Fairfax 2024

[SafetyinNumbers]

2 hours ago, giulio said:

Thanks @SafetyinNumbers, i did not consider this optionality actually.

Still, it's way easier to hold the stock now. If the stock ran way higher than the actual business results/prospects it would be harder to hold on. What do you think?

That’s more of a question on investor psychology. Prem isn’t even thinking about selling. It’s not something he has to worry about and maybe we shouldn’t either no matter how hard it is. 

[Hektor]

1 hour ago, StubbleJumper said:

Jen Allen seems like a pretty sharp cat and has probably done a bit of thinking about this, but it seems to me that FFH needs to carry much larger holdco cash balances (true liquidity, not some of the bullshit portrayed in Note 5) if it wants to continue to carry those TRS.

+1

 

One could argue that this Prem and team would be aware of this risk, probably even better than anyone else. Could there  be safeguards in place that would avoid an outflow of $0.5B?

[Redskin212]

I have been a FFH shareholder for over 20 years, regularly attending annual meeting and listening to most quarterly conference call.  It is hard to explain, but I can hardly wait for the annual results release tomorrow and conference call Friday morning.   To me this silly MW report has just hyped it up more for me.

 

Thanks to all, especially Viking, for all the recent posts - the wealth of learning is amazing!

 

 

[TwoCitiesCapital]

53 minutes ago, Redskin212 said:

I have been a FFH shareholder for over 20 years, regularly attending annual meeting and listening to most quarterly conference call.  It is hard to explain, but I can hardly wait for the annual results release tomorrow and conference call Friday morning.   To me this silly MW report has just hyped it up more for me.

 

Thanks to all, especially Viking, for all the recent posts - the wealth of learning is amazing!

 

 

 

I'm giddy myself

 

Is gonna be high quality earnings (not accounting/paper gains) and a killer report 

[SafetyinNumbers]

News on the Digit board about IRDAI approval. SEBI approval also expected soon and speculation on H1 IPO.

 

It will be nice when it’s priced above FFH’s mark but we’ll see how it goes.

 

 

[LC]

5 hours ago, Hoodlum said:

As long as we have a hard market and the share price is below intrinsic value, then I would want them to keep the TRS position in place as is.  Any available cash would be best spent on expanding the insurance business.  The TRS can be closed once the share price is much close to the value of Fairfax.   It would be better to buy back shares during a softer market when share price is down from the peak. 

 

 

Agreed. Almost every company makes the same mistake - they find themselves in super favorable business conditions, generating tons of cash. Shareholders clamoring to buyback shares. Buybacks inevitably commence.

 

12, 24 months later? The business landscape changes. The share price is half what it was, same with competitors/adjacents. Rather than being able to take advantage, the company spent hundreds of millions, billions, on buybacks at prices 2x above the current price. 

[Hektor]

Does anyone here know if TRS has a time bound expiration? I vaguely remember Prem saying FFH can renew TRS as long as they wish (or something similar). I wonder if the outflow due to a stock slump might be limited to a particular time window, and will not continue if they don't renew TRS.

[lessthaniv]

Early note redemption announced yesterday for ~ $350m C$
 

https://www.globenewswire.com/news-release/2024/02/14/2829510/0/en/Fairfax-Announces-Early-Redemption-Of-Senior-Notes-Due-March-3-2025.html

[StubbleJumper]

26 minutes ago, lessthaniv said:

Early note redemption announced yesterday for ~ $350m C$
 

https://www.globenewswire.com/news-release/2024/02/14/2829510/0/en/Fairfax-Announces-Early-Redemption-Of-Senior-Notes-Due-March-3-2025.html

 

 

It's always nice to see them proactively managing the debt maturities, but this one is a little funny as they are redeeming debt that costs 4.95% one year early, while last month they were floating new debt at 6%.  I guess managing maturities costs a bit of money.

 

 

SJ

[SafetyinNumbers]

17 minutes ago, StubbleJumper said:

 

 

It's always nice to see them proactively managing the debt maturities, but this one is a little funny as they are redeeming debt that costs 4.95% one year early, while last month they were floating new debt at 6%.  I guess managing maturities costs a bit of money.

 

 

SJ

60bps difference between Canada and US 10 year benchmarks so it’s not apples to apples. 

[StubbleJumper]

31 minutes ago, SafetyinNumbers said:

60bps difference between Canada and US 10 year benchmarks so it’s not apples to apples. 

 

No, it's not apples to apples at all because it's comparing existing 1-yr debt vs. the new 10-yr debt.  But, it is a cash for cash difference, in that if they had waited a year to refinance and if prevailing interest rates remained the same (ie, if they are still able to float debt for 6% next year), they'd have saved a bit more than US$2.5 million in interest.  Of course, that comes with a certain level of risk, and managing the debt-maturities is all about managing risk (and rarely is risk management free!).

 

 

SJ

[Xerxes]

clawed its way back and locked in a hair above $1,400. 
 

[Thrifty3000]

Quick question: Do reserve releases flow through the income statement?

[Thrifty3000]

2 minutes ago, Thrifty3000 said:

Quick question: Do reserve releases flow through the income statement?

I’m assuming it only impacts balance sheet (and book value).

[StubbleJumper]

5 minutes ago, Thrifty3000 said:

Quick question: Do reserve releases flow through the income statement?

 

Yes, they flow through the income statement.

 

 

SJ

[gfp]

https://www.globenewswire.com/news-release/2024/02/15/2830440/0/en/Fairfax-Financial-Holdings-Limited-Financial-Results-for-the-Year-Ended-December-31-2023.html

 

https://www.fairfax.ca/wp-content/uploads/02_February_15_2024-PRFFH-2023_Q4_Press_Release_Final.pdf

Edited February 15, 2024 by gfp

[gfp]

"We have increased our annual interest and dividend income run-rate to approximately $2.0 billion and we anticipate it will remain at this level for approximately the next four years."

 

"

At December 31, 2023 there were 23,003,248 common shares effectively outstanding"

Edited February 15, 2024 by gfp

[MMM20]

The stock should be +50% tomorrow. Again, to be clear, it won’t be, but it should be. Anything below US$1500 is a farce with these results and outlook. 
 

Edited February 15, 2024 by MMM20

[keegomaster]

Very strong annual results. This is what caught my eye:

• The excess of fair value over carrying value of investments in non-insurance associates and market traded consolidated non-insurance subsidiaries increased significantly to $1,006.0 million at December 31, 2023 from $310.0 million at December 31, 2022, with $315.2 million of that increase related to publicly traded Eurobank.

[nwoodman]

@valuesource any chance you can delete your post.  There are links to the release no need to cut and paste the whole thing and it makes the flow of this thread very distracting.  Thanks in advance

[Hamburg Investor]

 

Quote

 

"Book value per basic share at December 31, 2023 was $939.65 compared to $762.28 at December 31, 2022 (an increase of 24.7% adjusted for the $10 per common share dividend paid in the first quarter of 2023)."
 

1. Book value grew $63.10 in q4 alone or 35.6% of the $177.37 bvps of 2023. That's an increase of 8.3% in q4 alone (in relation to year end 2023).
2. Weightes shares outstanding in q4 just reduced by 1.1% / 23,076 in q4 2023 vs. 23,387 in q4 2022 (I don't have the YE numbers of 2022; still that will not move the needle)

 

[valuesource]

5 minutes ago, nwoodman said:

@valuesource any chance you can delete your post.  There are links to the release no need to cut and paste the whole thing and it makes the flow of this thread very distracting.  Thanks in advance

Done.  Sorry, everyone seemed to be chomping at the bit to see the numbers and sometimes it takes 15 mins for Fairfax to put it up.

[nwoodman]

1 minute ago, valuesource said:

Done.  Sorry, everyone seemed to be chomping at the bit to see the numbers and sometimes it takes 15 mins for Fairfax to put it up.

Many thanks .  Great results and the increase in duration is just brilliant.  When it comes to Bonds these guys really are Masters of the Universe.  It is a treat to watch the balance sheet get stronger quarter by quarter.

[Santayana]

It's a real shame to see the Allied acquisition ruining the combined ratio like that.   Excited to hear what Carson Block has to say about that on the call tomorrow.

[Ross812]

Seeking alpha is reporting an earnings miss of $4.23. Not sure where the ~$177 estimate is coming from...