Haryana Posted October 6, 2023 Author Share Posted October 6, 2023 Link to comment Share on other sites More sharing options...
Haryana Posted October 6, 2023 Author Share Posted October 6, 2023 https://www.morningstar.com/stocks/block-lowering-long-term-margin-assumptions Brett Horn Sep 19, 2023 "Block SQ is a fast-growing, highly scalable business, which creates a wide range of future possibilities. This consideration is the primary factor behind our Very High uncertainty rating. After reassessing our assumptions in light of the company’s recent performance, we think it is appropriate to lower our long-term margin assumptions given the lack of improvement in profitability. As a result, we are reducing our fair value estimate for Block to $83 per share from $98. We will maintain our narrow moat rating." Link to comment Share on other sites More sharing options...
cwericb Posted October 6, 2023 Share Posted October 6, 2023 6 hours ago, Haryana said: https://www.morningstar.com/stocks/block-lowering-long-term-margin-assumptions Brett Horn Sep 19, 2023 "Block SQ is a fast-growing, highly scalable business, which creates a wide range of future possibilities. This consideration is the primary factor behind our Very High uncertainty rating. After reassessing our assumptions in light of the company’s recent performance, we think it is appropriate to lower our long-term margin assumptions given the lack of improvement in profitability. As a result, we are reducing our fair value estimate for Block to $83 per share from $98. We will maintain our narrow moat rating." To add a little colour to Haryana’s post... Aug. 1, SQ was about $80. Sept 19, SQ was about $50. Horn lowered his target from $98 to $83. Yesterday SQ closed at $42.64. Link to comment Share on other sites More sharing options...
Hoodlum Posted October 20, 2023 Share Posted October 20, 2023 Brett is slowly coming around. https://www.morningstar.com/stocks/fairfax-financial-raising-our-valuation-cad-970 Quote We are increasing our fair value estimate for no-moat Fairfax Financial FFH to CAD 970 per share from CAD 790, after reassessing the company’s prospects on the investment side given recent changes in capital market conditions. The company is navigating the current environment well, but we would note that Fairfax’s investment performance has been spotty over time and includes some substantial losses along with impressive gains. Our fair value estimate equates to 0.9 times the book value at the end of the second quarter and 1.2 times the tangible book value. While we have raised our fair value estimate, we still see shares as a bit overvalued at the moment. Link to comment Share on other sites More sharing options...
Haryana Posted October 20, 2023 Author Share Posted October 20, 2023 So the system entertains that there be his kind of royal that is allowed to jump the estimation by >22% in one shot while continuously maintaining an evaluation of overvalued. Link to comment Share on other sites More sharing options...
Santayana Posted October 20, 2023 Share Posted October 20, 2023 This is the line that cracks me up. "Fairfax will continue to post poor results and could destroy significant value if Watsa's investment thesis doesn't pan out." Link to comment Share on other sites More sharing options...
Xerxes Posted October 21, 2023 Share Posted October 21, 2023 6 hours ago, Santayana said: This is the line that cracks me up. "Fairfax will continue to post poor results and could destroy significant value if Watsa's investment thesis doesn't pan out." The analyst is hedging his optimism. Just to be sure, just in case … Maybe much like his own nemesis (Watsa) he is going to end up hedging his ”book” for a decade. The 2020s will known as “Brett’ Lost Decade” Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted October 21, 2023 Share Posted October 21, 2023 On 10/6/2023 at 8:36 AM, cwericb said: To add a little colour to Haryana’s post... Aug. 1, SQ was about $80. Sept 19, SQ was about $50. Horn lowered his target from $98 to $83. Yesterday SQ closed at $42.64. On 10/19/2023 at 9:09 PM, Hoodlum said: Brett is slowly coming around. https://www.morningstar.com/stocks/fairfax-financial-raising-our-valuation-cad-970 All I see is performance chasing and hindsight justification. He's chasing prices down and chasing them up instead of leading them down and leading them up. Following his piece targets is no different then looking at a chart of what has already happened it seems. Link to comment Share on other sites More sharing options...
cwericb Posted October 21, 2023 Share Posted October 21, 2023 "He's chasing prices down and chasing them up instead of leading them down and leading them up. Following his piece targets is no different then looking at a chart of what has already happened it seems. " AND... He gets PAID for his brilliant prognostications? I guess, we mere mortals, are obviously not as bright as he is because he knows so much more about Fairfax than most of the members of this board - who, by the way, actually have money invested in the company. It is kind of comical as to how his original projections were so far out of wack that when when he was likely forced to adjust upwards, he does it in such a begrudging manner. One has to wonder if someone in management at Morningstar had a little word with him. Link to comment Share on other sites More sharing options...
Haryana Posted October 24, 2023 Author Share Posted October 24, 2023 On 10/19/2023 at 7:09 PM, Hoodlum said: Brett is slowly coming around. https://www.morningstar.com/stocks/fairfax-financial-raising-our-valuation-cad-970 Maybe his highness was pleased with my posting of his favorite mug shot. Link to comment Share on other sites More sharing options...
Hoodlum Posted November 3, 2023 Share Posted November 3, 2023 Brett is doubling down on his analysis. https://www.morningstar.com/stocks/fairfax-earnings-positive-momentum-continues Quote Fairfax FFH continued its recent string of good results in the third quarter. Book value per share, adjusted for dividends, has grown 16% year to date, which gives an indication of the winds the company has had at its back this year. While we appreciate the positives the company is enjoying right now, its historical performance has been increasingly hit or miss over time, and we don’t expect this to change long term. We will maintain our CAD 970 fair value estimate for the no-moat company and see shares as a bit overvalued at the moment. 1 Link to comment Share on other sites More sharing options...
Malmqky Posted November 3, 2023 Share Posted November 3, 2023 1 minute ago, Hoodlum said: Brett is doubling down on his analysis. https://www.morningstar.com/stocks/fairfax-earnings-positive-momentum-continues So Brett does not understand people can learn and grow from their mistakes. I’m talking about Prem as well as Brett himself here. Oh well, it’s his grave… 1 Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted November 3, 2023 Share Posted November 3, 2023 2 minutes ago, Malmqky said: So Brett does not understand people can learn and grow from their mistakes. I’m talking about Prem as well as Brett himself here. Oh well, it’s his grave… He covers ~25 companies and has no clients. I don’t think it matters much to him. His analysis is basically, “a lumpy 15 isn’t worth owning” Link to comment Share on other sites More sharing options...
Spekulatius Posted November 3, 2023 Share Posted November 3, 2023 4 hours ago, SafetyinNumbers said: He covers ~25 companies and has no clients. I don’t think it matters much to him. His analysis is basically, “a lumpy 15 isn’t worth owning” It's just one guy doing his job, possibly poorly. Who cares.... Morningstar isn't exactly the pinnacle of investment research, although i do sometimes like to read what they say as a primer. Comes free with a $50 brokerage account so you get what you pay for. Link to comment Share on other sites More sharing options...
Thrifty3000 Posted November 3, 2023 Share Posted November 3, 2023 46 minutes ago, Spekulatius said: It's just one guy doing his job, possibly poorly. Who cares.... Morningstar isn't exactly the pinnacle of investment research, although i do sometimes like to read what they say as a primer. Comes free with a $50 brokerage account so you get what you pay for. ^ what he said Link to comment Share on other sites More sharing options...
vakilkp Posted November 3, 2023 Share Posted November 3, 2023 Agree with Spek. Hence more gratitude to and appreciation for @Viking, @gfp and others who have provided all of their analysis and aren't afraid to be challenged. Not sure if there is much value in tracking what Mr. Horn has to say frankly. Link to comment Share on other sites More sharing options...
dealraker Posted November 3, 2023 Share Posted November 3, 2023 Morningstar is equally lame on the insurance brokers they cover and this has remained consistent for at least a couple of decades. Link to comment Share on other sites More sharing options...
Parsad Posted November 3, 2023 Share Posted November 3, 2023 6 hours ago, Hoodlum said: Brett is doubling down on his analysis. https://www.morningstar.com/stocks/fairfax-earnings-positive-momentum-continues His target was $730 CDN after Q1 2023, $790 CDN after Q2 2023 and now is at $970 CDN after Q3 2023. Somehow Horn's own estimates are increasing quarter after quarter for this "no moat" company! Cheers! Link to comment Share on other sites More sharing options...
Spekulatius Posted November 4, 2023 Share Posted November 4, 2023 (edited) 17 hours ago, Parsad said: His target was $730 CDN after Q1 2023, $790 CDN after Q2 2023 and now is at $970 CDN after Q3 2023. Somehow Horn's own estimates are increasing quarter after quarter for this "no moat" company! Cheers! This is the same than these CFRA recos and target prices They tend to trail stock prices. Here is an example- BAC. You wont make money following this advice… Edited November 4, 2023 by Spekulatius Link to comment Share on other sites More sharing options...
cwericb Posted November 5, 2023 Share Posted November 5, 2023 Some days it must suck to be Brett ............. SA Analysis <account@seekingalpha.com> Sat, Nov 4, 1:44 AM (1 day ago) Fairfax Financial: Q3 2023 Results Indicate Banner Year Ahead Link to comment Share on other sites More sharing options...
Haryana Posted February 10 Author Share Posted February 10 Adding More Mud to the Muddy Waters that they be swimming naked in: https://www.morningstar.com/company-reports/1206317-fairfax-muddy-waters-outlines-a-bear-case "As to Muddy Waters' claims that Fairfax is mismarking investments, we don’t think it is necessary to believe that to think the stock is overvalued." Link to comment Share on other sites More sharing options...
Luca Posted February 10 Share Posted February 10 1 hour ago, Haryana said: Adding More Mud to the Muddy Waters that they be swimming naked in: https://www.morningstar.com/company-reports/1206317-fairfax-muddy-waters-outlines-a-bear-case "As to Muddy Waters' claims that Fairfax is mismarking investments, we don’t think it is necessary to believe that to think the stock is overvalued." Would appreciate a screenshot of the full article, not a subscriber, thanks @Haryana in advance! Link to comment Share on other sites More sharing options...
Haryana Posted February 10 Author Share Posted February 10 20 minutes ago, Luca said: Would appreciate a screenshot of the full article, not a subscriber, thanks @Haryana in advance! Not a subscriber there myself either, sorry on that. Others here are as they posted full articles before. So here, I forward your thanks to them in advance. Link to comment Share on other sites More sharing options...
Spekulatius Posted February 10 Share Posted February 10 Here it is. 2* rated. I have seen worse. The gist is he states that that FFH is a mediocre underwriter and investor. No credit for recent improvements in profitability and hard market don’t last forever. Worth about book. Equity Report FFH 1-2024 MS.pdf Link to comment Share on other sites More sharing options...
Maverick47 Posted February 10 Share Posted February 10 (edited) 3 hours ago, Spekulatius said: Here it is. 2* rated. I have seen worse. The gist is he states that that FFH is a mediocre underwriter and investor. No credit for recent improvements in profitability and hard market don’t last forever. Worth about book. Thanks @Spekulatius, for the report. I do appreciate the opportunity to see some of the per share projections for 2023 and the two years thereafter. He shows a 2021 EPS of $122, and though the first 9 months of 2023 have come in at $129, his projection for the full year is at $113, with the next two years lower than that. As a likely net acquirer of the stock for the next two years, I would be more than happy if the market valuation takes time to react and respond to what (based on Prem’s expectations and supported by @Viking and the work he has done) are more likely to be EPS results closer to $150 than under $100. As Graham would say, in the short term, the market is a voting machine, in the long run it’s a weighing machine. If the company is able to produce three back to back years with the sort of earnings we think are likely, then we can begin to focus on what the company will do with the $9+ billion of cash added to the corporate coffers in that time frame. If the market provides opportunities for share repurchases, that might be one thing to keep an eye on. There certainly didn’t appear to be any long term expectation in Horn’s model for material investment income reported from the shares of earnings of associates, and he doesn’t seem to have increased the dividend rate to $15 yet. He only projects modest share count reductions. I did just notice that his outstanding share count for 2023 was listed as 25.9 million, whereas I expect we’ll learn next week that the share count is closer to 23.2 million or less. So his EPS modeled estimates are understated by a minimum of 10%. If I’ve gotten this wrong, please correct me. It does seem to be a rather material error in the work when one is advising readers of your analyses what sort of market price per share they should target as a fair valuation… All in all, I’m happy to have his model as a more pessimistic view of the future than I would hold, and if it, along with the Muddy Waters thesis help to keep the overall market valuation from reacting to likely future earnings power while allowing me to add to my position at more favorable prices, then I’m more than willing to be patient. Edited February 10 by Maverick47 Share count data Link to comment Share on other sites More sharing options...
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