Author Topic: Fairfax 2020  (Read 199921 times)

Parsad

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Re: Fairfax 2020
« Reply #250 on: May 11, 2020, 11:57:53 PM »
Unrelated Q1 13F seem to be due on Friday and Thursday for FFH and BRK.

It would be interesting to know what are top personal ownership of FFH management. How much of their wealth is tied to FFH percentage wise.

About FFH dividends, if that thing is turn off permanently it helps keep a good chunk of cash in and puts an incentive to increase value per share for the large owner-operator as oppose to live off dividends. Heck, the dividend outlay should in fact be used instead for share repurchase.

The only one of most concern is Prem...he has 90% of his net worth tied to Fairfax.  But pretty much all senior management holds significant amounts or did own significant amounts (they may be selling in retirement or for estate planning).  Francis Chou has held all of his Fairfax shares since he got them for $3 and has never sold a share.  The Watsa family has no intention of selling their stake either other than for charitable contributions/obligations a la Buffett.

As long as the Watsa family controls the votes, the dividend policy won't change.  It was controversial when it was implemented and it will remain controversial with some shareholders today, but Prem thought it was the most equitable way for him/family/charities to meet their financial obligations over time, without having to sell shares and give up control like most family-controlled companies...think Ford, think Eatons, etc.  With many long-term Fairfax shareholders hitting retirement, including former employees, the dividend gives them additional retirement income without selling their shares...I suspect they will vote with Prem on this one, so those against it should just suck it up.  Otherwise buy Markel or Berkshire!  You can always take your total dividends and just buy Fairfax shares on the open market...probably at a better price than Fairfax could each year as they have certain requirements on buybacks.  Cheers!
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Xerxes

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Re: Fairfax 2020
« Reply #251 on: May 12, 2020, 05:02:53 AM »
Thanks Parsad
Very clear. Just that Ford, Eaton example where family is given handouts are not encouraging when the business is just a piggybank. 

I am guessing that is why Buffet has personal holding of JPM and Seritgae REIT is that he can compliment his $100K salary without touching his shares with dividends.

petec

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Re: Fairfax 2020
« Reply #252 on: May 12, 2020, 06:03:15 AM »
Thanks Parsad
Very clear. Just that Ford, Eaton example where family is given handouts are not encouraging when the business is just a piggybank. 

I am guessing that is why Buffet has personal holding of JPM and Seritgae REIT is that he can compliment his $100K salary without touching his shares with dividends.

The majority of the dividend goes to shareholders other than Prem. If he wanted to use the business as a piggybank he'd pay himself more. 
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Bryggen

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Re: Fairfax 2020
« Reply #253 on: May 12, 2020, 01:32:12 PM »
Unrelated Q1 13F seem to be due on Friday and Thursday for FFH and BRK.

It would be interesting to know what are top personal ownership of FFH management. How much of their wealth is tied to FFH percentage wise.

About FFH dividends, if that thing is turn off permanently it helps keep a good chunk of cash in and puts an incentive to increase value per share for the large owner-operator as oppose to live off dividends. Heck, the dividend outlay should in fact be used instead for share repurchase.


With many long-term Fairfax shareholders hitting retirement, including former employees, the dividend gives them additional retirement income without selling their shares...

Those retired must be concerned with the share price as well. I support the dividend payment and glad to hear Prem won't give that up. Now, focus has to be on doing everything they need to show the market they will weather-the-storm and can do well on the investment side going forward. Then and only then, we will see our share regain ''some'' value.

Parsad

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Re: Fairfax 2020
« Reply #254 on: May 12, 2020, 11:09:08 PM »
Thanks Parsad
Very clear. Just that Ford, Eaton example where family is given handouts are not encouraging when the business is just a piggybank. 

I am guessing that is why Buffet has personal holding of JPM and Seritgae REIT is that he can compliment his $100K salary without touching his shares with dividends.

Hi Xerxes, my comparison was how Fairfax is different than the Ford and Eatons...not similar.  The Ford and Eatons slowly lost control and ownership.  Cheers!
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Bryggen

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Re: Fairfax 2020
« Reply #255 on: May 13, 2020, 07:09:40 AM »
Stock at a 52 weeks low today....

When is this going to stop?

Am I right to say that low interest rates impacts negatively their insurance businesses?
How is COVID-19 also impact them?

I assume that is the reason for the drop as well as the lost in the confidence people have on their investments.

I wouldn't lie saying I am a very unhappy shareholder these days.

Trying to understand to make some sense out of it, if any sense at all !

« Last Edit: May 13, 2020, 07:24:41 AM by Bryggen »

petec

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Re: Fairfax 2020
« Reply #256 on: May 13, 2020, 07:58:59 AM »

When is this going to stop?


Just after the last potential seller throws in the towel!

Low interest rates (all else equal) mean less income from float. So yes, bad.

Covid 19 has two impacts:
1) big recession means less demand for insurance.
2) potentially higher claims although Fairfax don't think they are badly affected.

But who knows why the stock is getting (even) cheaper today. Might be Powell's comments, might be because Eurobank is down 10%, or it might just be because there are more sellers than buyers today.
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bearprowler6

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Re: Fairfax 2020
« Reply #257 on: May 13, 2020, 08:06:49 AM »

When is this going to stop?


Just after the last potential seller throws in the towel!

Low interest rates (all else equal) mean less income from float. So yes, bad.

Covid 19 has two impacts:
1) big recession means less demand for insurance.
2) potentially higher claims although Fairfax don't think they are badly affected.

But who knows why the stock is getting (even) cheaper today. Might be Powell's comments, might be because Eurobank is down 10%, or it might just be because there are more sellers than buyers today.

Bryggen, I am sorry you are experiencing this pain however a few of us on here (myself included) attempted to warn shareholders and those considering becoming shareholders to stay away from owning the shares of this company. Before I write anything further please understand that there are a few on here that will continue to strongly advocate for investing in Fairfax. They will cite the "undervalued" nature of their major equity holdings, the fixed income yield pick up during the bottom in mid-March, the long term track record of Prem and team, the hardening market, the vastly improved underwriting results and of course the fair and friendly culture. In my view, none of these reasons is sufficient to overcome the many deficiencies that have existed at Fairfax for several years and which are now being exposed for what they are. For every positive point put forward by those who still believe and advocate for investing in Fairfax's shares are equal and in my view more compelling reasons for not doing so.

The company is now swimming in debt, it never had a strong capital structure however it is now simply awful. Its long term holdings in Eurobank, Resolute Forest, Stelco to name just a few are likely impaired beyond repair. I fear a similar fate for Recipe and the myriad of its private holdings in the retail space. These were low margin businesses at the best of times and that was before any additional costs that Covid will impose on all retail establishments. Fairfax Africa and India have been so very disappointing for shareholders in those companies as well as for shareholders of Fairfax who have watched their seed capital into these entities melt away. Furthermore, the low interest rates will hamper all insurance companies going forward. God help any existing shareholders if we have an active hurricane season this year.

You now have a decision to make. Continue to hold and believe in the long term value of Fairfax (that was hard for me to write) or sell your shares now and redeploy the proceeds into other more compelling opportunities. The choice is yours. I have made mine!

petec

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Re: Fairfax 2020
« Reply #258 on: May 13, 2020, 09:06:04 AM »
bearprowler, good post - even if I disagree with some of it.

Could you clarify what you mean when you say that Eurobank, Resolute, and Stelco are impaired? That statement has a different meaning depending on whether you're starting with current share prices, or carrying values, or purchase prices - hence the question. If you feel you have a clear handle on the value of any of these business I'd be interested to know.

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Bryggen

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Re: Fairfax 2020
« Reply #259 on: May 13, 2020, 09:30:13 AM »

When is this going to stop?


Just after the last potential seller throws in the towel!

Low interest rates (all else equal) mean less income from float. So yes, bad.

Covid 19 has two impacts:
1) big recession means less demand for insurance.
2) potentially higher claims although Fairfax don't think they are badly affected.

But who knows why the stock is getting (even) cheaper today. Might be Powell's comments, might be because Eurobank is down 10%, or it might just be because there are more sellers than buyers today.

Bryggen, I am sorry you are experiencing this pain however a few of us on here (myself included) attempted to warn shareholders and those considering becoming shareholders to stay away from owning the shares of this company. Before I write anything further please understand that there are a few on here that will continue to strongly advocate for investing in Fairfax. They will cite the "undervalued" nature of their major equity holdings, the fixed income yield pick up during the bottom in mid-March, the long term track record of Prem and team, the hardening market, the vastly improved underwriting results and of course the fair and friendly culture. In my view, none of these reasons is sufficient to overcome the many deficiencies that have existed at Fairfax for several years and which are now being exposed for what they are. For every positive point put forward by those who still believe and advocate for investing in Fairfax's shares are equal and in my view more compelling reasons for not doing so.

The company is now swimming in debt, it never had a strong capital structure however it is now simply awful. Its long term holdings in Eurobank, Resolute Forest, Stelco to name just a few are likely impaired beyond repair. I fear a similar fate for Recipe and the myriad of its private holdings in the retail space. These were low margin businesses at the best of times and that was before any additional costs that Covid will impose on all retail establishments. Fairfax Africa and India have been so very disappointing for shareholders in those companies as well as for shareholders of Fairfax who have watched their seed capital into these entities melt away. Furthermore, the low interest rates will hamper all insurance companies going forward. God help any existing shareholders if we have an active hurricane season this year.

You now have a decision to make. Continue to hold and believe in the long term value of Fairfax (that was hard for me to write) or sell your shares now and redeploy the proceeds into other more compelling opportunities. The choice is yours. I have made mine!

Thanks for your honest input. Not reassuring, but I would rather honesty.

I am now curious to hear from the others on it ;)

Bry