Author Topic: 2017 q4 result out!  (Read 17567 times)

no_free_lunch

  • Hero Member
  • *****
  • Posts: 1377
Re: 2017 q4 result out!
« Reply #10 on: February 15, 2018, 06:17:45 PM »
Sure BVPS is up 24% or whatever this year but it dipped down last year.   Here is the BVPS values for past few years:

2017: $449
2016: $367
2015: $403
2014: $394

Very sluggish results against 2015 or 2014 numbers.


Dazel

  • Full Member
  • ***
  • Posts: 223
Re: 2017 q4 result out!
« Reply #11 on: February 16, 2018, 06:17:07 AM »


There is $1.2b not recognized in book value  in the associates....and yes the hedging losses 2014-2016) is reason why  we trade so cheaply....it has been beaten to death here!

StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1007
Re: 2017 q4 result out!
« Reply #12 on: February 16, 2018, 06:49:29 AM »
And, the stock price is essentially flat at this morning's bell.  Interesting.


SJ

Crip1

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 405
Re: 2017 q4 result out!
« Reply #13 on: February 16, 2018, 10:40:44 AM »
And, the stock price is essentially flat at this morning's bell.  Interesting.


SJ


We've seen multiple instances of earnings coming out for FFH where price movement is relatively stable for 1-3 days only to see a significant move up (3-5%). Since I've got a pretty hefty position in Fairfax and am not one to trade on short-term movements, I'm not buying in to this, but history does show this to have occurred multiple times in the past.


-Crip

cwericb

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 767
Re: 2017 q4 result out!
« Reply #14 on: February 16, 2018, 10:48:31 AM »
"We've seen multiple instances of earnings coming out for FFH where price movement is relatively stable for 1-3 days only to see a significant move up (3-5%)"

That is absolutely right. I have noticed the same thing several times over the years. Any guesses as to why? The only thing I can think of is that FFH is just so far under the radar its like "Oh gee look at that, Fairfax posted some good results perhaps I should pick some up."

At times for me, it has been like having inside information about the results before they are posted. I'd be picking up more but I am already over concentrated in Fairfax.

FIH.U is up 4% though.
« Last Edit: February 16, 2018, 10:52:55 AM by cwericb »

Cardboard

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2757
Re: 2017 q4 result out!
« Reply #15 on: February 16, 2018, 11:35:41 AM »
2017 pretax loss before significant booking of capital gains and truly a one-time gain of just over $1 billion on the sale of a subsidiary was: -$462.9 million.

And out of the eye popping 20%+ growth in BVPS, a large portion is due to issuing 20% more shares than last year above book to acquire insurance companies combined with the one-time gain.

As I have mentioned countless times, there is no ROE generated if you exclude capital gains. So to trade well above book and generate the respect that you guys seek they have 2 choices:

1- Grow really fast like in the late 80's and 90's by acquiring company after company with an overvalued currency.
2- Generate a portion of the return via sound, repeatable earnings. That means low cost, less interest paid, profitable underwriting and more deployed into sound investments with the blessings of regulators.

Cardboard

vinod1

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1263
    • My Blog
Re: 2017 q4 result out!
« Reply #16 on: February 16, 2018, 11:53:56 AM »
Our results in 2017 were the best in our thirty-two year history, in spite of some of the largest catastrophe losses in
history as a result of Hurricanes Harvey, Irma and Maria and the California wildfires,” said Prem Watsa, Chairman
and Chief Executive Officer. “We achieved record earnings of over $1.7 billion, resulting in a 22.4% increase in
our book value per share to $449.55."

I cannot imagine Buffett or Mark Leonard would ever say such a thing with the results achieved.

Vinod
The fundamental algorithm of life: repeat what works. –Charlie Munger

StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1007
Re: 2017 q4 result out!
« Reply #17 on: February 16, 2018, 11:55:37 AM »
2017 pretax loss before significant booking of capital gains and truly a one-time gain of just over $1 billion on the sale of a subsidiary was: -$462.9 million.

And out of the eye popping 20%+ growth in BVPS, a large portion is due to issuing 20% more shares than last year above book to acquire insurance companies combined with the one-time gain.

As I have mentioned countless times, there is no ROE generated if you exclude capital gains. So to trade well above book and generate the respect that you guys seek they have 2 choices:

1- Grow really fast like in the late 80's and 90's by acquiring company after company with an overvalued currency.
2- Generate a portion of the return via sound, repeatable earnings. That means low cost, less interest paid, profitable underwriting and more deployed into sound investments with the blessings of regulators.

Cardboard

I heartily disagree.

1) Underwriting - if you run-rate Q4 you get $11B net written.  Tack on price growth from a firming market, you are at $12B net written.  Given past performance, I'd say they can write the $12B at a 95 CR, which gives $600m UW profit.

2) Interest and divvies - FFH has $20B of cash/T-bills/etc.  Interest rates have risen.  If they can average 2% during 2018, that's $400m.  They have $9B in bonds, which might average 2.5%, so that's another $225m.  And then $5B in common stocks might average 1%, so that's another $50m.  Call it ~$600m for the sake of conservatism (knowing that it's likely more like $700m)?

So, let's rack it up:


UW profit: $600
Interest and divvies: $600
Run-off: -$250
Non-insurance profit: $200
Corporate O/H & interest expense: -$300
Net gains: 0

Pre-tax income: $850m

So, in my book, there's $20+/share of after-tax earnings from operations.  The realised gains are gravy.


SJ

Cardboard

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 2757
Re: 2017 q4 result out!
« Reply #18 on: February 16, 2018, 01:12:01 PM »
Check your math at the end of next year and I can almost guarantee you that you will be wrong.

Cardboard

StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1007
Re: 2017 q4 result out!
« Reply #19 on: February 16, 2018, 01:31:50 PM »
Check your math at the end of next year and I can almost guarantee you that you will be wrong.

Cardboard


The numbers are 100% wrong, there's no doubt.  The question is if you eliminate the realised gains, will there be a material EPS?  And I will go out on a limb and say yes, in the absence of some unusual series of cats, there will be a material EPS from underwriting, interest/divvies and non insurance.

But, as a long time shareholder, I understand your cynicism. 


SJ