Fairfax 2025

[gfp]

3 minutes ago, Junior R said:

but remember on the earnings call when asked about Blackberry during the hype ..Prem said they where in blackout period if they wheren't they would of sold it....They got CLF from STLC sale so its not something they bought based on their analyst 

 

Well...  They received 5.9m CLF shares in November 2024 for that reason.  Then they used their own money and their own "analyst" to purchase another 9m CLF shares in Q1 2025.  So it's a bit of both

[Santayana]

Won't Fairfax be able to refinance any KW debt at better rates now?   Seem like that should help this work out nicely in the long run.

[Viking]

1 hour ago, gfp said:

 

Good deal for everyone.  Maybe results in some messy consolidated accounting taking KW's entire balance sheet onto Fairfax's

 

Didn't someone on this message board ask recently why Prem and Bill hadn't taken this thing private?

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1408100/000119312525264971/d58472d8k.htm

I think KW’s business today would be better served being run as a private company (as opposed to being publicly traded). So Fairfax buys low AND puts the company in a better position to succeed. 
 

My summary below assumes Fairfax owns more than 50%. (Perhaps Fairfax ends up owning less than 50% - transaction details are pretty sparse. So, we will see how it all shakes out.)
 

This is yet another example of Fairfax:

• Buying more of something they already own a bunch of. They understand KW exceptionally well - the business, management, culture, issues, value. Obviously, Fairfax feels KW is a great fit.  Wade Burton has been on the KW board forever.
• Being VERY opportunistic ($10.25/share to take it private?) - The timing of this purchase is interesting (why now?). Importantly, KW looks like it is already well into its turnaround. Fairfax appears to buying at/near the bottom of the commercial real estate cycle.
• Building out their non-insurance consolidated company bucket. Last year it was Sleep Country, Peak Achievement and Meadow Foods. Earlier this year they took out their minority partner in Recipe and public shareholders in the Keg Royalty Income Trust. This bucket of holdings is growing like a weed. With the hard market in P/C insurance slowing, this should not come as a surprise (that capital will be shifted to other opportunities).

Edited November 5, 2025 by Viking

[gfp]

12 minutes ago, Santayana said:

Won't Fairfax be able to refinance any KW debt at better rates now?   Seem like that should help this work out nicely in the long run.

 

I sort of doubt it?  Isn't KW's debt pretty inexpensive?  Less than 5%

[Hoodlum]

21 minutes ago, gfp said:

 

I sort of doubt it?  Isn't KW's debt pretty inexpensive?  Less than 5%

 

The below from the 2024 Fairfax Shareholders letter suggests their debt was expensive.

"At the end of 2024, we had invested in $4.4 billion of first mortgage loans in the U.S. at an average yield of 7.8% and an average maturity of 1.7 years with two, one-year renewal rights, and in $440 million of first mortgage loans in the U.K. and Ireland at an average yield of 6.9% and an average maturity of 1.6 years."

[gfp]

3 minutes ago, Hoodlum said:

 

The below from the 2024 Fairfax Shareholders letter suggests their debt was expensive.

"At the end of 2024, we had invested in $4.4 billion of first mortgage loans in the U.S. at an average yield of 7.8% and an average maturity of 1.7 years with two, one-year renewal rights, and in $440 million of first mortgage loans in the U.K. and Ireland at an average yield of 6.9% and an average maturity of 1.6 years."

 

That is the debt investment platform that KW and their investor partners (Fairfax and other insurance companies primarily) are investing in.  Not the debt that Kennedy Wilson is borrowing.

 

KW is an investment manager that earns fees and a carry on this debt investment platform.  Fairfax is a primary partner, especially the portfolio that came over with the PacWest construction loan team.

 

The high yielding stuff is them as investor/ investment manager.

 

The low yielding stuff, sub 5, and much cheaper in places like Ireland, is them as borrower.

 

Edited November 5, 2025 by gfp

[Santayana]

31 minutes ago, gfp said:

I sort of doubt it?  Isn't KW's debt pretty inexpensive?  Less than 5%

Thanks. Maybe all the credit upgrades at FFH and subs isn't quite a meaningful as I thought.

[villainx]

I assume the KW debt would be more like non recourse to the property anyway?

 

 

edit for clarity

Edited November 5, 2025 by villainx

[Parsad]

1 hour ago, gfp said:

 

 

Sardar got control in a tender offer before there were two classes of shares.  He used company capital to fund the hedge fund that offered $420/share for the stock (pre-split price), which was a premium and an arbitrage spread persisted into the tender.  There was an attractive spread to be earned in a matter of days and many people participated - which helped him get voting control.

 

Fairfax itself bought and tendered 1200 Biglari shares to capture the spread.

 

That was 2015.

 

The dual class structure was put in place in 2017 or early 2018 when he already had voting control.

 

That entrenched Sardar as a majority shareholder...it wasn't until the multiple voting shares that he essentially had full voting control.  For certain votes, you would need 2/3rd majority.  He could not do that after the tender.  After the multiple voting shares, he could.  He essentially now had drag along rights against the minority shareholders.  Cheers!

[Parsad]

1 hour ago, Junior R said:

I think awhile back you stated you didn't need the fat pitches any more and wanted to move more towards S&P ...Maybe someone else lol if that was you is that not the case? 20% cagr will be a really good rate of return

 

Yup, that was me.  I don't need the fat pitches anymore, but habit is habit, and you still want to overshoot...not undershoot.  So if I'm buying an individual stock, not the VOO, it is still the same hurdle and the same margin of safety as before.  Cheers!

[SafetyinNumbers]

15 minutes ago, Parsad said:

 

Yup, that was me.  I don't need the fat pitches anymore, but habit is habit, and you still want to overshoot...not undershoot.  So if I'm buying an individual stock, not the VOO, it is still the same hurdle and the same margin of safety as before.  Cheers!

I still think it makes sense to buy ELF.TO instead of VOO. Give up some liquidity for margin of safety. 

[mananainvesting]

6 hours ago, Crip1 said:

My apologies to everyone for not disclosing that I bought yesterday morning at US$1,615. True to my anti-Midas touch, it's down 3.5% in the 24 hours since I bought in. I should have mentioned this so that anyone who was looking to buy would have waited a day or two for "anti-Midas" to click in. 

 

-Crip

 

Thanks, I'll try(may) adding a bit more tomorrow to help it go down further for others  cheers

[mananainvesting]

--

Edited November 5, 2025 by mananainvesting

[SafetyinNumbers]

This is pretty cool

 

 

[SafetyinNumbers]

4 hours ago, Viking said:

I think KW’s business today would be better served being run as a private company (as opposed to being publicly traded). So Fairfax buys low AND puts the company in a better position to succeed. 
 

My summary below assumes Fairfax owns more than 50%. (Perhaps Fairfax ends up owning less than 50% - transaction details are pretty sparse. So, we will see how it all shakes out.)
 

This is yet another example of Fairfax:

• Buying more of something they already own a bunch of. They understand KW exceptionally well - the business, management, culture, issues, value. Obviously, Fairfax feels KW is a great fit.  Wade Burton has been on the KW board forever.
• Being VERY opportunistic ($10.25/share to take it private?) - The timing of this purchase is interesting (why now?). Importantly, KW looks like it is already well into its turnaround. Fairfax appears to buying at/near the bottom of the commercial real estate cycle.
• Building out their non-insurance consolidated company bucket. Last year it was Sleep Country, Peak Achievement and Meadow Foods. Earlier this year they took out their minority partner in Recipe and public shareholders in the Keg Royalty Income Trust. This bucket of holdings is growing like a weed. With the hard market in P/C insurance slowing, this should not come as a surprise (that capital will be shifted to other opportunities).

I really like this deal. Diversified, asset backed, growing capital light management business and a good place to pick up returns above treasuries if the yield curve goes lower. The business benefits from lower interest rates so should help assuage concerns of those who think duration is too low and the whole yield curve is going lower.

Edited November 5, 2025 by SafetyinNumbers

[Parsad]

4 hours ago, SafetyinNumbers said:

I still think it makes sense to buy ELF.TO instead of VOO. Give up some liquidity for margin of safety. 

 

Long-term, not sure it does...and that's what Fairfax is for anyways...as well as my own picks.  Cheers!

 

[Parsad]

2 hours ago, SafetyinNumbers said:

This is pretty cool

 

 

 

Terrific chart!  Cheers!

[petec]

8 hours ago, gfp said:

Didn't someone on this message board ask recently why Prem and Bill hadn't taken this thing private?

Yes, me. Struck me as a very natural thing to have in-house. Growing asset-light fee stream backed by increasingly mature/realisable real estate. I think the NAVPS is $18 or more. Very happy owner of both today. Just wondering whether to sell my KW or hold. I could easily see the board rejecting the offer and FFH bumping it a little.

[This2ShallPass]

Atlas and now KW. Using temporary market dislocations to take the company from minority shareholders. It's something we can expect to continue, Fairfax India watchout. 

[SafetyinNumbers]

1 hour ago, This2ShallPass said:

Atlas and now KW. Using temporary market dislocations to take the company from minority shareholders. It's something we can expect to continue, Fairfax India watchout. 

Not going to happen with Fairfax India. Private Indian companies won’t get the same capital treatment as a TSX listed company. 

[SafetyinNumbers]

5 hours ago, Parsad said:

 

Long-term, not sure it does...and that's what Fairfax is for anyways...as well as my own picks.  Cheers!

 

NAV discount started in 2013 and efforts to close it started in 2020. Of course, the bigger the discount, the lower the historical return. It doesn’t mean the intrinsic value didn’t increase. Still a ~40%+ discount to liquidation value for very marketable assets including 1.48m shares of VOO!
 

 

Edited November 5, 2025 by SafetyinNumbers

[petec]

3 hours ago, This2ShallPass said:

Atlas and now KW. Using temporary market dislocations to take the company from minority shareholders. It's something we can expect to continue, Fairfax India watchout. 

 

As a minority owner of Fairfax, would you rather they paid full value?

 

I was and will be quite content to sell both Atlas and KW at the prices offered and even happier to continue to own Fairfax. And I went into both subsidiary positions knowing full well what might happen. 
 

Also, the last time KW traded above the offer price was nearly 2 years ago. I think that’s stretching the definition of a temporary market dislocation. 
 

Edit: Prem, if you’re reading this, please do Ensign next. The cash flow is obscene. 

Edited November 5, 2025 by petec

[villainx]

56 minutes ago, petec said:

Edit: Prem, if you’re reading this, please do Ensign next. The cash flow is obscene. 

 

You beat me to the joke about Prem being a lurker here!

 

You might check the folks following you too!

 

=P

[Txvestor]

16 hours ago, gfp said:

 

I've seen you mention it a few times - it is wishful thinking to hope that they blew out their entire position in one day on a brief spike in the CLF share price.  They haven't been very nimble with their equity positions on one-day moves historically 

If they didn't/couldn't do so with Blackberry during the meme stock craze(which hich actually lasted more like a couple of weeks) then there's next to no chance here.

heck I got out of a residual Blackberry position for a tiny profit at around $18, it eventually topped out around 30. But position size is definitely a hindrance in such situations. 

[Viking]

6 hours ago, This2ShallPass said:

Atlas and now KW. Using temporary market dislocations to take the company from minority shareholders. It's something we can expect to continue, Fairfax India watchout. 

Fairfax is generating an enormous amount of excess capital these days. It needs to go somewhere. Why not opportunities like KW? In terms of what is best for KW, the company is better off as a private company (IMHO). 
 

KW has been a terrible long term investment for its shareholders. That is not on Fairfax. 

 

Fairfax is executing value investing as Ben Graham teaches it - one of the big benefits of public markets is the ability to take advantage of Mr Market’s folly. 

 

Fairfax has been vacuuming up a lot of stuff it already owns in recent years - both public and private holdings. KW is just the latest example. This is a sign of very good capital allocation - all these take-outs are in businesses they already understand exceptionally well (are in their circle of competence), which should lower the risk. I love the moves. 

Edited November 5, 2025 by Viking