Corner of Berkshire & Fairfax Message Board

General Category => Fairfax Financial => Topic started by: Partner24 on June 05, 2009, 06:55:50 AM

Title: Fairfax return over the next 10 years
Post by: Partner24 on June 05, 2009, 06:55:50 AM
Please don't try to be overconservative, just the most likely range of return that you truly think. Also, keep in mind that this poll is anonymous. The results will be shown in 5 days. Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: alertmeipp on June 05, 2009, 07:10:23 AM
how come there is no negative #? :)

FFH is going down no matter what the market does.
Title: Re: Fairfax return over the next 10 years
Post by: UhuruPeak on June 05, 2009, 07:28:03 AM
how come there is no negative #? :)

FFH is going down no matter what the market does.


FFH is uncorrelated to the market.  It goes down when Sanjeev diets, and goes up when he lunches :)
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 05, 2009, 07:57:16 AM
how come there is no negative?

Oopss. I tought that I had only 5 options available. :-[

But if someone think that it would be less than zero, please email me to "post" your vote and I will keep your name confidential. I will adjust the final results with these votes.

Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 11, 2009, 04:51:24 AM
Here are the results.

- 54 voters (none have sent me email to vote for less than zero).

- Highest votes for a given range: 16-20%

- Mean: 17,3%

Thank you for voting!

Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: Uccmal on June 11, 2009, 07:08:15 AM
At some point closer to the ten year mark than now I expect that their returns will start to drop below 15%. 

and

Are we collectively overly optimistic? 
Title: Re: Fairfax return over the next 10 years
Post by: calonego on June 11, 2009, 08:03:57 AM
FFH is at 260 now - it will be at almost 1300 in a decade if the 17.3% is correct - that may not be too far off, up or down, although my guesstimate would be a lower return. If you take a point in exactly 120 months - who knows where it's at (very dependent on the state of the economy at that exact time, etc). But there is a likelihood that in the interim a number like that is attainable (and a higher "now-to-peak" return).
At 26%/annum, it would be trading at over $2,600...
Title: Re: Fairfax return over the next 10 years
Post by: oldye on June 11, 2009, 11:27:29 AM
Its simply a function of whether or not they can keep investing capital at 15+%, without knowing the future its impossible to tell if that will happen.  Heck if the shares stay this cheap for the next 10 years, they'd have no problem earning 25% a year.
Title: Re: Fairfax return over the next 10 years
Post by: ERICOPOLY on June 11, 2009, 04:49:35 PM
I think that you get roughly $1 of equities for every $1 invested in FFH at today's price.

It seems like a 12% return on their equity portfolio over the next 10 years will get you 17% return on the stock if you assume:
1)  a modest expansion of B/V multiple (say 1.2x) to offset taxes paid/due on the equity gains
2)  5% per annum boost from the float (pretty easy this year with the tax-free muni bonds)

So is a 12% return possible? 
Title: Re: Fairfax return over the next 10 years
Post by: ubuy2wron on June 12, 2009, 11:58:25 AM
Its simply a function of whether or not they can keep investing capital at 15+%, without knowing the future its impossible to tell if that will happen.  Heck if the shares stay this cheap for the next 10 years, they'd have no problem earning 25% a year.

Oldeye you do not have to know the future only Prem has to know the future, given his investment calls in the last three years I suspect that he has made a pact with the devil to get a copy of the WSJ delivered every morning 3 years in advance. LOL
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 10, 2019, 07:15:30 AM
We're 10 years later now and it's  time to use your calculator! ;-)

Cheers!
Title: Re: Fairfax return over the next 10 years
Post by: petec on June 10, 2019, 08:32:13 AM
Sadly I don't need to use a calculator ;)
Title: Re: Fairfax return over the next 10 years
Post by: tooskinneejs on June 10, 2019, 09:15:16 AM
7.9%?  So nobody guessed correctly?
Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 10, 2019, 11:14:12 AM
Sad.
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 10, 2019, 01:50:45 PM
Sad indeed. Lesson learned about how we can sometimes be over-optimistic about value investors. And how FFH team was too scared about macro stuff for too long.
Title: Re: Fairfax return over the next 10 years
Post by: investmd on June 11, 2019, 08:03:22 PM
Interesting. Thanks for following up on this Partner24. Wisdom of the crowd was wrong in 2009. If the same poll was conducted today, probably everyone would say either <10% or 11-15%. Wonder if we would all the wrong again....hopefully.
Title: Re: Fairfax return over the next 10 years
Post by: petec on June 12, 2019, 04:59:07 AM
Interesting. Thanks for following up on this Partner24. Wisdom of the crowd was wrong in 2009. If the same poll was conducted today, probably everyone would say either <10% or 11-15%. Wonder if we would all the wrong again....hopefully.

Ha - exactly.
Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 12, 2019, 08:25:57 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.
Title: Re: Fairfax return over the next 10 years
Post by: jfan on June 12, 2019, 09:41:01 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?
Title: Re: Fairfax return over the next 10 years
Post by: Partner24 on June 12, 2019, 10:07:57 AM
Regarding FFH, I do not keep myself informed about it anymore, so I will not start a new poll. But feel free to do so.

Cheers! 
Title: Re: Fairfax return over the next 10 years
Post by: Viking on June 12, 2019, 10:19:00 AM
I was likely one of the people who voted back in 2009 :-)

The lesson for me is as follows:
- you make decisions (and projections) based on the facts you have on hand at the time
- when the facts change you may need to change your mind

After 2009 FFH made some very big bets with the investment portfolio that proved to be flat out wrong. These bets were plain for all investors to see.

The lesson for me is not that projections often do not work out as expected (this is kind of obvious). The lesson for me is the important over time of processing new information and acting on it (if it is important). The opposite of thumb sucking.
Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 12, 2019, 10:38:41 PM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?

70-30.

But I won't make a real bet since (a) there's no platform that I'd trust (b) if bet amount would have to be pre-deposited, it's a negative return even if I win.
Title: Re: Fairfax return over the next 10 years
Post by: bizaro86 on June 13, 2019, 07:24:19 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?

70-30.

But I won't make a real bet since (a) there's no platform that I'd trust (b) if bet amount would have to be pre-deposited, it's a negative return even if I win.

B isn't true if the two people betting can agree on a suitable investment to keep the funds that they would otherwise both hold.

When Buffett made his hedge fund vs S&P bet, they put the money in zero coupon treasuries, and then switched to BRK after treasuries rocketed, and did very well.

Surely there would be some compounder the two parties could agree on...

Title: Re: Fairfax return over the next 10 years
Post by: Jurgis on June 13, 2019, 07:50:38 AM
Feel free to start a new 10 year return poll and we can see the results in 10 years.

I would be willing to bet real money that Fairfax return will be below 15% annual for next 10 years.

What are the odds you are offering?

70-30.

But I won't make a real bet since (a) there's no platform that I'd trust (b) if bet amount would have to be pre-deposited, it's a negative return even if I win.

B isn't true if the two people betting can agree on a suitable investment to keep the funds that they would otherwise both hold.

When Buffett made his hedge fund vs S&P bet, they put the money in zero coupon treasuries, and then switched to BRK after treasuries rocketed, and did very well.

Surely there would be some compounder the two parties could agree on...

Fair enough. We could deposit money into Fairfax... ... ...  ::)  8)
Title: Re: Fairfax return over the next 10 years
Post by: StevieV on June 13, 2019, 07:57:09 AM
As long as we are speculating, I would certainly take the under on 15% compounded over the next 10 years.  If you gave me 7% I would take the over.  It gets murkier from there.  I would not bet real money on this, but I guess that is where I see the likely range of returns.
Title: Re: Fairfax return over the next 10 years
Post by: longinvestor on June 13, 2019, 12:24:09 PM
More than anonymous  posters with aliases on a public forum getting it wrong, I wish the CEO would refrain from making public statements about specific future returns. I was a Fairfax shareholder in 2009 and was a happy one based on the turn of events of 2005-09 and still had mixed feelings about Prem making such projections. It just is not good practice. Those words do tend to haunt. Keeping your head down and running your business well is better. Surely Fairfax has done some really good things with their business since 2009. I just see this as another “macro” call which they got wrong. It’s akin to an unforced error.
Title: Re: Fairfax return over the next 10 years
Post by: Cardboard on June 14, 2019, 05:46:10 AM
LOL!

Then you never end praising Buffett for saying that Berkshire will keep beating the S&P.  ::)

Seriously, any worthwhile organization needs to set targets. It is an essential part of good management. In this case they badly missed so either the target is wrong and/or the execution.

Cardboard
Title: Re: Fairfax return over the next 10 years
Post by: Txvestor on July 25, 2019, 07:59:54 AM
Wonder where are all the buybacks. The stock is languishing barely above TBV and I guess we will be hearing more in the next Q but I am not sensing that there is much activity. For all the talk of Singleton etc. Actions are proving increasingly worrisome here. 
Title: Re: Fairfax return over the next 10 years
Post by: TwoCitiesCapital on July 25, 2019, 08:02:30 AM
Wonder where are all the buybacks. The stock is languishing barely above TBV and I guess we will be hearing more in the next Q but I am not sensing that there is much activity. For all the talk of Singleton etc. Actions are proving increasingly worrisome here.

+1

This, and the surprising drop in interest rates, is what led me to sell the entire position.

I still watch, but haven't missed it much in the portfolio.
Title: Re: Fairfax return over the next 10 years
Post by: petec on July 25, 2019, 08:37:16 AM

This, and the surprising drop in interest rates.

Off topic, but why was that surprising?
Title: Re: Fairfax return over the next 10 years
Post by: Cigarbutt 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?
Title: Re: Fairfax return over the next 10 years
Post by: bearprowler6 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....
Title: Re: Fairfax return over the next 10 years
Post by: TwoCitiesCapital 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.