Author Topic: Fairfax2019  (Read 53839 times)

gary17

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Re: Fairfax2019
« Reply #80 on: September 06, 2019, 07:31:20 AM »
thanks
  i think BRK has a lot of cash , probably stand to benefit.

  FFH is cheap but of lesser quality and questionable culture.   hard for me to pull the trigger.


John Hjorth

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Re: Fairfax2019
« Reply #81 on: September 06, 2019, 08:12:23 AM »
https://www.woodlockhousefamilycapital.com/post/the-horse-story

This. Thank you for sharing, wisowis. Chris Mayer bents it in neon tubes : -Buy, if you're interested &/or want to get in, -hold on, if you're at full position [for you], & do not sell here at these levels.
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Spekulatius

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Re: Fairfax2019
« Reply #82 on: September 06, 2019, 05:23:55 PM »
Of course.  The hard market starts to appear when insurers, that have under-priced their contracts, consume capital in payouts for catastrophe losses.  These insurers tend to write less business as they need to preserve capital.  So, the insurers that have a counter-cyclical approach (i.e., write less business when pricing is soft and more when pricing is firm) have lots of available capital just as pricing increases (post-catastrophe pricing usually increases) and the overall capital is shrinking.  Hard markets can last a few months or a couple of years, often in niche categories, so putting capital to work at high rates for long periods is the aim of the game.  Not every insurer is geared to do this, so lots get caught up in increasing top-line revenues year by year.  Multi-cat years will shake out the weak capital.

- O

is a hard market good for P and C insurers?

The problem is now that so much hybrid capital (catastrophe bonds  etc.) is on standby to take advantage of any hard market, should it occur. Unless we have an unfavorable credit market at the same time than a hard insurance market, I don’t see hard markets lasting.
To be a realist, one has to believe in miracles.

Spekulatius

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Re: Fairfax2019
« Reply #83 on: September 07, 2019, 08:52:47 AM »


$6b debt at the holding company is net $4b after cash...and the insurance companies do not have a lot of debt as they are strategically being less levered to be able to take advantage of an event, maintain high ratings and once you dividend their access capital to the holding company it’s gone...so it does not concern me. Insurance companies are vastly undervalued.

Belated answer - the $4.3B in net debt with a $12.5B equity base is still higher than many other insurance cos that are typically 20-25% levered. Most other insurance cos don’t have the equity exposure that FFH has though FF India, Africa and various other holdings. It clearly is a more levered insurer than many others.

FWIW, I sold my FF holding when it went to $480+ and essentially put the proceeds into BRKB, which consider a better bet. I would consider buying back FFH below $430, but that would probably be for a trade.
To be a realist, one has to believe in miracles.

UK

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Re: Fairfax2019
« Reply #84 on: September 08, 2019, 04:28:37 AM »
https://www.wsj.com/articles/storm-clouds-not-capital-ones-ease-for-reinsurers-11567767780

"Reinsurers’ shares already have made huge gains this year. Arch Capital Group Ltd. and RenaissanceRe Holdings Ltd. are up 54% and 41% respectively. Arch Capital is priced at about 1.7 times book value, and RenaissanceRe is at 1.6 times. The latter is close to its highest level since 2007 on that measure."

KFS

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Re: Fairfax2019
« Reply #85 on: September 25, 2019, 07:25:30 AM »
https://www.wsj.com/articles/value-stocks-beckon-investors-in-aging-bull-market-11569412801?mod=hp_lead_pos4

Value Stocks Beckon Investors in Aging Bull Market

"Diane Jaffee, a senior portfolio manager running $3.7 billion in value-focused funds at TCW Group Inc., notes the spread between the trailing price/earnings ratios of growth and value stocks on the Russell 1000 index hasn’t been this wide since the dot-com crash of 2001."


bearprowler6

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Re: Fairfax2019
« Reply #87 on: September 28, 2019, 05:14:10 AM »
https://www.bloomberg.com/news/articles/2019-09-27/watsa-s-mindboggling-reasoning-in-takeover-prompts-court-award

That is a stunning decision by the Judge and damning commentary on Prem.

At one point The Judge called Prem's testimony "mindboggling"....on this I have to respectively disagree with the Judge. What is mindboggling is the decision to continue to hold Resolute Forest Products at all. And may I add...Blackberry, Eurobank, Stelco Torstar etc etc.

As far as the "long term" defence for hollding these positions....with the exception of Stelco all of these positions have been held for numerous years without any positive results. Blackberry for instance has been held 6 years since John Chen took over as CEO and years before that. Argue all you want but something is broken at the Hamblyn Watsa equity team and that is what is truly Mindboggling.

Thanks UK for posting the article.

Cigarbutt

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Re: Fairfax2019
« Reply #88 on: September 28, 2019, 05:30:06 AM »
https://www.bloomberg.com/news/articles/2019-09-27/watsa-s-mindboggling-reasoning-in-takeover-prompts-court-award
Humble opinion here, after having discovered and reviewed previous comments made on this Board years ago.
Disclosure: I was a Fairfax shareholder then and intensively looked at how money could be made somehow with ABH and FBK.
The definitive opinion may change after reading the whole judgement but this seems to be the price to pay for playing the game between legal rules and ethics.

There was a conceptual flaw from the start (especially versus the fair and friendly and not hostile culture mindset) by actively pursuing an acquisition where Fairfax was a significant shareholder in the bidder and the target. The relevant National Policy 62-202: Take-Over Bids Defensive Tactics, indicates that “[t]he primary objective of the take-over bid provisions of Canadian securities legislation is the protection of the bona fi de interests of the shareholders of the target company.” Regulatory bodies then focused on a majority concept of the take-over which did not take into account that this majority was possible by the inclusion of a party which had diverging interests and that this basic fact likely contributed to a financial oppression of Fibrek's minority shareholders. Higher Courts eventually deferred to the regulatory body's decisions so that Fairfax got the legal nod to proceed. But one has to consider that this would not have been OK under other legal jurisdictional auspices.

It seems that the September 2019 judgement is, somehow, an attempt to correct an unfair outcome for minority shareholders but the Court seems to omit that this process had been anointed with a legal seal of approval in a contemporaneous way and perhaps the judgement is an attempt to bridge the definition of fairness, from legal to ethical. It's not the job of the legal system to do this but it's an interesting side effect and a reminder to legislators.

« Last Edit: September 28, 2019, 05:35:57 AM by Cigarbutt »

StubbleJumper

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Re: Fairfax2019
« Reply #89 on: September 28, 2019, 07:10:40 AM »
https://www.bloomberg.com/news/articles/2019-09-27/watsa-s-mindboggling-reasoning-in-takeover-prompts-court-award
Humble opinion here, after having discovered and reviewed previous comments made on this Board years ago.
Disclosure: I was a Fairfax shareholder then and intensively looked at how money could be made somehow with ABH and FBK.
The definitive opinion may change after reading the whole judgement but this seems to be the price to pay for playing the game between legal rules and ethics.

There was a conceptual flaw from the start (especially versus the fair and friendly and not hostile culture mindset) by actively pursuing an acquisition where Fairfax was a significant shareholder in the bidder and the target. The relevant National Policy 62-202: Take-Over Bids Defensive Tactics, indicates that “[t]he primary objective of the take-over bid provisions of Canadian securities legislation is the protection of the bona fi de interests of the shareholders of the target company.” Regulatory bodies then focused on a majority concept of the take-over which did not take into account that this majority was possible by the inclusion of a party which had diverging interests and that this basic fact likely contributed to a financial oppression of Fibrek's minority shareholders. Higher Courts eventually deferred to the regulatory body's decisions so that Fairfax got the legal nod to proceed. But one has to consider that this would not have been OK under other legal jurisdictional auspices.

It seems that the September 2019 judgement is, somehow, an attempt to correct an unfair outcome for minority shareholders but the Court seems to omit that this process had been anointed with a legal seal of approval in a contemporaneous way and perhaps the judgement is an attempt to bridge the definition of fairness, from legal to ethical. It's not the job of the legal system to do this but it's an interesting side effect and a reminder to legislators.



So, the problem is that FFH puffs its chest out about employees conducting themselves with integrity and about undertaking Fair and Friendly Acquisitions (Fairfax), but then doesn't always walk the talk.  You now have a judge who noted their shortcomings during the Fibrek takeover, but to make matters worse, if the judge is to be believed, Prem was not always honest and forthcoming during the trial and instead hid behind a series of "I cannot recall" type of responses.  Given that Prem has had several years to review his notebooks from that period and to examine his diary to refresh his mind about meetings and teleconferences, the "I don't know" responses leaves me with really only two possible explanations for his behaviour:  1) he is incompetent and cannot take basic notes and review them later; or 2) the "I don't know" responses were a dishonest and unethical approach to concealing his previous unethical conduct.

In any case, we shouldn't expect to see any more posts in this forum praising Watsa's integrity.


SJ