Fairfax 3.0

[adventurer]

On 3/10/2025 at 9:12 PM, Dazel said:

yes it is.

 

I do not think Fairfax 3.0 remains under $2000 (cdn) to much longer and may never see the price gain in its lifetime. Pretty sure there was a lot of technical selling today as per above. Berkshire and Chubb finished green. Fairfax 3.0 should trade in tandem with those two as a defensive moving forward. There is no one per share that benefits more from this pullback than Fairfax…bonds up big today.

What do you think speaks against the possibility of the stock moving further south? Especially in times of (a tiny bit at least) turmoil? 

[nwoodman]

27 minutes ago, adventurer said:

What do you think speaks against the possibility of the stock moving further south? Especially in times of (a tiny bit at least) turmoil? 

Damn, that voting machine….it get’s me every time. If you are under the age of 25 you get a free pass btw

[Hamburg Investor]

I am just all in (from my perspective) with 43% Fairfax Financial and nearly 2% extra in Fairfax India. Is it a pity, that I can't buy more just right now? Not really. 

For one: Prem buys back shares for me anyhow. So his buybacks are my profits anyway. 

For two:

With what I had, I was able to buy much cheaper. So it was good not to keep ANY ‘dry powder’, but to ALWAYS be all in with the investable budget in FFH within the last years imho.

What is 4 months when investing? I think that's (almost) nothing. But it's only been four months since Fairfax Financial was consistently cheaper to buy then today; and it's only been 4.5 months since Fairfax was 7% cheaper; and before that it was very much cheaper very quickly. So the little bit of growth in intrinsic value in those short 4.5 months (maybe 5% to over 8%?), that was already reflected in the price then, when we compare it to todays situation: Fairfax was as cheap then as it is now relative to IV; and before it was much (much?) cheaper. So anyone having dry powder for over 4,5 months until now and not having invested back then, hasn't done so good in my eyes, but only has had luck - of course only as long as it was clear to that person, that Fairfax was a great investment back then.

But you have to bear in mind the risk of not having been invested during this time. And that's a really high risk imho. If it is true that Fairfax Financial is (very) cheap at the moment (which I believe), then it makes no sense to wait for it to become even cheaper. I don't think a lot of people have been profiting within the last years by trying to time Fairfax. It just went up and always very rare came back and then it's been for a very short time. It's just gone up, up, up sind end of 2022.

A very good investment that you can buy cheaply is like a very stretched rubber band: it is very likely to shoot forwards and this can happen very quickly. It doesn't make much sense to speculate that such a strongly stretched rubber band will become much tighter or could be folded for a long time in that situation. The arm holding it (even if it's Mr. Markets arm) will eventually become limp and will no longer be able to hold the pressure. The comparison is probably moderate, but I hope you get my point. 

Not doing the right thing one is very quickly caught in the trap of constantly waiting for setbacks that never come and all the time the dry powder is lying around instead of compounding.

We all know the stories of Buffett and Munger about the biggest mistakes they ever made: When asked, they keep (kept) citing situations where they didn't buy even though they could see that an investment could be good. Gayner often talks about how he bought his first shares of BRK far too late, and many other value investors tell similar stories. I was able to buy Lotus Bakeries for 400 Euro 10 years ago (or so); now it's 12.000 Euro or so. Since that happened and I was "thumb sucking", I now, what Buffett meant. And each time I drink a coffee and they put this little caramel cake to the coffee, I get remembered.

What else is it then thumb sucking to have dry powder lying unused while having discovered an investment (in my case FFH) that one sees as a once in a lifetime opportunity and isn't going all in, but holding something back? What is one waiting for when looking at a very good or even once-in-a-lifetime investment? What is one waiting for? For an even better investment or an even better price? Really? If the dry powder is investable, then I invest; if it's not investable (but needed for my financial security), then of course it's not to touch (in fact it isn't dry powder then). 

Of course, it's a little bit different if you are constantly expecting new cash flows that you can reinvest (which is not the case for me at the moment). It's totally clear, that one is happy then, buying on the cheap. But Fairfax has been cheap today and all days before within the last years, so I don't see any point "actively waiting" for a cheaper entry - the risk of missing this opportunity is just far too big in my eyes.

[adventurer]

8 minutes ago, Hamburg Investor said:

I am just all in (from my perspective) with 43% Fairfax Financial and nearly 2% extra in Fairfax India. Is it a pity, that I can't buy more just right now? Not really. 

For one: Prem buys back shares for me anyhow. So his buybacks are my profits anyway. 

For two:

With what I had, I was able to buy much cheaper. So it was good not to keep ANY ‘dry powder’, but to ALWAYS be all in with the investable budget in FFH within the last years imho.

What is 4 months when investing? I think that's (almost) nothing. But it's only been four months since Fairfax Financial was consistently cheaper to buy then today; and it's only been 4.5 months since Fairfax was 7% cheaper; and before that it was very much cheaper very quickly. So the little bit of growth in intrinsic value in those short 4.5 months (maybe 5% to over 8%?), that was already reflected in the price then, when we compare it to todays situation: Fairfax was as cheap then as it is now relative to IV; and before it was much (much?) cheaper. So anyone having dry powder for over 4,5 months until now and not having invested back then, hasn't done so good in my eyes, but only has had luck - of course only as long as it was clear to that person, that Fairfax was a great investment back then.

But you have to bear in mind the risk of not having been invested during this time. And that's a really high risk imho. If it is true that Fairfax Financial is (very) cheap at the moment (which I believe), then it makes no sense to wait for it to become even cheaper. I don't think a lot of people have been profiting within the last years by trying to time Fairfax. It just went up and always very rare came back and then it's been for a very short time. It's just gone up, up, up sind end of 2022.

A very good investment that you can buy cheaply is like a very stretched rubber band: it is very likely to shoot forwards and this can happen very quickly. It doesn't make much sense to speculate that such a strongly stretched rubber band will become much tighter or could be folded for a long time in that situation. The arm holding it (even if it's Mr. Markets arm) will eventually become limp and will no longer be able to hold the pressure. The comparison is probably moderate, but I hope you get my point. 

Not doing the right thing one is very quickly caught in the trap of constantly waiting for setbacks that never come and all the time the dry powder is lying around instead of compounding.

We all know the stories of Buffett and Munger about the biggest mistakes they ever made: When asked, they keep (kept) citing situations where they didn't buy even though they could see that an investment could be good. Gayner often talks about how he bought his first shares of BRK far too late, and many other value investors tell similar stories. I was able to buy Lotus Bakeries for 400 Euro 10 years ago (or so); now it's 12.000 Euro or so. Since that happened and I was "thumb sucking", I now, what Buffett meant. And each time I drink a coffee and they put this little caramel cake to the coffee, I get remembered.

What else is it then thumb sucking to have dry powder lying unused while having discovered an investment (in my case FFH) that one sees as a once in a lifetime opportunity and isn't going all in, but holding something back? What is one waiting for when looking at a very good or even once-in-a-lifetime investment? What is one waiting for? For an even better investment or an even better price? Really? If the dry powder is investable, then I invest; if it's not investable (but needed for my financial security), then of course it's not to touch (in fact it isn't dry powder then). 

Of course, it's a little bit different if you are constantly expecting new cash flows that you can reinvest (which is not the case for me at the moment). It's totally clear, that one is happy then, buying on the cheap. But Fairfax has been cheap today and all days before within the last years, so I don't see any point "actively waiting" for a cheaper entry - the risk of missing this opportunity is just far too big in my eyes.

Thank you.

[Cod Liver Oil]

I know they are different animals, but do you guys think FFH or FIH is more attractive at these prices?

[Hsmpanl]

14 minutes ago, Cod Liver Oil said:

I know they are different animals, but do you guys think FFH or FIH is more attractive at these prices?

I'm a buyer of both but like FIH better at these prices. More uncertainty but lower base to grow off of. Very conservative marks to market and a discount to book value makes it highly attractive. I own more FFH than FIH and think the near term outlook is bright for it as well.

[Dazel]

 

Prem has been buying a lot of stock back (he has done a incredible job of it) and it is a huge benefit to all of us because the intrinsic value is much much higher. 

 

A couple of years ago Buffett and Munger realized that Berkshire had finally become cheap and they started buying billions of stock back instead of buying other companies that were higher priced. 

 

Fairfax is in a position where it is time to sell off Digit and "ALL" holdings that are more expensive than Fairfax stock and buy back all that they can of their own stock. This would include portions of insurance companies like Pet insurance...What a great sale.

 

They will get blocks of stock in this type of forced selling market. This is the equivalent of stealing a company for cheap 8x PE! 

 

That is Fairfax 3.0=strength

[A_Hamilton]

Prem wrote the following in this year's annual letter: 

 

Is this an accurate description of how things will progress? My understanding has always been there is a sunset provision on the multi-voting shares if Prem steps down / that continuation of supervoting shares to the next generation would need to be approved by shareholders. 

 

If any one has any thoughts I'd appreciate them.

[nwoodman]

2 hours ago, A_Hamilton said:

Prem wrote the following in this year's annual letter: 

 

Is this an accurate description of how things will progress? My understanding has always been there is a sunset provision on the multi-voting shares if Prem steps down / that continuation of supervoting shares to the next generation would need to be approved by shareholders. 

 

If any one has any thoughts I'd appreciate them.

Its my understanding that they have 5 years but you are correct in that it would eventually need to be voted on: 

 

The continuing preservation of the 41.8% voting power of the multiple voting shares is subject to a majority of the minority shareholder ratification vote (i) at the annual meeting of shareholders following the period ending December 31, 2020 and any one or more consecutive five-year periods thereafter during which the number of our outstanding shares

(multiple voting shares plus subordinate voting shares) has increased by at least 25%, or following any calendar year more than five years after the last ratification vote (or after August 31, 2015) if the number of our outstanding shares (multiple voting shares plus subordinate voting shares) has increased by at least 50% since the last ratification vote (or after August 31, 2015); (ii) if we intend to issue more than 50% of our outstanding shares in a single transaction; and (iii) within five years after V. Prem Watsa is, for whatever reason, neither our Chairman nor our CEO. At August 31, 2015, the number of our outstanding shares (multiple voting shares plus subordinate voting shares) was 23,583,605.

https://www.fairfax.ca/wp-content/uploads/2025/03/FFH-Notice-and-Circular-March-7-2025-2.pdf

Edited March 13, 2025 by nwoodman

[Dazel]

The Reinsurance license in India is very big news. Maybe do not sell Digit…This growth story will huge in reinsurance for India. Congrats Fairfax!

[gfp]

2 minutes ago, Dazel said:

The Reinsurance license in India is very big news. Maybe do not sell Digit…This growth story will huge in reinsurance for India. Congrats Fairfax!

 

Seems like this is independent of Digit (both the public and private versions) and backed by Kamesh Goyal and Fairfax through separate vehicles.  FAL (Fairfax) will be the majority owner.

[Dazel]

https://economictimes.indiatimes.com/news/international/us/warren-buffett-saw-the-trump-slump-coming-and-berkshire-hathaway-is-built-to-withstand-it-heres-how-the-94-year-old-market-legend-planned-to-handle-it/articleshow/118988544.cms?from=mdr
 

Berkshire’s marketable security portfolio dropped from $357b and $254b in 2024…Mr. Buffett said “Despite what commentator’s currently view as an extraordinary cash position at Berkshire, the great majority of our money remains in equities.” They had $318b of cash at year end. $1.08T market cap (.294 cash/mkt cap) equity portfolio $254b if untouched down $30b plus in this drawdown..Apple down 20%).

 

 

Fairfax has $19b (fair value at year end) in marketable securities out of $70b…The bond portfolio is mostly in US treasuries the most liquid asset on the planet. Call it $40b cash equivalent even though it is more like $51b. $29.72b market cap (1.35 cash/mkt ..equity portfolio flat to up with the bond portfolio up approx $700m)

 

Fairfax 3.0 should be talked about especially in the economic India times. They are in the best position of anyone I see globally for this pullback. The market just does not know who they are. Keep buying the shares back Fairfax…Berkshire/Fairfax there is no question who is the better value. 

Edited March 14, 2025 by Dazel
Numbers correction

[Dazel]

I mean no disrespect to Warren Buffett and Berkshire they are the second best company prepared for this pullback! 
 

Fairfax remains deep value in a world of 100x earnings companies…hard to believe at times.

[Dazel]

 

Quick sidebar…There are not any value managers left from this U.S bull market. Both age and market mechanics have depleted all but a few. Quick story for you younger folk…Fairfax successfully shorted the dot com era (we are still in a tech bubble) and Sir John Templeton (Prem’s mentor) killed it shorting it. Brian Bradstreet hit it out of the park going long bonds during the era. But a forgotten “super investor” Richard Rainwater did better than everyone after riding out the dot com era in oil. If you would like to learn study Rainwater. The best deal maker of all time? He sold a piece of swamp land to Disney for 10% of Disney and then hired CEO Michael Eisner and turned the company around.

https://money.cnn.com/magazines/fortune/fortune_archive/2001/06/11/304646/index.htm

Prem and his team have proven that in private deals they would rival him the market just does not realize what they built. A top 20 global insurance company from scratch…Rainwater would be proud! 

[Dazel]

Here is a famous resource value investor who uses Warren Buffett as a mentor. Guess what he says to buy? Fairfax! Rick is maybe the most intelligent Speaker on investing that I have come across he is always worth a listen. His scope is banks, Fairfax to mining across the globe. 

 

He put Altius minerals in business at Pennie’s…taking a shot on a very young Brian Dalton (Fairfax owns 14%). 

 

Edited March 14, 2025 by Dazel

[adventurer]

8 minutes ago, Dazel said:

Here is a famous resource value investor who uses Warren Buffett as a mentor. Guess what he says to buy? Fairfax! Rick is maybe the most intelligent Speaker on investing that I have come across he is always worth a listen. His scope is banks, Fairfax to mining across the globe. 

 

He put Altius minerals in business at Pennie’s…taking a shot on a very young Brian Dalton (Fairfax owns 14%). 

 

 

Thank you. Listening to this right now. 

[MMM20]

2 hours ago, Dazel said:

Here is a famous resource value investor who uses Warren Buffett as a mentor. Guess what he says to buy? Fairfax! Rick is maybe the most intelligent Speaker on investing that I have come across he is always worth a listen. His scope is banks, Fairfax to mining across the globe. 

 

He put Altius minerals in business at Pennie’s…taking a shot on a very young Brian Dalton (Fairfax owns 14%). 

 

 

The "plummeting" thing gets me. We get a 10% S&P 500 drawdown about once a year and a 20% drawdown once every few years. Fairfax trades where it did about a month and a half ago! I guess I'm just barely old enough to remember -50% in the GFC and maybe that's a blessing and a curse - sort of a light version of a Depression baby. I think Fairfax is worth ~US$2500-3000+ so I don't really understand trading around a drop from ~US$1500 to ~US$1350. Not much has changed. I was maxed out size-wise at ~US$1500 and I'm still maxed out now.

 

Edited March 14, 2025 by MMM20

[maxthetrade]

On 3/12/2025 at 7:12 PM, Cod Liver Oil said:

I know they are different animals, but do you guys think FFH or FIH is more attractive at these prices?

 

Adam, I've been buying FFH for both new accounts and old accounts where I already hold sizeable positions. I think decent growth in BV over the next few years is almost certain and the valuation is pretty reasonable as well as well.

[Cod Liver Oil]

Thanks Cord. You, Greg, @Dinar , @nwoodman , @Luke and all the other great posters have wised me up to the quality of Fairfax.  I can be dense so it takes a lot of battering.

[Dazel]

https://finance.yahoo.com/m/bafc242a-5c86-34b4-b30f-b72546c25c40/berkshire’s-stock-buyback.html
 

There is no one better than Warren Buffett and when he is not buying his stock back you know why. It’s not cheap.

 

Prem has a cheap stock price and he and his team will buy every share back that they can.

 

price matters.

[Hsmpanl]

41 minutes ago, Dazel said:

https://finance.yahoo.com/m/bafc242a-5c86-34b4-b30f-b72546c25c40/berkshire’s-stock-buyback.html
 

There is no one better than Warren Buffett and when he is not buying his stock back you know why. It’s not cheap.

 

Prem has a cheap stock price and he and his team will buy every share back that they can.

 

price matters.

Do we get regular indications of buyback activity or just with quarterly reports?

[Dazel]

quarterly is good enough for me I am confident they are buying as many as they can.

 

If Prem would sell Fairfax to Berkshire Buffett would buy it….likely his number one pick for a take over. That’s all you really have to know…Prem is doing the same thing by buying back Fairfax stock. As shareholders we own a bigger piece of the company daily. The lower the price the better for the long termers.

[gfp]

4 hours ago, Hsmpanl said:

Do we get regular indications of buyback activity or just with quarterly reports?

You can usually tell their repurchase activity on SEDI but Canadian securities filings are such a pain in the ass to retrieve.  I still don't know how to check SEDI filings for free without using 

https://www.canadianinsider.com/node/7?menu_tickersearch=FFH+|+Fairfax+Financial+Holding

[SafetyinNumbers]

5 hours ago, gfp said:

You can usually tell their repurchase activity on SEDI but Canadian securities filings are such a pain in the ass to retrieve.  I still don't know how to check SEDI filings for free without using 

https://www.canadianinsider.com/node/7?menu_tickersearch=FFH+|+Fairfax+Financial+Holding

 

Within the first 10 days of the month FFH has to file the previous month's buyback activity.

 

I agree with @gfp that SEDI is a pain to use.

 

I find https://ceo.ca/ffh to be an easier way to see new filings.

 

Btw I thought it was impressive our new CFO has ~8500 shares already!

[gfp]

Thanks - that’s the one I meant to link. ceo.ca is better. Cheers!