Jump to content

At what price...


Guest swf83
 Share

Recommended Posts

Guest swf83

Are some of you guys looking to add shares to your position? I want to pick some up below $250, and I am hoping to get that opportunity this week. Anyone else?

 

I hope everyone has had a good holiday weekend.

 

Scott

Link to comment
Share on other sites

Hi swf, If you want to own FFH shares 250, 258, or 265 US is a real good price.  For that matter $300 is still insanely cheap for a company that will have an ROE of >20% over the next 5 years. 

 

In the medium term the $8.00-$15.00 or 3.2%-5% difference from your price target is going to make no difference. 

 

In my opinion it is running at a very minimum at least 150 US below where it would be trading in a healthier investment environment.  In a frothy market this company could easily be at 750 US.   

 

It could go way lower than 250 as well, but it may not ever reach 250, in which case a randomly selected number will keep you out of an exceptional deal.  Of course if you're like me where you hold a huge amount of this one company then you may want to pick and choose. 

Link to comment
Share on other sites

swf, my favourite currently is ORH, which is trading below 0.9 x BV (US$38.55/$43.80). We know ORH is sitting on sizable investment gains and also that their ICICI Lombard stake is undervalued. As well, reinsurance pricing is moving higher (more so than insurance pricing). Looks to me to be lots of safety and also several catalysts to drive share price moving forward.

 

I am waiting for FFH to fall to 0.9 x Q1 BV = US$253 = US$228 = CAN$256

At this price, similar to ORH, we know there is $900 million in mark to market gains (about $30/share) and ICICI Lombard is undervalued.

 

Regarding directly comparing ORH to FFH, yes, it is difficult. Here are a few thoughts (would appreciate others):

FFH Strength (versus ORH)

- size... more diversified

- runoff... further large distributions to parent likely coming this year

- investment leverage (I believe FFH has more than ORH)

- less dependent on US market/impacted less with dollar weakness (important for CAN investor)

 

ORH Strength

- simpler business to understand

- reinsurance pricing is firming faster than insurance

- possibility that FFH purchases 30% it does not own (likely at 1.2 x BV or higher)

 

A major weakness with ORH is the small float (given FFH 70% ownership). However, as the company continues to grow and the investment community comes to appreciate its business model/management this may not be the issue is was in the past. The fact that it is currently trading at a multiple to BV that is higher than most of its peers tells me it may be getting a little more respect these days...

Link to comment
Share on other sites

Guest swf83

Good stuff guys. I will look into ORH, but I am a firm believer in FFH, and considering that it owns 70% in ORH, owning FFH is still a great way to indirectly benefit from ORH's successes in the future.

 

I think FFH is at a point where all the stars are really starting to align and that this truly could appreciate over the next 10,20,30 years like Berkshire has over the years. I am 26 yrs old, and I could see myself possibly retiring off of this stock in 30-40 years if I can buy enough at opportune times such as now.

 

Scott

Link to comment
Share on other sites

Guest longinvestor

<It could go way lower than 250 as well, but it may not ever reach 250, in which case a randomly selected number will keep you out of an exceptional deal.>

Exactly, well said. That happened to me, but my buy at $200 did not fill a few months ago. I picked up on the uptick and as we well know, with great buys the uptick is really fast. Again, whether the price is 200-220-250 or even 300 within a period of months is part of the silly syllabus when it comes to FFH over the long term. Violent agreement here. Great lesson learned, when you see a great deal, go "all in" like WEB suggested with WFC.

Link to comment
Share on other sites

I think the easy decision is buying FFH at attractive prices I suspect bad weather or disasters are the only events that will make FFH significantly cheaper on a relative basis and even then only for a fleeting period. The difficult part will be to hang on and not sell when things are going in the right direction. The single mistake that Value guys make with the most frequency is selling too soon it is entirely possible that this could trade @ 160% of book in the next decade this will be after it has generated a few years of back to back positive lumpy returns. Peak valuations are not set by value investors but by momentum players and trend followers.

Link to comment
Share on other sites

Do not fall in love with stocks, be it Berkshire or Fairfax.  Prem is my mentor, but if somebody wanted to pay me 2.5 times book for Fairfax, I would sell in a heartbeat.  The market provides the opportunity of exploiting inefficiencies that whole business ownership does not.  If you are a passive investor, always base your decisions on price, quality and risk/reward.  That will secure a retirement better than any one investment.  Cheers!

Link to comment
Share on other sites

Guest JackRiver

I suspect that people are getting confused as to who or what is the compounding machine.  Is it the investment or is it the money manager? 

 

Yours

 

Jack River

Link to comment
Share on other sites

Guest longinvestor

<but if somebody wanted to pay me 2.5 times book for Fairfax, I would sell in a heartbeat.

 

Unfortunately no one has offered me this amount since 1998.  A.>

 

And book should be $1100 in 2018, if growing at 15%(prem's #). Tell me why one should not love this stock over the past 10 years? Or BRK for that matter. We have lived thru a period of unparalleled buying opportunities. Many-time versus 1-time buying opportunities of great businesses with 1-time problems in a predominantly voting market machine.

Link to comment
Share on other sites

What a nice dilemma it would be to decide what do to with FFH if it was trading at 2,5 X book value... ;)

 

I guess I would then sell a part of my FFH shares, but maybe not all of them. I find it very hard to put my money in businesses where I have as much trust and confidence about it's long term prospects and it's people than FFH. There is some, but not very much. If my other holdings were also too much expensive, I guess I would try to find somewhere else to put my money, but I could also just sit on cash and wait for a good price before buying them again.

 

It's no fun to sit on cash, but it's better than make stupid investment decisions.

 

That being said, suffice it to say that this is actually a very theorical discussion.

 

Cheers!

Link to comment
Share on other sites

Guest swf83

Today is a great day to add to my FFH position. Book value is obviously increasing on a day like today with the market up over 200 right now, but FFH is basically flat. Adding today...

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...