Author Topic: Fairfax 2020  (Read 53819 times)

Viking

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Re: Fairfax 2020
« Reply #100 on: March 19, 2020, 03:15:51 PM »
Dropped 25% in 3 hours.....


Yep.  Did anyone ever expect to see FFH with a 4% dividend yield?


SJ


At $290 USD this is late 2007 prices!  Did the last 12-13 years really happen?


Honestly, some days it feels like Back to the Future.  Professor, fire up the DeLoreon because some bad investments and poor liquidity are coming back to roost...


SJ

Great analogy.


Xerxes

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Re: Fairfax 2020
« Reply #101 on: March 19, 2020, 05:06:05 PM »
Perhaps I can neutralize further downside by shorting the exact # of FFH I am currently long  ;D

ERICOPOLY

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Re: Fairfax 2020
« Reply #102 on: March 19, 2020, 05:49:45 PM »
Dropped 25% in 3 hours.....


Yep.  Did anyone ever expect to see FFH with a 4% dividend yield?


SJ


At $290 USD this is late 2007 prices!  Did the last 12-13 years really happen?


Honestly, some days it feels like Back to the Future.  Professor, fire up the DeLoreon because some bad investments and poor liquidity are coming back to roost...


SJ

You'll know it when they move to list on the NYSE.

StubbleJumper

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Re: Fairfax 2020
« Reply #103 on: March 19, 2020, 05:57:23 PM »
Dropped 25% in 3 hours.....


Yep.  Did anyone ever expect to see FFH with a 4% dividend yield?


SJ


At $290 USD this is late 2007 prices!  Did the last 12-13 years really happen?


Honestly, some days it feels like Back to the Future.  Professor, fire up the DeLoreon because some bad investments and poor liquidity are coming back to roost...


SJ

You'll know it when they move to list on the NYSE.


RIP Spiro Contogouris

mcliu

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Re: Fairfax 2020
« Reply #104 on: March 19, 2020, 06:39:32 PM »
This is their chance to shine. Hope they donít f it up. Iím selling if they mess this up.  ;D

StubbleJumper

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Re: Fairfax 2020
« Reply #105 on: March 19, 2020, 07:07:49 PM »
This is their chance to shine. Hope they donít f it up. Iím selling if they mess this up.  ;D

How would you define "shine" during 2020?  What elements would be the key characteristics?  A few ideas of potential elements of a "good" year:

1) Grow the book by 10% or more, while simultaneously shaving the CR by 2%;
2) Keep the fixed income portfolio short in governments while piling some capital into corporate debt where the spreads are attractive or if warrants offered as a kicker;
3) Float a new debt issue for at least $750m to finance current year needs and Q1 2021;
4) Try to pick up the minority positions in Brit and Allied for a song during this market disruption, if they can scrape together the capital;
5) Get some cash in return for the deflation derivatives;
6) During a year that equities are in the shitter, don't throw a single penny at the "too hard pile" because there is plenty of value to be found in quality issues;

Seriously, what would constitute "shine" in your book?  Hopefully it doesn't involve triggering a bunch of paper gains by selling a portion of a sub so that it can be deconsolidated or by marking BIAL to market.  I've given you six potential elements...do you have other ideas?


SJ

petec

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Re: Fairfax 2020
« Reply #106 on: March 19, 2020, 07:39:34 PM »
Only no2 is realistic. Hands are tied on all the others. Especially buying the minorities - these are at fixed prices, or with price floors.

My view is best you get this year is
1) div & int income sustainably over $1bn due to redeployment of fixed income at fatter spreads
2) equity portfolio has a v-shaped recovery due to corona-control and the fact that itís v cheap
3) Brit and Eurolife minorities bought, Allied postponed (a virtual certainty)
4) CR doesnít crap out too hard given corona
5) moderate ability to grow in 2021 in an even harder insurance market.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A

jfan

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Re: Fairfax 2020
« Reply #107 on: March 19, 2020, 07:43:40 PM »
But at what point in price (given that the market price has dropped as low as $230 USD/share recently) that FFH becomes attractive despite issues with Prem, capital constraints, and a portfolio of turnaround equity choices?

At $230, they wouldn't have to achieve more than a 98% CR and 3-4% Pre-tax Investment return by my estimates.

 

petec

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Re: Fairfax 2020
« Reply #108 on: March 19, 2020, 07:53:58 PM »
But at what point in price (given that the market price has dropped as low as $230 USD/share recently) that FFH becomes attractive despite issues with Prem, capital constraints, and a portfolio of turnaround equity choices?

At $230, they wouldn't have to achieve more than a 98% CR and 3-4% Pre-tax Investment return by my estimates.

Agreed, and I wonít be selling here. But 3-4% positive might be quite an ask given what their equities have done ytd.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A

TwoCitiesCapital

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Re: Fairfax 2020
« Reply #109 on: March 19, 2020, 09:09:20 PM »
But at what point in price (given that the market price has dropped as low as $230 USD/share recently) that FFH becomes attractive despite issues with Prem, capital constraints, and a portfolio of turnaround equity choices?

At $230, they wouldn't have to achieve more than a 98% CR and 3-4% Pre-tax Investment return by my estimates.

Agreed, and I wonít be selling here. But 3-4% positive might be quite an ask given what their equities have done ytd.

Quite honestly, what's happened to their equities YTD is what gives me the confidence that they can do 3-4% on their investments. A simple 50% reversion back to what they were likely provides that.

Given the blow out in spreads, the drop in equities, and the drop in FFH, it's the first time it's been attractive to me with a clear path to 15% annualized since my lapse in judgement in 2018 thinking interest rates might actually be sustainably rising.