FFH at multi-year high

[txitxo]

  I started liquidating my FFH position about a month ago (most of it bought during the drop last year), not because of any tactical reasons, but because of better opportunities available elsewhere. And this sudden drop has caught me still with a 10% position. I intended to sell it anyway, but if I keep reading messages about people getting rid of all their FFH, etc. I may hold to mine or even add to it...Prem Watsa hasn't suddenly turned stupid. Yes, if BBRY were based in Chattanooga he probably wouldn't be invested in it. But the pattern of his results is typical of cigar butt investing. A fraction of the stocks tank, most of them go nowhere and a few soar. When you are this big, the failures become very prominent, but to judge his performance you have to look at the average over all the stocks he holds, over a long enough period of time. 

[Kraven]

One thing I've noticed that fascinates me is the false premise by many on the board that they "know" what Watsa is thinking or will do in virtually any situation presented.  How many times have we read someone post "Prem would never not do [insert action]" or something of the kind?  Even referring to him, and others (Warren, Mohnish, etc), by their first name only implies a familiarity that doesn't exist.  It's like Madonna or Oprah.  To my knowledge, other than a few posters no one here knows him from Adam, knows what he is thinking, has any kind of psychic connection with him or any other relationship save for some public statements.  It's a fallacy to assume a greater knowledge.  He's a smart man, very smart, and has done a lot of good and built up a nice company.  But attempting to interpret motivations and future actions because you "know" him is a very flawed process. 

 

At the end of the day, regardless of what happens and how much he cares for each and every one of his stockholders and so forth, he is still a billionaire and is in a position where he can take risks that others are not able to.  So what if the BBRY situation goes down in flames?  It will knock a few bucks off his net worth, but won't change the way he or his family eats.  Meanwhile, you've got people putting huge percentages of their net worth into these things because he did so.  I am not sure how the math works on that.

[Guest wellmont]

good post above. it's all about position size/net worth. make sure you understand how much your "guru" really has on the line. bbry was not a large investment for ffx so it was not material to the nw of pw. it would be another story if pw made a large personal investment in bbry. and in the end, the Founders did not step up, put their net worth on the line, and make an acceptable bid for current bbry. the founders of bbry were huge net selllers of bbry pre 2007.

[ERICOPOLY]

Something we knew ahead of time, years ago, is that Buffett likes the 1 foot hurdles, sticking to predicting the relatively most predictable.  And Watsa likes them too but will also chase after the turnarounds that are higher hurdles, knowing that some will blow up but the rest will carry the average above the goal line.

 

 

[Parsad]

One thing I've noticed that fascinates me is the false premise by many on the board that they "know" what Watsa is thinking or will do in virtually any situation presented.  How many times have we read someone post "Prem would never not do [insert action]" or something of the kind?  Even referring to him, and others (Warren, Mohnish, etc), by their first name only implies a familiarity that doesn't exist.  It's like Madonna or Oprah.  To my knowledge, other than a few posters no one here knows him from Adam, knows what he is thinking, has any kind of psychic connection with him or any other relationship save for some public statements.  It's a fallacy to assume a greater knowledge.  He's a smart man, very smart, and has done a lot of good and built up a nice company.  But attempting to interpret motivations and future actions because you "know" him is a very flawed process. 

 

At the end of the day, regardless of what happens and how much he cares for each and every one of his stockholders and so forth, he is still a billionaire and is in a position where he can take risks that others are not able to.  So what if the BBRY situation goes down in flames?  It will knock a few bucks off his net worth, but won't change the way he or his family eats.  Meanwhile, you've got people putting huge percentages of their net worth into these things because he did so.  I am not sure how the math works on that.

 

True, but that's actually the investor's deficiency not the managers.  Prem didn't put a huge chunk of his net worth, or Fairfax's net worth, into BBRY.  It's also not entirely different than someone emulating someone posting on this message board, but ended up realizing they couldn't handle as large an exposure, or mis-read what the poster was trying to say.  Cheers!

[Kraven]

One thing I've noticed that fascinates me is the false premise by many on the board that they "know" what Watsa is thinking or will do in virtually any situation presented.  How many times have we read someone post "Prem would never not do [insert action]" or something of the kind?  Even referring to him, and others (Warren, Mohnish, etc), by their first name only implies a familiarity that doesn't exist.  It's like Madonna or Oprah.  To my knowledge, other than a few posters no one here knows him from Adam, knows what he is thinking, has any kind of psychic connection with him or any other relationship save for some public statements.  It's a fallacy to assume a greater knowledge.  He's a smart man, very smart, and has done a lot of good and built up a nice company.  But attempting to interpret motivations and future actions because you "know" him is a very flawed process. 

 

At the end of the day, regardless of what happens and how much he cares for each and every one of his stockholders and so forth, he is still a billionaire and is in a position where he can take risks that others are not able to.  So what if the BBRY situation goes down in flames?  It will knock a few bucks off his net worth, but won't change the way he or his family eats.  Meanwhile, you've got people putting huge percentages of their net worth into these things because he did so.  I am not sure how the math works on that.

 

True, but that's actually the investor's deficiency not the managers.  Prem didn't put a huge chunk of his net worth, or Fairfax's net worth, into BBRY.  It's also not entirely different than someone emulating someone posting on this message board, but ended up realizing they couldn't handle as large an exposure, or mis-read what the poster was trying to say.  Cheers!

 

I don't disagree at all. Good points. My post wasn't a commentary on the managers but the investors/posters.

[giofranchi]

When I tell you guys to temper your expectations, you don't listen. 

 

Parsad,

sorry, today I am bothering you… But I don’t think my expectations that FFH can grow BVPS at a CAGR of 15% for many years into the future are completely extravagant and unfounded… People on the board say “I am living in a bubble”, yet no one has convincingly explained why FFH should fail to achieve that goal. They must return circa 7% on their portfolio of investments, when historically they have returned 9.4%. I am not saying it will be easy, I am not saying they will succeed. All I am saying is I think my expectations are reasonable and don’t see why I should temper them.

Here is, I think, something important: when you really want to invest in a business for the long-run, I mean you want to own a business for years, you can be neither too optimistic nor too conservative. Instead, you must be (at least vaguely) right. Why you shouldn’t be too optimistic is plain to see for everyone. Maybe, why you shouldn’t be too conservative, is less well understood. Yet, if you think of it, this also is clear enough: because, if you don’t know the true potential of a business, as soon as the stock rises, you will sell it.

 

One day, Andrews snapped at Rockefeller, “I wish I was out of this business.” … Rockefeller replied, “Sam, you don’t seem to have faith in the way this company is operating. What will you take for your holdings?” “I will take one million dollars,” Andrews shot back.

… At first, Andrews exulted over the sale and was convinced that he had unloaded the stock at a premium.

… Had he kept the stock, it would have been worth $900 million by the early 1930s, by one estimate.

--TITAN

 

giofranchi

 

[Uccmal]

When I tell you guys to temper your expectations, you don't listen. 

 

Parsad,

sorry, today I am bothering you… But I don’t think my expectations that FFH can grow BVPS at a CAGR of 15% for many years into the future are completely extravagant and unfounded… People on the board say “I am living in a bubble”, yet no one has convincingly explained why FFH should fail to achieve that goal. They must return circa 7% on their portfolio of investments, when historically they have returned 9.4%. I am not saying it will be easy, I am not saying they will succeed. All I am saying is I think my expectations are reasonable and don’t see why I should temper them.

Here is, I think, something important: when you really want to invest in a business for the long-run, I mean you want to own a business for years, you can be neither too optimistic nor too conservative. Instead, you must be (at least vaguely) right. Why you shouldn’t be too optimistic is plain to see for everyone. Maybe, why you shouldn’t be too conservative, is less well understood. Yet, if you think of it, this also is clear enough: because, if you don’t know the true potential of a business, as soon as the stock rises, you will sell it.

 

One day, Andrews snapped at Rockefeller, “I wish I was out of this business.” … Rockefeller replied, “Sam, you don’t seem to have faith in the way this company is operating. What will you take for your holdings?” “I will take one million dollars,” Andrews shot back.

… At first, Andrews exulted over the sale and was convinced that he had unloaded the stock at a premium.

… Had he kept the stock, it would have been worth $900 million by the early 1930s, by one estimate.

--TITAN

 

giofranchi

 

 

Gio, Sanj. said to temper your expectations ahead of the earnings when the stock was 10% higher.

 

Gio, CAGR of 15% is nothing extraordinary.  The Canadian banks have been doing this for 15 years.  If you buy them at respective low points you could easily exceed 15%.  And its not lumpy, and yu get paid well to wait.  FFh used to outperform.  There is no indication it will ever do so again.

[mcliu]

When I tell you guys to temper your expectations, you don't listen. 

 

Parsad,

sorry, today I am bothering you… But I don’t think my expectations that FFH can grow BVPS at a CAGR of 15% for many years into the future are completely extravagant and unfounded… People on the board say “I am living in a bubble”, yet no one has convincingly explained why FFH should fail to achieve that goal. They must return circa 7% on their portfolio of investments, when historically they have returned 9.4%. I am not saying it will be easy, I am not saying they will succeed. All I am saying is I think my expectations are reasonable and don’t see why I should temper them.

Here is, I think, something important: when you really want to invest in a business for the long-run, I mean you want to own a business for years, you can be neither too optimistic nor too conservative. Instead, you must be (at least vaguely) right. Why you shouldn’t be too optimistic is plain to see for everyone. Maybe, why you shouldn’t be too conservative, is less well understood. Yet, if you think of it, this also is clear enough: because, if you don’t know the true potential of a business, as soon as the stock rises, you will sell it.

 

One day, Andrews snapped at Rockefeller, “I wish I was out of this business.” … Rockefeller replied, “Sam, you don’t seem to have faith in the way this company is operating. What will you take for your holdings?” “I will take one million dollars,” Andrews shot back.

… At first, Andrews exulted over the sale and was convinced that he had unloaded the stock at a premium.

… Had he kept the stock, it would have been worth $900 million by the early 1930s, by one estimate.

--TITAN

 

giofranchi

 

 

Gio, Sanj. said to temper your expectations ahead of the earnings when the stock was 10% higher.

 

Gio, CAGR of 15% is nothing extraordinary.  The Canadian banks have been doing this for 15 years.  If you buy them at respective low points you could easily exceed 15%.  And its not lumpy, and yu get paid well to wait.  FFh used to outperform.  There is no indication it will ever do so again.

 

Isn't it a little early to reach that conclusion?

[Uccmal]

Gio, follow on to that.  I bought 100 shares of BMO around 6 years ago for 3100.  It is now worth 7200, and has paid a 4.5 % dividend along the way.

 

100 shares of RBC. - also about 6 or 7 years : purchase: 3057; value today 7030. Similar dividend as well.  An easy 15 % return. 

 

These are held in my kids RESP, untouched with no Drip plan. 

 

 

[Uccmal]

 

 

 

 

Gio, Sanj. said to temper your expectations ahead of the earnings when the stock was 10% higher.

 

Gio, CAGR of 15% is nothing extraordinary.  The Canadian banks have been doing this for 15 years.  If you buy them at respective low points you could easily exceed 15%.  And its not lumpy, and yu get paid well to wait.  FFh used to outperform.  There is no indication it will ever do so again.

 

Isn't it a little early to reach that conclusion?

 

Show me how, given their present style?

[giofranchi]

Gio, follow on to that.  I bought 100 shares of BMO around 6 years ago for 3100.  It is now worth 7200, and has paid a 4.5 % dividend along the way.

 

100 shares of RBC. - also about 6 or 7 years : purchase: 3057; value today 7030. Similar dividend as well.  An easy 15 % return. 

 

These are held in my kids RESP, untouched with no Drip plan.

 

Al, what can I say? Congratulations!

In the thread about Italian banks I have specified “Must 1), Must 2), Must 3)”… Among the businesses I know, and I certainly DON’T know many of them, FFH is still one that complies with “Must 1), Must 2), Must 3)” egregiously.

If BMO and RBC also do, I cannot tell… If you think they do, I would be very pleased to know more about them! :)

 

Gio

 

[mcliu]

 

 

 

 

Gio, Sanj. said to temper your expectations ahead of the earnings when the stock was 10% higher.

 

Gio, CAGR of 15% is nothing extraordinary.  The Canadian banks have been doing this for 15 years.  If you buy them at respective low points you could easily exceed 15%.  And its not lumpy, and yu get paid well to wait.  FFh used to outperform.  There is no indication it will ever do so again.

 

Isn't it a little early to reach that conclusion?

 

Show me how, given their present style?

 

Well to begin, nothing has really changed at FFH, it's the same investment people, similar (if not, better) collection of insurance business and operating companies. So if it worked for the first 20+ years, I don't understand why it won't work for the next 20.

[obtuse_investor]

Gio, follow on to that.  I bought 100 shares of BMO around 6 years ago for 3100.  It is now worth 7200, and has paid a 4.5 % dividend along the way.

 

100 shares of RBC. - also about 6 or 7 years : purchase: 3057; value today 7030. Similar dividend as well.  An easy 15 % return. 

 

These are held in my kids RESP, untouched with no Drip plan.

 

Not to digress this thread, but Canadian bank earnings are based on a Canadian economy that is humming along on high oil prices and extremely high houshold debt. This 15% return is built on pillars of sand-- caution is well advised.

 

 

[vinod1]

 

Parsad,

sorry, today I am bothering you… But I don’t think my expectations that FFH can grow BVPS at a CAGR of 15% for many years into the future are completely extravagant and unfounded… People on the board say “I am living in a bubble”, yet no one has convincingly explained why FFH should fail to achieve that goal. They must return circa 7% on their portfolio of investments, when historically they have returned 9.4%. I am not saying it will be easy, I am not saying they will succeed. All I am saying is I think my expectations are reasonable and don’t see why I should temper them.

Here is, I think, something important: when you really want to invest in a business for the long-run, I mean you want to own a business for years, you can be neither too optimistic nor too conservative. Instead, you must be (at least vaguely) right. Why you shouldn’t be too optimistic is plain to see for everyone. Maybe, why you shouldn’t be too conservative, is less well understood. Yet, if you think of it, this also is clear enough: because, if you don’t know the true potential of a business, as soon as the stock rises, you will sell it.

 

giofranchi

 

Gio,

 

Here is what I see using 2013, Q3 balance sheet adjusted for investments in associates that are not carried at fair value

 

• $7000 million common stock holders equity

• 20.25 million shares outstanding

• $23,000 million of investments ($6 billion stocks, $17 billion cash/bonds/derivatives)

• $3200 million long term debt ($210 million in annual interest cost)

• $1200 million preferred stock (5% interest)

 

The best case return at this time would be

 

• $300 million Return on stocks (5% alpha as it is hedged)

• $700 million Return on bonds (4% yield, overall non stock portfolio is actually yielding about 2.3%)

• $120 million Underwriting income (98% CR on $6 billion of net premiums earned)

• -$200 million interest cost

• -$100 million corporate overhead

• $820 million pre-tax income or about $575 million Net Income

• -$60 million preferred dividends

• $515 million net income to common stockholders or about 7% ROE

 

Again the above are what I would expect Fairfax to earn if the present investment climate goes on for a few more years. My assumptions above are not something I would be comfortable making, they are the most optimistic estimates that I can stomach.

 

- 5% alpha in an environment when expected market returns are around 3-5% represents an alpha that is around 100% of expected returns.

- Bond returns of 4% are over 50% of what they are currently making. Note that I have included all non-stock portfolio so that includes cash and other assets that have been pledged short, etc.

- CR of 98% is 5% better that what their 25 year average.

 

If I assume all that I come up with 7% ROE. Absent a major stock market correction or further major drop in yields, I just cannot see Fairfax making 10%. Again, this is in the short term until there is a market correction. It might be one year or it might take another 3 years, I do not know. When it happens I would reevaluate investment in Fairfax. I came to this conclusion in late 2011 and got out of Fairfax.

 

I understand that you are taking a much more longer term view.

 

Vinod

 

[vinod1]

I also want to make clear, that I am 100% comfortable with Watsa. He has always made macro bets, just that in the previous cases they have come off relatively quickly. He has been more optimistic than the situation warranted at other times in the past as well. So nothing new here.

 

Vinod

[giofranchi]

Thank you Vinod!

You are always very precise and I read and enjoy all posts of yours. :)

This being said, have you taken a look at “My 7 lean years model for FFH”? I make the assumption of 0% ROE for 3 more years… So, 7% is just wonderful!! ;D ;D

Ok, I am only joking, but I guess you are right when you say I want to spend a lot of time thinking about my investments, then I want to stay with them through thick and thin… Of course, until something clearly deteriorates for the worst, or I am offered an obscene price to sell them!

 

giofranchi

 

[mcliu]

You probably shouldn't extrapolate recent performance (past 2 years) into the future.

 

FFH's equities will not be hedged forever. As the company has said once the economic conditions stabilize, the hedges will be lifted.

[Cardboard]

15% CAGR "guaranteed" according to Gio...

 

Now, let's consider some facts or the last 5 and 10 years returns in book value growth per share per the annual report:

 

5 year: 10.5%

10 year: 11.7%

 

An easy observation is that the percentage is probably declining in the most recent period due to the larger size. Another easy one is that both starting points were very low or depth of the abyss at the beginning of 2003 and beginning of 2008 or before the financial crisis started.

 

So somehow, we are supposed to believe that future years will be much better than prior ones? By the way, I was also involved when the percentage goal was dropped from 20 to 15%. Is 12% coming? 10%?

 

I was also challenged and maybe insulted in another post about my attitude towards Fairfax and my "lack of respect". Well, let me state some observations to justify my view which are not at all emotional but, based on real information and simple math.

 

1- I have said for years that Fairfax structure or balance sheet is at a negative disadvantage. There is little invested in best return assets or stocks and businesses relative to shareholders equity. At least much less than at Berkshire. This is the result of carrying on too much debt, risky assets such as reinsurance and a fair amount of latent liabilities such as asbestos all of this leading to mediocre insurance ratings preventing the deployment into more productive and best return assets. I see no desire to reverse this and this hurts ROE.

 

2- We have been told for years that the focus is on improving combined ratios. To my knowledge, Fairfax has only achieved over the last 10 years below 100% combined ratios during hard markets and when no cat losses occurred. My conclusion was that the company is an average insurer in terms of underwriting profitability and that Mr. Watsa should have identified that the goal of the company was to amass float, minimize costs or at best make an underwriting profit but, not to keep creating this impression that we are all about making money on the underwriting side. Strike one for me on the "trust" front.

 

3- As Al and others have stated many times, the tendency to invest in poor businesses is creating unwanted issues and degrading the prospects for higher returns. I agree. It is also reducing insurance ratings since there is no visible, stable, recurring cash flows coming from what is considered the most risky part of the investment portfolio. I am also quite concerned about these large contrarian and macro bets. It has worked a few times, but there is no guarantee that it will work again, at least to the same extent.

 

4- I will bring up one point that I have never seen challenged or discussed on this board. Prem is apparently a multi-billionaire according to Forbes and others. I am sorry but, did anyone find out how that came about? He holds roughly 1.8 million shares of Fairfax through Sixty-Two (if he holds at 100%) and personally which is about $800 million. I can't remember which annual letter, but it was stated that he held over 90% of his wealth via Fairfax. So with the annual dividends, his small salary and his initial 10% outside Fairfax, he has made well over a billion$? I am not saying that there is anything nefarious here, I would simply like to understand how it was done and if the multi-billionaire status is accurate. It would be very interesting to know also when it was made since Fairfax could have badly used insider investment at a few times during the lean years when we signed dilutive deals.

 

5- The Fibrek/Resolute saga. Strike two on the "trust" front.

 

6- Continual praise for Tom Ward. Strike three on the "trust" front.

 

7- Blackberry involvement: Prasing Heins and never publicly challenging the board if things were thought to be heading badly or if the strategy seemed wrong. The Street would certainly have listened and be ready to help. Offering a low ball bid. Firing Heins, so apparently the strategy was all wrong. Not making good on the bid despite "guaranteed" type statements and putting reputation at stake. Investing more into Blackberry despite saying no previously to concerned Fairfax shareholders.

 

#7 was the last straw for me. While I hold no share of Fairfax since a long time, I held a small position in BBRY thinking that Prem's word was solid. Now, caveats are coming out or that an LBO was not right, etc. Trust is something that you don't play with me. Once it is broken, it is for good. If you say that you will do something, you do it. That is how I deal with friends, relatives, strangers, etc. I don't see why I should make an exception here.

 

Cardboard

[giofranchi]

15% CAGR "guaranteed" according to Gio...

 

Cardboard,

wow! You have written a lot and I will read all with much interest and calm.

Although, you have started not very accurately… 15% CAGR “guaranteed”?!?! I don’t think I have ever said such a thing!!

 

giofranchi

 

[Grenville]

I've decided to sell down my stake in Fairfax and I wanted to share with the board members. I've owned Fairfax since 2008 and attended the AGM since 2010. I've also read all the AR's since inception and have a lot of respect for what Prem has built both in terms of companies and people.

 

My issue has been with position sizing with respect to shareholder's equity. I've asked questions related to this at the 2010 AGM and this  year at the dinner. Below are my questions and the responses I got from Prem. I went back to my notes to post here.

 

2010 AGM:

"How does FFH decide its max position size for an investment in the common stock portfolio? Is there a general rule based on % of equity? For example when WFC continued to decrease in value to $10, no additional shares were bought.

-->Answer from Prem (from my notes): 5 to 10% range at the high end in relation to book value.

 

2013 Dinner:

"At a past AGM you mentioned the max position size for an investment was 5 to 10% at the high end. The position in Blackberry at cost using YE SE was 11.5%. What changed to allow such a large common stock position relative to past guidance?"

--> Answer from Prem - Referred to Paul Rivett to confirm position size and then answered that they were just averaging down into the investment.

 

Recent comments re Blackberry $9 offer

"

To Reuters: “We wouldn’t put our name to such a high-profile deal if we didn’t feel confident that at the end of the day that our diligence would be fine and we’d be able to finance it … Short term these things fluctuate, there is speculation one way, there’s speculation the other way. We never pay too much attention to the marketplace.”

 

Mr. Watsa said Fairfax won’t put in anything more to the offer than the 10 per cent of BlackBerry it now owns.

 

“The 10 per cent is like $500-million,” he said.

 

“It’s a significant amount of money. We’re going to bring equity partners and we think the company will be very well capitalized.”

http://www.theglobeandmail.com/report-on-business/top-business-stories/fairfaxs-prem-watsa-fires-back-at-skeptics-as-doubts-over-blackberry-deal-mount/article14540650/

---

 

The fact that Prem & Fairfax are investing an additional $250mln after already investing 880mln after all their comments at the meetings and in the press related to this deal were too much for me. I understand that 1.13bln is not much in relation to assets, but it's huge related to shareholder's equity. The position size was huge related to equity before this additional investment and now it's bigger. Some may say that this additional investment is in the form of debt so it's safer, but to me it's an additional investment.

 

I would much prefer Prem & Fairfax putting this kind of money into better businesses, but I understand it's not their specialty. I just think if you're going to go after turn arounds you need to be disciplined on how much money you put in, especially when that's what your telling your partners.

 

 

[txlaw]

Some thoughts I just posted on another thread:

http://www.cornerofberkshireandfairfax.ca/forum/fairfax-financial/prem-watsa-and-respect/msg139605/?topicseen#msg139605

 

I view all of this feedback as good.  Hopefully, the folks at FFH are reading carefully.

[rjstc]

Txlaw, Grenville, Gio, Parsad. Maybe part of the problem also is that he is called the Buffett of the North, & that expectation is not fair. He is who he is. He invests in the way he knows how. It's obviously not like Buffett or MKL, or LUK. Sometimes when you go from managing medium amounts of money to huge amounts of money you start reaching. We'll only know in hindsight if that's true here.

  However as an investor, if I am not comfortable, or think it's a too high hurdle to be comfortable with then I pass and go on to others. That's not saying I mistrust him, or think he's lost his edge. It's just that some are not comfortable and some are. Hindsight will tell us who was MORE right.

[Parsad]

Txlaw, Grenville, Gio, Parsad. Maybe part of the problem also is that he is called the Buffett of the North, & that expectation is not fair. He is who he is. He invests in the way he knows how. It's obviously not like Buffett or MKL, or LUK. Sometimes when you go from managing medium amounts of money to huge amounts of money you start reaching. We'll only know in hindsight if that's true here.

  However as an investor, if I am not comfortable, or think it's a too high hurdle to be comfortable with then I pass and go on to others. That's not saying I mistrust him, or think he's lost his edge. It's just that some are not comfortable and some are. Hindsight will tell us who was MORE right.

 

40 years of hindsight should prove who he is by now.  It may be that investors are weighing 40 years against 1 event that accounts for 2.2% of Fairfax's assets.  Where is the logic in that?  This whole debate is ridiculous.  The man is no idiot, and his results for the last 25 plus years has been on par or better than Berkshire.  He never came up with that moniker, but if anyone is going to use it, it probably fits him better than most.  Hindsight will prove that this period was a significant over-reaction to an investment that may or may not turn out well.  Cheers!

[ERICOPOLY]

Here is my thesis why FRFHF has limited upside - I want to put this up here as it contradicts the views of the folks bullish about FFH/FRFHF. However, this also jives well with the thesis put forth by vinod, uccaml, cardboard etc.

 

Canadian GDP is about 1.8 trillion, FRFHF( or FFH) already is .4% of the Canadian GDP by market cap. Take for example something like apple, which is around 2.8% of the U.S GDP. WFC market cap is at 1.3% of U.S GDP.

 

To put it in another way, it is already a big fish in a big pond. PW and his group are working within their circle of competence and while many would be more than happy to be as successful as PM ( or his family, who is the beneficiary of this trust ). One has to keep in mind that FRFHF is no where as good a business as Berkshire.

 

cheers!

 

Not sure why FFH is being compared to Canadian GDP.

 

Just take for example the total size of their US operations (Odyssey Re, Crum, etc...) and their Asian operations, investments elsewhere, etc...

 

Maybe compare them to global GDP, but Canadian?  They practically have nothing to do with Canada -- Northbridge is not that big a piece of their pie.