Author Topic: Fairfax India new issue  (Read 121737 times)

thowed

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Re: Fairfax India new issue
« Reply #260 on: November 21, 2018, 04:43:02 AM »
I struggle to understand all the businesses in detail, but believe in the long-term India story, and hope that Fairfax should be in place to benefit.

Asian Airports can be fine businesses (Shanghai International is a case in point at the moment), but I don't know enough about the Bengaluru management to feel confident about how how well they'll execute the expansion.  I'm sure I just need to sit down and research more.

The Finechem chemicals business had a decent reputation (so I heard, but not from primary research) before Fairfax got involved.

Stock exchanges are great businesses I think if you believe in long-term capitalism.

I need to do a lot more work, but overall the sectors they've gone into look very appealing.

Having said that, don't forget there are a heap load of well-run family companies in India to choose from - it's not tricky to create a small basket, or find a fund manager who knows what they're doing.


DocSnowball

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Re: Fairfax India new issue
« Reply #261 on: November 26, 2018, 09:56:25 AM »
I struggle to understand all the businesses in detail, but believe in the long-term India story, and hope that Fairfax should be in place to benefit.

Asian Airports can be fine businesses (Shanghai International is a case in point at the moment), but I don't know enough about the Bengaluru management to feel confident about how how well they'll execute the expansion.  I'm sure I just need to sit down and research more.

The Finechem chemicals business had a decent reputation (so I heard, but not from primary research) before Fairfax got involved.

Stock exchanges are great businesses I think if you believe in long-term capitalism.

I need to do a lot more work, but overall the sectors they've gone into look very appealing.

Having said that, don't forget there are a heap load of well-run family companies in India to choose from - it's not tricky to create a small basket, or find a fund manager who knows what they're doing.

One thing I am noting from the latest filing is Sanmar common equity went from 554 (million Indian rupees) to 208,854. There is a section that gives reasoning but it is a 376 fold increase in a quarter and holds up the shareholder equity and book value per share in the bottom line for the year and the quarter. How does such a dramatic increase work out?

https://s1.q4cdn.com/293822657/files/doc_financials/quarterly_reports/2018/2018-Q3-Interim-Report-(FIH)-(Final).pdf
"Sanmar Common Shares
At September 30, 2018 the company estimated the fair value of its investment in Sanmar common shares using a discounted cash flow analysis based on multi-year free cash flow projections with assumed after-tax discount rates ranging from 13.4% to 16.6% and long term growth rates ranging from 3.0% to 4.0% (December 31, 2017 - 15.2% to 19.5% and 2.0% to 3.6%, respectively). Free cash flow projections were based on EBITDA estimates derived from financial information for Sanmar's four business units (with additional financial information and analysis completed for Chemplast's underlying business units involved in new capital projects) prepared in the third quarter of 2018 by Sanmar's management. Discount rates were based on the company's assessment of risk premiums to the appropriate risk-free rate of the economic environment in which Sanmar operates. In the third quarter of 2018 Fairfax India recorded unrealized gains of $225,013 on its investment in Sanmar common shares primarily as a result of: (i) positive operational developments at Sanmar Egypt (successful completion of its increased capacities in Egypt) and Chemplast (will benefit from the completion of new capital projects); (ii) continued strong demand for PVC and related products in India, Europe, the Middle East and North Africa; and (iii) the decrease in the after-tax discount rates (principally related to the decreased risk at Sanmar Egypt as a result of the completion of its capital expenditure project to increase capacity). At September 30, 2018 the company's internal valuation model indicated that the fair value of the company's investment in Sanmar common shares was $208,854 (December 31, 2017 - $556). The changes in fair value of the company's investment in Sanmar common shares for the third quarters and first nine months of 2018 and 2017 are presented in the tables disclosed earlier in note 5."

petec

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Re: Fairfax India new issue
« Reply #262 on: November 26, 2018, 10:14:16 AM »
I struggle to understand all the businesses in detail, but believe in the long-term India story, and hope that Fairfax should be in place to benefit.

Asian Airports can be fine businesses (Shanghai International is a case in point at the moment), but I don't know enough about the Bengaluru management to feel confident about how how well they'll execute the expansion.  I'm sure I just need to sit down and research more.

The Finechem chemicals business had a decent reputation (so I heard, but not from primary research) before Fairfax got involved.

Stock exchanges are great businesses I think if you believe in long-term capitalism.

I need to do a lot more work, but overall the sectors they've gone into look very appealing.

Having said that, don't forget there are a heap load of well-run family companies in India to choose from - it's not tricky to create a small basket, or find a fund manager who knows what they're doing.

One thing I am noting from the latest filing is Sanmar common equity went from 554 (million Indian rupees) to 208,854. There is a section that gives reasoning but it is a 376 fold increase in a quarter and holds up the shareholder equity and book value per share in the bottom line for the year and the quarter. How does such a dramatic increase work out?

https://s1.q4cdn.com/293822657/files/doc_financials/quarterly_reports/2018/2018-Q3-Interim-Report-(FIH)-(Final).pdf
"Sanmar Common Shares
At September 30, 2018 the company estimated the fair value of its investment in Sanmar common shares using a discounted cash flow analysis based on multi-year free cash flow projections with assumed after-tax discount rates ranging from 13.4% to 16.6% and long term growth rates ranging from 3.0% to 4.0% (December 31, 2017 - 15.2% to 19.5% and 2.0% to 3.6%, respectively). Free cash flow projections were based on EBITDA estimates derived from financial information for Sanmar's four business units (with additional financial information and analysis completed for Chemplast's underlying business units involved in new capital projects) prepared in the third quarter of 2018 by Sanmar's management. Discount rates were based on the company's assessment of risk premiums to the appropriate risk-free rate of the economic environment in which Sanmar operates. In the third quarter of 2018 Fairfax India recorded unrealized gains of $225,013 on its investment in Sanmar common shares primarily as a result of: (i) positive operational developments at Sanmar Egypt (successful completion of its increased capacities in Egypt) and Chemplast (will benefit from the completion of new capital projects); (ii) continued strong demand for PVC and related products in India, Europe, the Middle East and North Africa; and (iii) the decrease in the after-tax discount rates (principally related to the decreased risk at Sanmar Egypt as a result of the completion of its capital expenditure project to increase capacity). At September 30, 2018 the company's internal valuation model indicated that the fair value of the company's investment in Sanmar common shares was $208,854 (December 31, 2017 - $556). The changes in fair value of the company's investment in Sanmar common shares for the third quarters and first nine months of 2018 and 2017 are presented in the tables disclosed earlier in note 5."

Didnít Sanmar repay a big loan to FFH? My recollection was the original equity investment was valued almost at 0 and most of the financing was the loan, so when the company repaid the loan the equity value will have risen dramatically.

DocSnowball

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Re: Fairfax India new issue
« Reply #263 on: November 30, 2018, 11:23:00 AM »
@thowed and @petec Thank you for your replies.

hobbit

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Re: Fairfax India new issue
« Reply #264 on: January 10, 2019, 02:11:46 PM »
Significant insider buying in the last 3-4 months

chrispy

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Re: Fairfax India new issue
« Reply #265 on: January 13, 2019, 11:56:33 AM »
Hobbit, where did you see this? I am having trouble finding anything besides Bradstreet with my quick search

hobbit

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Re: Fairfax India new issue
« Reply #266 on: January 14, 2019, 07:47:28 AM »

gfp

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Re: Fairfax India new issue
« Reply #267 on: January 14, 2019, 08:12:51 AM »
Significant insider buying in the last 3-4 months

Is this "insider buying" or issuer repurchase activity?

Cigarbutt

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Re: Fairfax India new issue
« Reply #268 on: January 14, 2019, 10:09:07 AM »
Significant insider buying in the last 3-4 months
Is this "insider buying" or issuer repurchase activity?
Looking back at the last 6 months or so in the canadianinsider reports, most to all share purchase activity is corporate repurchasing, including the last part where the maximum (25% of volume per trading day) number of shares is repurchased for eventual cancellation.

https://www.fairfaxindia.ca/news/press-releases/press-release-details/2018/Fairfax-India-Holdings-Corporation-Intention-to-Make-a-Normal-Course-Issuer-Bid-for-Subordinate-Voting-Shares/default.aspx

The only insiders I see in that period (# of shares):
-J. Cloutier        -6350
-D. Bonham      +800
-B. Bradstreet   net +28500

Note to "gfp", since your name modification:
what's changed: I used to picture you as an international executive and now I think of Grandmothers For Peace.
what's the same: the level of interest I have for your posts.

Jurgis

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Re: Fairfax India new issue
« Reply #269 on: January 14, 2019, 12:07:19 PM »
Note to "gfp", since your name modification:
what's changed: I used to picture you as an international executive and now I think of Grandmothers For Peace.
what's the same: the level of interest I have for your posts.

Gross Financial Product?  8)
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