Author Topic: Fairfax 2018  (Read 9413 times)

cwericb

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Re: Fairfax 2018
« Reply #40 on: January 12, 2018, 10:20:02 AM »
Donít necessarily disagree with you. But it will be interesting to watch BB over the next few years.

Prem has orchestrated some significant turn-arounds in the past, The Brick comes to mind when he put Gregson in control. Think Chen may well do the same with Blackberry, it is just taking a lot longer than anyone expected and it is a different company today than when Prem jumped in with both feet.


Cigarbutt

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Re: Fairfax 2018
« Reply #41 on: January 12, 2018, 10:48:30 AM »
I wonder if it is appropriate to compare Blackberry and The Brick.

Not an expert in the Blackberry businesses (old or new) but the turnaround relied on huge shifts including strategic, products, markets etc
So, I submit the jury is still out on this one.

I can say a few relevant words about The Brick as I followed closely and held units, warrants and debentures during the down and up phase. I suggest that Fairfax involvement made more sense then as there were very specific issues that had to be dealt with (liquidity squeeze, inventory shortages, lack of staff (sale) and slashed publicity spending) that led to a downward spiral that could be stopped by a cash infusion which Fairfax could provide. Obviously, credit has to be given to the new management including Mr. Gregson, but the key event was the financing done by FFH and the founder (Mr. Comrie).

In the future, I hope that they make more deals templated on liquidity issues and not on fundamental or existential issues.

cwericb

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Re: Fairfax 2018
« Reply #42 on: January 12, 2018, 11:10:56 AM »
Yes, they are quite different situations, I was referring more to the fact that Prem was able to put the right guy in to run The Brick and I believe he has probably put the right guy into run Blackberry with Chen. I too had shares in The Brick back then and one of my sons was running their flagship store in Calgary at the time. It was a quick rescue and turn around.

Bottom line is that I believe that Fairfax is a good investment - for me at least. Bought a few more Fairfax shares this week and started a position in Fairfax India as well.

Dazel

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Re: Fairfax 2018
« Reply #43 on: January 12, 2018, 01:36:33 PM »




Longinvestor,

It was not 1970-80....it was around 1966-76...
Rick Guerin Mungers partner famously asked Warren if the stock would go down anymore...to which he said ďI donít knowĒ...Guerin sold his shares as Berkshire dropped 50% from its top. Geico was bankrupt and Buffett and Salmon bailed them out, the Buffalo news was a disaster in the late 70ís...Seeís killed it...and there you have it. Buffettís aha moment....pay up for great businesses. He said he would never have bought Coke without seeing seeís economics first hand.

Fairfax is at an aha moment. The past does not matter the company is primed for the next decade letís hope they do as well as Berkshire did coming out of a dry spell. Premís strength is math...good businesses and big bets on them...they have just been used to picking up dollars for 50 cents. Itís mungers math that works for big insurance companies. And a smaller bets on the eurobank of the world.

Incidentally the Credit default swap portfolio was intitiated to hedge against the companies that Fairfax had reinsurance with in 2003. It expanded as the housing bubble grew....$400m was down 90% before it exploded higher. But the insurance was real and brilliant at the time in 2003..as it eased fear that Fairfax would collect its reinsurance receivable which was large relative to equity.

Dazel

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Re: Fairfax 2018
« Reply #44 on: January 12, 2018, 01:38:50 PM »


Brian Bradstreets idea.

petec

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Re: Fairfax 2018
« Reply #45 on: January 12, 2018, 02:20:58 PM »
Nobody is going to agree with every investment that FFH makes.  And nobody should expect 100% success from any investor.  But we should expect that the risks being taken are not reckless.

SJ

Reckless is too strong a word, I think. Blackberry, the equity hedges, the CPI hedges, Eurobank, and a few smaller ones all went about as badly as they could have done in the time period we are discussing. And book value was...flat (more or less). It's also worth remembering that Prem knew (even if we didn't) the value that was building at Lombard and First Capital. My view is that while Prem took big bets, they weren't reckless risks.

Also a point of detail: $500m of the $1.3bn the BBRY bet was in convertible bonds to a net cash company that had a decent chance of stabilising cash burn (and did). That changes the risk profile, obviously.

chrispy

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Re: Fairfax 2018
« Reply #46 on: January 13, 2018, 06:03:01 AM »
One way to think of this is, what does an investor get that bought in over the past 1-2 years? Very low equity prices in nearly all the major holdings and profitable insurance businesses

Dazel

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Re: Fairfax 2018
« Reply #47 on: January 13, 2018, 09:27:51 AM »

I think we have beat the proverbial Fairfax past to death here. November 2016 they changed course saved billions in hedge losses...took their profits in treasury bills before they tanked and made by far their biggest acquisition ever taking investments up to $40b and they added heavily to their India bet. They told us that the Trump victory would bring animal spirits back and that U.S growth would power global growth they were correct. Investment (capital) Gains in 2017 will be a record despite what people think. Many holders used Fairfax doomsday hedges as their own hedge as did I...that shareholder base has sold out taking the stock down to these levels.

The world economic system has found a floor...as deflation is no longer the dibilitating fear. Another couple of trillion came out of negative rates. Governments will not try to slow it down they need the growth to manage debts. The CPI hedges are there if it falls apart they have already been written down to negligible levels.

Fairfax new story will be one of growth as they will be able take advantage of rising rates while many large fixed income holders will experience serious losses...expect them to take equity positions that grow over time (Berkshire model) they are in the drivers seat so letís see what the future holds.



FFHWatcher

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Re: Fairfax 2018
« Reply #48 on: January 13, 2018, 12:35:43 PM »
I was surprised (and encouraged) by Prem's comments after the election.  It sounded like and I think most would agree, that FFH was ready to play offense.  I don't know the exact numbers but it seems like FFH have added almost NO significant equity long positions to their portfolio's.  Portfolio is still mostly cash well over a year later.  What gives?  Valuation?

chrispy

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Re: Fairfax 2018
« Reply #49 on: January 13, 2018, 12:49:14 PM »
What are all of the Greek investments?