wisdom Posted February 15, 2013 Share Posted February 15, 2013 Watsa comments: http://blogs.wsj.com/canadarealtime/2013/02/15/canadas-prem-watsa-still-wary-about-stock-markets/?mod=yahoo_hs Link to comment Share on other sites More sharing options...
Tommm50 Posted February 15, 2013 Share Posted February 15, 2013 I'm gratified to see the combined ratio came in under 100 (just). It's troubling however to see that it took a spectacular quarter and year for Odyssey Re. Zenith and Crum & Forster are still bleeding money at a prodigious rate. I don't know what Prem's expectations for Zenith were but it's taking a long time to bring it in line. Other WC writers are doing much better. Crum seems like it's been a poor performer forever. Anyway, big cash hoard, increase in book value despite the hedges and Sandy, good overall result. Let's hope this is the beginning of consistent improvement and those 15% annual returns we've been expecting. Link to comment Share on other sites More sharing options...
Guest Dazel Posted February 15, 2013 Share Posted February 15, 2013 While I love Fairfax and their team it is not a time to rejoice...for those looking for an education in investing and history....they have missed a great opportunity that Mr. Buffett and other rational people took advantage of... No hedges you have a $650 stock....they know it...they slept well but that was the cost. Dazel. Link to comment Share on other sites More sharing options...
DynamicPerception Posted February 15, 2013 Share Posted February 15, 2013 Better to be safe than out of business. Its a long way to $650.00. Link to comment Share on other sites More sharing options...
Alekbaylee Posted February 15, 2013 Share Posted February 15, 2013 Fairfax is for patient/lazy investors. Otherwise, it can be frustrating. I'm a 25% patient person; so I put 25% of my money in this stock and I try to forget about it. I know it'll perform on the long run. Meanwhile I can play with other stocks. Link to comment Share on other sites More sharing options...
Uccmal Posted February 16, 2013 Share Posted February 16, 2013 mhdousa : roughly 20% FFh to US financials; the rapid rise of the financials has changed the ratio significantly. Dazel, that is the cost - I agree. I think they goofed... too much observation of the Japan bubble and not enough appreciation that it might be different elsewhere. Getting below 1060 on the SPY will take an awful lot. That being said, knowing I have that catastrophic insurance via FFh has enabled me to get very good results elsewhere without undue worrying, and there is always the possibility that it gets used and FFH makes billions. It has happened before, a couple of times, although the Cd bet was much more assymetric in nature. Link to comment Share on other sites More sharing options...
giofranchi Posted February 16, 2013 Share Posted February 16, 2013 Here is the link to the full transcript of the Q4 2012 Coference Call: http://seekingalpha.com/article/1188131-fairfax-financial-holdings-limited-management-discusses-q4-2012-results-earnings-call-transcript?source=email_rt_article_title giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
JoJo1 Posted February 16, 2013 Share Posted February 16, 2013 The Hedges i'm fine with. They hedge against market risk and let their alpha run. And there is a lot of risk out there. Nothing is over, even the Japanese Story is not told, yet. C&F, Zenith ... a desaster, Northbridge smells like desaster ? i'll not sell even a dime of my ffhs JoJo Link to comment Share on other sites More sharing options...
Valuebo Posted February 16, 2013 Share Posted February 16, 2013 Nice quarter. Bought more this week and will be adding if it remains around BV. I believe there is a recency/past bias at work here making people believe that this stock won't bunch much anymore unless the market drops considerably. Returns will be lumpy. Link to comment Share on other sites More sharing options...
Guest Dazel Posted February 16, 2013 Share Posted February 16, 2013 I agree it would be just wrong to sell ffh now. Dazel. Link to comment Share on other sites More sharing options...
nwoodman Posted February 17, 2013 Share Posted February 17, 2013 Q4 2012 CC Transcript http://seekingalpha.com/article/1188131-fairfax-financial-holdings-limited-management-discusses-q4-2012-results-earnings-call-transcript?source=google_news Link to comment Share on other sites More sharing options...
giofranchi Posted February 17, 2013 Share Posted February 17, 2013 While I love Fairfax and their team it is not a time to rejoice...for those looking for an education in investing and history....they have missed a great opportunity that Mr. Buffett and other rational people took advantage of... No hedges you have a $650 stock....they know it...they slept well but that was the cost. Dazel. Dazel, with all due respect, I don’t quite agree with your analysis. Please, follow me for just a sec, and I will try to explain my reasonings. First, let’s compare FFH returns with the returns of the general market: FFH 2011-2012: FFH BV x share at 2010 year end: $379.46 FFH BV x share at 2012 year end: $378.10 Dividends distributed: $20 Total returns: $378.10 - $379.46 + $10 + $10 = $18.64, or +4.9% of FFH BV x share at 2010 year end. S&P500 2011-2012: Closing price at 2010 year end: 1,257.64 Closing price at 2012 year end: 1,426.19 Dividends distributed: 58.34 Total returns: 1,426.19 – 1,257.64 + 27.09 + 31.25 = 226.89, or +18.04% of the closing price at 2010 year end. So, yes! FFH is trailing behind the general market for the last two years. But… and here is the rub! A 13% cumulative over-performance of the general market could be easily and completely wiped out by a 2 months correction! Now, let’s take a similar look at the 3 years from 2008 to 2010: FFH 2008-2009-2010: FFH BV x share at 2007 year end: $230.01 FFH BV x share at 2010 year end: $379.46 Dividends distributed: $23 Total returns: $379.46 - $230.01 + $5 + $8 + $10 = $172.45, or +74.97% of FFH BV x share at 2007 year end. S&P500 2008-2009-2010: Closing price at 2007 year end: 1,468.29 Closing price at 2010 year end: 1,257.64 Dividends distributed: 77.96 Total returns: 1,257.64 – 1,468.29 + 23.94 + 23.56 + 30.46 = -132.69, or -9.04% of the closing price at 2007 year end. Finally, lets’ take a look at the whole 5 years from 2008 to 2012: FFH 2008-2009-2010-2011-2012: FFH BV x share at 2007 year end: $230.01 FFH BV x share at 2012 year end: $378.10 Dividends distributed: $43 Total returns: $378.10 - $230.01 + $5 + $8 + $10 + $10 + $10 = $191.09, or +83.08% of FFH BV x share at 2007 year end. S&P500 2008-2009-2010-2011-2012: Closing price at 2007 year end: 1,468.29 Closing price at 2012 year end: 1,426.19 Dividends distributed: 136.30 Total returns: 1,426.19 – 1,468.29 + 27.09 + 31.25 + 23.94 + 23.56 + 30.46 = 94.20, or +6.42% of the closing price at 2007 year end. So, how do you go from a total return of +6.42% to a total return of +83.08%? Answer: you want to invest in something that doubles its capital, when right, while still being profitable, when wrong. And you want to have patience, because sometimes that thing will be right, and sometimes it will be wrong. Second, if for “missed opportunity” you refer to the financial industry in the US, well actually Mr. Watsa & Company were among the first to recognize it and to take advantage of it. When Mr. Berkowitz was still dabbling with defensive stocks (say, for instance, Pfizer), Mr. Watsa had already bought a lot of Wells Fargo and US Bancorp at very depressed prices! Later he also chose to make a substantial investment in Bank of Ireland. Finally, if our politicians will definitely prove them wrong, FFH under-performance to the general market will get wider and wider. But I have an extremely hard time believing that… would you prefer to bet on Mr. Watsa & Company, or on our politicians? Com’n let’s be realistic: politicians don’t have a clue about what’s really going on! And, vice versa, if Mr. Watsa & Company will be proven right, the next doubling of FFH’s capital might just be around the corner! :) giofranchi “As time goes on I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one’s risk by spreading too much between enterprises about which one knows little and has no reason for special confidence.” - John Maynard Keynes Link to comment Share on other sites More sharing options...
obtuse_investor Posted February 17, 2013 Share Posted February 17, 2013 Q4 2012 CC Transcript http://seekingalpha.com/article/1188131-fairfax-financial-holdings-limited-management-discusses-q4-2012-results-earnings-call-transcript?source=google_news Thanks for posting. I am looking forward to the Annual report on Mar 8. Also, I plan to be at the Roy Thompson hall on Apr 11. Link to comment Share on other sites More sharing options...
Guest Dazel Posted February 17, 2013 Share Posted February 17, 2013 Giofranchi, Thanks for the very valuable data....to be clear...Fairfax has done "great" things for a long time...by no means am I taking a shot at them. Simply stated...they have underperformed for a 3 year period..this is rare if not a 6 sigma event at Fairfax. Insurance is a different animal so they should be cut some slack for some hedging...so I would be interested in what Markel, Berkshire, WBerkeley have done in the same period...2007 to now. I agree Fairfax did very well investing all the way through...the Muni bond buy was unbelievably good! The insurance company buys during this time "will" look very smart in a few years... For anyone else they would be satisfied with Fairfax numbers...when you are compared to the greats it has to be pointed out when you are wrong for a period of 3 years...in 2004-2007 they were wrong on the cds' hedge... their cost at $360m dropped to fair market value of $60m...the difference is that the cost of this hedge was maximized at $360m not $3b and counting...$3 billion is a lot of money. Dazel. Link to comment Share on other sites More sharing options...
Guest Dazel Posted February 17, 2013 Share Posted February 17, 2013 Markel Book value $235-2007 $403-2012 I will not do anymore work here because I love Fairfax...and I am not trying to discredit the amazing job they have done...but the extraordinary win in 2008... Which we benefitted from greatly and much appreciate the work Fairfax did has been normalized by the hedge losses for the last 3 years... So we see an exceptional future for Fairfax...if it was at $600 we would not be as happy as we are now. Dazel. Link to comment Share on other sites More sharing options...
DynamicPerception Posted February 17, 2013 Share Posted February 17, 2013 Dazel, I agree enough said but one last comment, as far as a 'Sigma 6' event Fairfax has had a couple of bad runs using Share Price as a metric. 1) 1998 - $540.00 and 1) 2003 - $226.11 2) 1999 - $245.50 2) 2004 - $202.24 3) 2000 - $228.50 3) 2005 - $168.00 4) 2001 - $164.00 5) 2002 - $121.11 1999 to 2005 were Prem's 7 lean years and (6 down years and 1 up) 2006 to 2012 were Prem's 7 fat years (2 down years and 5 up) So many things have happened and changed in these 14 years. Personally I'm considering them a wash and look forward to 2013 and beyond. Link to comment Share on other sites More sharing options...
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