FFH at multi-year high

[Uccmal]

 

For a lot of people FFH has been flying under the radar for a long time and you have to wonder if all the recent talk about BBRY has made a lot of investors take a closer look at it and they like what they see. HOWEVER we've seen these ups and downs many times before and one has to wonder if its time to take some profit to re-invest later.  Is anyone doing this now?

 

Yes sold a little @430 and $440 over the past couple of days.

 

Yes.  Virtually sold out.  Fair value to rich imo.

[fareastwarriors]

http://www.bloomberg.com/news/2013-10-28/fairfax-at-14-year-high-shows-blackberry-is-gravy.html

 

 

Fairfax at 14-Year High Shows BlackBerry Is Gravy

[giofranchi]

I wouldn't read too much into the stock price. 

 

I agree. Either the “smart money” is starting to smell something rotten in the air and piling on FFH, or stock price appreciation will soon be reversed.

This doesn’t mean that I think FFH at 1.2xBV is expensive, because I think it is not, or that I am going to sell a single share, because I won’t. :)

Sell everything you’ve got even to the shirt on your back, but hold on to the stock.

--John D. Rockefeller, Sr.

 

giofranchi

 

[TwoCitiesCapital]

 

For a lot of people FFH has been flying under the radar for a long time and you have to wonder if all the recent talk about BBRY has made a lot of investors take a closer look at it and they like what they see. HOWEVER we've seen these ups and downs many times before and one has to wonder if its time to take some profit to re-invest later.  Is anyone doing this now?

 

Yes sold a little @430 and $440 over the past couple of days.

 

Yes.  Virtually sold out.  Fair value to rich imo.

 

I sold all the shares I bought when they were delisted at $425 but I'm holding onto my core position. I figure that improvements within the insurance industry might be worth waiting around for...especially with the downside protection that comes inherent in a position in Fairfax at this point if the markets go haywire.

[nwoodman]

Currently around 40% of my portfolio, after trimming some BRK and BAC.  I will only consider selling FFH if the bid gets to > 1.5x's book (which I hope it doesn't)

[james22]

While fully hedged in preparation for a market correction that has yet to arrive, Fairfax Financial Holdings Ltd.’s stock has nevertheless risen to a new post-crisis high.

 

But analysts expect that Fairfax’s third-quarter results, which the company is scheduled to release on Thursday, will reveal a big loss on the company’s investment portfolio.

 

http://www.theglobeandmail.com/globe-investor/investment-ideas/a-contrarian-favourite-faces-headwinds/article15148251/

[Guest longinvestor]

Title of this thread was short lived and not valid anymore.

 

Painful to see FFH (&Prem's) reputation take a giant blow. What a distraction the BBRY deal has been for them. Risk aversion is a genetic pre-disposition and the way Warren has buttressed this trait with mastery over the method of learning about the world around us is simply unmatched. Prem is no where close to Warren in this regard, age be damned. "Buffett of the north" has been too early, at best. Waiting to hear from Prem on what he has learned from all of this?

[fareastwarriors]

I'm looking forward for the drop to continue so I can build a position.  ;)

[Uccmal]

I am out.  No Fairfax shares at all for the first time in my investing career. 

 

Its just business. 

[wisdom]

Hoping that it gets down to the new BV. I would love to add at that price.

[plato1976]

The new BV, esp. the tangible one, can go below 300USD

it's virtually impossible to get there...

 

Hoping that it gets down to the new BV. I would love to add at that price.

[Kraven]

I've got to say that this whole BBRY debacle just demonstrates for me once again the flaws in following "gurus".  I just have never quite understood the appeal.  I have no interest in anything that Buffett, Watsa, etc buy.  They have motivations and situations that are far different from most mortal people.  There are several people on this board, as well as a number of friends, that I would follow into something, if in fact I wanted to do that, long before I did the same with a "guru". 

 

It's fine to make mistakes, we all make them, but there is this sense that even after the fit hits the shan that there is an infallibility to the decision making.  Some have posted saying that they look forward to an opportunity to buy BBRY and FFH cheaper.  I don't get it.  There are so many ideas out there just ready to be taken advantage of, yet the focus is on the same old tired things. 

 

I hope that anyone on this board who followed Watsa into BBRY wasn't hurt too badly.  It's always painful to take a loss (albeit in some cases unrealized), but hopefully this will demonstrate that perhaps different avenues might be explored.

[T-bone1]

I am out.  No Fairfax shares at all for the first time in my investing career. 

 

Its just business.

 

I find myself unhappily in the same position.  I thought this was a stock I would never sell, but over the last month I couldn't find a good justification for holding on.  For better or for worse, past experience has taught me that a market decline (which would be great for FFH) will provide the chance the buy the stock a lot cheaper.

 

I certainly don't question their investment acumen and their long term record speaks for itself, but I find myself scratching my head at their investments more and more these days.  I own a lot of CHK, but have never understood why someone would want to own XCO or SD.  As far as I can tell, Tom Ward was a really bad businessman and a pretty bad guy . . . what the heck went on there?  Fairfax seems to have put a lot of money into the worst segments of the energy sector and technology sectors (other than DELL).  Are they really experts here?  Sam Mitchell said at the last dinner that Sandridge has "great rock", but I have heard from more than one person that Tom Ward privately said it was "crappy rock" while he was still running the company. 

 

I still don't understand RFP, but that is much more likely to be a deficiency on my end.  I don't understand the big banks (or bank of Ireland) so I can't really comment there either.  I certainly hope all of these investments work out. 

 

I have basically had a bad gut feeling since the SFK/Fibrek fiasco.  I understand why they did what they did, but it just didn't seem to pass the smell test.  I believe I defended their actions on this board at the time, but can you really see Buffett forcing shareholders to accept a lower offer from a party he essentially controlled? 

 

Between the uber-bearish mentality (I would rather hold more cash than have FFH hold more hedges), the lionization of Tom Ward, The Fibrek mess, and this new Blackberry mess (a mess that it is getting harder and harder to believe was about making money rather than some sort of nationalism), I have to admit I no longer look at this management team as someone I'm willing to partner with at almost any price. 

 

As a few others have mentioned, the "everything is going great" public face doesn't give me more confidence.  Buffett would have started each quarterly report by saying "We lost you a bunch of money this quarter because I screwed up and was too bearish and our own investments underperformed at the same time.  We are going to do something about it, like possibly hold cash and lower exposure until we are comfortable investing . . ."

 

I guess you can't expect anyone to be Buffett/Berkshire, but I must confess that with this management and company, I did.  I feel like I've been told there is no Santa Claus and I no longer feel like I understand what they are doing or why they are doing it. 

 

Am I alone in this feeling?  Does it bother anyone else that they have never given a straight answer as to why their "hedges" and bond portfolio are basically huge bets on the apocalypse?  These positions go far beyond hedging and have cost us a lot of money as shareholders.  I don't have a problem with them making macro bets, but I'd like to be treated like an adult an hear them say "we are making a huge macro bet because of such and such and here is why and here is what happens if it works out or doesn't".  I don't really feel like a partner anymore when they instead say "we are cautious here" with no further explanation for loading up on derivatives that are unlikely to pay out and going massively long short while making tech and energy bets (two areas where they do not seem to have a good track record).

 

/end of rant.  Please tell me why I am wrong.  I don't think the company is all that expensive here, but I think if the market rises it will be more expensive, and if they market falls I can buy it cheaper.

[Mikenhe]

Could have made a decent amount of money shorting FFH in the last week. Whats Cohen been up to?

 

I too no longer hold FFH. Although I have slightly different reasons to those mentioned so far. Eiher way i'm out for the moment.

 

The good news is that if the market falls then FFH will fall with it until they start to realise gains in the hedges. Then its a good time to buy... but that puts you into a situation that requires getting your timing right.

 

I'll continue to watch as this  unravels.

 

 

[wisdom]

The reason for looking into the same old tired names is because I know very few companies well enough that I can hold large concentrated positions in them. I have confidence in these positions to not sell during panics. I might even add.

 

Every so often Mr market offer up a nice price and i add more. I dont sell as often either.

 

It is due to my limitations, but, so far it has worked.

[Guest longinvestor]

The reason for looking into the same old tired names is because I know very few companies well enough that I can hold large concentrated positions in them. I have confidence in these positions to not sell during panics. I might even add.

 

Every so often Mr market offer up a nice price and i add more. I dont sell as often either.

 

It is due to my limitations, but, so far it has worked.

 

+1

 

[premfan]

Prem and his team didnt become stupid overnight. You guys are overreacting. Your expectations are too high. This is a setback but i'm sure there is a lesson to be learned here which will make them stronger in the future.

[rkbabang]

+1 to Kraven and T-Bone1's last posts.  If there is one lesson that I think I'm starting to learn is that there is no "next Buffet" and to stop searching for him.  I've always done best by finding undervalued companies and investing in them myself.  Sure I sometimes find them because someone else invested in them, but stealing someone's idea is different than blindly depending on some guru to invest your money for you.  I've been paring down my FFH over the last year anyway for many of the same reasons T-Bone stated.  "Prem is smarter than me, he must know what he's doing" doesn't cut if for me anymore.  When you don't agree with how someone does business there is no need to do business with that individual.  The amount of hubris required to think that you are going to turn Blackberry's handset business around at this point in the game is just absolutely staggering.  Yes the BBRY investment it is only a small percentage of FFH, but like the SD and Fibrek situations it is a window into a personality type of someone that I'm not sure I wish to invest in/with.  I used to hold a 50% FFH position, it is still 14% of my portfolio today and I'm re-evaluating that.  If the info that the plan is to try to turn BBRY around is true than I think BBRY is the final straw for me.

[Parsad]

LOL!  Most of you guys are my friends and very smart investors, but you're letting your emotions take over here.  When I tell you guys that you shouldn't have everything in Fairfax, you don't listen.  When I tell you guys to temper your expectations, you don't listen.  When I tell you the man and company aren't infallible, you say he should be.  Now some of you have thrown the baby out with the bathwater! 

 

I've only owned Berkshire and Fairfax 100% twice...Berkshire back in 1999/2000 and Fairfax through 2003-2005.  Otherwise, as valuations go up, the holding goes down...price drops, the holding increases.  Never fall in love with any one investment!  Currently, I own no Berkshire other than 1 share, and Fairfax makes up about 4% of the funds.  But at some point in time, that percentage will go up...it may come because of you guys letting your emotions get the better of you!  Cheers! 

[twacowfca]

I am out.  No Fairfax shares at all for the first time in my investing career. 

 

Its just business.

 

I find myself unhappily in the same position.  I thought this was a stock I would never sell, but over the last month I couldn't find a good justification for holding on.  For better or for worse, past experience has taught me that a market decline (which would be great for FFH) will provide the chance the buy the stock a lot cheaper.

 

I certainly don't question their investment acumen and their long term record speaks for itself, but I find myself scratching my head at their investments more and more these days.  I own a lot of CHK, but have never understood why someone would want to own XCO or SD.  As far as I can tell, Tom Ward was a really bad businessman and a pretty bad guy . . . what the heck went on there?  Fairfax seems to have put a lot of money into the worst segments of the energy sector and technology sectors (other than DELL).  Are they really experts here?  Sam Mitchell said at the last dinner that Sandridge has "great rock", but I have heard from more than one person that Tom Ward privately said it was "crappy rock" while he was still running the company. 

 

I still don't understand RFP, but that is much more likely to be a deficiency on my end.  I don't understand the big banks (or bank of Ireland) so I can't really comment there either.  I certainly hope all of these investments work out. 

 

I have basically had a bad gut feeling since the SFK/Fibrek fiasco.  I understand why they did what they did, but it just didn't seem to pass the smell test.  I believe I defended their actions on this board at the time, but can you really see Buffett forcing shareholders to accept a lower offer from a party he essentially controlled? 

 

Between the uber-bearish mentality (I would rather hold more cash than have FFH hold more hedges), the lionization of Tom Ward, The Fibrek mess, and this new Blackberry mess (a mess that it is getting harder and harder to believe was about making money rather than some sort of nationalism), I have to admit I no longer look at this management team as someone I'm willing to partner with at almost any price. 

 

As a few others have mentioned, the "everything is going great" public face doesn't give me more confidence.  Buffett would have started each quarterly report by saying "We lost you a bunch of money this quarter because I screwed up and was too bearish and our own investments underperformed at the same time.  We are going to do something about it, like possibly hold cash and lower exposure until we are comfortable investing . . ."

 

I guess you can't expect anyone to be Buffett/Berkshire, but I must confess that with this management and company, I did.  I feel like I've been told there is no Santa Claus and I no longer feel like I understand what they are doing or why they are doing it. 

 

Am I alone in this feeling?  Does it bother anyone else that they have never given a straight answer as to why their "hedges" and bond portfolio are basically huge bets on the apocalypse?  These positions go far beyond hedging and have cost us a lot of money as shareholders.  I don't have a problem with them making macro bets, but I'd like to be treated like an adult an hear them say "we are making a huge macro bet because of such and such and here is why and here is what happens if it works out or doesn't".  I don't really feel like a partner anymore when they instead say "we are cautious here" with no further explanation for loading up on derivatives that are unlikely to pay out and going massively long short while making tech and energy bets (two areas where they do not seem to have a good track record).

 

/end of rant.  Please tell me why I am wrong.  I don't think the company is all that expensive here, but I think if the market rises it will be more expensive, and if they market falls I can buy it cheaper.

 

 

I think the world of Prem and his team.  But we have held merely a token number of shares for the last three years because we hold a different macro view.  Hoisington et al and followers like FFH see the unraveling of a credit super cycle being bearish. The FED, sees this too.  That's why they have goosed the money supply in a way that has never been done before.  However what they are doing now is no different, except in degree, than what they did when the market rolled over in 2000.  Eventually this inflation will work its way through the economy and we will get out of the hole by paying off debts with dollars that are worth perhaps half as much as before the crisis. 

 

Now, the inflation shows up mainly on the FED's balance sheet.  We think our stocks are worth more than they were not long ago, but looking at the increase in dollars in the system, this is an illusion with a long term prospective.  The inflation will continue until it stops.  Then there will be the piper to pay.  The problem with appraising FFH is that being early looks a lot like being wrong.

[SharperDingaan]

Drink enough cool aid - & you are going to make errors. It is going to take a while for them to show themselves; but survive the ass kicking you deserve .... & you aren't going to be making any more of them for a while. Lot of upset folks over BB, & there is a need for a target - so why would you NOT expect the stock to drift lower over the next few weeks.

 

And if there is the slightest negative around Q4 earnings, real or imagined ........

 

But 3 months from today, are you really going to feel the same way about it ?

 

SD

[DynamicPerception]

A wise man once said "You might want to look tactically at FFH, over the next 2-3 months" and I agree.

[Uccmal]

 

 

 

+1 to Kraven and T-Bone1's last posts.  If there is one lesson that I think I'm starting to learn is that there is no "next Buffet" and to stop searching for him.  I've always done best by finding undervalued companies and investing in them myself.  Sure I sometimes find them because someone else invested in them, but stealing someone's idea is different than blindly depending on some guru to invest your money for you.  I've been paring down my FFH over the last year anyway for many of the same reasons T-Bone stated.  "Prem is smarter than me, he must know what he's doing" doesn't cut if for me anymore.  When you don't agree with how someone does business there is no need to do business with that individual.  The amount of hubris required to think that you are going to turn Blackberry's handset business around at this point in the game is just absolutely staggering.  Yes the BBRY investment it is only a small percentage of FFH, but like the SD and Fibrek situations it is a window into a personality type of someone that I'm not sure I wish to invest in/with.  I used to hold a 50% FFH position, it is still 14% of my portfolio today and I'm re-evaluating that.  If the info that the plan is to try to turn BBRY around is true than I think BBRY is the final straw for me.

 

I concur.  These are most of my reasons between your post, T-Bones, and Kravens. 

[wisdom]

http://www.theglobeandmail.com/report-on-business/watsa-high-debt-deal-not-right-for-blackberry/article15242905/

 

[Uccmal]

LOL!  Most of you guys are my friends and very smart investors, but you're letting your emotions take over here.  When I tell you guys that you shouldn't have everything in Fairfax, you don't listen.  When I tell you guys to temper your expectations, you don't listen.  When I tell you the man and company aren't infallible, you say he should be.  Now some of you have thrown the baby out with the bathwater! 

 

I've only owned Berkshire and Fairfax 100% twice...Berkshire back in 1999/2000 and Fairfax through 2003-2005.  Otherwise, as valuations go up, the holding goes down...price drops, the holding increases.  Never fall in love with any one investment!  Currently, I own no Berkshire other than 1 share, and Fairfax makes up about 4% of the funds.  But at some point in time, that percentage will go up...it may come because of you guys letting your emotions get the better of you!  Cheers! 

 

Sanj, I dont disagree.  In my case however, its not my emotions that got the better of me.  The underlying investments by FFh are not thrilling me much.  I have been selling down for 2 plus years.  I was trying to hang onto the FFh shares in the Registered accounts but with very little growth potential going forward I had enough.  I still maintain FFH needs to stabilize the cash flow with top notch operating companies, as Buffett has, and get rid of this lumpy earnings attitude. 

 

FFh is suffering from death by a thousand cuts right now.  The combined ratios have turned some, but other investments are destroying gains made there.  If they are going to operate a turn around shop, then they need to do what KKR does and take companies private, fix them up and IPO them.  These half measures are availing them nothing in the end.