Fairfax 2026

[SafetyinNumbers]

8 hours ago, dartmonkey said:

Count me as one who is perplexed by this investment. First, it is a $400m investment, more than one percent of the whole company, and while it may be #9 among investments, it is not like Eurobank or Orla which has gotten there because of its performance, it’s that amount invested, comparable to the size of another investment in a struggling company with a fruity name that I try to forget. 

 

With an insurance company I love and which they know intimately, available at less than 8 times earnings, I just can’t understand why they are putting a penny into a struggling retailer. Watsa praises Henry Singleton, a CEO who bought back 90% of his company’s shares. At the current rate, how many decades will it take for Fairfax to do the same? Why not plough into this opportunity, instead of buying back 2-3% a year?

Once again, I think there is confusion with capital allocation at the holding company vs the insurance subsidiaries. They can only pull so much capital out of the insurance subsidiaries while trying to maintain regulatory limits and credit ratings. That capital goes to pay interest expense, holding company costs (paying everyone at HWIC etc..) and buybacks for the most part. Investments like UA are happening at the insurance subsidiaries level and is not capital that could be used for buybacks.  

[dartmonkey]

1 hour ago, SafetyinNumbers said:

They can only pull so much capital out of the insurance subsidiaries while trying to maintain regulatory limits and credit ratings. That capital goes to pay interest expense, holding company costs (paying everyone at HWIC etc..) and buybacks for the most part. Investments like UA are happening at the insurance subsidiaries level and is not capital that could be used for buybacks.

Would insurance regulators not allow them to buy FFH shares (or something economically equivalent, like TRSs on Fairfax shares) at the insurance subsidiary level? I could see why they might not, but it would seem like a safer bet than buying Under Armour…

[gfp]

15 minutes ago, dartmonkey said:

Would insurance regulators not allow them to buy FFH shares (or something economically equivalent, like TRSs on Fairfax shares) at the insurance subsidiary level? I could see why they might not, but it would seem like a safer bet than buying Under Armour…

 

It is possible to buy the issuer's own shares within a Bermuda reinsurance company (I know that for sure), and Fairfax has several of those (Brit Re, Allied World Assurance, Ltd, etc) and to count un-cancelled de-facto treasury shares toward regulatory capital.  But it is extremely unusual and I wouldn't be happy to see Fairfax doing something like that.

 

Let them retire shares and cancel them the "regular way" and be patient - you never know when lower prices for your own shares are just around the corner.

 

I believe Fairfax holds the TRS position on their own shares at the Holding company level.

 

Edited February 1 by gfp

[dartmonkey]

7 hours ago, UK said:

with FFH liquidity, are not there a limit of how much they can buyback, without affecting the price? What would be a reasonable upper limit in your view?

I think they could buy back a lot more without affecting the price. Average daily volume, combining FFH and FRFHF, is about 100,000, or 25m shares a year. If they had the liquidity and wanted to buy back 10% of the company every year, it would still be less than 10% of the volume and shouldn’t affect the share price. 

 

The major limitation is insurance-regulatory approval with the cash they have on hand. But with $5b in annual earnings, they should be able to do this if they make it a priority, as the cash arrives. Buying back 2% of their company every year represents about $700m, it is currently only a small part of what they are investing in. 

[Hoodlum]

36 minutes ago, dartmonkey said:

I think they could buy back a lot more without affecting the price. Average daily volume, combining FFH and FRFHF, is about 100,000, or 25m shares a year. If they had the liquidity and wanted to buy back 10% of the company every year, it would still be less than 10% of the volume and shouldn’t affect the share price. 

 

The major limitation is insurance-regulatory approval with the cash they have on hand. But with $5b in annual earnings, they should be able to do this if they make it a priority, as the cash arrives. Buying back 2% of their company every year represents about $700m, it is currently only a small part of what they are investing in. 

 

I would like to see them buy more at this price as well.   But they have had other priorities as well at the holding company level. 

 

Over the past year they have been buying back their preferred, some with new debt and some with cash coming back from insurance subs.  I believe they have one series remaining of the Preferred to close out.  

 

Their option to buy the minority in Allied expires in September.  They may be waiting for the sale of EuroLife to go through so they could use that for this purchase.  But I suspect they want to have the flexibility to buy the Allied minority interest with cash, in case the EuroLife sale doesn't close for some reason.   

 

Once EuroLife sale closes we may see Fairfax close the final Preferred series and then focus on the buybacks.  Fairfax has until 2029 before the Odyssey Re Minority purchase option expires, so they don't need to do that for a while. 

 

I am not aware of any other use for cash at the holding company and at this price level I would prefer they focus on the buybacks, versus buying another insurance company.

[TwoCitiesCapital]

12 hours ago, dartmonkey said:

Count me as one who is perplexed by this investment. First, it is a $400m investment, more than one percent of the whole company, and while it may be #9 among investments, it is not like Eurobank or Orla which has gotten there because of its performance, . 

 

Fairfax invested 400 million euro in Eurobank in 2014 and took nearly a 100% loss on it in the restructuring. They then committed a few hundred million more AND purchased Eurolife. 

 

Ultimately, Fairfax's capital commitment/capital at risk on Eurobank was significantly more AND while it was a significantly smaller company. I don't think we need to sweat UA just yet. 

 

12 hours ago, dartmonkey said:

With an insurance company I love and which they know intimately, available at less than 8 times earnings, I just can’t understand why they are putting a penny into a struggling retailer. Watsa praises Henry Singleton, a CEO who bought back 90% of his company’s shares. At the current rate, how many decades will it take for Fairfax to do the same? Why not plough into this opportunity, instead of buying back 2-3% a year?

 

I think people underestimate the size of the repurchases because they're not including the impact of the repurchases of associates and maybe not the impact of the TRS (which comes through earnings instead of a balance sheet reducing of shares). 

 

Fairfax HAS repurchased substantial amounts over the last 5-years demonstrated by any measure - float/share, earnings/share, stocks & bonds/share, etc.

 

I don't think they need to commit 100% of excess capital to repurchases oyf there are other opportunities with attractive returns that diversify future return streams. 

 

10 hours ago, Maverick47 said:

But individuals, once burned on a given security, don’t often give it a fair “second chance” to be a significant part of their future portfolio.  

 

I must be a glutton for pain. 

 

Forgave Fairfax and loaded up in 2021/2022

 

Forgave Eurobank and loaded up in 2020

 

Currently forgiving and doubling down on JACK

 

Doubled down on Fannie/Freddie in 2020 when Biden was elected. 

 

Have owned Exor since 2014/2015, been adding to it ever since, and here we are below my average cost-basis for that 10-year period and I'm still adding. 

 

Accumulated BTC at $14k and rode down to $3k in 2020, accumulated the whole way up to $40k and road down to $15k in 2022, and accumulated all the way up to $100k and road down to the current ~75-80k now. 

 

I regularly chase pain, I suppose. But long term it's worked out for most of those. 

Edited February 1 by TwoCitiesCapital

[mananainvesting]

2 hours ago, TwoCitiesCapital said:

 

Fairfax invested 400 million euro in Eurobank in 2014 and took nearly a 100% loss on it in the restructuring. They then committed a few hundred million more AND purchased Eurolife. 

 

Ultimately, Fairfax's capital commitment/capital at risk on Eurobank was significantly more AND while it was a significantly smaller company. I don't think we need to sweat UA just yet. 

 

 

I think people underestimate the size of the repurchases because they're not including the impact of the repurchases of associates and maybe not the impact of the TRS (which comes through earnings instead of a balance sheet reducing of shares). 

 

Fairfax HAS repurchased substantial amounts over the last 5-years demonstrated by any measure - float/share, earnings/share, stocks & bonds/share, etc.

 

I don't think they need to commit 100% of excess capital to repurchases oyf there are other opportunities with attractive returns that diversify future return streams. 

 

 

I must be a glutton for pain. 

 

Forgave Fairfax and loaded up in 2021/2022

 

Forgave Eurobank and loaded up in 2020

 

Currently forgiving and doubling down on JACK

 

Doubled down on Fannie/Freddie in 2020 when Biden was elected. 

 

Have owned Exor since 2014/2015, been adding to it ever since, and here we are below my average cost-basis for that 10-year period and I'm still adding. 

 

Accumulated BTC at $14k and rode down to $3k in 2020, accumulated the whole way up to $40k and road down to $15k in 2022, and accumulated all the way up to $100k and road down to the current ~75-80k now. 

 

I regularly chase pain, I suppose. But long term it's worked out for most of those. 

 

What's the quick elevator pitch on Exor? Thanks

[Junior R]

2 hours ago, TwoCitiesCapital said:

 

Fairfax invested 400 million euro in Eurobank in 2014 and took nearly a 100% loss on it in the restructuring. They then committed a few hundred million more AND purchased Eurolife. 

 

Ultimately, Fairfax's capital commitment/capital at risk on Eurobank was significantly more AND while it was a significantly smaller company. I don't think we need to sweat UA just yet. 

 

 

I think people underestimate the size of the repurchases because they're not including the impact of the repurchases of associates and maybe not the impact of the TRS (which comes through earnings instead of a balance sheet reducing of shares). 

 

Fairfax HAS repurchased substantial amounts over the last 5-years demonstrated by any measure - float/share, earnings/share, stocks & bonds/share, etc.

 

I don't think they need to commit 100% of excess capital to repurchases oyf there are other opportunities with attractive returns that diversify future return streams. 

 

 

I must be a glutton for pain. 

 

Forgave Fairfax and loaded up in 2021/2022

 

Forgave Eurobank and loaded up in 2020

 

Currently forgiving and doubling down on JACK

 

Doubled down on Fannie/Freddie in 2020 when Biden was elected. 

 

Have owned Exor since 2014/2015, been adding to it ever since, and here we are below my average cost-basis for that 10-year period and I'm still adding. 

 

Accumulated BTC at $14k and rode down to $3k in 2020, accumulated the whole way up to $40k and road down to $15k in 2022, and accumulated all the way up to $100k and road down to the current ~75-80k now. 

 

I regularly chase pain, I suppose. But long term it's worked out for most of those. 

The ones mispriced give you the best returns if it works out

[SafetyinNumbers]

2 hours ago, Junior R said:

The ones mispriced give you the best returns if it works out

Also partly why returns on the equity portfolio likely have a higher floor than investors appreciate. The accounting of businesses where Fairfax has significant influence or control has the effect of writing down businesses more aggressively than writing them up. The effect of that is higher return on equity. 
 

Eurobank is a good example. We carry it at $2.7b but it contributes about $540m to earnings. That’s a 20% ROI which with 3:1 leverage contributes to FFH’s ROE at 60%. Our carrying value next year in theory should jump to $3.2b but EUROB pays dividends and buys back stock from us every day. Both reduce carrying value most of the way back to $2.7b. But earnings power at EUROB is unlikely to change so forward ROI should be going higher which bolsters Fairfax’s return on the equity portfolio that much more. 

[TwoCitiesCapital]

4 hours ago, mananainvesting said:

 

What's the quick elevator pitch on Exor? Thanks

 

There's a thread on it where that is covered. 

[Hoodlum]

4 hours ago, mananainvesting said:

 

What's the quick elevator pitch on Exor? Thanks

Vikings response and Anshulp’s initial info on Exco

 

 

[TwoCitiesCapital]

1 hour ago, Hoodlum said:

Vikings response and Anshulp’s initial info on Exco

 

 

 

Exco =\= Exor

[Junior R]

Quote

Eldorado Gold Acquires Foran Mining in all Stock-Deal at $2.78 Billion Valuation

 

[Hoodlum]

1 hour ago, Junior R said:

 

 

This is basically a share swap at current stock prices, with just a 6% premium.   While Eldorado Gold share price did drop late last week due to the gold drop, this becomes a combined gold/Copper play now.  I wonder if Fairfax plans to hold on to the shares after this goes through.  At least it will be easier for Fairfax to sell their shares as they could do it gradually without needing to inform the market as their equity interest will be below 10%.

 

Edited February 2 by Hoodlum

[SafetyinNumbers]

2 minutes ago, Hoodlum said:

 

This is basically a share swap at current stock prices, with just a 6% premium.   While Eldorado Gold share price did drop late last week due to the gold drop, this becomes a combined gold/Copper play now.  I wonder if Fairfax plans to hold on to the shares after this goes through.  At least it will be easier for Fairfax to sell their shares as they could do it gradually without needing to inform the market as their equity interest will be below 10%.

 

Liquidity probably more important than anything else. 

[Hoodlum]

Unless I missed it, I don't believe Fairfax have any convertible debt or warrants with Foran Mining.

 

Edited February 2 by Hoodlum

[gfp]

4 minutes ago, Hoodlum said:

Unless I missed it, I don't believe we have any convertible debt or warrants with Foran Mining

 

That is correct, Fairfax exercised its Foran warrants back in 2022

[MMM20]

I'm not a big fan of this guy (he charges a fortune for his substack and says he's a real investor but his interviews with companies I know well seem to totally miss the mark, like he hasn't done his research but still has an arrogant tone as if he's sure he's already got all the answers)... but I thought his take on FFH/UA was 100% worth the read. https://www.yetanothervalueblog.com/p/fairfax-loves-under-armour-im-not "For minority shareholders, there is one other interesting angle worth considering. This was mentioned towards the end of the Trata call, but there could be some logic to a take private at UA. Plank owns a big stake in the company, most companies don’t like to do turnarounds in public, and there’s a lot of private equity money out there. Could a take private happen here? Absolutely possible. In particular, I’d note Fairfax has a lot of financial resources and a history of taking businesses private, particularly when they like the management team (they’re in the middle of a take private right now⁷!). IDK how Fairfax feels about Kevin Plank, but he does kind of seem like the type of executive Prem likes / would back. Could Fairfax look to support a UA take private? Or could UA just run a process and have a private equity firm back a take private? Either seems absolutely possible, and would likely result in a windfall for minority shareholders (a windfall that I think the take private sponsors would ultimately rue!)." 

 

Edited February 2 by MMM20

[Pellom]

17 minutes ago, MMM20 said:

I'm not a big fan of this guy (he charges a fortune for his substack and says he's a real investor but his interviews with companies I know well seem to totally miss the mark, like he hasn't done his research but still has an arrogant tone, like he's sure he's already got all the answers)... but I thought his take on FFH/UA was 100% worth the read. https://www.yetanothervalueblog.com/p/fairfax-loves-under-armour-im-not "For minority shareholders, there is one other interesting angle worth considering. This was mentioned towards the end of the Trata call, but there could be some logic to a take private at UA. Plank owns a big stake in the company, most companies don’t like to do turnarounds in public, and there’s a lot of private equity money out there. Could a take private happen here? Absolutely possible. In particular, I’d note Fairfax has a lot of financial resources and a history of taking businesses private, particularly when they like the management team (they’re in the middle of a take private right now⁷!). IDK how Fairfax feels about Kevin Plank, but he does kind of seem like the type of executive Prem likes / would back. Could Fairfax look to support a UA take private? Or could UA just run a process and have a private equity firm back a take private? Either seems absolutely possible, and would likely result in a windfall for minority shareholders (a windfall that I think the take private sponsors would ultimately rue!)." 

 

 

I think UA is 100% going private. The question is whether Fairfax wants to own it, or they just see it as an arbitrage situation. 

[SafetyinNumbers]

3 hours ago, Pellom said:

 

I think UA is 100% going private. The question is whether Fairfax wants to own it, or they just see it as an arbitrage situation. 

What do you think they have to pay?

[TwoCitiesCapital]

8 hours ago, Hoodlum said:

 

This is basically a share swap at current stock prices, with just a 6% premium.   While Eldorado Gold share price did drop late last week due to the gold drop, this becomes a combined gold/Copper play now.  I wonder if Fairfax plans to hold on to the shares after this goes through.  At least it will be easier for Fairfax to sell their shares as they could do it gradually without needing to inform the market as their equity interest will be below 10%.

 

 

I wonder if it goes through at all. Why should Foran shareholders vote this through just for a 6% premium? 

 

I wanted copper exposure. That's why I bought it. If you're gonna take that away from me, fine! But pay me for it. 

 

I trimmed my shares a hair at 7 CAD last week just because the vertical climb probably needed a breather - but I'm gonna want a higher price to let the whole position go than the ~$6-6.25 CAD this represents.

[Hoodlum]

28 minutes ago, TwoCitiesCapital said:

 

I wonder if it goes through at all. Why should Foran shareholders vote this through just for a 6% premium? 

 

I wanted copper exposure. That's why I bought it. If you're gonna take that away from me, fine! But pay me for it. 

 

I trimmed my shares a hair at 7 CAD last week just because the vertical climb probably needed a breather - but I'm gonna want a higher price to let the whole position go than the ~$6-6.25 CAD this represents.

 

That was my thought as well, especially since this was done at the peak of the Gold Price.  Copper pricing and conversely Foran Mining was not as volatile as Gold/ORLA over the past few months and Foran would not fall as far if Gold pricing falls further.  It will be interesting to watch as I would suspect that Fairfax and other major shareholders would have been asked about this and likely agreed in advance.  

[SafetyinNumbers]

50 minutes ago, Hoodlum said:

 

That was my thought as well, especially since this was done at the peak of the Gold Price.  Copper pricing and conversely Foran Mining was not as volatile as Gold/ORLA over the past few months and Foran would not fall as far if Gold pricing falls further.  It will be interesting to watch as I would suspect that Fairfax and other major shareholders would have been asked about this and likely agreed in advance.  

I think they are getting good value in ELD shares and the premium will come from the rerate. Both the narrative and flows (index related) are supportive. Allows anyone who wants to defer the gains to do so  and anyone who wants to take profits to have liquidity. 

[Hoodlum]

5 minutes ago, SafetyinNumbers said:

I think they are getting good value in ELD shares and the premium will come from the rerate. Both the narrative and flows (index related) are supportive. Allows anyone who wants to defer the gains to do so  and anyone who wants to take profits to have liquidity. 

 

That would work as long as Gold doesn't drop significantly future before this transactions closes.  

[TwoCitiesCapital]

34 minutes ago, Hoodlum said:

 

That would work as long as Gold doesn't drop significantly future before this transactions closes.  

 

Or copper rise significantly relative to it. We'll see where we were trading at in April, but I'm not inclined to be interested in the offer at this price. 

Edited February 2 by TwoCitiesCapital