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SafetyinNumbers

By SafetyinNumbers
in Fairfax Financial

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Thrifty3000 Proficient

Thrifty3000

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Posted
On 2/4/2024 at 9:54 AM, Crip1 said:

@Thrifty3000

 

Thanks again for the time/effort to respond on this. It is something that I thought I should do but now really realize that I NEEDED to do this to better frame investment decisions. One other question...do you have any ETFs or mutual funds and, if so, how do you incorporate those into the analysis? About 70% of financial net worth is invested in individual stocks, but some money is in ETFs (for access to industries where I want to be but would prefer others with more knowledge pick out winners/losers) or Mutual Funds (401k accounts my wife and I pay into that do not offer self-directed stocks as investment options). 

 

-Crip

 

Pre-COVID I had about a third of my portfolio in an all-world (ex US) ETF.

 

The only other ETF I’ve ever owned has been S&P 500.

 

Currently, I don’t own a meaningful amount of ETFs or mutual funds. Right now I prefer individual equities and cash over broad indexes.

 

I basically look at the S&P 500 index as risk free over the long term. I assume it will compound at 6 or 7%. So, since I consider it risk free I usually won’t invest in an individual company unless I’m confident the investment will outperform the S&P 500 by at LEAST double. In other words if I don’t think I can earn at least 14% on an individual company I’d prefer to own an index. (However, if cash is yielding 5% I’ll take the cash.)

 

These days if I sell stock I’m parking proceeds in cash, which is about 10% of my portfolio.

 

 

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SafetyinNumbers
SafetyinNumbers

I went on a podcast and spoke mostly about Fairfax.   https://t.co/x7v5g2OvGf

Hoodlum
Hoodlum

I think this last sentence is important because if we do see a sizable drop in interest rates, then that would suggest we are in a recession and allows them to move to longer corporate bonds with high

gfp
gfp

The same kind of volume spikes happened last January - I assume it has something to do with the timing of the dividend, the counterparties to the TRS and the calendar year.

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Maverick47 Collaborator

Maverick47

Posted
Posted
1 hour ago, glider3834 said:

podcast with European investment team at Fairfax

 

 

Thanks, @glider3834!  This was an extremely valuable conversation for me to learn from.  It clarified for me the value of corporate culture, family ownership/long-term control, and I appreciated learning some more about how the duration decision on fixed income gets made (at the Investment Committee level, with heavy involvement by Prem and Brian Bradstreet).  The value of the decentralized nature of the business, avoiding the sclerotic nature of large corporate bloat, was also good to learn some more about.  Much appreciated!

nwoodman Mentor

nwoodman

Posted
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3 hours ago, glider3834 said:

podcast with European investment team at Fairfax

 

 

Great stuff.  Reiterated “no shorts” and a move to quality.  Music to one’s ears.

SafetyinNumbers Veteran

SafetyinNumbers

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14 hours ago, glider3834 said:

podcast with European investment team at Fairfax

 

 


Thanks for sharing Glider! Was a good listen.
 

Overall, the commentary on culture was very interesting and encouraging. I think the most disappointing parts to me were that they think markets are efficient and they manage money the same way they did at Schroders. I think FFH best chance for significant absolute returns is not acting like everyone else and taking advantage where others have constraints that FFH doesn’t. 

gfp Grand Master

gfp

Posted
Posted
18 minutes ago, glider3834 said:

in the interview Jamie L mentions a book he gave to Prem W on Teledyne - A Distant Force - ~$521 at Amazon - too expensive for me but I would like to read it 

https://www.amazon.com.au/Distant-Force-Teledyne-Corporation-Created/dp/097913630X

 

 

Oh wow, I had no idea that book had gone all "margin of safety" - maybe I should list my copy.  It used to be quite easy to buy.  I'm sure a bunch of libraries still have it.

Munger_Disciple Mentor

Munger_Disciple

Posted
Posted
27 minutes ago, gfp said:

 

Oh wow, I had no idea that book had gone all "margin of safety" - maybe I should list my copy.  It used to be quite easy to buy.  I'm sure a bunch of libraries still have it.

 

And it is not a particularly good book either. 

glider3834 Mentor

glider3834

Posted
Posted (edited)
8 hours ago, SafetyinNumbers said:


Thanks for sharing Glider! Was a good listen.
 

Overall, the commentary on culture was very interesting and encouraging. I think the most disappointing parts to me were that they think markets are efficient and they manage money the same way they did at Schroders. I think FFH best chance for significant absolute returns is not acting like everyone else and taking advantage where others have constraints that FFH doesn’t. 

I think where it was similar was more on quant side but learnings with Fairfax have been more on qualitative side -   importance of quality of management and corporate culture 

 

I had a re-listen to Ian Kelly point on mean reversion skepticism - I think what he is saying is that as they look under the hood at the cheapest subset of value stocks in Europe they are seeing more companies that have genuine problems ie they haven't just underperformed (relative to growth ) purely due to slower growth (ie cyclical factors) but other underlying drivers of business performance have changed - so they wouldn't expect the margins to mean revert as economy gets better ie the underlying value has degraded (my word) in a sense - thats my 2 cents worth take anyway...

 

Edited by glider3834
glider3834 Mentor

glider3834

Posted
Posted
6 hours ago, SafetyinNumbers said:


Thanks for sharing Glider! Was a good listen.
 

Overall, the commentary on culture was very interesting and encouraging. I think the most disappointing parts to me were that they think markets are efficient and they manage money the same way they did at Schroders. I think FFH best chance for significant absolute returns is not acting like everyone else and taking advantage where others have constraints that FFH doesn’t. 

👍

Maverick47 Collaborator

Maverick47

Posted
Posted
3 hours ago, Munger_Disciple said:

 

And it is not a particularly good book either. 

Chapter 2 of William Thorndike's "The Outsiders" is probably all you need to read to find out about Henry Singleton and Teledyne.  Given the Fairfax stock buyback at $500 and the Total Return Swap homerun, it's clear that Prem has gleaned the correct lessons from Henry Singleton's example at Teledyne. 

SafetyinNumbers Veteran

SafetyinNumbers

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19 minutes ago, Maverick47 said:

Chapter 2 of William Thorndike's "The Outsiders" is probably all you need to read to find out about Henry Singleton and Teledyne.  Given the Fairfax stock buyback at $500 and the Total Return Swap homerun, it's clear that Prem has gleaned the correct lessons from Henry Singleton's example at Teledyne. 

 

I think all of the equity issuances that were well north of book value  probably created a lot more value. The most important might have been for Allied World at 1.3x BV in the midst of the zero interest rate era. It really put a damper on ROE and an overhang on the stock which they took advantage of with the moves you noted.

 

Prem's painting quite a masterpiece, it will make for a good book some day!

 

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