Author Topic: Fairfax 2018  (Read 100608 times)

petec

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Re: Fairfax 2018
« Reply #190 on: February 07, 2018, 10:08:10 AM »

Petec....slow down...most of the 85% investment of investment at the end of quarter one in accounts at the insurance level will go into bonds.


I'm well aware of that. But they're not going to go all in at the long end of the US sovereign curve either - like stocks, it's barely moved in the grand scheme of things. Hence my point that the only way they are going to put 85% to work is in the 2 year. Unless you think that they can find $17bn in individual high yield opportunities (e.g. corporate, EM sovereign) that have suddenly started screaming value, which would be great, but I just don't think the markets have moved that much.



Dazel

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Re: Fairfax 2018
« Reply #191 on: February 08, 2018, 05:59:11 AM »


I expect a bit of everything but you are correct 2 yr yields have doubled....
If you think in terms of every 100 basis points is $400m in income like Fairfax is thinking...it does not make sense to have long periods of holding cash unless things are really stupid....they were correct yields were really stupid...they are becoming normalized. All Fairfax needs to do is have normal returns on their investements.....they have set up the future with all of the insurance companies they bought and consolidated cheaply after the crisis. Its time to invest the money....rising rateswill create value quickly...you can see in their last two deals. Opportunity is here...

Dazel

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Re: Fairfax 2018
« Reply #192 on: February 08, 2018, 06:15:58 AM »


If they continue to follow Berkshire and Markel...they will do very very well over the next 10 years. As the brilliant Charlie Munger said “Warren and I figured out that we only had to do 10% and the magic of the float would give substantial returns over the long term”. Berkshire holds common stock for the long term because of their dividends...do you know what their yield is on Coca Cola!!
Wells Fargo for example  is similar to Fairfax other deals...it is yielding 2.7% and will yield 5% on purchases now over the next few years and maybe much more depending on what the shares do. If it were to fall great buy more and more and higher yields averaging cost and rising the yield on investments...it Is just math now for the majority of the investments...obviously India are greater risk reward....but the majority of the money should be Bradstreet’s and yields are the key...

petec

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Re: Fairfax 2018
« Reply #193 on: February 08, 2018, 08:42:55 AM »
Dazel I agree with everything you're saying except that markets have moved enough for them to invest 85% of their cash by the end of q1. The 30y yield is 18bps higher than its peak in October, when to the best of my knowledge they didn't do much. That's not the opportunity they are waiting for.

The 2 year has risen 60bps in the same time. That's a great place to park cash now. And I am sure they have found some individual values. But 85% invested - only if it's in the 2 year, IMHO. But there is no point arguing further - we'll get an update soon enough!
« Last Edit: February 08, 2018, 08:44:59 AM by petec »

gary17

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Re: Fairfax 2018
« Reply #194 on: February 08, 2018, 12:35:03 PM »
Thanks for all the posts
i certainly learned a lot
i had AWH shares before and have been tempted to buy  but can't 100% get comfortable with whether Prem has really learned from his mistakes...  and what they are thinking now...    looking forward to hearing from them again soon when the results are out and then see if it gets to a even better price to enter. 

gary17

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Re: Fairfax 2018
« Reply #195 on: February 08, 2018, 05:14:47 PM »
does anyone know what is the following for FFH in $CAD/share? your guess for fairfax right now?
- float
- book value about $560
- net debt
? thanks

gary17

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Re: Fairfax 2018
« Reply #196 on: February 08, 2018, 08:10:31 PM »
i think i found my answers -

anyway, i think the key question is if this thing can compound at 13% of book over the next 5 years... if it can and gets re-valued to 1.5x then that'll provide an attractive return....

Can rising interest rates cause a hard insurance market ? 

Dazel

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Re: Fairfax 2018
« Reply #197 on: February 15, 2018, 05:38:49 PM »

Some will recall.....record earnings.....just saying!

Dazel

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Re: Fairfax 2018
« Reply #198 on: February 15, 2018, 06:00:01 PM »

And...$20b cash...

Lucky I guess?

gary17

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Re: Fairfax 2018
« Reply #199 on: February 15, 2018, 06:45:05 PM »
why do i feel they bought a lemon with the AWH purchase