Author Topic: Results out  (Read 6574 times)

StubbleJumper

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Re: Results out
« Reply #10 on: February 15, 2019, 05:55:22 AM »
Any way to listen to the conference call without actually calling the number for a playback ?
Not only it is very expensive to overseas investors but it is very inconvenient to sit for an hour on the phone.

am I missing something or is fairfax basically the only company that doesn't provide a transcript / playback on their website ?


If you have an Android phone, you might be able to download a Canadian VOIP app called Fongo.  This will give you a Canadian VOIP phone number and allow you to listen to the conference call re-play for free.  The sound will probably be a little choppy if your internet connection is poor or if the ping is long due to your distance, but free is a good price.

cheers.


SJ


StubbleJumper

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Re: Results out
« Reply #11 on: February 15, 2019, 05:59:00 AM »
Did anyone at FFH proof-read this:

During the fourth quarter of 2018 the company repurchased for cancellation and repurchased for treasury a total of 150,073 subordinate voting shares at an aggregate cost of $20.4 million.  During the fourth quarter of 2017 and up to December 31, 2018, the company repurchased for cancellation and repurchased for treasury a total of 806,136 subordinate voting shares at an aggregate cost of $413.5 million.


So they were buying back shares for US$133 each during the fourth quarter?  I feel like a really shitty investor now because I didn't jump aboard that train!


SJ

petec

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Re: Results out
« Reply #12 on: February 15, 2019, 06:31:42 AM »
Did anyone at FFH proof-read this:

During the fourth quarter of 2018 the company repurchased for cancellation and repurchased for treasury a total of 150,073 subordinate voting shares at an aggregate cost of $20.4 million.  During the fourth quarter of 2017 and up to December 31, 2018, the company repurchased for cancellation and repurchased for treasury a total of 806,136 subordinate voting shares at an aggregate cost of $413.5 million.

So they were buying back shares for US$133 each during the fourth quarter?  I feel like a really shitty investor now because I didn't jump aboard that train!

SJ


Ha ha amazing!

StubbleJumper

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Re: Results out
« Reply #13 on: February 15, 2019, 06:42:07 AM »
I didn't mind the quarter.  The headline numbers might make you want to vomit, but the underlying strength is clearly there.  I eagerly await the annual report to get a better understanding of the CR, and particularly I'd like to see those loss triangles.  I'm a little disappointed that they weren't a shade more aggressive on the buybacks as it appears that they've only bought back a total of 800,000 shares over the past five quarters -- it's not exactly CitiBank. 

The interesting exercise is to take the actual 2018 numbers and pencil in some estimates for 2019:


U/W profit: $650                                  <== run rate Q4 net earned premiums to get $13B at a 95 CR
Interest and divvies: $850                   <== run rate Q4 number, probably a little too conservative
Run-off: -200
Non-insurance: 200                            <==plug in rough number from 2017 because 2018 was anomalous
Interest expense: -350                        <==plug in number from 2018
Overhead: -200
Net gains: 0

Basic pre-tax income: $950
Tax: $332.5
Net income: $617.5

Shares outstanding: 27.2m

Basic EPS: $22.70/share



I like it.  A basic EPS of ~$23/sh under the assumption of zero realized gains, zero increase in net earned, and zero increase in interest rates.  It's certainly not hard to imagine an actual figure of double that amount....


Cheers

SJ

Spekulatius

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To be a realist, one has to believe in miracles.

Crip1

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Re: Results out
« Reply #15 on: February 15, 2019, 11:19:45 AM »
Any way to listen to the conference call without actually calling the number for a playback ?
Not only it is very expensive to overseas investors but it is very inconvenient to sit for an hour on the phone.

am I missing something or is fairfax basically the only company that doesn't provide a transcript / playback on their website ?


Seeking Alpha normally has a transcript of the Conference Call a couple of days later. The problem is that the transcribers are not terribly well aware of insurance terms so you'll need to interpret here and there.


-Crip




wachtwoord

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Re: Results out
« Reply #16 on: February 15, 2019, 11:45:47 AM »
Fairfax Financial Holdings Ltd. (FRFHF) Q4 2018 Results - Earnings Call Transcript https://seekingalpha.com/article/4241537?source=ansh $FRFHF
"Beware of he who would deny you access to information, for in his heart he dreams himself your master"

petec

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Re: Results out
« Reply #17 on: February 17, 2019, 12:24:22 AM »
My notes from the results and call:

97.3% CCR and prior year development continues strong. 8.7% organic premiums growth - pricing generally positive except at Zenith which is on its own cycle. Think the market might harden in 2H19, and confirm they can grow premiums materially if so. Notable that AW produced 98% after a poor 2017. Brit had a tough year but will benefit from Lloyds getting tougher and the market there rebalancing.

Accounting EPS of $12 offset by non-P&L currency losses so BVPS down y/y to $432, although their equities have recouped in 2019 over half the $500m they lost in 4q18, which adds about $10/share. NB the adjustment for the market value of associates is now a negative - need to dig into why, possibly the deconsolidation of Quess but I think this is now an associate and so still not marked.

Questions about solvency in a market crash. Reiterated they will not hedge wholesale again. Claim the equity portfolio outperformed in 4q and highlight $114bn in deflation swaps plus the debt+warrant deals that give downside protection. Not a full answer.

They lose $190m amortising things like client lists which were written up on acquisition. I think that's daft as long as the acquired properties are profitable and growing - if anything the intangibles are appreciating in value. Adds about $4/share in pretax earnings if you exclude it, plus the fact these intangibles are being amortised needs to be taken into account when thinking about p/bv vs p/tbv.

"Monetising" and "reoptimising" the equity portfolio. Evaluating the entire portfolio, which is great news, but sounds like one of the opportunities is selling unlisted equities into a hot PE market. The team (Wade, Lawrence, Prem, Roger) are "salivating a little bit" in this "stockpicker's market" but they are at the top end of what they can allocate to equities. Unlikely to sell Seaspan - Sokol is "one of the best managers we have ever seen" and "intimately involved" and they could hold it for a very long time. Also think Eurobank/Grivalia will do very well, and Toys R Us is not on the block yet - sounds like ebitda is still positive but might have contracted, so it needs some work, but the RE alone is worth more than they paid.

More cash has gone into ST treasuries and corporates. Dividend & interest income run rate now $800m and they think they can get it to $1bn without adding duration.

Have been buying in minorities and shares. Since 1q17 they've bought 1.1m but NB largely offset by options issuance which wasn't discussed other than they split out the 150k 4q buyback between cancellation and treasury and treasury is 2/3rds of it. YE share count was 27.24m and they've bought 0.34m in the first 6 weeks of 2019 so I put them at 26.9m today. Will continue to buy back "particularly at these levels". Doesn't fill me with joy until we know the options plans.

Cigarbutt

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Re: Results out
« Reply #18 on: February 17, 2019, 05:06:39 AM »
^It seems that they have reached some kind of transition for their investment stance and IMO it is still unclear what the outcome will be.

The underwriting results continue to be strong although Brit's results need to be followed. In the industry, periods of reserve releases are typically followed by periods of negative development and the last period has been particularly significant for releases. For Fairfax, the releases correspond more to a strong underwriting culture than following industry trends but, looking forward, it is reasonable to expect lower releases. In 2018, FFH released the equivalent of about 14.6 CR points in Q4 and the equivalent of about 6.8 CR points for the year. If anything at Fairfax, the trend for releases has been going up which is at least partly a sign of conservatism and may be mitigated by growth in premiums in the future when the trend goes down, but is still something to consider when evaluating future underwriting results. Business at run-off includes a lot of old lines but results there show how long it may take to see the full realization of reserve development.

StubbleJumper

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Re: Results out
« Reply #19 on: February 17, 2019, 06:42:05 AM »
Quote
"Monetising" and "reoptimising" the equity portfolio.


Yes, I skimmed the conference call transcript and noted the funny description of what they want to do with equities.  I'm still not entirely clear what it means.  Maybe it means that they'll try to divest some of the stinkers that have not been contributing to a solid return (Torstar, Resolute, BlackBerry, likely Stelco in the future, etc).  Some of those could be sold slowly over a year or so and they'd get a fair-ish price for them, but the market is so thin and the holdings are so large that it would be better to find a buyer for a large block.  In any case, if they have finally capitulated on a few of them, I would take that as a positive sign.

The comments about Toys R Us were a little concerning.  It's looking a little bit like a Sears scenario where the real estate is obviously quite valuable, but the actual retail performance is dubious.  So, how do you ever unlock value, and does FFH have the internal fortitude to shut down operations to capture the remaining value?  I don't generally take much comfort in statements like, "It kicks out $100m EBITDA annually" because that likely means it is fundamentally unprofitable over the long term, or at best it is fundamentally marginally profitable when you account for things like amortization of computer systems, depreciation of the little bit of equipment that they own, and of course, interest on their revolver.  It will be interesting to see what sort of break out (if any) is provided in the annual to help us understand whether this is a raisin or a turd.


SJ