Fairfax 2024

[Viking]

What people are dancing around is the following: Is it possible to learn from your mistakes as an investor? Yes? Or no? 
 

Let’s ask a really mind bender of a question: Can making mistakes make you a better investor?
 

I think the best way to think about the equity hedge fiasco (2010 to 2016) is simply as a bad decision. Yes, the losses lasted for 7 straight years. And they were massive in size. But when the decision was reversed in late 2016, the losses stopped. 

The same could be said about the short positions that were held from 2010 to 2020. Lots of losses. But when the last short positions was exited in late 2020, the losses stopped. 
 

The same could be said about Fairfax’s poor equity decisions/holdings pre-2018. My read is Fairfax changed their investing framework around 2018. Partnering with strong management teams became more important. As did being in strong condition financially. And being profitable. The new equity purchases made beginning in 2018 to today have performed exceptionally well. And they were massive legacy equity holdings have all largely been fixed. It is a double whammy (in a good way). 
 

Back to our original questions:

 

1.) Did Fairfax learn from their 3 mistakes? Yes, i think they have. 

 

That is important, because it means they are unlikely to repeat them.
 

2.) Is Fairfax a better company today because of the 3 mistakes made? Yes, I think it is. 
 

That is important, because it gives us insight into the quality of the company and the senior team in place today - it has improved markedly.

 

Why do I think this? 

 

Learning the lesson - past is prologue
 

The best analog is when Fairfax last experienced great adversity - back in 2003 to 2005. The adversity was driven, in part, by losses in its shitty P/C insurance operations. Fairfax got through that trying time. And proceeded to learn the right lesson - stop buying low quality/under-reserved/statistically cheap P/C insurance companies often trading at big discounts to book value.

 

And that is what happened. Even though most investors still don’t fully recognize that this happened many years ago. 
 

Both P/C insurance and investment management businesses have experienced extreme adversity (at very different times in the company’s history). Both times Fairfax learned the right lessons. Today we have a company that is battle tested. It is more mature. It is like a star athlete just now entering its prime. Its most trying times are behind it. 

—————

 

Some investors are waiting for Fairfax to revert to its old ways again. This view assumes they have not learned the right lessons. They did not revert with insurance. I am optimistic they will not revert with investment management part of the business. Time will tell. 

Edited December 26, 2024 by Viking

[SafetyinNumbers]

7 hours ago, gfp said:

Who wants to bet that Fairfax's fixed income team moved further out in average duration during Q4?  Big "bull steepening" in the treasury market lately, and Fairfax had already been dipping their toes in the long end.

 

This spike in yields is super interesting if you are like me and focused on not just the fundamentals but also multiple expansion. One way multiples expand is if there is price insensitive buying like quants and passive. That’s why earnings beats/misses often result in outsized moves.

 

I have written previously about the quirky way that FFH reports making it look more expensive than it actually on a forward P/E basis. To recap, FFH only reports IFRS EPS unlike most companies that report adjusted EPS. Unsurprisingly, for most stocks adjusted EPS has a higher correlation to stock price movement so most screens ignore GAAP/IFRS EPS. Seven financial analysts cover FFH. All seven have GAAP EPS estimates. Two analysts have adjusted EPS estimates, Morningstar and RBC. Morningstar has the same estimate for Adjusted EPS and GAAP EPS but RBC reports core earnings in that spot which excludes gains/losses. When FFH is screened on trailing core earnings it looks like it trades at 21x trailing which doesn’t seem very cheap. Plus FTM EPS looks like it’s $127 which is 11x earnings with low predictability. 

Adjusted EPS was particularly weak in Q423 and Q324 because interest rates declined significantly. Under IFRS 17, that forces FFH to revalue their insurance liabilities higher which hurts underwriting profit. The gains/losses on the bond portfolio more than offset on an economic basis but they aren’t captured in core earnings. Both quarters look like misses but we can see they were very healthy on an IFRS basis. 
 

In Q424 as @gfp highlighted rates are up a lot so this quarter should be the opposite. Underwriting profit should be up a lot and take adjusted EPS along with it while bond losses will be in IFRS EPS. There are also lots of equity gains (STLC, PAA, FFH TRS) so it’s possible both numbers beat consensus by a decent margin. In theory earnings beats bring buyers so we might get some multiple expansion. 

 

 

[Viking]

10 minutes ago, SafetyinNumbers said:

This spike in yields is super interesting if you are like me and focused on not just the fundamentals but also multiple expansion. One way multiples expand is if there is price insensitive buying like quants and passive. That’s why earnings beats/misses often result in outsized moves.

 

I have written previously about the quirky way that FFH reports making it look more expensive than it actually on a forward P/E basis. To recap, FFH only reports IFRS EPS unlike most companies that report adjusted EPS. Unsurprisingly, for most stocks adjusted EPS has a higher correlation to stock price movement so most screens ignore GAAP/IFRS EPS. Seven financial analysts cover FFH. All seven have GAAP EPS estimates. Two analysts have adjusted EPS estimates, Morningstar and RBC. Morningstar has the same estimate for Adjusted EPS and GAAP EPS but RBC reports core earnings in that spot which excludes gains/losses. When FFH is screened on trailing core earnings it looks like it trades at 21x trailing which doesn’t seem very cheap. Plus FTM EPS looks like it’s $127 which is 11x earnings with low predictability. 

Adjusted EPS was particularly weak in Q423 and Q324 because interest rates declined significantly. Under IFRS 17, that forces FFH to revalue their insurance liabilities higher which hurts underwriting profit. The gains/losses on the bond portfolio more than offset on an economic basis but they aren’t captured in core earnings. Both quarters look like misses but we can see they were very healthy on an IFRS basis. 
 

In Q424 as @gfp highlighted rates are up a lot so this quarter should be the opposite. Underwriting profit should be up a lot and take adjusted EPS along with it while bond losses will be in IFRS EPS. There are also lots of equity gains (STLC, PAA, FFH TRS) so it’s possible both numbers beat consensus by a decent margin. In theory earnings beats bring buyers so we might get some multiple expansion. 

 

 

 

@SafetyinNumbers , thanks for taking the time to explain the difference in GAAP and IFRS reporting, and how it is used by analysts. Very insightful  

[Viking]

3 hours ago, TwoCitiesCapital said:

 

I made the argument awhile back that being so underweight duration relative to their liabilities absolutely WAS a macro call when people were suggesting Fairfax has learned their lesson and moved beyond that. 

 

It was a $20-30 billion bet that rates would go higher and it paid off. 

 

But the last time they made such a bet, in 2016, rates rose briefly and Fairfax never extended then rates collapsed in 2020 costing billions in interest and potentially billions in capital gains if you believe they'd have sold the bottom in 2020. 

 

I don't view the short duration between as a 2021 and onwards move. It's been a trade they've had on since 2016 and any gains need to be averaged out over that timeline and against the cost of earnings 2-3%, or more, on the bonds over that timeline. 

 

 

 

@TwoCitiesCapital , my view on this topic has evolved over the years. One of the keys with investing is the following: "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong," Druckenmiller told author Jack Schwager about what he learned from Soros.

- https://markets.businessinsider.com/news/stocks/stanley-druckenmiller-13-most-brilliant-quotes-from-2019-2-1027989932#its-not-whether-youre-right-or-wrong-thats-important-but-how-much-money-you-make-when-youre-right-and-how-much-you-lose-when-youre-wrong-13

 

Fairfax made two big changes to their investment portfolio in late 2016 (after Trump was elected for the first time):

1.) They exited their equity hedges.

2.) They shortened the average duration of their bond portfolio - thinking inflation might be coming in the future.

 

Let's look at the second decision, shortening the average duration of the fixed income portfolio. Yes, Fairfax's average yield was low. For the 5 years from 2017 to 2021, Fairfax's average yield was 2.4%. Let's assume this very defensive stance 'cost' Fairfax investors an average of 1% per year. This 'cost' was about $1.5 billion from 2016 to 2021 ($147.6 billion x 1%).   

 

From 2016 to 2021, Fairfax was active buying and selling its fixed income portfolio. In 2021, the realized more than $200 million in gains (when they sold all their corporate bonds at a 1% yield). So the total 'cost' to Fairfax was not $1.5 billion. When we include bond gains from 2016 to 2021 it was much less than this.

 

Now we need to calculate how much Fairfax 'made' when interest rates turned in 2022.

 

My guess is the average duration of the fixed income portfolio:

1.) Likely saved the company $2 to $3 billion in losses on their bond portfolio alone (this estimate might be low).

2.) Allowed extremely rapid earn through to interest income of much higher interest rates. How much of a benefit? I don't think an incremental $1 billion is a crazy number to use.  

3.) Their positioning also allowed them to be extremely aggressive growing their insurance business in the hard market during 2022 (Fairfax had 25% growth that year). Value of this? A big number. 

 

Bottom line, I think when you actually run the numbers and include all the puts and takes, the decision to go short duration on the fixed income portfolio was a very good decision for Fairfax shareholders - even when calculated beginning in 2017. It was a small drag on earnings from 2017 to 2021. And then it worked out spectacularly well for Fairfax in 2022, 2023, 2024 and future years. 

 

What Fairfax did was value investing 101. Back in late 2016, Fairfax correctly surmised that investors were not being properly compensated for taking duration. With hindsight, they were right. They sized their investment appropriately. And as a result, they made Fairfax shareholders a lot of money.

 

Edited December 27, 2024 by Viking

[mananainvesting]

A subsidiary of Odyssey Group expanding to Hong Kong

 

https://www.insurancebusinessmag.com/asia/news/breaking-news/ukheadquartered-newline-group-establishes-base-in-hong-kong-518739.aspx

 

[ValueMaven]

Does anyone have an interesting chart of FFH shares outstanding since inception?  

I know it went from like 3M in the 80s to 12M in the late 90s ... back down, then peaked near 27M from Allied ... and is around 22M or so? 

I'm sure others have this at the tip of their fingers.  

[Junior R]

2 minutes ago, ValueMaven said:

Does anyone have an interesting chart of FFH shares outstanding since inception?  

I know it went from like 3M in the 80s to 12M in the late 90s ... back down, then peaked near 27M from Allied ... and is around 22M or so? 

I'm sure others have this at the tip of their fingers.  

https://www.macrotrends.net/stocks/charts/FRFHF/fairfax-financial-holdings/shares-outstanding

[ValueMaven]

4 minutes ago, Junior R said:

https://www.macrotrends.net/stocks/charts/FRFHF/fairfax-financial-holdings/shares-outstanding

 

Thank you.  But need since inception to include the 80s and 90s!

[SafetyinNumbers]

18 minutes ago, ValueMaven said:

 

Thank you.  But need since inception to include the 80s and 90s!

The data is in every annual report but it’s not in chart form

 

 

[gfp]

In case you really want a visual - here is 96 onwards.  Otherwise, the Annual Report as above

https://companiesmarketcap.com/fairfax-financial/shares-outstanding/

[TwoCitiesCapital]

20 hours ago, Viking said:

 

@TwoCitiesCapital , my view on this topic has evolved over the years. One of the keys with investing is the following: "It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong,"

 

I don't disagree with this. 

 

20 hours ago, Viking said:

 

Fairfax made two big changes to their investment portfolio in late 2016 (after Trump was elected for the first time):

1.) They exited their equity hedges.

2.) They shortened the average duration of their bond portfolio - thinking inflation might be coming in the future.

 

They didn't fully exit their hedges/shorts in 2016. Fairfax maintained a regular short book until 2020/2021 and continued to lose quit a bit on them. Whether or not you consider the shorts to be hedges for the remainder of the equity book or not may depend on the person you ask. But I don't really care if they were shorting individual companies or the S&P - they lost money doing it through 2020/2021. 

 

20 hours ago, Viking said:

Let's look at the second decision, shortening the average duration of the fixed income portfolio. Yes, Fairfax's average yield was low. For the 5 years from 2017 to 2021, Fairfax's average yield was 2.4%. Let's assume this very defensive stance 'cost' Fairfax investors an average of 1% per year. 

 

Why only 1% a year? And why not consider the optionality/potential for billions of gains in 2020? And why not consider the compound effect on those billions being invested at the covid lows? 

 

20 hours ago, Viking said:

Now we need to calculate how much Fairfax 'made' when interest rates turned in 2022.

 

My guess is the average duration of the fixed income portfolio:

1.) Likely saved the company $2 to $3 billion in losses on their bond portfolio alone (this estimate might be low).

2.) Allowed extremely rapid earn through to interest income of much higher interest rates. How much of a benefit? I don't think an incremental $1 billion is a crazy number to use.  

3.) Their positioning also allowed them to be extremely aggressive growing their insurance business in the hard market during 2022 (Fairfax had 25% growth that year). Value of this? A big number. 

 

I don't disagree with this. They've been exceptionally well positioned from 2021 onwards. My  point is that it wasn't a home run and some visionary positioning decision made in 2021 that they moved to the short end - they had been there for 5 years and had suffered poor returns and limited optionality through Covid as a result. 

 

What made this trade work out for them was the hard insurance market. They had billions more in float when they were right vs when they were wrong which swings the numbers more in their favor. And that wasn't something they could have foreseen, or were betting on, when they went short in 2016.

 

Making an extra $1-2 billion over the course of 8-years isn't a big win - especially when you they could have made that much, or more,  in a single trade by dumping duration during Covid if they hadn't already dumped it. And then what would have happened to those reinvested monies? More gains!

 

20 hours ago, Viking said:

 

Bottom line, I think when you actually run the numbers and include all the puts and takes, the decision to go short duration on the fixed income portfolio was a very good decision for Fairfax shareholders - even when calculated beginning in 2017. It was a small drag on earnings from 2017 to 2021. And then it worked out spectacularly well for Fairfax in 2022, 2023, 2024 and future years. 

 

It ended up being a marginally good trade for them. And maybe I shouldn't be complaining - that positioning is probably what allowed me to buy them @ $250-450 as shareholders gave up after 7-8 years of exceptionally poor performance during a ripping bull market. 

 

But now that I own them in size, I don't want them making the same mistakes. 

 

20 hours ago, Viking said:

 

What Fairfax did was value investing 101. Back in late 2016, Fairfax correctly surmised that investors were not being properly compensated for taking duration. With hindsight, they were right.

 

I disagree. The initial thesis was that Donald Trump would take office and the economy would go gangbusters. In hind sight, they were wrong. But they waited 5-years and got lucky with a hard market insurance, Covid supply chain disruptions, and inflationary policies from both Trump/Biden.

 

None of those had anything to do with the original thesis in 2016. You're resulting instead of judging the initial thesis and outcome. 

 

20 hours ago, Viking said:

 

 

They sized their investment appropriately. And as a result, they made Fairfax shareholders a lot of money.

 

 

They were wrong, were patient, and got lucky. It WAS a macro trade.

 

It was hugely risky in term of forward returns. And despite eventually working out, I'd rather them not being wrong on macro/rate calls with the entire fixed income portfolio again. Keep the duration within a reasonable margin of liabilities going forward, allow for the interest income to be predictable and provide optionality in crisis, and make your alpha being opportunistic. That is what I want from them instead of swinging for the fences and being wrong on a major call once every few years. 

Edited December 27, 2024 by TwoCitiesCapital

[Viking]

3 hours ago, TwoCitiesCapital said:

 

I don't disagree with this. 

 

 

They didn't fully exit their hedges/shorts in 2016. Fairfax maintained a regular short book until 2020/2021 and continued to lose quit a bit on them. Whether or not you consider the shorts to be hedges for the remainder of the equity book or not may depend on the person you ask. But I don't really care if they were shorting individual companies or the S&P - they lost money doing it through 2020/2021. 

 

 

Why only 1% a year? And why not consider the optionality/potential for billions of gains in 2020? And why not consider the compound effect on those billions being invested at the covid lows? 

 

 

I don't disagree with this. They've been exceptionally well positioned from 2021 onwards. My  point is that it wasn't a home run and some visionary positioning decision made in 2021 that they moved to the short end - they had been there for 5 years and had suffered poor returns and limited optionality through Covid as a result. 

 

What made this trade work out for them was the hard insurance market. They had billions more in float when they were right vs when they were wrong which swings the numbers more in their favor. And that wasn't something they could have foreseen, or were betting on, when they went short in 2016.

 

Making an extra $1-2 billion over the course of 8-years isn't a big win - especially when you they could have made that much, or more,  in a single trade by dumping duration during Covid if they hadn't already dumped it. And then what would have happened to those reinvested monies? More gains!

 

 

It ended up being a marginally good trade for them. And maybe I shouldn't be complaining - that positioning is probably what allowed me to buy them @ $250-450 as shareholders gave up after 7-8 years of exceptionally poor performance during a ripping bull market. 

 

But now that I own them in size, I don't want them making the same mistakes. 

 

 

I disagree. The initial thesis was that Donald Trump would take office and the economy would go gangbusters. In hind sight, they were wrong. But they waited 5-years and got lucky with a hard market insurance, Covid supply chain disruptions, and inflationary policies from both Trump/Biden.

 

None of those had anything to do with the original thesis in 2016. You're resulting instead of judging the initial thesis and outcome. 

 

 

They were wrong, were patient, and got lucky. It WAS a macro trade.

 

It was hugely risky in term of forward returns. And despite eventually working out, I'd rather them not being wrong on macro/rate calls with the entire fixed income portfolio again. Keep the duration within a reasonable margin of liabilities going forward, allow for the interest income to be predictable and provide optionality in crisis, and make your alpha being opportunistic. That is what I want from them instead of swinging for the fences and being wrong on a major call once every few years. 

@TwoCitiesCapital , i appreciate the opportunity to discuss/debate. At the end of the day, we all have our own frameworks to understand/process the decisions that Fairfax has made in the past, what the results were and what it means for the company today and in the future. As a result, we are sometimes going to see things differently. And that is not a bad thing.

Edited December 28, 2024 by Viking

[nwoodman]

11 hours ago, TwoCitiesCapital said:

It ended up being a marginally good trade for them. And maybe I shouldn't be complaining - that positioning is probably what allowed me to buy them @ $250-450 as shareholders gave up after 7-8 years of exceptionally poor performance during a ripping bull market. 

 

But now that I own them in size, I don't want them making the same mistakes. 

I don’t think any of us does.  I think we are back in Bradstreet’s sweet spot I.e normal rates vs abnormally low.   Also the hubris/sugar hits of the wins from the GFC and Bank of Ireland are just distant echoes.  Eurobank has worked but no Midas touch.  Shorts done, replaced by considered stock picking.  Last time, I mention it, I promise, but a very different President in Peter Clarke.  I think Prem has his A-Team for the next 10-15 years.  Let’s see how Ben Watsa does at Fairfax India, but so far I don’t see any red flags there.  If this transition works out it will truly cement Prem as one of the greats.  
 

Edit:  I threw a few more on the pile over the last couple of weeks and as recently as last night.  Still my highest conviction idea other than Nintendo.

Edited December 28, 2024 by nwoodman

[SafetyinNumbers]

5 hours ago, nwoodman said:
 

Edit:  I threw a few more on the pile over the last couple of weeks and as recently as last night.  Still my highest conviction idea other than Nintendo.

I added a small amount yesterday too. I really shouldn’t at a 45%+ position but the more I learn, the more excited I get about the prospects of 20%+ ROE over the next 5 years given the H4L rates, high return reinvestment opportunities (buybacks, minority interests buy ins) and all of the right tail options in the non-fixed income portfolio (Ki, BIAL, EUROB…).
 

I don’t expect every call to be right just that it is logical in the context in which it was made. 

[whatstheofficerproblem]

https://archive.is/WX51w

 

Worth noting.

[Junior R]

6 hours ago, SafetyinNumbers said:

I added a small amount yesterday too. I really shouldn’t at a 45%+ position but the more I learn, the more excited I get about the prospects of 20%+ ROE over the next 5 years given the H4L rates, high return reinvestment opportunities (buybacks, minority interests buy ins) and all of the right tail options in the non-fixed income portfolio (Ki, BIAL, EUROB…).
 

I don’t expect every call to be right just that it is logical in the context in which it was made. 

It is interesting FFH has been stable during the drops in other stocks...I wanted to add more if it went under $1900 but lowest it touched was 1950ish couple days / weeks ago

 

 

Blackberry also might be a stock that eventually breaks even for Fairfax or goes higher

[Dinar]

3 hours ago, whatstheofficerproblem said:

https://archive.is/WX51w

 

Worth noting.

This is a very good point.  However, there was an article a while ago, which stated that many countries in Europe are beginning to require climate insurance.  So while the supply of insurance may increase, the demand increase might be much bigger. 

[Hoodlum]

1 hour ago, Dinar said:

This is a very good point.  However, there was an article a while ago, which stated that many countries in Europe are beginning to require climate insurance.  So while the supply of insurance may increase, the demand increase might be much bigger. 

I believe there will be new areas that will require catastrophe insurance that either lumped it in with other insurance in the past or never thought it could occur in their area.
 

Some areas in the Carolinas got hit very hard from Hurricane Milton and I know from speaking to some of my staff from that area who lived there for over 30 years, they thought they were protected because they were far enough inland.  Even the  NCEI that collect hurricane data in Asheville was unprepared and was offline for almost a month. The NCEI actually moved there over 50 years ago from New Orleans believing they would be protected. 

 

Earlier this month TD Insurance requested the first ever Canada Catastrophe bond. We will see more of this globally. 
 

https://www.artemis.bm/news/td-insurance-first-ever-pure-canada-risk-cat-bond-c150m-mmifs-re-2025-1/
 

TD Insurance, part of Canada’s TD Bank group, is seeking C$150 million in reinsurance from the capital markets through its debut MMIFS Re Ltd. (Series 2025-1) catastrophe bond deal, which would be the first natural cat bond to solely cover perils in that country, Artemis has learned.
 

There are other insurers in Canada that have the scale and natural catastrophe exposure to become cat bond sponsors in future, so this MMIFS Re issuance should serve to further promote the potential for accessing reinsurance through the capital markets to those companies.

 

Edited December 28, 2024 by Hoodlum

[nwoodman]

1 hour ago, Junior R said:

Blackberry also might be a stock that eventually breaks even for Fairfax or goes higher

Yep, never say never.  It’s been on a bit of a tear, after  a break-even quarter and  the Cylance sale for ~$160m plus shares in Arctic Wolf.  After adjustments this gives them $80m now and $40m in a years time.  The fact that they paid $1.4 bn in cash (ouch) in 2018 is history. I am sure we have all written off the BlackBerry investment so it’s like an option on IoT and Secure Comms at this stage.  Hopefully WSB boys get behind it again

 

https://www.blackberry.com/us/en/company/newsroom/press-releases/2024/arctic-wolf-and-blackberry-announce-acquisition-agreement-for-cylance

[petec]

On 12/28/2024 at 3:25 PM, SafetyinNumbers said:

I added a small amount yesterday too. I really shouldn’t at a 45%+ position but the more I learn, the more excited I get about the prospects of 20%+ ROE over the next 5 years given the H4L rates, high return reinvestment opportunities (buybacks, minority interests buy ins) and all of the right tail options in the non-fixed income portfolio (Ki, BIAL, EUROB…).
 

I don’t expect every call to be right just that it is logical in the context in which it was made. 

 

I don't really understand this logic now vs 4 years ago when FFH was a nested egg of value. Today buybacks are worth far less and several of the right tail options have happened. What's the right tail at Eurobank, for example? Are our stakes in Ki (or even BIAL) really big enough to make a difference? 

 

4 years ago FFH was fairly easy to identify as a massive value opportunity. Today it looks more like a very attractive compounder to me.

[SafetyinNumbers]

2 hours ago, petec said:

 

I don't really understand this logic now vs 4 years ago when FFH was a nested egg of value. Today buybacks are worth far less and several of the right tail options have happened. What's the right tail at Eurobank, for example? Are our stakes in Ki (or even BIAL) really big enough to make a difference? 

 

4 years ago FFH was fairly easy to identify as a massive value opportunity. Today it looks more like a very attractive compounder to me.

4 years ago I didn’t appreciate what a move in interest rates was going to do for base ROE. We hadn’t had the hard market yet either so premiums were a lot smaller and I didn’t know they were going to be able to grow so fast. The margin of safety on earnings is higher now than it was back then even if the stock is now trading at a premium to book vs a discount. 
 

Eurobank may have sustainable ROE of 15%+ which means it’s probably worth north of 2x BV. I’m not saying anyone will pay it anytime soon but it does mean buybacks can meaningfully improve EPS. They may also be able to continue doing accretive deals like Hellenic which seems very accretive. Ki and BIAL are also $100/sh+ opportunities in gains potential each when they IPO. That’s on top of the current FV over CV close to $100/sh. 

 

I think you are correct that it’s an attractive compounder. Forward ROE is likely somewhere between 15-25% over the next 5 years but it makes a big difference where it lands in that range to total returns especially if multiple expansion is has correlation with ROE. 
 

Not everyone invests the same though. That’s what makes a market. 

[petec]

On 12/28/2024 at 11:52 PM, nwoodman said:

The fact that they paid $1.4 bn in cash (ouch) in 2018 is history.

 

Just incredible when you think back.

[petec]

12 minutes ago, SafetyinNumbers said:

Not everyone invests the same though.

 

Absolutely and I did not mean to be critical. Just find it interesting. To me, 4 years ago, Fairfax was priced for nothing to go right, and I liked that because there were many ways for things to go right (even if I wasn't sure when).

 

Today I find it harder (but it is still my largest position).

 

14 minutes ago, SafetyinNumbers said:

Ki and BIAL are also $100/sh+ opportunities in gains potential each when they IPO.

 

This seems rather high to me. What are the underlying assumptions? (Sorry if it has been discussed upthread - I may have missed stuff over the last few weeks.)

[SafetyinNumbers]

28 minutes ago, petec said:

 

Absolutely and I did not mean to be critical. Just find it interesting. To me, 4 years ago, Fairfax was priced for nothing to go right, and I liked that because there were many ways for things to go right (even if I wasn't sure when).

 

Today I find it harder (but it is still my largest position).

 

 

This seems rather high to me. What are the underlying assumptions? (Sorry if it has been discussed upthread - I may have missed stuff over the last few weeks.)

Maybe you can share your own assumptions on BIAL and Ki as they seem high to you, you must have something in mind. 

[bluedevil]

I believe the upside in Ki is limited by the fact that BX owns most of the equity.  Unfortunately, when Ki needed to raise money to launch, Fairfax was capital restrained.