Rate the overall quality of the management team at Fairfax

[Viking]

What is board members assessment of the quality of Fairfax's management team? I am interested to learn what the COBF mob thinks.

 

After you vote can you provide a brief comment: What 3 things influenced your vote the most? I want to keep things pretty vague so we get as much original thinking as possible.

Edited May 27, 2023 by Viking

[MMM20]

A few thoughts off the top. They run the company like a true family business / family office. For better and worse. Excellent in turnaround / management of insurance acquisitions. Contrarian and opportunistic. Not afraid to look dumb, e.g. going to extremely short duration when rates were at all time lows (and kept dropping for a while). Family / kids on the Board. Shareholder communication could still improve (fewer words, better explanation of the key drivers, like peers)

 

Edited May 27, 2023 by MMM20

[Thrifty3000]

- Fair

- Friendly

- Honest

- Continuously Improving

[LC]

I voted 6. Frankly I think it took them too long to correct the errors of the 2010s- and i think they are selectively fair/friendly/honest.

 

I do believe they are talented

Edited May 27, 2023 by LC

[Tommm50]

I rate them a solid eight. I've been following them for 20 years and I worked for Fairfax back then. When they finally had to shut down TIG Specialty Prem made sure all stakeholders got out safe, including employees and especially reinsurers. That was extremely rare. I have absolutely no doubt of his integrity. They made a killing on the MBS debacle, they got killed on the huge deflation bet. I think they had the economics right, they badly underestimated what governments would do to prop up their economies. They have a lot of scars but they've learned and all their moves are finally paying off.

[Munger_Disciple]

I voted 6. Too many investment decisions based on macro (sometimes they get it right, sometimes not). Sub-optimal capital allocation decision with respect to dividend. Too many cigar butt type investments which require trading in & out and incurring taxes as opposed to buying quality businesses and keeping them for very long time. Succession plan very unclear. 

 

On the plus side, excellent FI investment team & improving underwriting which I hope is permanent. 

[Haryana]

 

01. Buying a failing Blackberry and keeping it afloat for another decade = Exceptional.

 

02. Shorting and hedging in a great bull market and still surviving it well = Exceptional.

 

03. Staying low duration in low interest rate without yielding to the yield = Exceptional.

 

04. Beating the broad S&P 500 index by over 2% over the last 20 years = Exceptional.

 

05. Fueling a profitable unicorn getting 5 year annualized return of 80% = Exceptional.

 

06. Going for a win in Ireland and Greece when their economy fell apart = Exceptional.

 

07. Immigrant born and raised in India becoming a billionaire in Canada = Exceptional.

 

08. Returns among the top 1% of listed companies since inception date = Exceptional.

 

09. Daring to go and invest in future potential of India and even Africas = Exceptional.

 

10. Donating 2% of pre-tax profit per year to charities across the globe = Exceptional.

 

[patterson]

8 hours ago, Haryana said:

 

01. Buying a failing Blackberry and keeping it afloat for another decade = Exceptional.

 

02. Shorting and hedging in a great bull market and still surviving it well = Exceptional.

 

03. Staying low duration in low interest rate without yielding to the yield = Exceptional.

 

04. Beating the broad S&P 500 index by over 2% over the last 20 years = Exceptional.

 

05. Fueling a profitable unicorn getting 5 year annualized return of 80% = Exceptional.

 

06. Going for a win in Ireland and Greece when their economy fell apart = Exceptional.

 

07. Immigrant born and raised in India becoming a billionaire in Canada = Exceptional.

 

08. Returns among the top 1% of listed companies since inception date = Exceptional.

 

09. Daring to go and invest in future potential of India and even Africas = Exceptional.

 

10. Donating 2% of pre-tax profit per year to charities across the globe = Exceptional.

 

Haryana,

 

I wouldn't characterize the Blackberry investment that way, nor the hedging. I hope Fairfax's management takes an objective view and recognizes and learns from their mistakes, and there are encouraging signs that they've done so. In the case of Blackberry, one lesson is not to make outsized commitments to declining businesses. However, I agree emphatically with your other points. I voted an 8/10 as someone who has owned and followed Fairfax for several years; whereas in the current environment, it would be hard not to give them a 9 or 10.

[Haryana]

5 hours ago, patterson said:

Haryana,

 

I wouldn't characterize the Blackberry investment that way, nor the hedging. I hope Fairfax's management takes an objective view and recognizes and learns from their mistakes, and there are encouraging signs that they've done so. In the case of Blackberry, one lesson is not to make outsized commitments to declining businesses. However, I agree emphatically with your other points. I voted an 8/10 as someone who has owned and followed Fairfax for several years; whereas in the current environment, it would be hard not to give them a 9 or 10.

My original two cent with the Blackberry and hedging is that management looks capable of surviving exceptionally catastrophic storms.
(let there be pun)

 

 

[Saluki]

This guy retired from the Board last year, I believe.  I was very impressed with his track record.  

 

https://www.amazon.com/Corporate-Catalyst-Chronicle-Management-Canadian/dp/1118152867

 

If you read his book and put your self in his shoes in some these turnaround situations, you will quickly realize what a rarity it is to find a turnaround guy who can actually turn things around. 

 

Prem seems to have a knack for attracting competent and ethical people. His bond guys could easily have left to open a bond fund and eaten a lot of PIMCO's lunch. 

 

 

[Viking]

Thanks to everyone for responding. The COBF mob gave Fairfax management an average grade of 7.7 out of 10, with 38 votes cast. That is a solid vote of confidence from a pretty knowledgeable group of investors, many of whom are also likely shareholders. It would have been interesting have done this poll 2 years ago. Please continue to vote if you have not yet done so and would like to.

 

I voted 8. No company I follow would get a 10 (i am a hard marker, although that likely does not look like the case when I post on Fairfax). The big mis-step from the past (equity hedges) was the primary reason I did not go with a 9. 

 

The turnaround engineered by the management team at Fairfax the past 5 years has been impressive. The company is exceptionally well positioned today. With one arm no longer tied behind their back, I am looking forward to seeing what they are capable of doing over the next couple of years.

Edited May 31, 2023 by Viking

[Cageyone]

In 1990 my investment advisor who I had known for over 20 years told me he had gotten to know Prem as a person of the highest integrity. So I bought my first 500 FFH shares at under $14 CDN. I was always a “lazy” buy and hold investor and acquired more shares since then. It has definitely been a bumpy ride, but now FFH is more than 60 % of my portfolio.  And I sleep nights because of Prem’s integrity and the integrity of the team he’s built. So based on watching FFH for over 30 years, in my view the FFH team is a solid 8.

[glider3834]

@VikingI thought this was an interesting stat from C&F website which provides current employee perspective on management 

 

'In 2022, 93% of C&F’s nearly 2,500 U.S. employees participating in the survey said the company is a great place to work - 36 percentage points higher than the average U.S. company.'

 

https://www.cfins.com/

[glider3834]

3 minutes ago, glider3834 said:

@VikingI thought this was an interesting stat from C&F website which provides current employee perspective on management 

 

'In 2022, 93% of C&F’s nearly 2,500 U.S. employees participating in the survey said the company is a great place to work - 36 percentage points higher than the average U.S. company.'

 

https://www.cfins.com/

 

Northbridge is also rated as a top insurance employer in 2022 

https://www.insurancebusinessmag.com/ca/best-insurance/top-insurance-employers-2022-427797.aspx#winnersListSection

 

[Haryana]

On 5/29/2023 at 2:51 AM, Haryana said:

 

01. Buying a failing Blackberry and keeping it afloat for another decade = Exceptional.

 

02. Shorting and hedging in a great bull market and still surviving it well = Exceptional.

 

03. Staying low duration in low interest rate without yielding to the yield = Exceptional.

 

04. Beating the broad S&P 500 index by over 2% over the last 20 years = Exceptional.

 

05. Fueling a profitable unicorn getting 5 year annualized return of 80% = Exceptional.

 

06. Going for a win in Ireland and Greece when their economy fell apart = Exceptional.

 

07. Immigrant born and raised in India becoming a billionaire in Canada = Exceptional.

 

08. Returns among the top 1% of listed companies since inception date = Exceptional.

 

09. Daring to go and invest in future potential of India and even Africas = Exceptional.

 

10. Donating 2% of pre-tax profit per year to charities across the globe = Exceptional.

 

 

 

Adding two more points to the list for those who disagree with the first two:

 

01. Chairman & CEO paid only CA$600k without bonus or stock incentive = Exceptional.

 

02. Chairman & CEO personally bought ~US$150 million in company stock = Exceptional.

 

[Parsad]

59 minutes ago, Haryana said:

 

 

Adding two more points to the list for those who disagree with the first two:

 

01. Chairman & CEO paid only CA$600k without bonus or stock incentive = Exceptional.

 

02. Chairman & CEO personally bought ~US$150 million in company stock = Exceptional.

 

 

+1!  

 

You can add a couple more:

 

03.  Chairman & CEO has never sold a share = Exceptional.

 

04.  Chairman & CEO donates a shitload of money, but never uses his name or his family's name = Exceptional.

 

Cheers!

[Haryana]

Prem Watsa Named 2024 Insurance Hall of Fame Laureate
https://www.internationalinsurance.org/prem-watsa-named-2024-insurance-hall-fame-laureate

"The International Insurance Society (IIS) has named Prem Watsa, the Founder, Chairman and CEO of Toronto-based Fairfax Financial Holdings Limited, the 2024 Insurance Hall of Fame Laureate. Mr. Watsa will be formally honored at an awards ceremony on Nov. 17, 2024 at the Hyatt Regency Miami. The awards ceremony kicks off the Global Insurance Forum, running from Nov. 17-19, 2024."

Another Feather in the Cap in addition to the following -
https://en.wikipedia.org/wiki/Prem_Watsa

In June 2009, he was appointed as the ninth chancellor of the University of Waterloo.

He was named a Member of the Order of Canada in 2015.

In September 2017, he was elected as the first chancellor of Huron University College.

He was awarded the fourth highest civilian award of India, Padma Shri, in January 2020.

Watsa was inducted into the Canadian Business Hall of Fame in 2024.

 

[FearfulWhenOthersAreGreedy]

After hearing them talk during the share holder meeting they quenched all my concerns, Brian Bradstreet posed a question at a supper that I found very profound about interest rates which made me realize they are well beyond my intelligence and they have thought long and hard about where rates may be headed and how to deal with them. It was a bit of a sad experience since I realized I need to find more in my life to focus on since they've got this covered. 

[Cigarbutt]

2 minutes ago, FearfulWhenOthersAreGreedy said:

After hearing them talk during the share holder meeting they quenched all my concerns, Brian Bradstreet posed a question at a supper that I found very profound about interest rates which made me realize they are well beyond my intelligence and they have thought long and hard about where rates may be headed and how to deal with them. It was a bit of a sad experience since I realized I need to find more in my life to focus on since they've got this covered. 

-Where rates may be headed?

-How to deal with them?