Fairfax 2024

[cwericb]

1 hour ago, Spooky said:

 

If you don't know anything about the company why are you even posting here? Please at least bring some analysis to the table if you are going to post.

 

I was wondering the same as he previously admitted he didn't know much about Fairfax - which I found surprising given the name of this board and the fact that he has been a member for a couple of years.

 

He seems to have formed a snap opinion of Fairfax based simply on the MW report. There is a wealth of information on these pages if he really wanted to offer an educated and informed opinion on the subject. 

 

It is always good to see contrary opinions, but when they are obviously and admittedly ill informed then they serve little purpose.

[MMM20]

I guess simple errors of omission don't matter when you can move the market and cover the next day.

 

Source: National Bank of Canada

 

[SafetyinNumbers]

1 hour ago, StubbleJumper said:

 

Yes, that's true.  FFH has been making a tonne of money over the past couple of years and will probably continue to do so for the next few years.  So, what an investor needs to figure out is whether that is just a cyclical phenomenon, or whether this time it's different.

 

 

SJ

Most investors don’t bother to model out the earnings power and look at historical results expecting mean reversion. The quants have had a great influence over how the average investor invests.

[MMM20]

1 minute ago, MMM20 said:

I guess simple errors of omission don't matter when you can move the market and cover the next day.

 

Source: National Bank of Canada

 

 

And I guess obvious analytical errors don't matter either. 

 

Source: National Bank of Canada

[Gregmal]

I honestly don’t know why this is such a big deal to people. Either way, the move is pretty immaterial and anyone who’s followed Block knows that he is somebody who at best, is very comfortable being deliberately misleading. Like the sleaze balls who sell sports betting tips claiming they have 80% win rates. And you don’t follow closely but as far as the eye can see know that number isn’t right. And when you actually see the dudes at the bar they’ll tell you off the record that the 80% number is totally cherry picked but no one will care about them if they gave you the entire picture. 

[MMM20]

24 minutes ago, Gregmal said:

I honestly don’t know why this is such a big deal to people. Either way, the move is pretty immaterial and anyone who’s followed Block knows that he is somebody who at best, is very comfortable being deliberately misleading. Like the sleaze balls who sell sports betting tips claiming they have 80% win rates. And you don’t follow closely but as far as the eye can see know that number isn’t right. And when you actually see the dudes at the bar they’ll tell you off the record that the 80% number is totally cherry picked but no one will care about them if they gave you the entire picture. 

 

I'd prefer that FFH not end up forced to sell another piece of a sub (even if it's at ~2x book). They're not running with some massive cushion at the holdco. Yes, they are generating a whole lot of cash right now - but if short sellers pile on, spread misinformation, and force them to post cash for the TRS going against them, then it's not just about meaningless volatility b/c anything can happen with stock prices in the short run - especially if short sellers smell blood in a relatively complex, volatile and illiquid one. I don't think it plays out this way, but that's why it's hard to just wave away as the bush league manipulative nonsense it seems to be. Maybe I'm off base?

 

I think many of us have big positions and just trying to make sure we're not missing something stupid.

 

Edited February 9, 2024 by MMM20

[Alekbaylee]

47 minutes ago, MMM20 said:

 

Good job! They just forgot to update the dividend ($15 not 10).

 

[Red Lion]

6 minutes ago, Gregmal said:

I honestly don’t know why this is such a big deal to people. Either way, the move is pretty immaterial and anyone who’s followed Block knows that he is somebody who at best, is very comfortable being deliberately misleading. Like the sleaze balls who sell sports betting tips claiming they have 80% win rates. And you don’t follow closely but as far as the eye can see know that number isn’t right. And when you actually see the dudes at the bar they’ll tell you off the record that the 80% number is totally cherry picked but no one will care about them if they gave you the entire picture. 

I’ve done well over the years buying after some of block’s reports. Buford was the best. I’m fully invested right now, already have a big chunk of ffh, and watching to see if I get a great chance to backup the truck. Looks like probably not. 

[SharperDingaan]

5 minutes ago, Ghost said:

Promises...promises. 

 

Hopefully, a good $300+/share on the turn before any option/margin leverage!

 

We would also be very surprised if MW didn't intend to exercise on existing options, as the mechanism by which to raise the shares to repay the short loans; plus accumulate some additional - offered for a buyback. We also expect them to have used the drop to lay in a stack of out-of-the-money calls; FFH buys in the stock at a price well < 1401, MW walks away, the price quickly returns > 1401 & all those calls go deep in the  money.

 

.... Now of course, if an enterprising lad had learnt from ericopoly, and also knew how to work this trick!

Interesting times 

 

SD

[Gregmal]

18 minutes ago, MMM20 said:

 

I'd prefer that FFH not end up forced to sell another piece of a sub (even if it's at ~2x book). They're not running with some massive cushion at the holdco. Yes, they are generating a whole lot of cash right now - but if short sellers pile on, spread misinformation, and force them to post cash for the TRS going against them, then it's not just about meaningless volatility. And anything can happen with stock prices in the short run, especially if short sellers smell blood in a relatively complex, volatile and illiquid one. I don't think it plays out this way, but that's why it's hard to just wave away as the bush league manipulative nonsense it seems to be. Maybe I'm off base here?

 

I think many of us have big positions and just trying to make sure we're not missing something stupid.

 

If they’re forced to sell anything because the stock trades back to where it was a few weeks or months ago then they’re idiots.

[ander]

1 minute ago, Gregmal said:

If they’re forced to sell anything because the stock trades back to where it was a few weeks or months ago then they’re idiots.

@MMM20 I agree with Gregmal they're idiots if they do not have a margin of safety for stock price movement that forces their hand. I have an oversized position and added to it - am only annoyed it's not down further! But @MMM20 what do you think the price threshold would be that would actually force their hand??

[Gmthebeau]

1 hour ago, Malmqky said:

Thanks for the positive contribution to this board.

Do you understand the report? It’s kind of a joke. A lot of these “issues” have actually been addressed by Fairfax. I don’t think this is a good faith report by MW…or they’re just misinformed. Guess FFH shouldn’t follow accounting rules..

 

Also not sure why you’re bringing up a situation from two decades ago that was proven to be false.

 

Fairfax isn’t a fraud lol
 

 

 

I didn't say it was a fraud, nor did the MW report.  They said it used iffy accounting to overstate assets and profits.   

 

As far as the guy who said the prior lawsuit sued the short sellers into the Stone Age, I hope he realizes that Fairfax lost that lawsuit and it was dismissed.

 

I am done replying to this thread because to many people only want to hear one side of a story.  MW has identified numerous company for many years that are frauds or using bad accounting so to simply dismiss it is stupid in my opinion.

 

Edited February 9, 2024 by Gmthebeau

[Ghost]

20 minutes ago, SharperDingaan said:

 

Hopefully, a good $300+/share on the turn before any option/margin leverage!

 

We would also be very surprised if MW didn't intend to exercise on existing options, as the mechanism by which to raise the shares to repay the short loans; plus accumulate some additional - offered for a buyback. We also expect them to have used the drop to lay in a stack of out-of-the-money calls; FFH buys in the stock at a price well < 1401, MW walks away, the price quickly returns > 1401 & all those calls go deep in the  money.

 

.... Now of course, if an enterprising lad had learnt from ericopoly, and also knew how to work this trick!

Interesting times 

 

SD

I am most likely missing the obvious, where would one find call options on FFH?  

[Junior R]

turned green lol

[Spooky]

13 minutes ago, Gmthebeau said:

I am done replying to this thread

 

Good riddance.

[lessthaniv]

19 hours ago, SharperDingaan said:

Folks, the reality is that FFH is going to go a good bit lower before this is all over. Simply do a swing trade, buy your stock back later at the lower price, and take your cash difference off the table. MW drives the share price down; FFH does a share buyback at below book, and books both a gain on cancellation, and a higher EPS. 

 

SD

Hedge by liquidating to cash based on a weakly supported argument ahead of what will likely be an exceptional looking annual report in 7 days? No thx. The last thing I want to do is lower my exposure here.

[UK]

1 hour ago, MMM20 said:

 

And I guess obvious analytical errors don't matter either. 

 

Source: National Bank of Canada

 

Thanks for these snippets!

[dartmonkey]

OK, question for the board: Given the fact that Fairfax has a normal course issuer bid outstanding, enabling them to purchase up to 10% of outstandings shares between 30 Sept 2023 and 29 Sept 2024, am I correct in thinking this allows them to continue purchasing their maximum of 8219 shares a day? (i.e., 25% of the average daily volume of Subordinate Voting Shares last year.) Given the fact that shares are selling at about $100 less than the pre-MW price, this would mean that they are saving almost $1m a day, thanks to the waters having been muddied for a little while.

 

Unfortunately, I don't expect this savings to last long enough for it to be material.

[spartansaver]

I don't have any skin in this game but man am I cheering for Fairfax to put on a short squeeze. Good luck! Diamond Hands!

[sleepydragon]

The thing is there won’t be any short squeeze.. Maybe MW is shorting, but if so they don’t have much money and if they have clients , those clients are not shorting, at least don’t seems so right now. They either have already tried and got burned in Jan, or they will try again after earning 

 

[cwericb]

Putting things in perspective, isn't share price presently back to where FFH was about three weeks ago?

[value_hunter]

Are shorts covering now? Looks like no chance to buy it cheap any more.

[Santayana]

3 minutes ago, value_hunter said:

Looks like no chance to buy it cheap any more.

Oh, it's still cheap.

[LC]

The only outstanding question I have is on the Level 2 classification for FFH's bond portfolio. My guess is there are covenants/options linked to these bonds which cause the L2 classification. Even with that question mark outstanding, the interest income generated from these bonds is observable so it is really more of a curiosity vs. a concern.

 

 

[nwoodman]

2 hours ago, MMM20 said:

I guess simple errors of omission don't matter when you can move the market and cover the next day.

 

Source: National Bank of Canada

 

This is partly why the board was scratching it's collective head yesterday.  My gut feeling is that MW has been “researching” for a while and knew their thesis was about to get run over by two freight trains - Fairfax equity positions and earnings.  They dropped the report to get at least some return on their efforts.