Author Topic: 2030-35 --- Fairfax 10-15 years from now  (Read 5001 times)

Xerxes

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Re: 2030-35 --- Fairfax 10-15 years from now
« Reply #20 on: September 26, 2020, 06:59:22 PM »
Ultimately, while the team at FFH corporate office has been clever in the last few years in some of its restructuring and non-cash book-value-driven asset swaps, these were all plan Bs, because their original investment thesis (plan A) didn't go through either by bad luck or plain bad judgement. At least FFH corporate office is good at being in the underdog position and are adapting.

Some good news perhaps:
Looks like Longleaf Partners Fund which had been steadily selling FFH every quarter from 2018 through Q4 2019, is buying back FFH. They know FFH well. But the ultimate long term test toward re-rating would be bringing new institutional investors, though most of those are not comfortable with lumpy return. In its report the fund state, Prem Watsa putting his own money in was a factor.

From the report =>
Ref: Longleaf-Semi-annual-Report-6.30.20.pdf

"Additionally, Fairfax Financial (FFH), which was a star in the global financial crisis (GFC)
downturn, has so far disappointed from a stock price perspective in the current downturn. From a relative perspective, FFH
also suffered as a cloud hangs over many insurers due to the ongoing business interruption insurance debate over COVID-19.
FFH was also grouped with emerging market stocks after a decade of value-accretive investments outside of North America
amidst an environment where US large cap companies have continued to dominate global markets. We took our time to
reassess our FFH case and ultimately decided to buy more, a decision which was bolstered further when CEO/Founder Prem
Watsa stepped up with a personal investment of over $100 million. We have filtered through the tough reality of the “new
normal” environment into our appraisals for each business and made changes in our portfolio positioning where appropriate
to reflect our new outlook.
"

Portfolio Holdings at June 30, 2020
Net Assets Investments
EXOR N.V.               8.7
CenturyLink, Inc.     7.4
FedEx Corporation   6.5
Melco International  5.4
Fairfax Financial      5.1
Prosus N.V.            5.0

About Exor, referencing FFH ==> "The COVID impact on top of an already firming price environment is translating to the hardest (most positive) reinsurance pricing environment in years. We believe this is a good time to be allocating capital to the space. That is also part of the calculus in investing in Fairfax and its Odyssey reinsurance subsidiary, with whom our long history also informs our current bullish view. We are disappointednot to receive deal liquidity at what would have been an opportune time, but we were happy to see CEO John Elkann’s discipline in refusing to negotiate a lower, fire sale price in the face of a dramatically improving business environment.
PartnerRe is well positioned to thrive over the next f
"

« Last Edit: September 26, 2020, 07:02:03 PM by Xerxes »


Pedro

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Re: 2030-35 --- Fairfax 10-15 years from now
« Reply #21 on: September 27, 2020, 10:06:58 AM »
Liking the thread and glad we have something to look back on to learn from.   Lots of bull cases  inverting below. Searching for the known unknowns to see both sides. Any other ideas?
 
-cats rise at greater frequency/severity which makes the hardening market neeeding to keep  up with increased costs.
-history repeats itself and another poor directional long term bet hurts BV
-succession in the bond area doesn't live up to bradstreets returns
-equity investments remain Achilles heel
-virus lawsuits become the new asbestos and drag on for decades increasing non cat claims costs
-market doesn't like the lumpyness and continues to value  at multiples below competition
-insurance industry undergoes fast disruption from AI companies - although the Brit/Ki/Google seem like we are leading that game