Fairfax 2026

[dartmonkey]

2 hours ago, SafetyinNumbers said:

I believe they can only buy 2% of shares outstanding on the NCIB over a 30 day period. 

I tried to look up how this ruile was framed and found this, which suggest that the 2% rule wouldn't apply to a company purchasing its own shares:

 

"To prevent the company from manipulating the stock price, exchanges enforce daily purchasing restrictions. For TSX-listed companies, the daily limit is restricted to the greater of: [1, 2]

• 25% of the Average Daily Trading Volume (ADTV) of the shares.
• 1,000 securities per trading day. [1]

(Note: There is a separate 2% rolling limit applied specifically to investment funds over a 30-day period, which doesn't apply to standard corporate equity). [1, 2].

 

 

The second note goes to a 2007 Stikeman Elliott document that summarizes the change from the prior rule which DID prevent a compan from buying more than 2% of its own shares over 30 days:

 

"The rolling 2% restriction on the repurchase of shares within any 30 day period has been eliminated for issuers that are not investment funds. The new limit is now the greater of 25% of the average daily trading volume (ADTV) and 1000 securities per trading day. This limit will only apply to purchases made through the TSX. The rolling 2% limit for investment funds remains. "

 

That was 20 years ago, but it would not surprise me that there is a more recent version. Does anyone know?

 

 

 

 

[dartmonkey]

This document https://corporatefinanceinstitute.com/resources/wealth-management/normal-course-issuer-bid-ncib/ would seem to suggest that the 2% rule during a 30-day period is back.

[dartmonkey]

But this document https://www.fasken.com/en/knowledge/2022/07/toronto-stock-exchange-staff-notice-on-normal-course-issuer-bids does not mention the 2% restriction. OTOH, it does mention the fact that only 25% of the average daily volume in the last 6 months can be repurchased in a given day, but that one block trade per week is permitted even if it exceeds this limit, and that no trades are allowed at the open (how many minutes after the open?) nor in the last 30 minutes of the trading day, and that trades on other exchanges do not have these restrictions, except in as much as they contribute to the total allowable shares authorized to be repurchased in the year by the NCIB.

[dartmonkey]

I believe this is the current TSX document: 

https://cdn-ceo-ca.s3.amazonaws.com/1in03pb-TSX_Company_Manual_-_April_20__2023__English_.pdf

 

(ix) "normal course issuer bid" means an issuer bid by a listed issuer to acquire its listed securities where the purchases: (a) if the issuer is not an investment fund, do not, when aggregated with all other purchases by the listed issuer during the same trading day, aggregate more than the greater of: (i) 25% of the average daily trading volume of the listed securities of that class; and (ii) 1,000 securities; (b) if the issuer is an investment fund, do not, when aggregated with all other purchases by the listed issuer during the preceding 30 days, aggregate more than 2% of the listed securities of that class outstanding on the date of acceptance of the notice of normal course issuer bid by TSX; and (c) over a 12-month period, commencing on the date specified in the notice of the normal course issuer bid, do not exceed the greater of (i) 10% of the public float on the date of acceptance of the notice of normal course issuer bid by TSX, or (ii)  5% of such class of securities issued and outstanding on the date of acceptance of the notice of normal course issuer bid by TSX, excluding any securities held by or on behalf of the listed issuer on the date of acceptance of the notice of normal course issuer bid by TSX, and for the purposes of (b) and (c), whether such purchases are made through the facilities of a stock exchange or otherwise, but excluding purchases made under a circular bid; 

 

In other words, the 2% in 30 days rule seems to only apply to investment funds.

[SafetyinNumbers]

21 minutes ago, dartmonkey said:

But this document https://www.fasken.com/en/knowledge/2022/07/toronto-stock-exchange-staff-notice-on-normal-course-issuer-bids does not mention the 2% restriction. OTOH, it does mention the fact that only 25% of the average daily volume in the last 6 months can be repurchased in a given day, but that one block trade per week is permitted even if it exceeds this limit, and that no trades are allowed at the open (how many minutes after the open?) nor in the last 30 minutes of the trading day, and that trades on other exchanges do not have these restrictions, except in as much as they contribute to the total allowable shares authorized to be repurchased in the year by the NCIB.

This is an interesting document. Thanks for sharing. The discussion around buying on ATS is interesting. It seems like they can exceed the daily limit by bidding on an ATS. I think they have done so on occasion when looking at insider filings but I wasn’t curious enough to figure out how they were able to do so. In this way it makes sense to cross blocks on the TSX and save the room for the ATS if necessary. We think they bought a 416k share block last week but there can’t be many of those left so this allows for faster buybacks if the price is right and the capital is available. 

Edited 1 hour ago by SafetyinNumbers

[Viking]

10 hours ago, SafetyinNumbers said:

I wrote an update on Fairfax Financial and Fairfax India for the Berczy Park Capital substack. 
 

https://open.substack.com/pub/berczyparkcapital/p/past-is-prologue?r=ecc87&utm_medium=ios

 

I am generally an idiot when it comes to understanding market multiple. I am looking forward to see what P/BV multiple (the range) Fairfax's stock trades at in the coming years.

 

I think Fairfax's 2010-2020 multiple range was something 1.0x to 1.3x range. That looks much too low to use today, given the strong performance the company has delivered over the past 5 years and its strong prospects.  

 

But what is an appropriate multiple range to use today? 

 

Interestingly, what multiple will Mr. Market use? 

 

I am not optimistic. I think there is a good chance Fairfax stays cheap. For a whole bunch of reasons. 

 

If I am right, the silver lining is Fairfax will be able to buy back an enormous amount of stock at a low valuation. For long term shareholders that would an amazing outcome. Of interest, that is exactly what they have been doing for the past 6 years.

[SafetyinNumbers]

16 minutes ago, Viking said:

am not optimistic. I think there is a good chance Fairfax stays cheap. For a whole bunch of reasons. 

 

If I am right, the silver lining is Fairfax will be able to buy back an enormous amount of stock at a low valuation. For long term shareholders that would an amazing outcome. Of interest, that is exactly what they have been doing for the past 6 years.

What multiple range do you think we’ll trade in? My bracket of 1.2-1.5x is pretty tight and we’re right in the middle as it stands now. I think there are a lot of people on this board that will sell at least some of their shares at the high end of the range even if BVPS is compounding 2-6% a quarter, don’t you?