Fairfax 2024

[nwoodman]

https://www.fairfax.ca/press-releases/fairfax-responds-further-to-short-seller-report/

 

To the best of our knowledge, Muddy Waters has never attended our conference calls and neverasked a question, called us or written to us, but instead went to CNBC during our quiet period with these one-sided, ill-informed allegations and insinuations in a transparent attempt to profit by short selling our stock. They may have successfully done this with other companies, but they have woefully misjudged the strength of Fairfax’s financials and prospects and we are confident the marketplace will reflect our strong fundamentals.

Prem Watsa, Chairman and CEO of Fairfax, commented: “We are neither Berkshire Hathaway, nor GE, as Muddy Waters suggests. We are Fairfax, a strong and enduring company built over 38 years, committed to integrity, customer service, employee welfare and the communities we operate in. We have a unique Fair and Friendly culture throughout our organization. We strive to provide excellent returns to shareholders, and are committed to providing full disclosure in our annual report, highlighting both our pluses and minuses.

 

 

[glider3834]

Looking at MW  chart table below for years 2017-22 - how does that reconcile with Fairfax's number from their 2022 Annual report for 2017-22 period? Or am I missing something?

 

 

 

[dealraker]

2 hours ago, Hamburg Investor said:

 

 

@SafetyinNumbers Yes, thanks a lot, I really appreciate you're taking the time . You guys here are so much longer in the investing world and from time to time I need a little bit of assurance... We have way less people in Germany being interested in investing than you guys on the other side of the atlantic have. So I don't really have a lot of opportunities to get in touch with other people, discuss ideas etc. So I read a lot and feel Buffett, Prem & Co talking to me through the books and annual reports; so I really appreciate gett8ng into contact here (and - way less - at Seeking Alpha). And sorry for my english...


@dealraker nice comment; from the investments with over 10 per cent of my portfolio, Fairfax has been my worst performer since 2011 by miles for a long time; still it always felt being on the right train. In fact it helped me to learn, that Munger and Co are right, when saying you make money by sitting around and waiting instead of trading.

Yes but it does go somewhat further that the starting point during a positive investor view is simply going to be somewhat negative as to outcome vs a starting point that's questioning the model.  I wasn't aware enough to sell the stock when obviously it, the business and stock, wasn't performing all that well.  But I have bought/added the stock over 30 times in the last several years.

 

Thus the outcome is crazy good despite...

 

So while it is up to Fairfax on how to deal with the MW accusations it is up to the investor to deal with stock ownership.  I don't think any of us are capable of avoiding negative blasts or accusations, but I do think that even if some of the accusations are accurate that it is up to the investor to judge that effect on your decisions as to stock ownership.

 

A great example as I've mentioned so many times is the insurance broker contingency commissions, something that I considered quite accurate as to Spitzer's complaint.  Yet that was buying euphoria, not selling manadate, time.  In hindsight (remember I owned but did not buy more) while I have made many millions on these investments I, likely one of the most knowledgable investors holding the stocks, was the main idiot in the room for not buying more.

 

Knowing yourself, monitoring yourself, rather than trying to control the wild-ass happenings as to "shorts" or whatever the hell they are?   Well we just watched a Super Bowl, that quarterback that went on the field seemed to control himself rather impressively ----- despite having quite the yard sale of a game up until the overtime.

 

Who are you? The mirror tells all.  We all can't live by the grievance...but it is the popular theme of the world today.  Fairfax?  To me it is a place to be invested and probably will be far less risky from here that some of the most trusted and successful technology stocks that are likely (in my view) not in any way shape or form capable of giving investors what they expect going forward.  

[glider3834]

34 minutes ago, nwoodman said:

https://www.fairfax.ca/press-releases/fairfax-responds-further-to-short-seller-report/

 

To the best of our knowledge, Muddy Waters has never attended our conference calls and neverasked a question, called us or written to us, but instead went to CNBC during our quiet period with these one-sided, ill-informed allegations and insinuations in a transparent attempt to profit by short selling our stock. They may have successfully done this with other companies, but they have woefully misjudged the strength of Fairfax’s financials and prospects and we are confident the marketplace will reflect our strong fundamentals.

Prem Watsa, Chairman and CEO of Fairfax, commented: “We are neither Berkshire Hathaway, nor GE, as Muddy Waters suggests. We are Fairfax, a strong and enduring company built over 38 years, committed to integrity, customer service, employee welfare and the communities we operate in. We have a unique Fair and Friendly culture throughout our organization. We strive to provide excellent returns to shareholders, and are committed to providing full disclosure in our annual report, highlighting both our pluses and minuses.

 

 

great response- liked '“We are neither Berkshire Hathaway, nor GE, as Muddy Waters suggests. We are Fairfax..."

 

[gfp]

46 minutes ago, glider3834 said:

Looking at MW  chart table below for years 2017-22 - how does that reconcile with Fairfax's number from their 2022 Annual report for 2017-22 period? Or am I missing something?

 

 

 

 

The Muddy Waters graph of book values appear to be each year's CAGR in Book value since some arbitrary day they are calling "the GFC."  So it isn't the book value growth for those years, but those end-dates.

 

The actual BV growth for those years (which is probably what most casual observers understood it as) was this:

 

2017: +24.7%

2018: -1.5%

2019: +14.8%

2020: +0.6%

2021: +34.2%

2022: +6%

 

(and 2023 comes out this week and should look pretty good)

 

* one thing about posting Fairfax's actual annual results as above is that the bumpiness goes against the narrative that this is a GE-style smoothed manipulator. 

Edited February 12 by gfp

[Hektor]

14 hours ago, dealraker said:

Of course I meant GE for Welch.

I read it as Welch at GE

[SafetyinNumbers]

3 hours ago, Hamburg Investor said:

 

 

@SafetyinNumbers Yes, thanks a lot, I really appreciate you're taking the time . You guys here are so much longer in the investing world and from time to time I need a little bit of assurance... We have way less people in Germany being interested in investing than you guys on the other side of the atlantic have. So I don't really have a lot of opportunities to get in touch with other people, discuss ideas etc. So I read a lot and feel Buffett, Prem & Co talking to me through the books and annual reports; so I really appreciate gett8ng into contact here (and - way less - at Seeking Alpha). And sorry for my english...


@dealraker nice comment; from the investments with over 10 per cent of my portfolio, Fairfax has been my worst performer since 2011 by miles for a long time; still it always felt being on the right train. In fact it helped me to learn, that Munger and Co are right, when saying you make money by sitting around and waiting instead of trading.

You’re welcome and congratulations. If an 11% CAGR is your worst return “by miles” since 2011, you should just keep doing what you’re doing.

 

 

[Hektor]

1 hour ago, nwoodman said:

called us or written to us, but instead went to CNBC during our quiet period

That, in my view, is not honorable. MW should have approached FFH for comments before going public with their thesis, in my opinion.

[Hamburg Investor]

29 minutes ago, dealraker said:

Yes but it does go somewhat further that the starting point during a positive investor view is simply going to be somewhat negative as to outcome vs a starting point that's questioning the model.  I wasn't aware enough to sell the stock when obviously it, the business and stock, wasn't performing all that well.  But I have bought/added the stock over 30 times in the last several years.

 

Thus the outcome is crazy good despite...

 

So while it is up to Fairfax on how to deal with the MW accusations it is up to the investor to deal with stock ownership.  I don't think any of us are capable of avoiding negative blasts or accusations, but I do think that even if some of the accusations are accurate that it is up to the investor to judge that effect on your decisions as to stock ownership.

 

A great example as I've mentioned so many times is the insurance broker contingency commissions, something that I considered quite accurate as to Spitzer's complaint.  Yet that was buying euphoria, not selling manadate, time.  In hindsight (remember I owned but did not buy more) while I have made many millions on these investments I, likely one of the most knowledgable investors holding the stocks, was the main idiot in the room for not buying more.

 

Knowing yourself, monitoring yourself, rather than trying to control the wild-ass happenings as to "shorts" or whatever the hell they are?   Well we just watched a Super Bowl, that quarterback that went on the field seemed to control himself rather impressively ----- despite having quite the yard sale of a game up until the overtime.

 

Who are you? The mirror tells all.  We all can't live by the grievance...but it is the popular theme of the world today.  Fairfax?  To me it is a place to be invested and probably will be far less risky from here that some of the most trusted and successful technology stocks that are likely (in my view) not in any way shape or form capable of giving investors what they expect going forward.  

 

Over all the bad years of Fairfax to me it always felt like the contrarian stock to the mainstream. The inflation hedge (to me fairfax was the insurance against a black swan event back than). Going into greece when it almost collapsed. Going into old style businesses, when the rest of the world was going into tech and growth and china. Going into africa and india felt like a useful diversification (which in a way doesn't make sens, as I view myself as a focus investor...). I wasn't aware that interest would stay so low for such a long time. If I knew I would have maybe sold some FFH stock. But I haven't known and I don't have any idea, where interest will stand in - say - 2026. Maybe there's another war, another Corona, maybe China collapses (housing), maybe the world finds its way back to peace? People in Germany weren't aware in 1920, that they would have a hyperinflation some years later. So maybe people could blame me (us?) for holding the stock so long. But I don't speculate on interest or anything; I just want a business that's robust against the downside.

[SafetyinNumbers]

8 minutes ago, Hektor said:

That, in my view, is not honorable. MW should have approached FFH for comments before going public with their thesis, in my opinion.

They know their arguments don’t hold any water so of course they didn’t. It’s a very good business model for those without integrity. 

[MMM20]

2 hours ago, Hektor said:

That, in my view, is not honorable. MW should have approached FFH for comments before going public with their thesis, in my opinion.

Maybe I’m not honorable enough but this didn’t bother me. I don’t check my facts with management before broadcasting an idea (even shorts) most of the time. What bothered me was pretty much entirely the whole “using your big platform to spread misinformation to move the market for a few days” thing. 
 

Edited February 12 by MMM20

[glider3834]

31 minutes ago, gfp said:

 

The Muddy Waters graph of book values appear to be each year's CAGR in Book value since some arbitrary day they are calling "the GFC."  So it isn't the book value growth for those years, but those end-dates.

 

The actual BV growth for those years (which is probably what most casual observers understood it as) was this:

 

2017: +24.7%

2018: -1.5%

2019: +14.8%

2020: +0.6%

2021: +34.2%

2022: +6%

 

(and 2023 comes out this week and should look pretty good)

 

* one thing about posting Fairfax's actual annual results as above is that the bumpiness goes against the narrative that this is a GE-style smoothed manipulator. 

yep the narrative -  I looked at the chart & thought it looked odd 

[Gregmal]

Again, the guy had an objective and it probably was already achieved. A 5 year old could quickly glance at what he was saying and see his objective if they had any previous familiarity with how he operates. Its magician level hand waiving. Look at this hand! he says, when what you want to be doing is paying attention to his other hand.

 

He has a formula for this sort of smash and grab stuff, the "thesis" is just arbitrary and tangentially necessary to justify him doing it. Continuing to talk about it and analyze it just validates what is clearly nonsense. The P/B metric was necessary when operations were mediocre from 2010-2020....When you've stabilized operations and will be producing steady earnings of the magnitude that they will, you need to change the way you value the company. 

[MMM20]

5 minutes ago, Gregmal said:

The P/B metric was necessary when operations were mediocre from 2010-2020....When you've stabilized operations and will be producing steady earnings of the magnitude that they will, you need to change the way you value the company. 

 

The question is if/when this ever becomes the consensus view. Maybe a fool's errand to even think about.

 

Edited February 12 by MMM20

[Xerxes]

wow.
Did MuddyWaters helped FFH by establishing a technical floor for a previously “overbought” stock !!

[gfp]

1 minute ago, MMM20 said:

 

The question is if/when this ever becomes the consensus view. Maybe a fool's errand to even think about.

 

I wouldn't hold your breath.  Berkshire is still being valued based on price-to-book value all these years later.

[MMM20]

Our guy @hardcorevalue with a great summary https://tidefall.substack.com/p/short-attacks-and-tobacco-stocks

[MMM20]

1 hour ago, gfp said:

 

I wouldn't hold your breath.  Berkshire is still being valued based on price-to-book value all these years later.

 

Fair enough, and that's why I just read Bloomstran's opuses breaking down intrinsic value in gory detail.

 

I guess therein lies the opportunity.

 

Edited February 12 by MMM20

[Viking]

This part of Fairfax's press release looks interesting.

 

At the end of 2022, the CAGR for BVPS was 17.8% (Fairfax 2022AR).

 

In the press release from this morning it has the CAGR as 18.9%. Can someone explain the difference?

 

Edited February 12 by Viking

[Spooky]

2 hours ago, dealraker said:

Yes but it does go somewhat further that the starting point during a positive investor view is simply going to be somewhat negative as to outcome vs a starting point that's questioning the model.  I wasn't aware enough to sell the stock when obviously it, the business and stock, wasn't performing all that well.  But I have bought/added the stock over 30 times in the last several years.

 

Thus the outcome is crazy good despite...

 

So while it is up to Fairfax on how to deal with the MW accusations it is up to the investor to deal with stock ownership.  I don't think any of us are capable of avoiding negative blasts or accusations, but I do think that even if some of the accusations are accurate that it is up to the investor to judge that effect on your decisions as to stock ownership.

 

A great example as I've mentioned so many times is the insurance broker contingency commissions, something that I considered quite accurate as to Spitzer's complaint.  Yet that was buying euphoria, not selling manadate, time.  In hindsight (remember I owned but did not buy more) while I have made many millions on these investments I, likely one of the most knowledgable investors holding the stocks, was the main idiot in the room for not buying more.

 

Knowing yourself, monitoring yourself, rather than trying to control the wild-ass happenings as to "shorts" or whatever the hell they are?   Well we just watched a Super Bowl, that quarterback that went on the field seemed to control himself rather impressively ----- despite having quite the yard sale of a game up until the overtime.

 

Who are you? The mirror tells all.  We all can't live by the grievance...but it is the popular theme of the world today.  Fairfax?  To me it is a place to be invested and probably will be far less risky from here that some of the most trusted and successful technology stocks that are likely (in my view) not in any way shape or form capable of giving investors what they expect going forward.  

 

Thanks for this post Dealraker. So much wisdom embedded within it.

 

 

[Libs]

<A great example as I've mentioned so many times is the insurance broker contingency commissions, something that I considered quite accurate as to Spitzer's complaint>

 

Sorry for a quick derail here, but I remember this well. I was in the thick of it as a branch (So Cal.) marketing manager for one of the major insurers. This was the mid 90's. We came up with the genius idea of offering bonuses to the brokers (Marsh Mac, Gallagher, etc.) if they put X amount of business with us for the year. It never occurred to us how unseemly it was! But of course, in keeping with Munger's teachings about incentives, brokers would, especially at year-end, put clients with the wrong carrier, to hit the goal. Not very ethical.

 

To go on a further tangent- at this same time (actually 2000) Buffett thought it was OK to 'rent out' Berkshire's balance sheet. As I recall AIG took him up on that. Most of us thought Brandon ( Gen Re head) took the fall for him on that one. A very rare lapse of judgement on Buffett's part IMO.

 

End of tangent. I think Dealraker has made me nostalgic for my old P & C days.

 

 

 

 

 

 

 

 

Edited February 12 by Libs

[Maverick47]

17 minutes ago, Viking said:

This part of Fairfax's press release looks interesting.

At the end of 2022, the CAGR for BVPS was 17.8% (Fairfax 2022AR).

 

In the press release from

this morning it has the CAGR as 18.9%. Can someone explain the difference?

 

@Viking  Maybe the inclusion of dividends or not?  Paragraph 2 of the 2022 letter refers to a 37 year book value including dividends CAGR as being 18.5%.  Still a good jump from there to 18.9 by adding one more year, but not as incongruous as moving from 17.8 to 18.9.  Likely an early read on how helpful 2023 was….

[Viking]

26 minutes ago, Maverick47 said:

@Viking  Maybe the inclusion of dividends or not?  Paragraph 2 of the 2022 letter refers to a 37 year book value including dividends CAGR as being 18.5%.  Still a good jump from there to 18.9 by adding one more year, but not as incongruous as moving from 17.8 to 18.9.  Likely an early read on how helpful 2023 was….

 

@Maverick47 great catch. From the 2022AR:

 

[SharperDingaan]

1 hour ago, Gregmal said:

Again, the guy had an objective and it probably was already achieved. A 5 year old could quickly glance at what he was saying and see his objective if they had any previous familiarity with how he operates. Its magician level hand waiving. Look at this hand! he says, when what you want to be doing is paying attention to his other hand.

 

He has a formula for this sort of smash and grab stuff, the "thesis" is just arbitrary and tangentially necessary to justify him doing it. Continuing to talk about it and analyze it just validates what is clearly nonsense. The P/B metric was necessary when operations were mediocre from 2010-2020....When you've stabilized operations and will be producing steady earnings of the magnitude that they will, you need to change the way you value the company. 

 

This is why we have the plastic bag; ain't in the playbook, and nobody grabs a slashing wolverine without getting at least a few wounds. Targets are supposed to roll over, not slash your throat! Fellow 'peers' pull back to watch the show, and place their bets! .... against MW.

 

SD  

[Hamburg Investor]

2 hours ago, SafetyinNumbers said:

You’re welcome and congratulations. If an 11% CAGR is your worst return “by miles” since 2011, you should just keep doing what you’re doing.

 

 

"By miles" was meant before the catch up of FFH. My other bigger longterm holdings since the crash in October 2011 (that was my - lucky - starting point) are BRK, MKL, DHR (including the Spinoffs), Brookfield (including the Splits) and Smurfit Kappa. They all performed better and the gap widend a lot from the beginning of 2017. Of course, since 2022 Fairfax catched up a lot, still it lags the others, most by miles. But I am hopeful, that will change now.