Jump to content

FFH Annual Report is out


Stone19
 Share

Recommended Posts

I'd like to get a copy of the book but unfortunately i will not be at the AGM.

 

This was interesting too.

 

"As I have mentioned to you ad nauseam, you will not get a takeover premium for Fairfax as I have the votes

(unfortunately not the equity interest!!), and even onmy death I expect my controlling interest will not be sold (my

children are in tears!), so that Fairfax can continue uninterrupted in building long term value for you, our

shareholders, by treating our customers, employees and the communities in which we operate in a fair and friendly

way! You of course also know that the multiple voting shares of Fairfax will not be sold outside my family unless the

same price per share is available to the holders of subordinate voting shares."

 

I'm going to stick my head in the SAND and wish Prem good health for many years to come.

Link to comment
Share on other sites

A couple of interesting paragraphs from the report (they are towards the very end):

 

While our primary objective is to expand our insurance and reinsurance operations worldwide,

our investing skills could provide us with opportunities to buy, in whole or in part, excellent companies in other

industries which generate strong free cash flows and will contribute to our objective of achieving a 15% per year

increase in book value per share over the long term. For entrepreneurial founders who have built their companies

over long periods of time, Fairfax will be an excellent owner, allowing the founders to continue to run their business,

unfettered by the head office, and we are open to these opportunities.

 

Sounds like Fairfax is following in the footsteps of Berkshire and Markel...

 

Please do not think we have forgotten about common stock buybacks. We have historically purchased significant

amounts of our stock, but have recently chosen instead to buy some excellent companies which became available

and that we think will create significant intrinsic value in the future.

 

I think buybacks are likely unless the insurance market hardens soon.

Link to comment
Share on other sites

Another great excerpt:

 

Consider, for instance, what we learned on a recent trip to China: many house (apartment) prices in Beijing and Shanghai had gone up almost four times – in the past four to five years!; many individuals own multiple apartments as investments with the certain belief that real estate prices can only go up; and maids are taking holidays so that they can buy apartments also. “Buy two and sell one after it doubles to get one for free” goes the refrain! In his essay in Vanity Fair, “When Irish Eyes Are Crying”, Michael Lewis says, “Real estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than expectations. The

moment people cease to believe that house prices will rise forever, they will notice what a terrible long term

investment real estate has become and flee the market, and the market will crash.” We agree!!

 

Infrastructure and construction spending in China accounts for more than 40% of GDP – a number rarely seen in the past in any economy. In fact, this demand has resulted in commodity prices going up in a parabolic curve. Combine the increase in commodity prices, substantially from Chinese demand, with hedge funds and others again trying to allocate money to these very illiquid markets, and you can understand why some of these commodities have exploded in price, as shown in the table below.

Link to comment
Share on other sites

My two favorite numbers from the letter:

 

around 95% -- the average, consolidated accident year combined ratio of the four main operating subs since 2002

 

around 8.5% -- the average, consolidated annual reserve releases since 2002

 

 

 

Link to comment
Share on other sites

My two favorite numbers from the letter:

 

around 95% -- the average, consolidated accident year combined ratio of the four main operating subs since 2002

 

around 8.5% -- the average, consolidated annual reserve releases since 2002

 

 

I liked that part as well!

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...