finally...been waiting for this for the last 2 weeks

[watsa_is_a_randian_hero]

http://www.sec.gov/Archives/edgar/data/915191/000090956709000451/o55357e13fvhr.txt

[watsa_is_a_randian_hero]

Major changes:

 

Add 3 mm shares BCE

Add 700k shares of BNI

Sell 3mm shares Dell

Sell 3mm shares FTR

Sell 6.5 mm shares Gannett

Sell 2mm GE, but buy corresponding position in Calls

Sell 9mm INTC

Buy 6 mm ICO

Sell 1 mm JNJ

Sell 1mm KG

Sell 1mm KFT

Buy 1mm LEUCADIA

Sell 700k PFE

Buy 15mm USB

Buy 16.5 WFC

[watsa_is_a_randian_hero]

40% of their portfolio (of what shows up filed with the SEC, which is mainly US positions), is now in 4 stocks:

 

WFC

USB

JNJ

DELL

[kyleholmes]

Great post... was waiting for this as well, out of curiosity largely.

 

Is there anyway to find out about Fairfax's investments in Canada (ie- The Brick, etc.) or elsewhere.... I haven't heard of any way before and maybe is a stupid question, but figured I would see if anyone knew where to look.

 

Thanks for the help,

Kyle

[Zorrofan]

thanks for the update Watsa...always interesting to see what Prem et al are up to!

 

cheers

Zorro

[Parsad]

Easily by far their biggest increase was in Wells Fargo.  They increased their holdings six fold from year-end.  A $285M investment is now worth well over $500M.  Cheers!

[Guest swf83]

Any idea, roughly, where book value for FFH is currently at?

[wabuffo]

USB was pretty big too - they had negligible holdings prior to this Q and it looks like Watsa bought 15.8m shares (vs 16.5m shares of WFC).  If he was buying during the quarter lows in early March (which Buffett also referenced as a great time to buy these two banks), he would have put about equal amounts in both US banks (probably a bit more in WFC but pretty close).

 

wabuffo

[watsa_is_a_randian_hero]

Any idea, roughly, where book value for FFH is currently at?

 

About $295 - $300, on an adjusted basis.  This is an estimate taking their stated BV as of April 24, adding to this the difference between FV and equity value in equity investments (adjusted for tax/minority interest), and then finally calculating the value changes in their equity portfolio holdings.  As a whole, the equity portfolio is slightly up since 4/24, but not too much.  This estimated BV was over $300 before the S&P started declining significantly.

[NormR]

Anyone understand the Magna holding which is in the top 10?

[Viking]

watsa-is..., thanks for letting us know this was out as I also was interested in seeing the changes. I dropped the new info into my spreadsheet and to provide a slightly different take on what has already been posted. I have tried to attach the Excel spreadsheet so you can understand my comments below.

 

- it appears FFH is not simply buying and holding all positions. I calculate they sold 13% of portfolio value in Q1, which is not a small number. They also added 23% new positions (or net 10% new positions).

- regarding sectors, they sold a number of stallwarts (KFT) and Pharma (J&J, PFE) to raise cash to buy primarily two financials (WFC & USB). They also sold all of Progressive and initiated positions in USB (very large), BCE (small) and LUK (very small).

- regarding changes in value (I am missing a few things like GE PUT and Preferreds? on list):

FFH communicated when they released Q1 results ALL investments were up $900 million to April 24. This summary allows us to see where some of those gains were from.

- it appears investment gains are tracking ahead of what FFH has comminucated.

- bottom line is FFH appears to be continuing to be very opportunistic and not afraid to make big decisions with the portfolio (i.e. adding financials).

- what does all this mean? With adding muni bonds in Q4 and then increasing their equity and corporate bond exposure they look well positioned to, at a minimum, maintain their long term return on average investments = 9.8%. March 31 carrying value of investments = $17.1 billion x 9.8% = $1.68 billion = $55/share (after minority interest and taxes).

 

March 31 to April 24 = + $456 million = + 17%

March 31 to May 14 = + $615 million = +23%

 

- as was pointed out earlier, Wells Fargo is the big dog, up $144 million to April 24 and $230 million to May 14. As of May 14, WFC was worth a staggering $515 million (their share of ORH is worth about $1.7 billion)!

- I also calculate current yield on stocks held is 3.5% (using March 31 prices), which is significant!

 

1.) sales: sold 10 positions and raised about $350 million (March 31 share price)

- intel - 9,027,000 shares = - 56% (total holdings) = - $135 million (amount raised)

- J&J  - 808,000 shares = - 10.5% = - $43 million

- Progressive - 2,881,000 shares = 100% = - $39 million

- Dell  - 2,685,000 shares = - 10% = - $25 million

- Kraft  - 1,000,000 shares = - 9% = - $22 million

- Pfizer - 1,618,000 shares = - 9% = - $22 million

- Frontier - 3,026,000 shares = - 16% = - $22 million

 

2.) purchases: bought 6 new position at cost of $606 million (March 31 share price)

- Wells Fargo + 16,514,000 = + 470% = + $235 million (amount spent)

- USG          + 15,838,000 = new = + $231 million

- BCE            + 3,180,000 = new = + $63 million

- Burl North  + 784,000 = + 60% = + $47 million

[oldye]

pgr is gone after only 1 quarter   :o

 

My estimate is that the Stock portfolio MTM as of today is up roughly 500 million assuming no changes since 3/31/09

[Viking]

Is it possible to get the same (or similar) report (13F) for ORH? If someone can point me in the right direction I would appreciate it! Thanks.

[Uccmal]

Norm, You certainly know Magna as well as I do.  Conservatively, when autoparts recovers I would suggest it could be worth 120/share fairly easily.  They are the most solvent of all the autoparts companies with enough cash behind them to buy up large pieces of the primary assemblers.

 

This could get really interesting if GM or Chrysler sell off parts of their Canadian assembly operations. 

[Partner24]

List of FFH US holdings adjusted for their actual value (based on end of March holdings):

 

http://holdings.nasdaq.com/asp/OwnerPortfolio.asp?FormType=OwnerPortfolio&CIK=0000915191&HolderName=FAIRFAX+FINANCIAL+HOLDINGS+LTD%2F+CAN

 

So, our US stocks portfolio is probably worth more than FFH market cap.

 

 

 

 

[watsa_is_a_randian_hero]

Thats if you count ORH.  By counting ORH you are double-counting.  ORH gets its value from the investments it holds, and because FFH controls ORH, those investments show up here.

[watsa_is_a_randian_hero]

watsa-is..., thanks for letting us know this was out as I also was interested in seeing the changes. I dropped the new info into my spreadsheet and to provide a slightly different take on what has already been posted. I have tried to attach the Excel spreadsheet so you can understand my comments below.

 

- it appears FFH is not simply buying and holding all positions. I calculate they sold 13% of portfolio value in Q1, which is not a small number. They also added 23% new positions (or net 10% new positions).

 

I think what is most surprising to me is to see partial sales of KFT & JNJ after he said in this years AR that those are two positions he would contemplate holding for the long term.  He said the same thing about WFC - makes me wonder if he has done partial sales on that position too now that the value of the position is over $500mm.

[Partner24]

You're right watsa is a randian hero. If you exclude ORH from the equation, based on Nasdaq data, you get an approximately 3,3 billions stock portfolio, or approximately 70% of FFH market cap.

[Myth465]

It seems like a decent way to play Wells and UBS is to buy FFH. They have doubled and it hasnt moved much at all.

[watsa_is_a_randian_hero]

My calcs show $3.7 billion in equities.  That doesn't include what they might own in asia, europe, south america

[Partner24]

Yes, as stated before, the Nasdaq holdings show what is listed in US only, so we don't have all the picture here.

[Parsad]

I think what is most surprising to me is to see partial sales of KFT & JNJ after he said in this years AR that those are two positions he would contemplate holding for the long term.  He said the same thing about WFC - makes me wonder if he has done partial sales on that position too now that the value of the position is over $500mm.

 

When you can buy a business like WFC at 4-5 times earnings or hold KFT & JNJ at 12-14 times earnings, the right thing to do is lower the market risk to the portfolio by buying the cheaper investment.  That doesn't mean you wouldn't hold any of them forever, but you are weighing price against intrinsic value.  I'm sure they've taken a little bit of profit from WFC.

 

The only reason Buffett doesn't sell much is because he has to instill this culture of keeping businesses forever.  Otherwise, people would never sell their life's work to him.  He also has to create a type of business that will run completely smoothly without him being at the helm, thus you want a system that is easy to replicate for the new management.  Cheers!

[Uccmal]

I am betting they have unloaded a portion of WFC, or possibly all, since the latest filing.  Unlike Buffett FFH can unload their holding in a day or two without dropping the price.

 

There is absolutely no reason for FFH to sit on those gains.  We may be very surprised at Q end when we are told that there are a few hundred million in realized gains. 

 

[oldye]

Assuming 4$ a share in normalized earnings, FFH's lookthru earnings on the Wells position alone 80 million!  Why sell 80 million dollars in earnings for a mere 500 million when they can afford to wait? 

 

It would take roughly 2 billion dollars worth of treasuries to generate the same amount of earnings power, even more if you consider taxes! 

[watsa_is_a_randian_hero]

Assuming 4$ a share in normalized earnings, FFH's lookthru earnings on the Wells position alone 80 million!  Why sell 80 million dollars in earnings for a mere 500 million when they can afford to wait? 

 

It would take roughly 2 billion dollars worth of treasuries to generate the same amount of earnings power, even more if you consider taxes! 

 

How do you get to $4 per share normalized earnings.  Maybe by 2012.