CIBC says Fairfax is likely to be added to the S&P/TSX 60 in December 2024 - sell decisions

[Munger_Disciple]

5 hours ago, SafetyinNumbers said:

This is resulting though isn’t it? Buffett issued expensive stock to buy Gen Re and clearly expected a better result than what he got. Execution is the hardest part of probabilistic investing. Everything I buy is clearly cheap if the companies execute as expected but about a third of the time they don’t. Thankfully the winners more than offset the losers over time (at least so far).

 

I can assure you Buffett knows the difference between resulting and a poor decision. The reality was that he misjudged how horribly GenRe's underwriting had deteriorated in the years leading up to Berkshire's acquisition of GenRe in 1998. You should read BRK reports from 1999-2006. GenRe almost certainly would have gone bankrupt w/o the deal with BRK. 

Edited Thursday at 05:52 PM by Munger_Disciple

[SafetyinNumbers]

31 minutes ago, Munger_Disciple said:

 

I can assure you Buffett knows the difference between resulting and a poor decision. The reality was that he misjudged how horribly GenRe's underwriting had deteriorated in the years leading up to Berkshire's acquisition of GenRe in 1998. You should read BRK reports from 1999-2006. GenRe almost certainly would have gone bankrupt w/o the deal with BRK. 

So he should have known better based on what he knew at the time and still went ahead?

[Munger_Disciple]

1 minute ago, SafetyinNumbers said:

So he should have known better based on what he knew at the time and still went ahead?

 

Unlike you, I take Buffett's word for it. Let's just leave it at that.

[Parsad]

25 minutes ago, Haryana said:

Telltale sign of Buffett Brainwash syndrome. 

 

Not fair, nor polite.  Keep it nice boys...Santa's watching!  Cheers!

[John Hjorth]

1 hour ago, Munger_Disciple said:

 

I can assure you Buffett knows the difference between resulting and a poor decision. The reality was that he misjudged how horribly GenRe's underwriting had deteriorated in the years leading up to Berkshire's acquisition of GenRe in 1998. You should read BRK reports from 1999-2006. GenRe almost certainly would have gone bankrupt w/o the deal with BRK. 

 

38 minutes ago, SafetyinNumbers said:

So he should have known better based on what he knew at the time and still went ahead?

 

37 minutes ago, Munger_Disciple said:

 

Unlike you, I take Buffett's word for it. Let's just leave it at that.

 

32 minutes ago, Haryana said:

Telltale sign of Buffett Brainwash syndrome. 

 

7 minutes ago, Parsad said:

 

Not fair, nor polite.  Keep it nice boys...Santa's watching!  Cheers!

 

Some years back, I actually did the exercise proposed by @Munger_Disciple above. On the Berkshire insurance business for those years, one can quite easily follow the results for General Re post acquisition. After finishing the excercise, and adding up the numbers for the period it took to get General Re back on track, my reaction was : Holy Moly!  - Many billions of dollar!

 

Already back then, Berkshire was able to shoulder such size losses, because of it's size already back then, but it was certainly not good. And the man was totally candid and upright about it for years in the shareholder letters, untill the ship was tight again.

 

Since then, Buffett has been reluctant to talk about this acquisition, for obvious reasons.

 

About his mistakes he has always said he has made several, and that he'll likely continue make them.

[SafetyinNumbers]

2 hours ago, John Hjorth said:

 

 

 

 

 

Some years back, I actually did the exercise proposed by @Munger_Disciple above. On the Berkshire insurance business for those years, one can quite easily follow the results for General Re post acquisition. After finishing the excercise, and adding up the numbers for the period it took to get General Re back on track, my reaction was : Holy Moly!  - Many billions of dollar!

 

Already back then, Berkshire was able to shoulder such size losses, because of it's size already back then, but it was certainly not good. And the man was totally candid and upright about it for years in the shareholder letters, untill the ship was tight again.

 

Since then, Buffett has been reluctant to talk about this acquisition, for obvious reasons.

 

About his mistakes he has always said he has made several, and that he'll likely continue make them.

I’m curious when you did the exercise did you factor in the related float and how much the earnings were from that? I’m curious what the total return has been so far.

[John Hjorth]

14 minutes ago, SafetyinNumbers said:

I’m curious when you did the exercise did you factor in the related float and how much the earnings were from that? ...

 

@SafetyinNumbers,

 

No, I did not. I did only look at the results from General Re consolidated to Berkshire, consolidated back then.

 

19 minutes ago, SafetyinNumbers said:

... I’m curious what the total return has been so far. ...

 

The person to ask about what General Re contributions to Berkshire Hathaway Group equity over time would be Berkshire CFO Marc Hamburg. Unfortunately it makes no sense asking him, because he is providing information to us as investors as the Berkshire CFO, while he is not in the business of answering investor questions.

[Parsad]

2 hours ago, SafetyinNumbers said:

I’m curious when you did the exercise did you factor in the related float and how much the earnings were from that? I’m curious what the total return has been so far.

 

The question isn't if GenRe was a mistake or it has earned its purchase price...but that when issuing overvalued stock, often the target companies are also overvalued to a degree. 

 

Berkshire issued stock for GenRe and Dexter shoes...both turned out to be mistakes to some degree because he overpaid...even with overpriced stock.

 

It's not that Fairfax can't used overvalued stock to acquire other businesses.  Just that when FFH is overvalued, so are other insurers and target companies.  Hopefully, if the stock price does become significantly overvalued and they use it, they will get lucky and find quality, target companies that are worth less than their intrinsic value.

 

Cheers!

[SafetyinNumbers]

1 hour ago, Parsad said:

 

The question isn't if GenRe was a mistake or it has earned its purchase price...but that when issuing overvalued stock, often the target companies are also overvalued to a degree. 

 

Berkshire issued stock for GenRe and Dexter shoes...both turned out to be mistakes to some degree because he overpaid...even with overpriced stock.

 

It's not that Fairfax can't used overvalued stock to acquire other businesses.  Just that when FFH is overvalued, so are other insurers and target companies.  Hopefully, if the stock price does become significantly overvalued and they use it, they will get lucky and find quality, target companies that are worth less than their intrinsic value.

 

Cheers!

Using expensive paper helps with margin of safety, no question. 

[yesman182]

@SafetyinNumbers It seems like a few pages back you made the argument that getting added to the index will be a long term tailwind. If you believe that is true, why not advocate for listing in the US and getting in the S&P500. Wouldn't that be a much larger tailwind? 

[SafetyinNumbers]

11 minutes ago, yesman182 said:

@SafetyinNumbers It seems like a few pages back you made the argument that getting added to the index will be a long term tailwind. If you believe that is true, why not advocate for listing in the US and getting in the S&P500. Wouldn't that be a much larger tailwind? 

Fairfax is Canadian and I don’t think moving to the US is something Prem wants to do. I’m not advocating for the 60 add. It’s just something that’s going to happen. 

[cwericb]

31 minutes ago, yesman182 said:

@SafetyinNumbers It seems like a few pages back you made the argument that getting added to the index will be a long term tailwind. If you believe that is true, why not advocate for listing in the US and getting in the S&P500. Wouldn't that be a much larger tailwind? 

Being listed in the US will NOT happen. Fairfax has been there, done that.

[Parsad]

On 12/13/2024 at 7:51 AM, cwericb said:

Being listed in the US will NOT happen. Fairfax has been there, done that.

 

+1!  Cheers!

[Crip1]

On 12/13/2024 at 9:51 AM, cwericb said:

Being listed in the US will NOT happen. Fairfax has been there, done that.

Well, never say never. True that listing on the US exchange was as close to a disaster as one can get, but Fairfax is a far different animal now...far different. Short attacks can happen to any company at any time, but the financial situation of the company at that time made it an attractive short-target. It's FAR less attractive as a short target now. 

 

Not advocating for them to do so, but what looked to be a "never" years ago seems to be a "Not very likely, but one never knows" now.

 

-Crip

[Parsad]

11 hours ago, Crip1 said:

Well, never say never. True that listing on the US exchange was as close to a disaster as one can get, but Fairfax is a far different animal now...far different. Short attacks can happen to any company at any time, but the financial situation of the company at that time made it an attractive short-target. It's FAR less attractive as a short target now. 

 

Not advocating for them to do so, but what looked to be a "never" years ago seems to be a "Not very likely, but one never knows" now.

 

-Crip

 

There really is no need to be listed on the NYSE or Nasdaq, nor index inclusion.  If Fairfax is adequately capitalized, running their insurance businesses well and making sensible investment decisions, they will always have a loyal shareholder base and be in a position where they could buy back their shares if the opportunity presents itself.  Everything else is kind of irrelevant.  Cheers!

[Parsad]

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[vakilkp]

30 minutes ago, Parsad said:

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I see it in case you are testing functionality