ValueMaven Posted February 16 Share Posted February 16 This could easily be up 10% tomorrow. What a stupid stock to short. The float is so tight - you actually might get a squeeze. Wild. Link to comment Share on other sites More sharing options...
Haryana Posted February 16 Share Posted February 16 4 minutes ago, ValueMaven said: This could easily be up 10% tomorrow. What a stupid stock to short. The float is so tight - you actually might get a squeeze. Wild. Maybe the fee they received for shorting covers the limited cost of derivatives used to short. Link to comment Share on other sites More sharing options...
Haryana Posted February 16 Share Posted February 16 22 minutes ago, Hektor said: I guess this makes @Parsad happy. He has been calling for a $2B at the holding company Well, they felt comfortable increasing the dividend by 50%. FIH-U performance fee receivable of $110.2 million in cash. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted February 16 Share Posted February 16 1 hour ago, valuesource said: Newswire services have a way of really cutting to the bone... Jeezus.... You just can't win, can you. No mention of last year's profits being goosed by $1.2B from the per insurance sale.... 1 hour ago, StubbleJumper said: The most obvious point is that there's basically one bil of unrealised gains on fixed income, and it is unlikely that those bonds will be sold any time soon. We will see a nice pile of interest and divvies over the coming years, which is outstanding. But the $997m of unrealised gains on the bonds is low quality of earnings. No lower quality than the $1.2B in losses taken last year for interest rate moves. Most of these gains won't be given back because it's not reflective of premiums to par as much as it the reversal of prior discounts to par from interest rates running higher in 2022 as well as the amortization of those discounts as portions of bonds come nearer to maturity. Link to comment Share on other sites More sharing options...
Hektor Posted February 16 Share Posted February 16 3 minutes ago, Haryana said: Well, they felt comfortable increasing the dividend by 50%. FIH-U performance fee receivable of $110.2 million in cash. Link to comment Share on other sites More sharing options...
Hamburg Investor Posted February 16 Share Posted February 16 (edited) My main take away regarding the insurance segment: "International Insurers and Reinsurers" is taking giant steps from being the third (unrecognized) insurance segment of the three segments to rapidly overtaking the North American Insurers business within a few years. International improves very fast and gets nice CRs. Will International become the crown jewel of the Insurance Business within a few years? Anyway this will be one of the most interesting parts of Fairfax to keep an eye on in the next years and decades. While North American Insurers CR and Global Insureres CR stayed relatively unchanged in q4 in comparison to 2022, Internationals CR improved by 8.0% (!) yoy to 93.4%. FY now is 95.9% GWP within International segment grew by 27.3% in q4 yoy and 21.0% FY 2023. Impressive. As the biggest segment (Global Insurers and RI) shrank sharply by nearly 15% and the North American insurers significantly lagged the enormous international growth, the international segment accounted for 14.2% of Fairfax premiums in q4. (FY 2023: 12,4% / FY 2022: 10,8%). Around half of the premium growth in 2023 in absolute terms has its origin in the International Business. (Have we had that before?) Even though there were special effects in Q4, international business is a significant factor for the first time. It is catching up with the other two segments in terms of profitability and is becoming an important growth driver even in absolute terms. But that's not all: GIG will give another $2.7bn in GWP in 2024 (that's Prems estimate). Add that to the existing $3.6bn from 2023 and give a little bit extra growth and we'll get to around (or maybe above) $6.5bn gwp for the international insurance business in 2024. Compare that number to the $7.6bn GWP in North America in 2023. ... and International is growing stronger (GIG is a strong grower too). ... and International is getting more and more profitable. Why? I don't know, but maybe: economies of scale? The new Insurers are learning from other insurers (Is there a project like at BRK where the CEOs get special meetings)? Is Prem closley watching and investing opporunistically in countries and segments with special "one-time-opportunities"? (With some dozen Countries now, the chances accumulate to get those chances; I would be surprised, if Prem wouldn't like to take those chances) In any case I see some profit in having such a diverse group of insurance companies. It gives diversification, optionality and there's something to learn even for the "old" Fairfax Insurers I guess. OK, I leave it as it is now; it's 2:00 in the morning now and I am really tired. @Viking will give an overview anyway and I am really looking forward to that, so I thought I just pick this topic... Edited February 16 by Hamburg Investor Link to comment Share on other sites More sharing options...
Hoodlum Posted February 16 Share Posted February 16 17 minutes ago, glider3834 said: so appears no questions on Digit or IFRS 17 from what I can see That is interesting as Digit had by far the greatest gap between the book value of $3.5b and their estimated value of $1.5b from their initial report. I suspect the report from yesterday that the Go Digit IPO was approved gave them some pause as they didn’t want to give Prem any ammunition in his response in case he was able to comment on the IPO. I hope Prem is able to discuss the IPO and does bring it up during the response to these questions. GO Digit made up a large share of MW’s book shortfall. Link to comment Share on other sites More sharing options...
MMM20 Posted February 16 Share Posted February 16 Don't get lost in the weeds. They're expecting interest and dividend income alone of ~$2B for the next four years. That is up from ~$1.5B previously. That's just interest and dividend income. Link to comment Share on other sites More sharing options...
glider3834 Posted February 16 Share Posted February 16 (edited) 1 hour ago, MungerWunger said: MW questions to management for tomorrow's earnings call: https://d.muddywatersresearch.com/content/uploads/2024/02/Fairfax_MWQuestionsForQ423Call.pdf - so appears no questions on Digit valuation specifically or IFRS 17 from what I can see - MW thinks that Warren Buffet wouldn't have paid the same multiple for Gulf Insurance so Fairfax must have overpaid - I think this is speculating. Also Warren Buffet reportedly paid a higher multiple of 2.86xBV to minority interests to take control of Geico. to https://www.washingtonpost.com/archive/business/1995/12/04/a-23-billion-question-on-buffetts-geico-buyout/0c880b8a-d509-4121-b2ac-e50c28a7603a/ Gecio shareholders, she said, got a buyout price of 2.86 times Geico's book value of $24.44 per share as of June 30. The average price recorded for other deals involving property-casualty insurance companies, she said, has been only 1.5 times book value. Book value is a measure of a company's intrinsic value. Edited February 16 by glider3834 Link to comment Share on other sites More sharing options...
Hektor Posted February 16 Share Posted February 16 2 hours ago, valuesource said: Newswire services have a way of really cutting to the bone... My be AI generated Link to comment Share on other sites More sharing options...
treasurehunt Posted February 16 Share Posted February 16 1 hour ago, StubbleJumper said: Did I read this right? Today's release states that FFH's share of Exco's profit for 2023 was $129.1m and the Q3 release indicates that its carrying value on FFH's books was $418.3m, and those clowns are grousing that the position should be written down? I must confess that I wouldn't even know how to write down a position with that income number and that carrying value! SJ Yeah, seems ridiculous on the face of it. But I hope Prem goes into some detail about Exco tomorrow; I'd love to find out more about this investment! Link to comment Share on other sites More sharing options...
Viking Posted February 16 Share Posted February 16 I look forward to hearing what Fairfax has to say on the conference call tomorrow morning. But at first glance, what a great finish to the best year in the company’s history. In short, 2023 was a transformative year for Fairfax. Insurance? Never been better positioned. Fixed income? Looks close to perfectly positioned. Equities? Never been better positioned. Most importantly, the quality of insurance and the investment portfolios (fixed income and equities) has never been better. Not sure what more an investor could ask of a company. Link to comment Share on other sites More sharing options...
glider3834 Posted February 16 Share Posted February 16 8 minutes ago, treasurehunt said: Yeah, seems ridiculous on the face of it. But I hope Prem goes into some detail about Exco tomorrow; I'd love to find out more about this investment! I was hoping a silver lining with all this, is Fairfax delves a bit more into telling us about its private businesses including AGT - but lets see Link to comment Share on other sites More sharing options...
Parsad Posted February 16 Share Posted February 16 3 hours ago, Hektor said: I guess they can give up the nice interest stream and have the unrealized gains. Or, take the interest stream for as long as possible (either maturity or interest rates going down significantly), realize the (larger) gains and deploy it into a bigger income stream (hopefully) They can do both. Depends on what Brian is thinking. They could buy derivatives that lock in the current bond gains, while still reaping the interest for the next four years and any further bond gains if interest rates fall. They are the best at managing these types of issues on the fixed income side. No one is better...not even Berkshire! Cheers! Link to comment Share on other sites More sharing options...
Parsad Posted February 16 Share Posted February 16 2 hours ago, Haryana said: A 50% increase in cash and investments in the holding company from $1.2 billion at the end of Q3. “We remain focused on being soundly financed and ended 2023 in a strong financial position with $1.8 billion in cash and investments in the holding company, our debt to capital ratio at 23.1%,” said Prem Watsa, Chairman and Chief Executive Officer. Headed in the right direction Prem. I'd like to see it between $2-3B. Cheers! Link to comment Share on other sites More sharing options...
Cigarbutt Posted February 16 Share Posted February 16 2 hours ago, StubbleJumper said: MW stuff... I love it! A homework assignment for FFH! Prem is going to tell them that there is more than enough disclosure that has been provided over the years and that they should go pound sand. SJ They could also simply explain? For example, when referring to the CVC-Riverstone Barbados transaction, they (management, on the call tomorrow) could (opinion) simply infirm the insinuation by explaining that the total consideration paid of 1329 millions for 100% of the joint venture as reported by Gatland in 2021, implied, for Fairfax 60% interest, 695.7 millions (as reported) + the discounted value of the CVR of 235.7. So, 695.7 (1329-169.5) * 60% + 463.8 (Omers 40% part, (1329-169.5) * 40% + discounted 235.7 ie 169.5 = 1329 That is because the fair value of the CVR is generally be determined by discounting the probability-weighted future payments at an appropriate risk-adjusted rate, or by using derivative valuation methods such as the Black-Scholes option pricing model and because the fair value of the CVR is considered part of the consideration paid in the transaction, under the purchase accounting method for business combinations. The 1329 number is from a 2021 annual report. The eventual realized value of the CVR is very likely linked to potential adverse development of reserves over a few years. In the event of unfavorable development, the CVR value for FFH would decrease but that does not have an effect on the 1329 reported for the 2021 year. Link to comment Share on other sites More sharing options...
glider3834 Posted February 16 Share Posted February 16 (edited) So Fairfax's book value per share (BVPS) CAGR growth (incl dividends) for 2017-2022 period was 11.7% If we now update & look at 2017-2023 period, I get BVPS CAGR (incl dividends) as 15.5% Calc below =(1009.65*/367.4)^(1/7)-1 = 15.54% *2023 YE BVPS 939.65 + 70 divs = 1009.65 Edited February 16 by glider3834 Link to comment Share on other sites More sharing options...
Thrifty3000 Posted February 16 Share Posted February 16 5 hours ago, gfp said: "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" This is. Four years is an eternity in Mr. Market years. This stock is going to be worth SO MUCH more 4 years from now. Link to comment Share on other sites More sharing options...
Viking Posted February 16 Share Posted February 16 32 minutes ago, glider3834 said: So Fairfax's book value per share (BVPS) CAGR growth (incl dividends) for 2017-2022 period was 11.7% If we now update & look at 2017-2023 period, I get BVPS CAGR (incl dividends) as 15.5% Calc below =(1009.65*/367.4)^(1/7)-1 = 15.54% *2024 YE BVPS 939.65 + 70 divs = 1009.65 @glider3834 great point. Fairfax is now starting to build a pretty impressive long term track record in terms of CAGR for BVPS. And they are leaving peers like Markel, WR Berkley and Chubb in the dust. It is impressive how long old narratives stick around. But Mr Market will eventually figure it out. Link to comment Share on other sites More sharing options...
dealraker Posted February 16 Share Posted February 16 7 hours ago, Viking said: @glider3834 great point. Fairfax is now starting to build a pretty impressive long term track record in terms of CAGR for BVPS. And they are leaving peers like Markel, WR Berkley and Chubb in the dust. It is impressive how long old narratives stick around. But Mr Market will eventually figure it out. About the only thing an investor needs to know/be aware of. Seemed inevitable to me, just nearly certain to happen over time...a long time. Link to comment Share on other sites More sharing options...
MMM20 Posted February 16 Share Posted February 16 14 hours ago, MMM20 said: 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. "We maintain our C$1,600.00 target price based on 1.1x but see potential upside should FFH begin to be valued off of earnings, where the peer group median is ~12x in 2024 vs. FFH currently below 8x." 1 Link to comment Share on other sites More sharing options...
Junior R Posted February 16 Share Posted February 16 should be interesting conference calls and interesting day for muddy waters lol Link to comment Share on other sites More sharing options...
Spooky Posted February 16 Share Posted February 16 Just dialed in for the conference call... should be interesting! Link to comment Share on other sites More sharing options...
Hektor Posted February 16 Share Posted February 16 11 hours ago, Parsad said: They can do both. Depends on what Brian is thinking. They could buy derivatives that lock in the current bond gains, while still reaping the interest for the next four years and any further bond gains if interest rates fall. They are the best at managing these types of issues on the fixed income side. No one is better...not even Berkshire! Cheers! Interesting. This might be less complicated than the CDS or TRS, I guess. Link to comment Share on other sites More sharing options...
Luke Posted February 16 Share Posted February 16 3 minutes ago, Spooky said: Just dialed in for the conference call... should be interesting! Let us know any interesting developments, cant dial in right now but want to Link to comment Share on other sites More sharing options...
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