Author Topic: Fairfax has started repurchasing shares  (Read 6269 times)

ourkid8

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Fairfax has started repurchasing shares
« on: September 25, 2017, 02:25:10 PM »
https://finance.yahoo.com/news/intention-normal-course-issuer-bid-210200367.html

Under its existing normal course issuer bid, Fairfax has purchased 335,112 of its Subordinate Voting Shares, which included Subordinate Voting Shares reserved for share-based payment awards, through open market purchases on the TSX during the last twelve months at a weighted average price per share of Cdn.$621.65. Fairfax has not purchased any Preferred Shares under its existing normal course issuer bid.

Fairfax has repurchased $208M in stock so far, let the good times roll....



ValueMaven

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Re: Fairfax has started repurchasing shares
« Reply #1 on: September 25, 2017, 05:29:04 PM »
Fairly important update...

Let's see how this plays out...

Dazel

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Re: Fairfax has started repurchasing shares
« Reply #2 on: September 26, 2017, 06:23:37 AM »


I suspect that the cash infusion to the holding company from the recent ICICI-Lombard ipo that they should have received will speed up the buy backs at these levels...but the Fairfax Asia sale will fill the holding company with cash taking the buy back war chest above $2.5b. This will allow them to buy buckets full...Hoping the stock stays or falls from here before that deal gets completed....they would be able to do a Dutch auction or large block share repurchases. I also expect a debt ratings upgrade because of the liquidity at the holding company. If you throw in a possible hard market for the insurance subs...the buy backs would be immediate and very large in my opinion.

longinvestor

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Re: Fairfax has started repurchasing shares
« Reply #3 on: September 26, 2017, 07:05:08 AM »
What is the intrinsic value estimate for FFH? Does Prem have some sort of BV multiple to execute buyback, similar to Berkshire?

Dazel

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Re: Fairfax has started repurchasing shares
« Reply #4 on: September 26, 2017, 07:53:15 AM »



Prem told us that the book values of the insurance subs were very low...he showed us by selling ICICI-Lombard and Fairfax Asia at over 3 times book value. So he has proven that book values are low..he told us Fairfax was undervalued intrinsically but Prem has not given us a specific number. He likely won't until he has retired a lot more shares.
Unlike Mr. Buffett this is a hated stock and know one really cares what he says right now. That's why I am here! When everyone jumps on the "Buffett of the North" mantra the shares will be too high to buy back.

FFHWatcher

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Re: Fairfax has started repurchasing shares
« Reply #5 on: September 26, 2017, 08:10:26 AM »
I keep seeing that Fairfax Asia was sold. Was it? I am pretty sure only First Capital was sold which is one of several Fairfax Asia operating subsidiaries (First Capital is one of the best and biggest parts of Fairfax Asia but I am pretty sure Fairfax Asia is staying in tact Pacific, Falcon, Fairfirst, AMAM, - leaving relatively small assets and premiums, but something like 2000 employees?).


Dazel

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Re: Fairfax has started repurchasing shares
« Reply #6 on: September 26, 2017, 08:57:05 AM »



Last year's limit on share buy backs was 800,000 shares...and a little over 6000 shares per day. Excluding block trades.

This years the limit is 2.72 million shares....15,000 a day

Let the big buy back some of us predicted and Prem promised (if shares remained cheap) begin. Well the 200,000 already retired is a start so I guess it already has begun. I did tell the board so. LOL
Of course I was speculating...but being around Fairfax and watching studying them. They are predictable to do the right thing.

UK

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Re: Fairfax has started repurchasing shares
« Reply #7 on: September 27, 2017, 12:24:26 AM »
If I am not mistaken in March of 2015 and 2016 they issued 1.15 and 1.0 M shares at 650 and 735 CAD or simple/unadjusted 1.31 and 1.37 PBV (on year end BV of the each year) respectively. Now supposedly they are starting to buyback the same amount or little more at the price 625 CAD at the same simple/unadjusted 1.34 PBV (on 2q 2017). So how it could be so smart thing to do? Isn't the awesomeness of this whole operation not bigger than the difference between issuing and buying back valuations?

Other question is if we can be so sure that underwriting track record of recent years will not be broken due to the recent events? It is a question for FFH experts, because I myself have no idea really about his, but FFH attained these underwriting profits while under really favorable circumstances and now I read that Maria alone could caused an estimated $40 billion to $85 billion in insured losses (but mainly in Puerto Rico and I have no idea if they do have any exposure there).

UK 

Dazel

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Re: Fairfax has started repurchasing shares
« Reply #8 on: September 27, 2017, 06:51:47 AM »
FFHWatcher you are correct
UK
When the shares were issued Fairfax and its investors hedging and it is hated because of this drop and a few bad investments.
It's a different company now and the holding company will have $2.5b in cash...
Fairfax is become a large specialty insurer more like Markel although they will have losses from the hurricanes. If the industry event is big enough they will be able to increase their premiums which will more than make up for the losses. They have $15b in premiums now...in hard market they could could write $25b. How cheap would that make it?
If interest rates rise as they expect their now $40b investment portfolio probably benefit on a per share basis more than any other company in the world. (Because Brian Bradstreet is the best bond investor around)...and hopefully they took my advice and bought a billion worth of Citigroup and B of A like said they should!

The shares are cheap now that's why Prem will buy hand and fist as would I.

UK

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Re: Fairfax has started repurchasing shares
« Reply #9 on: September 28, 2017, 05:09:16 AM »
Yes, recent history/longer term/on general you are probably right regarding their improving quality, but they just made "transformation acquisition" (and btw issued some 4.8 M shares to finance it) and added substantial new exposures for 1.3 BV, seemingly not cheaper than their own shares, especially considering that they are undervalued and know themselves better, and I am wondering, can we be sure that there will not be any really negative surprises, especially considering this:

https://www.fitchratings.com/site/pr/1029717
http://www.artemis.bm/blog/2017/09/27/maria-turns-2017-cat-losses-into-a-capital-event-for-some-reinsurers-fitch/

"At the upper end of that range this would be a record year for global catastrophe losses, which Fitch says, “could weaken capital at some (re)insurers and increase the risk of rating downgrades.”

Does anybody has any deeper insights into this and possible impact on Fairfax+AW? Maybe than, accidentally or not, this could turn out to be even better opportunity/cheap price? Or just nobody can know about possible event impact even remotely at this time? Why not wait than?