added again slightly today. As somebody referred to earlier, there a nothing in the market right now that passes the test of “is it a better risk/reward than FFH” for the next 2-3 years that I’m aware of. It’s a very aggressive stance but I think it will be, in hindsight, a great decision. TBD…

[LC]

I took small bites as I’m trying to manage position size. I’ll slowly keep buying at this level however. There’s other stuff out there which has fallen in price as well, so we can be picky.

[MMM20]

14 hours ago, OCLMTL said:

I’m at 75% of the book and added again slightly today. As somebody referred to earlier, there a nothing in the market right now that passes the test of “is it a better risk/reward than FFH” for the next 2-3 years that I’m aware of. It’s a very aggressive stance but I think it will be, in hindsight, a great decision. TBD…

I respect the full Kelly criterion sizing. I don’t have the risk tolerance for that. Anything about FFH at 75% keep you up at night? What do you think could go wrong? How do you know when to cut it down or exit?
 

I’m constantly a bit paranoid I’m missing something. “It ain’t what you don’t know that kills you…”

 

Edited October 21, 2023 by MMM20

[OCLMTL]

1 hour ago, MMM20 said:

I respect the full Kelly criterion sizing. I don’t have the risk tolerance for that. Anything about FFH at 75% keep you up at night? What do you think could go wrong? How do you know when to cut it down or exit?
 

I’m constantly a bit paranoid I’m missing something. “It ain’t what you don’t know that kills you…”

 

What makes me comfortable is the low risk of waking up overnight and the stock being down 20-30% in one day or with one earnings release, like a biotech or very high multiple stock. The margin of safety is so big due to tailwinds + low multiples. 
 

i feel like it’s also a great hedge vs my housing, I.e. my homes have certainly gone done in value in the last 18 months due to rates while FFH will benefit. At the end of the day, mathematically, it should add $130-160 per year for 2-3 years to BV, and I don’t see how current BV gets chopped by 20-30% and/or multiple going back to 0.8x. In fact, I think the most likely scenario is a $1200-1400 BV within 3 years and a 1.2x multiple which gets us to around $2K CAD. I’m a big believer in the capital markets angle that @SafetyinNumbers has been pushing. PMs, at the margin, likely won’t add to banks here, they are all OW IFC (great company and stock) and FFH will be as big as IFC in the index soon. That will lead to uncomfortable conversations between CIOs, PMs analysts, as it pertains to why they have zero weight in FFH while the stock doubled under their nose in the last 24 months. 
 

we shall see. I’ll humbly adapt positioning if I need to. 

[UK]

On 10/20/2023 at 5:51 PM, Xerxes said:

 

Luca

i think you might enjoy this episode. Peter Keefe talks about his top three positions (decade(s) old holdings) in about 45 min into the episode. 
 

The top three (Microsoft, Markel and American Tower) are very different holdings and different history of how he got into them. There are lots of lore on American Tower.

 

At is pertains this thread and “driving FFH to the wall comment” by @StubbleJumper, Peter’s view on Markel is interesting. Calls insurance not a very good business and that he is only there because of the management as capital allocator. 

 

This is a new name for me, but it is very interesting/good interview! Liked his angle on nature. The only thing missing: a question on his view re MKL vs FFH:)

 

This seems to be his 13F: https://13f.info/13f/000103347523000006-avenir-corp-q2-2023

 

Edited October 22, 2023 by UK