Fairfax 2025

[Daphne]

Addressing one dartmonkey point, the US already has 16 banks operating in Canada as well as banks from many other countries. These claims appear to be more smoke not dissimilar to the false assertions around drug and migrant flow from Canada.

[SafetyinNumbers]

20 minutes ago, Hoodlum said:

This morning National Bank analyst upgraded Fairfax from $2400 to $2600.  This is the 2nd upgrade in the past week from different analysts, likely anticipating excellent results from Q4 and 2024 as a whole.  

 

I am curious to see what we did for buybacks and extending bond durations over the past couple months.

 

I haven’t seen the National note but CIBC cut it’s earnings estimates so it wasn’t a positive update in my view.

[Hoodlum]

47 minutes ago, SafetyinNumbers said:

I haven’t seen the National note but CIBC cut it’s earnings estimates so it wasn’t a positive update in my view.

 

Do you have the details of the CIBC analysis that you could share.

[Viking]

2 hours ago, Hoodlum said:

Fairfax certainly had good timing with the Stelco sale. 

Lucky. Just like when they sold Resolute at the top of the lumber cycle. Just like when they sold pet insurance when there was a mania in cats and dogs. Just like when the average duration of their bond portfolio was 1.2 years and bond yields spiked. Just like when they did a dutch auction and bought 2 million Fairfax shares at $500/share. I could go on…

 

Maybe they aren’t lucky… maybe its skill…

 

And if it is skill, the question becomes: “is it reflected in the stock price?” My guess is no. As a result, it is like an investor today is getting a free call option on this aspect of Fairfax. 

 

( @Hoodlum , FYI, my comment above is not directed at you   )

Edited Monday at 09:24 PM by Viking

[Hoodlum]

17 minutes ago, Viking said:

Lucky. Just like when they sold Resolute at the top of the lumber cycle. Just like when they sold pet insurance when there was a mania in cats and dogs. Just like when the average duration of their bond portfolio was 1.2 years and bond yields spiked. Just like when they did a dutch auction and bought 2 million Fairfax shares at $500/share. I could go on…

 

Maybe they aren’t lucky… maybe its skill…

 

And if it is skill, the question becomes: “is it reflected in the stock price?” My guess is no. As a result, it is like an investor today is getting a free call option on this aspect of Fairfax. 

 

( @Hoodlum , FYI, my comment above is not directed at you   )

 

yes, you definitely need to know when to take advantage of market valuation.  We are a bit fortunate in that in the case of Stelco, steel peaked before Trump became president.  

 

I am just thinking that the AGT Foods Rail sale while not finalized yet, just snuck through before this trade dispute.  The valuation today would be much less.

 

Edited Monday at 09:36 PM by Hoodlum

[Parsad]

4 hours ago, Daphne said:

Addressing one dartmonkey point, the US already has 16 banks operating in Canada as well as banks from many other countries. These claims appear to be more smoke not dissimilar to the false assertions around drug and migrant flow from Canada.

 

Not entirely.  The U.S. banks and most foreign banks operating in Canada (outside of HSBC which is now part of Royal Bank) operate as Schedule II banks, not Schedule I.  So there are restrictions on what lines of business and what they can offer Canadian consumers.  Essentially they are only half banks, like Trump is only half human!  Cheers!

[MMM20]

 

On 2/2/2025 at 4:07 PM, MMM20 said:

So do we get to pick up some FFH shares on the stupid cheap? Or does it not sell off as much as stuff in the indexes? Do the Canadian markets rip as people pull their money back from US and start boycotting US products? Will Canadians end up boycotting BRK and buy their homegrown FFH? Invert, always invert? Or does this end up as more sound and fury signifying nothing? 

 

On 2/2/2025 at 8:06 PM, Dinar said:

I remember the first day after Brexit, some European stocks that had nothing to do with Brexit, like Hermes were down 20%+ before recovering.  I figure CP/CNI could be down 5-15% in USD, Fairfax who knows but could easily open down 10-20% which would be absurd.  

 

Well turns out my limit buy order for FRFHF at $1,111 didn’t get filled. Looks like the right answer was something between typically off-putting negotiating tactics and a bunch of sound and fury signifying nothing… so far at least, and purely from a Fairfax investor POV!

 

Edited 10 hours ago by MMM20

[dartmonkey]

14 hours ago, Parsad said:

The U.S. banks and most foreign banks operating in Canada (outside of HSBC which is now part of Royal Bank) operate as Schedule II banks, not Schedule I.  So there are restrictions on what lines of business and what they can offer Canadian consumers. 

 

Yes, it is no coincidence that all the banks you can name in Canada, without googling it, are Canadian. Canadian banks have significant operations in the USA, but American banks do not have significant operations in Canada. The "16 banks with $113b in assets operating in Canada" is a talking point of, guess who?, the Canadian Bankers Association. The same FP article goes on to say that:

 

Because Schedule I banks are true domestic banks and not subsidiaries of a foreign bank, they are the only businesses that are allowed to receive, hold, and enforce security interest as described in the Bank Act. 

 

Ok, I don't fully understand the restrictions placed on schedule II banks (incidentally, the Canadian government abandoned this terminology in 2001, but it is still widely used. But clearly, the restrictions have not allowed US banks to pose any competitive threat to Canadian banks, and I think no one seriously believes that the Canadian government would allow any Canadian bank to be taken over by a US bank. And the impressive sounding $113b in assets number is less than a quarter of the size of the smallest of Canada's big 6, the National Bank of Canada.

 

More generally, I think if Canadians look honestly at the situation, the USA has plenty of beefs against Canada's protectionism (which in addition to banking - and maybe to insurance - also applies to telecoms, air transportation, poultry, eggs, dairy products, construction, etc. We want access to US markets, but we are not so happy about the US having access to our markets. The irony is that allowing better US access to Canadian markets would also be very beneficial to competition in Canada and could save Canadian citizens a lot of money. For instance the extra cost of dairy/poultry/egg because of supply management represents 2.3% of poor Canadians' incomes, according to one estimate: https://financialpost.com/opinion/supply-management-is-literally-driving-tens-of-thousands-of-canadians-into-poverty

[SafetyinNumbers]

3 hours ago, dartmonkey said:

 

Yes, it is no coincidence that all the banks you can name in Canada, without googling it, are Canadian. Canadian banks have significant operations in the USA, but American banks do not have significant operations in Canada. The "16 banks with $113b in assets operating in Canada" is a talking point of, guess who?, the Canadian Bankers Association. The same FP article goes on to say that:

 

Because Schedule I banks are true domestic banks and not subsidiaries of a foreign bank, they are the only businesses that are allowed to receive, hold, and enforce security interest as described in the Bank Act. 

 

Ok, I don't fully understand the restrictions placed on schedule II banks (incidentally, the Canadian government abandoned this terminology in 2001, but it is still widely used. But clearly, the restrictions have not allowed US banks to pose any competitive threat to Canadian banks, and I think no one seriously believes that the Canadian government would allow any Canadian bank to be taken over by a US bank. And the impressive sounding $113b in assets number is less than a quarter of the size of the smallest of Canada's big 6, the National Bank of Canada.

 

More generally, I think if Canadians look honestly at the situation, the USA has plenty of beefs against Canada's protectionism (which in addition to banking - and maybe to insurance - also applies to telecoms, air transportation, poultry, eggs, dairy products, construction, etc. We want access to US markets, but we are not so happy about the US having access to our markets. The irony is that allowing better US access to Canadian markets would also be very beneficial to competition in Canada and could save Canadian citizens a lot of money. For instance the extra cost of dairy/poultry/egg because of supply management represents 2.3% of poor Canadians' incomes, according to one estimate: https://financialpost.com/opinion/supply-management-is-literally-driving-tens-of-thousands-of-canadians-into-poverty

I’m not sure it’s wise to turn over poultry, eggs and dairy to an unreliable partner. I didn’t used to think that but I think that now.

[Parsad]

3 hours ago, dartmonkey said:

 

Yes, it is no coincidence that all the banks you can name in Canada, without googling it, are Canadian. Canadian banks have significant operations in the USA, but American banks do not have significant operations in Canada. The "16 banks with $113b in assets operating in Canada" is a talking point of, guess who?, the Canadian Bankers Association. The same FP article goes on to say that:

 

Because Schedule I banks are true domestic banks and not subsidiaries of a foreign bank, they are the only businesses that are allowed to receive, hold, and enforce security interest as described in the Bank Act. 

 

Ok, I don't fully understand the restrictions placed on schedule II banks (incidentally, the Canadian government abandoned this terminology in 2001, but it is still widely used. But clearly, the restrictions have not allowed US banks to pose any competitive threat to Canadian banks, and I think no one seriously believes that the Canadian government would allow any Canadian bank to be taken over by a US bank. And the impressive sounding $113b in assets number is less than a quarter of the size of the smallest of Canada's big 6, the National Bank of Canada.

 

More generally, I think if Canadians look honestly at the situation, the USA has plenty of beefs against Canada's protectionism (which in addition to banking - and maybe to insurance - also applies to telecoms, air transportation, poultry, eggs, dairy products, construction, etc. We want access to US markets, but we are not so happy about the US having access to our markets. The irony is that allowing better US access to Canadian markets would also be very beneficial to competition in Canada and could save Canadian citizens a lot of money. For instance the extra cost of dairy/poultry/egg because of supply management represents 2.3% of poor Canadians' incomes, according to one estimate: https://financialpost.com/opinion/supply-management-is-literally-driving-tens-of-thousands-of-canadians-into-poverty

 

Even in the U.S., Canadian banks don't have complete universal opportunities like U.S. large banks.  There are restrictions.  I think we could allow U.S. banks to compete on certain areas where pricing is just stupid in Canada, such as wealth management, brokerage fees, auto insurance, etc.  Just like I wouldn't mind some telecom competition by U.S./European companies in Canada as well.  But our banks stick to banking and avoided things like mortgage back securities, JUMBO/ARM loans, etc.  It's why when the U.S. financial system was collapsing, Canada's was fine.  Cheers!

[cwericb]

49 minutes ago, Parsad said:

 

 It's why when the U.S. financial system was collapsing, Canada's was fine.  Cheers!

THIS!