Dazel

Someone can check but I am assuming that Digit is owned by the Fairfax Holding company? Their IPO was expected early this year and would add great deal of cash into the hold co. Depending in the IPO size. The serendipitous timing is that the coming IPO comes at a time when the Indian stock market is screaming higher. Ie the sales of Thomas Cook shares after a great year.

https://markets.businessinsider.com/news/stocks/warren-buffett-most-gruesome-mistake-dexter-shoe-9-billion-error-2020-1-1028827359 Even Buffett makes mistakes…with the secured interest payments from BlackBerry over time the investment has become a rounding error. However, BlackBerry itself is one the stock markets great failures. Many followed Fairfax into Blackberry and had a horrible experience. That is why it is discussed it’s emotional. If anything it has been a deterrent on Fairfax stock price…unwarranted. BB is buy here probably…Fairfax needs it off the books. Dazel

The bond portfolio is driving Fairfax as I have said for 20 years…Brian Bradstreet is the best Bond guy in the world! He is the bond king no one knows. Expect them to start buying long bonds soon if they have not done so already.

Fairfax is positioned perfectly. They will continue to buy corporates and short term 1-5 year bonds….recession will fully hit…they will sell some short term bonds for profit-capital and buy long term bonds (barbell). It’s Brian Bradstreet’s time again. It’s the play book. They were one of the only ones on the planet to have the patience to have cash for this move… Prem and the Fairfax team have done a wonderful job and are getting rewarded in a hard market it does not get any better than that congratulations!!! “You make all your money in bear markets, you just don’t realize it at that time.” Shelby Davis Dazel.

I think what is being missed is the fact that Fairfax has historically made capital gains in the bond portfolio over the last two decades rather than reach for yield and bring interest income. Because of this they were not looked at for the interest income that their size afforded (this is contrary to other insurance companies). Brian Bradstreet is the best bond guy in the world…in fact no one is close! I have said this repeatedly since 2003. In order to grow the insurance units they had to pay very close attention to capital levels. They defaulted to take the gain add capital=grow. Now that they have grown premiums from 2015-$8b, 2018-$15b, $28b today! The size of investment portfolio is now $49b. They were holding at least 30% to 50% cash for most of the last two decades except when Bradstreet made big bets usually on long term treasuries and corporates which made ridiculous gains. Markets did not like the lumpy interest income because it did not fit their spread sheets. Now they are in position to buy 3 year treasuries and have 4% income with little to zero risk…the rest of the industry does not have the cash they are stuck in huge hole from bond losses mark to market. This discipline will separate Fairfax in this cycle. They have been waiting for this…. We are in a hard market so the Subs need all the capital they can get to take advantage of it…when it softens and premiums come down they will dividend cash to the holding company.

It seems like I have spent most of my time defending Prem and his team over the last number of years…No one is complaining and calling my “outlandish” price targets stupid anymore! I believe I spent time defending Prem and his family from a coup that said he was rolling up his ownership into India like the old Indian conglomerates! Lol. Can’t believe I had to do that! Remember SD? Anyways…very happy for those that believed and redemption for our friend Prem and his team. Fairfax has never been in better shape I guess that is why it is so quiet. Dazel

I would like thank Prem Watsa and his team for all the hard work they do. Prem’s picture is going back up with the family on the mantle. Great leaders show up during tough times and Prem once again has used his brains and “brass balls” (see David Tepper) to bring Fairfax back from the depths of hell in 2020. congratulations on a great year Prem and team! Happy New year all! Dazel

Teradyne in motion….. Prem joked about copying Harry Singleton…. time will tell but he may be headed this way!

As I remember it…Fairfax will send out details but I believe this aligns with the sale of Odyssey Re. I am not a tax expert…so don’t take my word for it… I am of the camp that unless you get arbitrage come in Fairfax will “Not” get many shares tendered. They will use the left over proceeds for share buybacks in the open market as was mentioned earlier. off the top of my head Fairfax will have $2.5b cash at the holding company before the tender.

Xerxes, Correct the financial analytics unit (TRI)They used the proceeds for a tender offer as Prem is doing. They continued to buy back stock afterward. it was a return of capital transaction.

I think it is brilliant. Was involved in TRI (ThomsonReuters)tender offer a few years back (take a look for taxation) it’s was a great move…they sold their financial unit and bought back through tender offer and then normal course issuer bid. The stock has doubled since the transaction. I like being involved with smart people. Well done. I believe that TRI was a return of capital because of the sale of the financial unit and the Fairfax transaction is likely the same because of the Odyssey Re sale…like I said smart people are fun! a pleasure as always Prem!

Beautiful just so smart.

Fairfax is as cheap as I have ever seen it!

Fairfax looks real good right here!!!

Very possible that they get a second chance at the BB run..wake up Mr. Chen.