Fairfax 2025

[Junior R]

Blackberry hits another 52 week high what if 2025 / 2026 is the year of BB

[TwoCitiesCapital]

At this point - are largely in insignificant position - especially with the reduced/eliminated convertible exposure...

 

Would love to see them exit and redeploy, but its not likely to move the needle. 

[MMM20]

On 1/5/2025 at 12:06 PM, Hamburg Investor said:

Why do you think 50% being reasonable this year?

 

On 1/6/2025 at 2:28 AM, Txvestor said:

Short term predictions are inherently fraught with risk.

Yeah to be clear I wasn’t making a one year prediction which is a fools errand. I think about it like ~50% expected return with maybe a -50% to +100% ~95% confidence interval (and a pretty flat distribution). Does that make sense? +50% return would be ~15-20% per share earnings yield and growth and the rest driven by rerating to a more reasonable multiple IMHO. Of course maybe theres a ~1% chance we hit 50% on the dot and then I’ll make sure to toot my own horn a year from now
 

Edited January 7 by MMM20

[Junior R]

On 1/3/2025 at 1:36 PM, TwoCitiesCapital said:

 

Same. 

 

With Bitcoin's performance this year, I've actually been able to modestly add to my position where I had been forced to trim in prior years to keep at ~10%. That was definitely an issue after Fairfax's blockbuster 2022 when everything else I owned was dropping as it rose. 

 

 

few more buyers in Dec couple shares lol..I wonder what is up with these insiders buying only few shares

 

 

Edited January 7 by Junior R

[KFRCanuk]

18 minutes ago, Junior R said:

 

 

few more buyers in Dec couple shares lol..I wonder what is up with these insiders buying only few shares

 

 

 

To me, this seems like a corporate stock purchase plan via payrol deduction but what do I know though.

Edited January 7 by KFRCanuk

[Junior R]

Just now, KFRCanuk said:

 

To me, this seems like a corporate stock purchase plan via payrol deduction.

 

What do I know though.

Those would be flagged 30 - Acquisition under a purchase/owership plan vs 10 - acquisition in the public market

[TwoCitiesCapital]

3 hours ago, Junior R said:

Those would be flagged 30 - Acquisition under a purchase/owership plan vs 10 - acquisition in the public market

 

That and they would all occur the same day at the same price. Different prices and Bradstreet's occurring on a different day make you wonder. This is beer money for all of those guys. What gives? 

[gfp]

It is probably something like this:

"

We continue to encourage all our employees to be owners of our company through our employee share ownership

plan, under which our employees’ share purchases by way of payroll deduction are supplemented by contributions

by their employer."

[SafetyinNumbers]

22 minutes ago, TwoCitiesCapital said:

 

That and they would all occur the same day at the same price. Different prices and Bradstreet's occurring on a different day make you wonder. This is beer money for all of those guys. What gives? 

Maybe sending a signal? December buybacks should also be announced by the end of the week. Given the large print near the end of December, they might have bought back over 1% of the shares last month alone. I have been picking away too despite vowing not to add anymore (it’s now a 47% position).
 

I think the underperformance  is due to some Canadian active managers moving to make their Financials exposure more Canadian and economically sensitive following Trudeau’s resignation announcement and selling that was deferred for tax reasons. Reasons to sell that are not related to FFH’s intrinsic value in other words.
 

The short term catalysts prompted me to add but perhaps the market won’t respond as I expect. In the next 3 months we’ll have Q1 results which should be well above consensus, the shareholder’s letter and the AGM. We may also get more information about potential Anchorage and Ki IPOs. BVPS inclusive of the dividend might be $100+ higher in just over 4 months when they report Q1.

 

 

[Hoodlum]

Swiss Re provides some projections for Premium growth out to 2026.  It looks like we won't see much of a drop next year although this will likely be dependent on what happens this coming Cat season.  Swiss Re likely used an average Cat. season in determining the 4% premium growth for 2026.

 

https://www.insurancebusinessmag.com/ca/news/reinsurance/us-pandc-insurance-sector-set-for-stable-roe-in-2025--swiss-re-519488.aspx

 

Swiss Re anticipates that premium growth will slow, with a forecasted 5% increase in 2025 and 4% in 2026, compared to nearly 10% in 2024. 

[dartmonkey]

14 hours ago, SafetyinNumbers said:

I think the underperformance  is due to some Canadian active managers moving to make their Financials exposure more Canadian and economically sensitive following Trudeau’s resignation announcement and selling that was deferred for tax reasons. Reasons to sell that are not related to FFH’s intrinsic value in other words.

Meaning that Fairfax is not really a Canadian financials exposure, given that most of its operations are abroad?

It's hard for me to say whether the resignation is good for Canadian business or bad. Trudeau was certainly poisonous, but the very likely prospect of elections in the Spring or Fall, with an almost certaiin Conservative victory with Trudeau leading the Liberals, is now looking a bit less certain. Carney or someone else might do a good enough job to salvage Liberals' fortunes, or reduce the Tories to a minority. I think a Tory majority victory is still the most likely outcome, but the probabillity may have gone from 95% to 75%.

[SafetyinNumbers]

30 minutes ago, dartmonkey said:

Meaning that Fairfax is not really a Canadian financials exposure, given that most of its operations are abroad?

It's hard for me to say whether the resignation is good for Canadian business or bad. Trudeau was certainly poisonous, but the very likely prospect of elections in the Spring or Fall, with an almost certaiin Conservative victory with Trudeau leading the Liberals, is now looking a bit less certain. Carney or someone else might do a good enough job to salvage Liberals' fortunes, or reduce the Tories to a minority. I think a Tory majority victory is still the most likely outcome, but the probabillity may have gone from 95% to 75%.

Yeah, that’s the general idea. Stronger CAD and stronger Canadian economy is better for CAD exposed financials. It’s just a bet on the narrative impacting flows. I don’t think there is a lot of probability analysis around it.

[Viking]

Well, we have certainly been getting some pretty wicked volatility in bond markets in recent months. I wonder if Brian Bradstreet and the fixed income team at Fairfax has ever invested using TIPS. Locking in a yield on the 10-year treasury that is 2.25% higher than inflation historically has been a pretty smart thing to do. But I don’t understand how that kind of investment might impact their insurance liabilities. That size of TIPS premium (+2.25%) typically does not last. 
 

Regardless, Fairfax is getting a nice opportunity to extend duration at what look to be pretty decent rates.
 

The risk is if inflation spikes higher. And Trump has filled the Fed with people who prioritize loyalty to Trump over fighting inflation. If this was easy, everyone would be rich  

 

Edited January 9 by Viking

[dartmonkey]

5 hours ago, Viking said:

And Trump has filled the Fed with people who prioritize loyalty to Trump over fighting inflation. 

This is odd because he isn’t the president and there are no vacancies anyway. 

[Viking]

2 hours ago, dartmonkey said:

This is odd because he isn’t the president and there are no vacancies anyway. 

Sorry, my post was unclear… I meant to say: “And if Trump has filled the Fed with people who prioritize loyalty to Trump over fighting inflation.”

[wondering]

https://www.theglobeandmail.com/business/article-fairfax-insurer-accused-worst-for-climate-strategies/

 

"According to the report by Investors for Paris Compliance, among the top 30 insurers globally, Fairfax Financial is ranked in the bottom 10 for underwriting insurance policies for fossil fuel companies that have not published climate goals."

 

More left-wing crap.  Left-wing reporting of a left-wing organization.  I have no problem FFH write policies to oil companies as long as they have viewed the premium as being sufficient for the risk that they are undertaking.

[dartmonkey]

40 minutes ago, wondering said:

"According to the report by Investors for Paris Compliance, among the top 30 insurers globally, Fairfax Financial is ranked in the bottom 10 for underwriting insurance policies for fossil fuel companies that have not published climate goals."

 

More left-wing crap.  Left-wing reporting of a left-wing organization.  I have no problem FFH write policies to oil companies as long as they have viewed the premium as being sufficient for the risk that they are undertaking.

Good grief. There are people that have nothing better to do than to compile lists of insurers, ranking them by the number of insurance policies they have written for companies that have or haven't published 'climate goals'. Implicit, I suppose, is that Fairfax SHOULD really be refusing to insure any oil company that hasn't followed the Investors for Paris Compliance organization's standards for recognizing how terrible their industry is and appropriately apologizing for it and planning to eventually phase out fossil fuels.

 

 personally would be horrified if Fairfax ever turned down business for such a flimsy reason. If they did, it would be a major red flag.

Edited January 9 by dartmonkey

[TwoCitiesCapital]

I tend to agree that climate change is something that needs to be addressed - but I think it needs to be addressed by governments and industry by putting forth solutions and alternatives - not by starving existing industries of insurance coverage when no reasonable replacement exists

Edited January 9 by TwoCitiesCapital

[villainx]

3 hours ago, dartmonkey said:

Good grief. There are people that have nothing better to do than to compile lists of insurers, ranking them by the number of insurance policies they have written for companies that have or haven't published 'climate goals'.

 

That's one of my take away from @SafetyinNumbers guesting on that podcast.

[nodnub]

Does Fairfax have much exposure to Los Angeles fires through reinsurance or P&C?   

 

I see headline estimates of 150B damages. 

[Hoodlum]

6 hours ago, nodnub said:

Does Fairfax have much exposure to Los Angeles fires through reinsurance or P&C?   

 

I see headline estimates of 150B damages. 

 

Not likely.  Keep in mind insures losses are much less that the total damage cost with primary insurers covering most of the insured losses.  The remaining reinsurance losses are still less than previous similar events over the past few years.  Many insurers have pulled out of California.  Speaking to coworkers at work they mentioned that fire insurance is very expensive or even difficult to get now.  Many had to turn to the State run FAIR plan.

 

https://www.investors.com/news/top-california-property-insurer-earns-double-upgrade-from-goldman/

 

Based on a preliminary assessment of the affected area and historical events, insured losses from this fire could approach $10 billion, with primary carriers being more exposed than reinsurers, the note said.  Arch Capital and RenaissanceRe are the most exposed reinsurers, but their losses should be less than for similar events prior to 2023, the JPMorgan note said.

 

https://www.afr.com/companies/financial-services/insurers-brace-for-losses-of-up-to-32b-from-la-fires-20250110-p5l3cq

 

Allstate and State Farm are among the insurers that have recently stopped selling new home insurance policies in the state, blaming regulatory caps on price rises that made it increasingly challenging to cover losses. Insurers have also dropped customers in the most at-risk areas.

 

Last year, State Farm announced it would not renew policies for 72,000 homes and apartments in the state, including 69 per cent of insurance plans in the upscale Pacific Palisades area engulfed by the latest wildfires.

 

That has left many homeowners turning to California’s state-backed Fair Plan as well as less-regulated home insurance policies, so-called “non-admitted” insurers.

 

Edited January 10 by Hoodlum

[Junior R]

FFH bought 1% back Dec 31, 2024 ($564,186,805.95)

[gfp]

13 minutes ago, Junior R said:

FFH bought 1% back Dec 31, 2024 ($564,186,805.95)

 

that's the stock they bought for all of December being cancelled at the end of the month.  obviously it wasn't all purchased on December 31st.  Most of it was purchased on December 20th in a block trade

Edited January 10 by gfp

[Junior R]

37 minutes ago, gfp said:

 

that's the stock they bought for all of December being cancelled at the end of the month.  obviously it wasn't all purchased on December 31st.  Most of it was purchased on December 20th in a block trade

Correct

 

[Hamburg Investor]

1 hour ago, gfp said:

 

that's the stock they bought for all of December being cancelled at the end of the month.  obviously it wasn't all purchased on December 31st.  Most of it was purchased on December 20th in a block trade

Anyway - 1% in any given months is a lot. Great!