SafetyinNumbers Posted August 12, 2025 Posted August 12, 2025 21 hours ago, Parsad said: Their biggest position was a distressed asset...Eurobank. Same with Seaspan which eventually became Poseidon. Blackberry when they bought it. Level 3 when they bought the convertible bonds. ToysRUs when they bought it. The fact that many of them turned around over time and are no longer distressed, doesn't mean that they won't invest in more businesses like that...they've historically done very well on those bets. But Wade and Lawrence tend to look for more quality businesses that are mispriced. Cheers! The message I keep hearing is a focus on quality. What is the last distressed asset they bought?
Viking Posted August 12, 2025 Posted August 12, 2025 (edited) 23 hours ago, Parsad said: Their biggest position was a distressed asset...Eurobank. Same with Seaspan which eventually became Poseidon. Blackberry when they bought it. Level 3 when they bought the convertible bonds. ToysRUs when they bought it. The fact that many of them turned around over time and are no longer distressed, doesn't mean that they won't invest in more businesses like that...they've historically done very well on those bets. But Wade and Lawrence tend to look for more quality businesses that are mispriced. Cheers! @Parsad, I think Fairfax has fundamentally changed how they invest capital (especially equities). I think 2018 was kind of the turning point. I call the pre-2018 period 'old Fairfax.' And the post-2018 period 'new Fairfax.' Of course there were some great investments were made in the old Fairfax era - like Fairfax India. So my distinction is nuanced. Why do I think this? When you look at what Fairfax owned and where they were putting new capital from 2014 to 2017 it is full of very bad decisions. When you look at what Fairfax owned and where they were putting new capital from 2019 to 2024 it is full of much better decisions. Most importantly, Fairfax appears to be putting a much higher premium on management - choosing to partner with outstanding capital allocators/CEO's/founders. You see that in spades with their biggest investment so far in 2025 - partnering with Caroline Shin at Vacatia. Below is a post I did a couple of years ago that reviews some of the investments that Fairfax made from 2014 to 2017. My view is it is VERY different from how they have been allocating capital over the past 5 years. My view is something changed at Fairfax. Of interest, Fairfax experienced more losses from Farmers Edge (2024) and Boat Rocker (2025). But we might actually 'be there' in terms of the legacy holdings from 2014-2017 (finally) being fixed. I also think it is very healthy to review this topic. Fairfax has made a great deal of progress over the past 6 years. The past must not be forgotten. ----------- A Review of 2014 to 2017: Old Fairfax – too many ‘chronically-leaking boats’ April 14, 2023 “My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago I wrote: “When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.” Nothing has since changed my point of view on that matter. Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” Warren Buffett – Berkshire Hathaway 1985AR Fairfax’s equity portfolio looks very well positioned today. Most of the equity holdings purchased since 2018 have been performing well. And, after years of hard work, the poor performing equity holdings (many purchased from 2014-2017) have largely been fixed and are now performing well. In fact, the equity portfolio looks better positioned today than at any other time in Fairfax’s recent history. We are increasingly seeing the benefits in improved reported results. A good recent example is ‘share of profit of associates,’ which spiked to more than $1 billion in 2022; the previous high was $402 million in 2021. What happened? Three things: 1.) Fairfax learned a few important lessons from the poor purchases they made from 2014-2017. It looks me like Fairfax has tweaked the methodologies used when allocating capital. They are putting a premium on management. Hamblin Watsa has decided it is not a turn-around shop - looking to actively run poorly lead/challenged businesses. They are also looking to invest in better balance sheets. Fairfax is no longer a piggy bank for poorly run companies in search of cash. Others on this board have pointed this out. 2.) The Fed and the ending of easy money (zero interest rates/QE) is likely a driver of the stronger performance the past two years of Fairfax’s equity holdings. Value investing is back. 3.) The timing of the cycle is finally working in Fairfax’s favour and is driving stronger performance of the equity holdings. Value, resource, and commodity stocks appear to be in a secular bull market. At the end of the day, all the above is likely partly responsible for the improvement we have seen in Fairfax's equity holdings in recent years. ————— It can be instructive to look into the past so we can learn. This helps us understand what has been baked into past results. In turn, this can help us understand what might happen in the future. What happened with the purchases from 2014-2017? A total of 10 investments are reviewed below. Fairfax invested a total of about $3.5 billion in these investments over the years. Over the past 8 years my math says Fairfax booked losses of about $1.5 billion on these holdings. That is almost $200 million, on average, each year. For example, in 2022, Fairfax wrote down its investment in Farmers Edge by $133 million. Stuff like that. The bigger cost to shareholders has been the opportunity cost. Prem tells us that Fairfax expects its equity investments to deliver returns of 15% per year. Applying a more modest 10% target, the $3.5 billion in investments (made 2014-2017) should have doubled in value by now to $7 billion. The opportunity cost of the poor investments made from 2014-2017 is likely an additional $2 billion. This is actually a good news post. The good news is: The equity purchases made from 2018 to April 2023, as a group, look very good and are performing well. As I will review below, the problem investments from 2014-2017 look like they are not only fixed - they are also poised to deliver solid returns for Fairfax shareholders moving forward. An 8 year-long headwind has now become a tailwind. As a result, I expect Fairfax’s $16 billion equity portfolio to generate a higher total return (percent and absolute) in the coming years than it has delivered over the last decade. Given its current construction, it could well compound at 12% over the next couple of years = $1.9 billion/year. dividends = $120 million share of profit of associates = $900 million consolidated earnings = $240 million mark-to-market investment gains = $650 million (not including fixed income) —————- Below is a short review of 10 large investments made over the 4 years from 2014-2017. 1.) EXCO Resources (2015): Fairfax’s initial investment was $300 million in 2015. We have since learned that shale was a bubble and it eviscerated something like $5 billion in capital up until 2020. Fairfax reported cumulative realized losses of $296 million on EXCO in 2019 (as per the AR). Learning: the old economic model for shale was a sham. The good news: energy looks like it is in a structural bull market; the new economic model for shale looks good - focussed on shareholder return. 2.) APR (2016): Fairfax invested a total of $462 million in APR in 2016 and 2017. In 2018 they sold it to Atlas for $200 million (in Atlas stock). The first thing Atlas did was replace the CEO. Learning: Terrible business. Poorly managed. The good news: APR is now Atlas’ problem. 3.) Fairfax Africa (2017): launched with much fanfare in 2017, Fairfax invested a total $476 million. Two short years later Fairfax exited its management of the business and moved the assets to a fund managed by Helios. The value of the Helios fund today is about $100 million. I am not sure what the total financial loss was for Fairfax on this investment, but it was significant. The damage to Fairfax’s reputation was also significant. Learning: Hubris on steroids? Terrible idea. Worse execution. The good news: Fairfax is partnered with Helios and looks well positioned moving forward in Africa. This is now a small investment for Fairfax. 4.) Farmers Edge (2017): Fairfax invested $159 million in Farmers Edge in 2017. Farmers Edge completed its IPO in 2021 and in the 2021 AR Fairfax said their total investment in Farmers Edge to that point was $376 million. The CEO ‘stepped down’ in April of 2022. In the 2022 AR, Fairfax said Farmer’s Edge had a carrying value of $71 million, after taking a $133 million write down in 2022. The market value of Fairfax stake was $5 million at Dec 31, 2022. My guess is this investment, because it performed so terribly post-IPO, has caused Fairfax some damage to its reputation (given Fairfax was the majority shareholder). Learning: Yup, SPAC’s were a bubble. The good news: carrying value is $71 million. This is now a small investment for Fairfax. 5.) Eurobank (2014): Fairfax invested $444 million in Eurobank in 2014. This initial investment went to close to zero later that year when the ECB mandated a 1-for-100 reverse share split. What was the problem? Greece was in the midst of a depression. What did Fairfax do? It doubled down and invested another $389 million in Eurobank in 2015. In 2019, Eurobank did a capital raise/merger with Grivalia. Greece elected a pro-business government in 2018. Eurobank fixed its balance sheet. Learning: Because the strategy worked in Ireland doesn’t mean it would work in Greece. The good news: Greece’s economy is well positioned. Eurobank, always well managed, is executing well and earnings are spiking. Share of profit of associates was $263 million in 2022, up from $162 million in 2021. Prem estimated Eurobank could earn €0.20/share in 2023; if so, Fairfax’s share of profits for Eurobank could be +$300 million in 2023. This investment is turning into a home run for Fairfax - a Greek tragedy turns to a triumph! 6.) AGT (2017): Fairfax invested $148 million in AGT in 2017. In 2019, as AGT was experiencing financial difficulties, Fairfax took AGT private, spending another $227 million (I think). Learning: It takes much more than a dynamic Canadian founder to succeed. The good news: from 2022 Fairfax AR: “AGT, run by founder and CEO Murad Al-Katib, had a record year in 2022, with EBITDA of over Cdn$150 million. This is a dramatic improvement from the time of the take-private transaction almost four years ago when the business was generating slightly over Cdn$60 million in EBITDA… Fairfax has an approximate 60% stake in AGT.” 7.) Commercial Industrial Bank (CIB) Egypt (2014): Fairfax invested $330 million in CIB in 2014. Today the position is worth about $240 million. Great company. Solid management. What is the problem? Egypt’s economy has been a slow-moving train wreck for decades - with constant currency devaluations. Learning: Constant currency devaluations (like 50% in the last year) hurt equity values. The good news: the bank is well managed. 8.) Mosaic Capital (2017): Fairfax invested $116 million in Mosaic in 2017. In 2021, Mosaic was taken private (not by Fairfax) with Fairfax owning 20% of the new investment. This investment went sideways for many years (that opportunity cost thing). Learning: not every investment you make is going to work out. The good news: Fairfax found a partner where Mosaic will hopefully be a better fit. 9.) Recipe/CARA (2014 & 2016): Fairfax made a couple of restaurant investments from 2014-2017: $77 million in the Keg in 2014 (merged with CARA in 2018) and $100 million in the CARA capital raise in $2016. Recipe/CARA was a poor investment for minority shareholders over its lifetime. Learning: the restaurant business in Canada is a tough business. Consolidating it proved to be even tougher. The good news: In the take private deal in 2022, Fairfax purchased Recipe at a Covid-low price. Recipe has a solid collection of assets that should be able to produce a solid amount of free cash flow for Fairfax moving forward. 10.) Astarta (2017): Fairfax invested $104 million in Astarta in 2017. Today that investment is worth around $45 million. I know very little about this investment. I wonder if it is not a similar situation to CIB, with opportunity cost being the big issue. Honorable mention: Torstar was initiated as a position before 2014 so I did not include it. However, Fairfax added to its position in 2014, 2016 and 2017 (yes, small amounts). In 2020 it sold the business and booked a $52 million loss. I see lots of self-inflicted wounds in the investments listed above – reading the list reminds me of the Monty Python skit “tis but a scratch". Edited August 12, 2025 by Viking
Parsad Posted August 12, 2025 Posted August 12, 2025 5 minutes ago, Viking said: @Parsad, I think Fairfax has fundamentally changed how they invest capital (especially equities). I think 2018 was kind of the turning point. I call the pre-2018 period 'old Fairfax.' And the post-2018 period 'new Fairfax.' Of course there were some great investments were made in the old Fairfax era - like Fairfax India. So my distinction is nuanced. Why do I think this? When you look at what Fairfax owned and where they were putting new capital from 2014 to 2017 it is full of very bad decisions. When you look at what Fairfax owned and where they were putting new capital from 2019 to 2024 it is full of much better decisions. Below is a post I did a couple of years ago that reviews some of the investments that Fairfax made from 2014 to 2017. My view is it is VERY different from how they have been allocating capital over the past 5 years. My view is something changed at Fairfax. ----------- A Review of 2014 to 2017: Old Fairfax – too many ‘chronically-leaking boats’ April 14, 2023 “My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago I wrote: “When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.” Nothing has since changed my point of view on that matter. Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” Warren Buffett – Berkshire Hathaway 1985AR Fairfax’s equity portfolio looks very well positioned today. Most of the equity holdings purchased since 2018 have been performing well. And, after years of hard work, the poor performing equity holdings (many purchased from 2014-2017) have largely been fixed and are now performing well. In fact, the equity portfolio looks better positioned today than at any other time in Fairfax’s recent history. We are increasingly seeing the benefits in improved reported results. A good recent example is ‘share of profit of associates,’ which spiked to more than $1 billion in 2022; the previous high was $402 million in 2021. What happened? Three things: 1.) Fairfax learned a few important lessons from the poor purchases they made from 2014-2017. It looks me like Fairfax has tweaked the methodologies used when allocating capital. They are putting a premium on management. Hamblin Watsa has decided it is not a turn-around shop - looking to actively run poorly lead/challenged businesses. They are also looking to invest in better balance sheets. Fairfax is no longer a piggy bank for poorly run companies in search of cash. Others on this board have pointed this out. 2.) The Fed and the ending of easy money (zero interest rates/QE) is likely a driver of the stronger performance the past two years of Fairfax’s equity holdings. Value investing is back. 3.) The timing of the cycle is finally working in Fairfax’s favour and is driving stronger performance of the equity holdings. Value, resource, and commodity stocks appear to be in a secular bull market. At the end of the day, all the above is likely partly responsible for the improvement we have seen in Fairfax's equity holdings in recent years. ————— It can be instructive to look into the past so we can learn. This helps us understand what has been baked into past results. In turn, this can help us understand what might happen in the future. What happened with the purchases from 2014-2017? A total of 10 investments are reviewed below. Fairfax invested a total of about $3.5 billion in these investments over the years. Over the past 8 years my math says Fairfax booked losses of about $1.5 billion on these holdings. That is almost $200 million, on average, each year. For example, in 2022, Fairfax wrote down its investment in Farmers Edge by $133 million. Stuff like that. The bigger cost to shareholders has been the opportunity cost. Prem tells us that Fairfax expects its equity investments to deliver returns of 15% per year. Applying a more modest 10% target, the $3.5 billion in investments (made 2014-2017) should have doubled in value by now to $7 billion. The opportunity cost of the poor investments made from 2014-2017 is likely an additional $2 billion. This is actually a good news post. The good news is: The equity purchases made from 2018 to April 2023, as a group, look very good and are performing well. As I will review below, the problem investments from 2014-2017 look like they are not only fixed - they are also poised to deliver solid returns for Fairfax shareholders moving forward. An 8 year-long headwind has now become a tailwind. As a result, I expect Fairfax’s $16 billion equity portfolio to generate a higher total return (percent and absolute) in the coming years than it has delivered over the last decade. Given its current construction, it could well compound at 12% over the next couple of years = $1.9 billion/year. dividends = $120 million share of profit of associates = $900 million consolidated earnings = $240 million mark-to-market investment gains = $650 million (not including fixed income) —————- Below is a short review of 10 large investments made over the 4 years from 2014-2017. 1.) EXCO Resources (2015): Fairfax’s initial investment was $300 million in 2015. We have since learned that shale was a bubble and it eviscerated something like $5 billion in capital up until 2020. Fairfax reported cumulative realized losses of $296 million on EXCO in 2019 (as per the AR). Learning: the old economic model for shale was a sham. The good news: energy looks like it is in a structural bull market; the new economic model for shale looks good - focussed on shareholder return. 2.) APR (2016): Fairfax invested a total of $462 million in APR in 2016 and 2017. In 2018 they sold it to Atlas for $200 million (in Atlas stock). The first thing Atlas did was replace the CEO. Learning: Terrible business. Poorly managed. The good news: APR is now Atlas’ problem. 3.) Fairfax Africa (2017): launched with much fanfare in 2017, Fairfax invested a total $476 million. Two short years later Fairfax exited its management of the business and moved the assets to a fund managed by Helios. The value of the Helios fund today is about $100 million. I am not sure what the total financial loss was for Fairfax on this investment, but it was significant. The damage to Fairfax’s reputation was also significant. Learning: Hubris on steroids? Terrible idea. Worse execution. The good news: Fairfax is partnered with Helios and looks well positioned moving forward in Africa. This is now a small investment for Fairfax. 4.) Farmers Edge (2017): Fairfax invested $159 million in Farmers Edge in 2017. Farmers Edge completed its IPO in 2021 and in the 2021 AR Fairfax said their total investment in Farmers Edge to that point was $376 million. The CEO ‘stepped down’ in April of 2022. In the 2022 AR, Fairfax said Farmer’s Edge had a carrying value of $71 million, after taking a $133 million write down in 2022. The market value of Fairfax stake was $5 million at Dec 31, 2022. My guess is this investment, because it performed so terribly post-IPO, has caused Fairfax some damage to its reputation (given Fairfax was the majority shareholder). Learning: Yup, SPAC’s were a bubble. The good news: carrying value is $71 million. This is now a small investment for Fairfax. 5.) Eurobank (2014): Fairfax invested $444 million in Eurobank in 2014. This initial investment went to close to zero later that year when the ECB mandated a 1-for-100 reverse share split. What was the problem? Greece was in the midst of a depression. What did Fairfax do? It doubled down and invested another $389 million in Eurobank in 2015. In 2019, Eurobank did a capital raise/merger with Grivalia. Greece elected a pro-business government in 2018. Eurobank fixed its balance sheet. Learning: Because the strategy worked in Ireland doesn’t mean it would work in Greece. The good news: Greece’s economy is well positioned. Eurobank, always well managed, is executing well and earnings are spiking. Share of profit of associates was $263 million in 2022, up from $162 million in 2021. Prem estimated Eurobank could earn €0.20/share in 2023; if so, Fairfax’s share of profits for Eurobank could be +$300 million in 2023. This investment is turning into a home run for Fairfax - a Greek tragedy turns to a triumph! 6.) AGT (2017): Fairfax invested $148 million in AGT in 2017. In 2019, as AGT was experiencing financial difficulties, Fairfax took AGT private, spending another $227 million (I think). Learning: It takes much more than a dynamic Canadian founder to succeed. The good news: from 2022 Fairfax AR: “AGT, run by founder and CEO Murad Al-Katib, had a record year in 2022, with EBITDA of over Cdn$150 million. This is a dramatic improvement from the time of the take-private transaction almost four years ago when the business was generating slightly over Cdn$60 million in EBITDA… Fairfax has an approximate 60% stake in AGT.” 7.) Commercial Industrial Bank (CIB) Egypt (2014): Fairfax invested $330 million in CIB in 2014. Today the position is worth about $240 million. Great company. Solid management. What is the problem? Egypt’s economy has been a slow-moving train wreck for decades - with constant currency devaluations. Learning: Constant currency devaluations (like 50% in the last year) hurt equity values. The good news: the bank is well managed. 8.) Mosaic Capital (2017): Fairfax invested $116 million in Mosaic in 2017. In 2021, Mosaic was taken private (not by Fairfax) with Fairfax owning 20% of the new investment. This investment went sideways for many years (that opportunity cost thing). Learning: not every investment you make is going to work out. The good news: Fairfax found a partner where Mosaic will hopefully be a better fit. 9.) Recipe/CARA (2014 & 2016): Fairfax made a couple of restaurant investments from 2014-2017: $77 million in the Keg in 2014 (merged with CARA in 2018) and $100 million in the CARA capital raise in $2016. Recipe/CARA was a poor investment for minority shareholders over its lifetime. Learning: the restaurant business in Canada is a tough business. Consolidating it proved to be even tougher. The good news: In the take private deal in 2022, Fairfax purchased Recipe at a Covid-low price. Recipe has a solid collection of assets that should be able to produce a solid amount of free cash flow for Fairfax moving forward. 10.) Astarta (2017): Fairfax invested $104 million in Astarta in 2017. Today that investment is worth around $45 million. I know very little about this investment. I wonder if it is not a similar situation to CIB, with opportunity cost being the big issue. Honorable mention: Torstar was initiated as a position before 2014 so I did not include it. However, Fairfax added to its position in 2014, 2016 and 2017 (yes, small amounts). In 2020 it sold the business and booked a $52 million loss. I see lots of self-inflicted wounds in the investments listed above – reading the list reminds me of the Monty Python skit “tis but a scratch". Hi Viking, I agree with all that. And I would suggest that is a result of Wade and Lawrence being given more leadership and money. At the core, the old guard at Hamblin-Watsa cut their teeth on distressed value assets, and I just don't think they will be able to entirely change from that. When it's ingrained in you that you cannot pay more for an asset, even if it is of high quality, it's tough to change that behavior...both as a consumer or an investment manager. So that's why I think Fairfax on occasion will still produce some lumpy investment results, but slowly moving to more consistent investment results as that mindset changes with the younger managers taking over. Cheers!
Viking Posted August 12, 2025 Posted August 12, 2025 12 minutes ago, Parsad said: Hi Viking, I agree with all that. And I would suggest that is a result of Wade and Lawrence being given more leadership and money. At the core, the old guard at Hamblin-Watsa cut their teeth on distressed value assets, and I just don't think they will be able to entirely change from that. When it's ingrained in you that you cannot pay more for an asset, even if it is of high quality, it's tough to change that behavior...both as a consumer or an investment manager. So that's why I think Fairfax on occasion will still produce some lumpy investment results, but slowly moving to more consistent investment results as that mindset changes with the younger managers taking over. Cheers! +1 Fairfax will always be value investors. And like any well run organization they are evolving over time
Marco Van Basten Posted August 13, 2025 Posted August 13, 2025 @Viking, would you mind explaining why partnering up with Caroline Shinn is a good idea? Why is it such a good opportunity? Thank you.
nwoodman Posted August 13, 2025 Posted August 13, 2025 2 hours ago, Viking said: When you look at what Fairfax owned and where they were putting new capital from 2014 to 2017 it is full of very bad decisions. When you look at what Fairfax owned and where they were putting new capital from 2019 to 2024 it is full of much better decisions. Most importantly, Fairfax appears to be putting a much higher premium on management - choosing to partner with outstanding capital allocators/CEO's/founders. You see that in spades with their biggest investment so far in 2025 - partnering with Caroline Shin at Vacatia. Adam Waterous is the shining example for my money. I am tipping that, collectively, their WEF exposure will be a top 3 holding by 2030. In the Eurobank and Poseidon league, on pure free cashflow it’s probably in spitting distance now.
Viking Posted August 13, 2025 Posted August 13, 2025 (edited) 2 hours ago, nwoodman said: Adam Waterous is the shining example for my money. I am tipping that, collectively, their WEF exposure will be a top 3 holding by 2030. In the Eurobank and Poseidon league, on pure free cashflow it’s probably in spitting distance now. @nwoodman, great example. I agree that Adam Waterous is the real deal and WEF/Strathcona/Greenfire is a sleeper holding for Fairfax (in terms of size and upside potential). Fairfax started with a small investment. Over time, as Adam earned their trust, the investment has increased. Smart. Capital at Fairfax now goes to the best available opportunities. That has important implications for the future returns of Fairfax... Edited August 13, 2025 by Viking
Castanza Posted August 13, 2025 Posted August 13, 2025 Has Brett Horn ever had ANY good insight into Fairfax that anyone on this board has found useful?
73 Reds Posted August 13, 2025 Posted August 13, 2025 25 minutes ago, Castanza said: Has Brett Horn ever had ANY good insight into Fairfax that anyone on this board has found useful? Sure, he causes folks to question their own assumptions. I mean even as obvious as Fairfax was to a lot of us several years ago, there were undoubtedly many more people who were exposed to Fairfax as a potential investment at the same time who looked at it and passed. To each, their own.
Crip1 Posted August 13, 2025 Posted August 13, 2025 5 hours ago, Castanza said: Has Brett Horn ever had ANY good insight into Fairfax that anyone on this board has found useful? “Useful” is in the eye of the beholder. When we read opinions which disagree with our own assumptions, it can and often does force us to pressure test our hypothesis, and that can result in reconsideration of the hypothesis or it can strengthen one’s convictions. So, to that end, he’s been useful. In this instance, he’s not really raised much to compel reconsideration. And, worse yet, when he asserts investing results being “increasingly hit or miss over the years” with zero tangible examples, it damages his credibility. His usefulness is limited, but not nil. -Crip
Viking Posted August 13, 2025 Posted August 13, 2025 (edited) 36 minutes ago, Crip1 said: “Useful” is in the eye of the beholder. When we read opinions which disagree with our own assumptions, it can and often does force us to pressure test our hypothesis, and that can result in reconsideration of the hypothesis or it can strengthen one’s convictions. So, to that end, he’s been useful. In this instance, he’s not really raised much to compel reconsideration. And, worse yet, when he asserts investing results being “increasingly hit or miss over the years” with zero tangible examples, it damages his credibility. His usefulness is limited, but not nil. -Crip I agree. Brett Horn is really publishing an opinion piece. But because it is under the 'Morningstar' brand, people mistakenly think it is a research piece. Why do I think it is an opinion piece? Because he does not provide any meaningful or relevant analysis/facts/logic to support his conclusions. How do you debate an argument that is not based on facts? The answer, of course, is you can't. There is no actual useful/relevant 'research' in what he writes on Fairfax. The problem is people aren't great at ignoring stuff they read - even the really bad stuff. It tends to lodge itself in the deep recesses of the mind. And when a person is in a weakened state, it can come forward and get acted upon. Peter Lynch has talked about this phenomenon. As a result, even really obviously bad opinion pieces like Brett Horne's can have a real (negative) impact on many investors. It is such a bizarre situation. Edited August 13, 2025 by Viking
wondering Posted August 13, 2025 Posted August 13, 2025 I am going to risk having eggs thrown at me, and play devils advocate for the moment. Here are some thoughts to consider I remember Prem saying in an AGM a few years back, that the insurance business, taken by itself, is a very so-so business, with crummy rates of return. It is only when management is super-sharp to invest the float wisely does the business begin to look better. Morningstar (I am not sure if it was Brett Horn specifically) gave bad ratings to Intact and Definity (Cdn P&C companies) as well. all one star investments. The models that Morningstart runs appears to not like all P&C insurance companies, not just FFH. @SafetyinNumbers mentioned that the danger of Morningstar is that they are hooked into various brokerage accounts as research (they appears in my RBC direct account), and thus have an influence on naive investors. However, @Viking mentioned by in the last 4.5 years FFH has compounded 44% annually. If Fairfax has compounded annually by 44% with a crap Morningstar rating, I will take it.
Parsad Posted August 14, 2025 Posted August 14, 2025 On 8/13/2025 at 5:35 AM, Castanza said: Has Brett Horn ever had ANY good insight into Fairfax that anyone on this board has found useful? I'm not sure I've ever found any analyst report particularly useful when making a decision. I decided a long time ago that my own calculations and analysis is what I would rely on...otherwise the conviction level wavers and you make decisions predicated on someone else's assumptions. That may work out at times, but often the result is negative! Cheers!
Parsad Posted August 14, 2025 Posted August 14, 2025 On 8/13/2025 at 11:19 AM, Crip1 said: “Useful” is in the eye of the beholder. When we read opinions which disagree with our own assumptions, it can and often does force us to pressure test our hypothesis, and that can result in reconsideration of the hypothesis or it can strengthen one’s convictions. So, to that end, he’s been useful. In this instance, he’s not really raised much to compel reconsideration. And, worse yet, when he asserts investing results being “increasingly hit or miss over the years” with zero tangible examples, it damages his credibility. His usefulness is limited, but not nil. -Crip I think it's the reverse. The more you use other analytical information to pressure test your own assumptions, the less conviction you have in your own ideas. Not talking about raw data...but analytical views. You should be able to do your own analysis accurately and trust that information. Cheers!
Parsad Posted August 14, 2025 Posted August 14, 2025 20 hours ago, wondering said: I am going to risk having eggs thrown at me, and play devils advocate for the moment. Here are some thoughts to consider I remember Prem saying in an AGM a few years back, that the insurance business, taken by itself, is a very so-so business, with crummy rates of return. It is only when management is super-sharp to invest the float wisely does the business begin to look better. Morningstar (I am not sure if it was Brett Horn specifically) gave bad ratings to Intact and Definity (Cdn P&C companies) as well. all one star investments. The models that Morningstart runs appears to not like all P&C insurance companies, not just FFH. @SafetyinNumbers mentioned that the danger of Morningstar is that they are hooked into various brokerage accounts as research (they appears in my RBC direct account), and thus have an influence on naive investors. However, @Viking mentioned by in the last 4.5 years FFH has compounded 44% annually. If Fairfax has compounded annually by 44% with a crap Morningstar rating, I will take it. No eggs thrown...I think you are correct! I think analyst reports offer little benefit and could be more detrimental to those that actually do their own work in detail and have conviction in their analysis. Cheers!
Crip1 Posted August 15, 2025 Posted August 15, 2025 23 hours ago, Parsad said: I think it's the reverse. The more you use other analytical information to pressure test your own assumptions, the less conviction you have in your own ideas. Not talking about raw data...but analytical views. You should be able to do your own analysis accurately and trust that information. Cheers! Yeah, we're going to disagree on this. "Invert, always invert" - objectively challenging one's own beliefs is really hard, which is why not many folks do it. I agree that one "should" be able to do one's own analysis, but one also needs to embrace that other viewpoints may be valid. That helps us to learn. Buffet concurs as he migrated from strict Ben Graham methodology as years went on. We grow more by understanding we may be wrong than believing we're definitely right. Objectively, BH is wrong. That was the gist of my original post. It was not defending the reasons I have a ton of my net worth in FFH. It was looking to understand his perspective and then determining the validity of his perspective. Invert, always invert. -Crip
Parsad Posted August 15, 2025 Posted August 15, 2025 3 hours ago, Crip1 said: Yeah, we're going to disagree on this. "Invert, always invert" - objectively challenging one's own beliefs is really hard, which is why not many folks do it. I agree that one "should" be able to do one's own analysis, but one also needs to embrace that other viewpoints may be valid. That helps us to learn. Buffet concurs as he migrated from strict Ben Graham methodology as years went on. We grow more by understanding we may be wrong than believing we're definitely right. Objectively, BH is wrong. That was the gist of my original post. It was not defending the reasons I have a ton of my net worth in FFH. It was looking to understand his perspective and then determining the validity of his perspective. Invert, always invert. -Crip Young Buffett didn't need Charlie's quote because young Buffett looked at his ideas from a solely fundamental, mathematical view. You either trust the numbers or you don't...discount cash flow, liquidation value, etc. That's where I am...Ben Graham. I'm not comfortable with Buffett's adaption of Phil Fisher's ideas. That's where Charlie comes in and the invert quote. You are no longer trusting the math but making long-term assumptions about a business, it's moats, dominance, change in trends, etc. All the things that math cannot prove out. So yes, we'll have to agree to disagree, since I evaluate my investments based on the former (math) and not the latter (greater perspective). Trust your own analysis and instincts! As long as the math is correct, you are fine. It's what lit the bug in the first place...check the numbers, over and over. An intellectual framework incorporating math, not a philosophical exercise. Cheers!
cwericb Posted February 20 Posted February 20 From Brett Horne today: Fairfax Financial Earnings: A Strong Year Finishes on a Solid Note We think the market is extrapolating Fairfax’s favorable period too far into the future. Key Morningstar Metrics for Fairfax Financial Holdings Fair Value Estimate: C$1,730.00 Morningstar Rating: ★★ Morningstar Economic Moat Rating: None Morningstar Uncertainty Rating: Medium https://global.morningstar.com/en-ca/stocks/fairfax-financial-earnings-strong-year-finishes-solid-note
73 Reds Posted February 20 Posted February 20 17 minutes ago, cwericb said: From Brett Horne today: Fairfax Financial Earnings: A Strong Year Finishes on a Solid Note We think the market is extrapolating Fairfax’s favorable period too far into the future. Key Morningstar Metrics for Fairfax Financial Holdings Fair Value Estimate: C$1,730.00 Morningstar Rating: ★★ Morningstar Economic Moat Rating: None Morningstar Uncertainty Rating: Medium https://global.morningstar.com/en-ca/stocks/fairfax-financial-earnings-strong-year-finishes-solid-note LOL, I tend to agree with the "extrapolation into the future" part but this guy is so out to lunch on his value estimate its truly a wonder he still has a job. Yet as long as he is going to be wrong, we all should wish him more followers so we could pluck some shares at his value estimate.
cwericb Posted February 20 Posted February 20 25 minutes ago, 73 Reds said: LOL, I tend to agree with the "extrapolation into the future" part but this guy is so out to lunch on his value estimate its truly a wonder he still has a job. Yet as long as he is going to be wrong, we all should wish him more followers so we could pluck some shares at his value estimate. Aaaa, perhaps if he looked at his own chart do ya think he might detect the error of his ways?
SafetyinNumbers Posted February 20 Posted February 20 45 minutes ago, 73 Reds said: LOL, I tend to agree with the "extrapolation into the future" part but this guy is so out to lunch on his value estimate its truly a wonder he still has a job. Yet as long as he is going to be wrong, we all should wish him more followers so we could pluck some shares at his value estimate. He doesn’t make the value estimate, Morningstar’s computer does. He is responsible for the terrible estimates and moat evaluation.
Txvestor Posted February 20 Posted February 20 1 hour ago, cwericb said: From Brett Horne today: Fairfax Financial Earnings: A Strong Year Finishes on a Solid Note We think the market is extrapolating Fairfax’s favorable period too far into the future. Key Morningstar Metrics for Fairfax Financial Holdings Fair Value Estimate: C$1,730.00 Morningstar Rating: ★★ Morningstar Economic Moat Rating: None Morningstar Uncertainty Rating: Medium https://global.morningstar.com/en-ca/stocks/fairfax-financial-earnings-strong-year-finishes-solid-note i effed up with my predictions in the past, but I'm certain that the future will be bad. 3rd yr running,
cwericb Posted February 20 Posted February 20 19 minutes ago, Txvestor said: i effed up with my predictions in the past, but I'm certain that the future will be bad. 3rd yr running, One would think that anyone who followed Horne's advice back in 2023 and was persuaded NOT to buy Fairfax back then, they might just be a trifle miffed as stock has appreciated by about $1,437 per share since then. Perhaps one of these days LA slides into the Pacific, Miami floats out into the Atlantic and then Horne will say...." "See, see I told you the share price would drop!" As 73 Reds said "...its truly a wonder he still has a job..."
Crip1 Posted February 20 Posted February 20 (edited) 19 hours ago, Txvestor said: i effed up with my predictions in the past, but I'm certain that the future will be bad. 3rd yr running, This is a textbook example of Consistency Bias, a component thereof is Commitment Trap. Commitment Trap: Because humans value consistency, once a person makes a commitment (public or private), they are more likely to continue that behavior, even if it is no longer in their best interest. None of us can control this, nor does it really do appreciable harm to us, so there's no reason to get bent out of shape over it. I personally find it amusing. -Crip Edited February 21 by Crip1
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