Author Topic: 2017 q4 result out!  (Read 17262 times)

FairFacts

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Re: 2017 q4 result out!
« Reply #70 on: February 23, 2018, 09:42:50 AM »
my two cents...

BRK is currently valued at 1.6x BV
MKL is currently valued at 1.7x BV
FFH is currently valued at 1.1x BV (and even less if you add the unbooked adjustments to FMV of TC/Quess and FIH).

WB has always said that at 1.2x his company is undervalued and at 2x it is overvalued. I imply that the mid point 1.6x is his idea of FMV.

In my view FFH is so thinly covered by analysts and trades such low volumes its entirely possible (probable) that it is mispriced.

As they digest AWH, getting the under writing under control (AWH and BRIT), leverage the float AND grow revenues into a better market the insurance businesses look well placed to do really well over the next few years. Looking at some of the larger investments, BB, TC/Quess, FIH and Gravalia there is the possibility of some serious upside. Having dropped the hedging and winding down the CPI options we'll get a chance to see FFH for what it can really do. The market could wake up at any time and award this the multiple it deserves.

For me, the most compelling source of information is the conference calls and listening directly to PW. He has changed his emphasis notably this year:
1. Dropping the bond holdings, removing equity hedges, going on the offensive.
2. Still maintaining a conservative posture eg not reaching for yield.
3. Added AWH to the stable and stated that this is the last big acquisition.
4. Repeatedly stated that they will firstly strengthen FFH financial position and then buy back stock. (first part is underway and stock purchases starting slowly).
5. Most importantly on the year-end call he said "$15bil revenue now in place, we expect to generate 15% return to shareholders of about net $70/share"....later in the Q&A he said..."we expect $2bil after tax in 2018". I have never heard him get this close to giving guidance even though he emphatically said he was not and never would issue guidance.

All thats needed now is a liitle proof, if the next few quarters go according to plan I fully expect to see FFH priced at +1.5x BV by the end of the year.





netnet

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Re: 2017 q4 result out!
« Reply #71 on: February 23, 2018, 12:00:51 PM »
Close FFH watchers correct me if I'm wrong, (not a close watcher myself) but it seems to me the trade for FFH has been buy at 1.1 or less and sell at 1.4.  This has been a regular trade over the last 6 years or so.

StubbleJumper

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Re: 2017 q4 result out!
« Reply #72 on: February 23, 2018, 01:23:57 PM »
Close FFH watchers correct me if I'm wrong, (not a close watcher myself) but it seems to me the trade for FFH has been buy at 1.1 or less and sell at 1.4.  This has been a regular trade over the last 6 years or so.


Yep.  That's about right.  And it's currently about 1x when you make a couple of adjustments to BV.  So, the idea of it moving to 1.2 within a year or 18 months isn't crazy.  And then if BV rises ~10% after the divvy, you could see a healthy return.


SJ

FFHWatcher

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Re: 2017 q4 result out!
« Reply #73 on: February 23, 2018, 02:19:24 PM »
Close FFH watchers correct me if I'm wrong, (not a close watcher myself) but it seems to me the trade for FFH has been buy at 1.1 or less and sell at 1.4.  This has been a regular trade over the last 6 years or so.

I am much less sophisticated than that. The point I was trying to make was that historically, FFH has not been one of those 'buy it now and ignore it for 20 years' type of stocks.  While the company has grown significantly in the past 20 years and is a much different company today, historically, it hasn't been a terribly nice stock to buy and hold (except if you have Prem's cost basis and number of shares). 
Going forward hopefully FFH has made the necessary changes to get the company on a steadier more consistent upward trajectory in earnings and in share price than in the past (much more of an earnings machine as opposed to a gamble hedge and hope to hit it big every 6-10 years).

Txvestor

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Re: 2017 q4 result out!
« Reply #74 on: February 23, 2018, 06:33:27 PM »
It hasn't been a buy and forget, because of all the missteps HW has made. Were it not for the equity hedges and deflation swaps, BV would easily have been 50% higer. And the multiple to BV would likely have persisted. If you buy here, you are betting that Prem will not do anything value destructive in the next few years. The market has not ruled put that possibility and I think the market is probably right.
They jury remains out on the AWH purchase alone.
To the poster stating he mentioned 2B and $70 per share, I was on the call as well. When an analyst asked, he was clear that this was not guidance. On that I would just say he has also touted 15% annual gains in BV for many years, and keeps saying over the long term, that hasn't happened in post crisis era either.
« Last Edit: February 25, 2018, 09:00:44 AM by Txvestor »