Author Topic: Fairfax return over the next 10 years  (Read 9664 times)

Cigarbutt

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Re: Fairfax return over the next 10 years
« Reply #30 on: July 25, 2019, 08:45:00 AM »

This, and the surprising drop in interest rates.

Off topic, but why was that surprising?
Off topic but I wonder if TwoCitiesCapital did not mean surprised by the drop in interest rates as they had positioned the fixed income portfolio for a rising rate environment. What will happen now?


bearprowler6

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Re: Fairfax return over the next 10 years
« Reply #31 on: July 25, 2019, 08:57:41 AM »
I initiated my original position in FFH in Nov 1999...and trading around that core position for years. I sold off a portion of my core position a few years ago and continue to hold a smallish position in the company. I have watched this company very closely since taking my initial position. With that as the background ... I will now comment on the this company...

The stock performance of this company continues to disappoint. Many of the reasons for the under performance have previously been discussed on this board however I believe the time is right to revisit them:

i) The equity portfolio is made up of a bunch of out right losers. Sure Blackberry has some promise and Eurobank is the cheapest bank on the planet but seriously....who in their right mind would put together a portfolio of equity positions that look anything like the ones held by FFH. Resolute Forest ...surely they can find something better. They need to cut their losers and free up and reallocate the capital.

ii) The company is seriously over leveraged. Continuing to borrow at 4%+ in today`s interest rate environment is foolish. And don`t get me started on the outstanding classes of  preferred shares.

ii) Their major non-insurance subsidiaries largely consist of various retail and restaurant companies. They have not performed (and that`s with the tail wind of a strong economy behind them) and need to be addressed.

iv) Communication to the market. I know all you hard core value guys will think this is unnecessary however the reality is in today`s market this may be the most important aspect behind operating a successful public company. The market communication they do is ineffective and outdated. Wake up...its 2019 and todays investing community expect and deserve more than ...we manage for the long term.

v) Building on the point made in (iv) earlier this year management floated out the idea that they were looking at monetizing several of their private market holdings. Since then...total silence. Bueller...Bueller....Prem ...Paul.... please provide an update.

vi) The Board....please dont get me started....do your job....do something....

vii) Share buybacks....perhaps management is waiting for the stock to go lower. Not a bad bet if you ask me. What a farce. Singleton if he were alive should sue this company for misrepresenting what he had done.

vii) Buyout of minority positions in Brit, Eurolife, Allied World....provide the details....amount, timelines, etc. Why the secrecy...

viii) Fairfax India and Fairfax Africa...okay...now what....yes...yes ...I know....long term....frankly that explanation or what they are trying to pass off as an explanation is old and tired and of no real value.

I could go on and on and on...but whats the point. The next move is on me...most likely I will follow TwoCitiesCapital lead and exit this position entirely once and for all and not look back. I will however to continue to show up at the AGM to collect my $25 Keg gift card.

I await the attack from the FFH hard core fans...all 5 of you....

TwoCitiesCapital

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Re: Fairfax return over the next 10 years
« Reply #32 on: July 25, 2019, 10:41:36 AM »

This, and the surprising drop in interest rates.

Off topic, but why was that surprising?

Seemed like everyone was on board for the "rates are heading higher" debate.

Pundits were talking about the "rising rate cycle."
All of our retail clients were dumping bonds, or having to be persuaded to continue holding them, into the end of 2017.
Fairfax had avoided hundreds of millions in losses by repositioning the portfolio for the big economic revival
Gundlach was on television talking about the massive short position in Treasury rates (showing other market participants agreed with rates -> higher)

I think the dramatic reversal in rates shocked most market participants. Even myself, who had been in the "lower for longer"/fear of deflation camp for years, was considering the possibility of being wrong on rates and Fairfax minting money in that environment.

« Last Edit: July 25, 2019, 10:49:40 AM by TwoCitiesCapital »