Author Topic: Fairfax 2020  (Read 206899 times)

Bryggen

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SharperDingaan

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Re: Fairfax 2020
« Reply #511 on: July 22, 2020, 11:00:41 AM »
No dog in this, but it's not a bad deal for the work-out.
Very telling that the principal o/s is being reduced by 80 M - depending on how one calculates.
Risk management.

Ultimately, the business expectation is that BB is eventually merged into someone bigger, for a smaller slice of a bigger/better pie. But were they not already trapped in BB, there are other/better IT investments. The ongoing opportunity cost is the premium on the call option, at the current yield curve - pretty cheap. Can't really fault the business decision.

SD


Thrifty3000

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Re: Fairfax 2020
« Reply #512 on: July 22, 2020, 12:13:28 PM »
When someone shows you who they are, believe them.

IMO the right time to move on from FFH was many years ago and many instances of them talking from both sides of their mouths ago.

AZ

I've read Prem's letters and listened to him speak for years. I think he's a good man. I think he's a great promoter. I never feel like he's trying to mislead me. I always feel like he's trying to sell me, on Fairfax. Good for him. That's what I want from a CEO.

Prem is a human billionaire. He will have good days and bad days. In the public eye he will have good performances and bad performances. He will experience a range of good and bad fortune. You can easily selectively build a case for or against a man like Prem.

It's why we have to look at the data over time - at the per share earnings potential against the price per share.

If you think Prem belongs anywhere near the same camp as someone like Biglari then by all means exit and don't look back - at least until he's no longer in control.

As investors it's our job to evaluate the prospects of the business. A decade ago Prem was regarded as super-human, and the company was selling for something like 30 times its near-term earnings potential. That's Mr. Market's fault, not Prem's. (It was probably a good time to trim one's position and become an observer. I think plenty of investors did.)

No matter how you slice it the earnings power of the business grew over the last 10 years. Now the company is a going concern selling for what could easily be less than 10 times its near-term earnings potential.

So, the value has increased while the price has plummeted. I'm not sure that's the kind of scenario I'd advise others to "move on" from.

StubbleJumper

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Re: Fairfax 2020
« Reply #513 on: July 22, 2020, 12:26:03 PM »
Now, as everyone talks about integrity and suspicious deals, what are your thoughts on that one with BB - just out today:

https://seekingalpha.com/news/3593625-blackberry-redeeming-convertibles-in-debt-restructuring?utm_medium=email&utm_source=seeking_alpha&mail_subject=frfhf-blackberry-redeeming-convertibles-in-debt-restructuring&utm_campaign=rta-stock-news&utm_content=link-3


Yep, the BB shareholders are up in arms.  I guess their underlying assumption was that either BB doesn't need the liquidity or that there is a long line-up of potential lenders who would be prepared to lend a half-billion at 3.75% with no conversion privilege.  I am from the school of thought that FFH's last note flotation was at 4 5/8%, so if that's what FFH pays for debt, what should a riskier outfit like BB pay?  Maybe 7%?  Seriously, a 15 minute walk through their financials for the past 3 or 4 years is enough to make a guy want to puke. 

Maybe there is a long line-up of outfits wanting to lend money to companies that have drastically transformed their business and are cashflow negative?  I don't see it, but I've been wrong plenty of times before...


SJ

Parsad

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Re: Fairfax 2020
« Reply #514 on: July 22, 2020, 04:00:37 PM »
Whenever I see a run of posts like this on Fairfax, the stock usually does well in the ensuing months...keep it up!  Cheers!
No man is a failure who has friends!

StubbleJumper

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Re: Fairfax 2020
« Reply #515 on: July 22, 2020, 06:02:14 PM »
Whenever I see a run of posts like this on Fairfax, the stock usually does well in the ensuing months...keep it up!  Cheers!



What have you been eating recently?  My portfolio needs that you go out for lunch!


SJ

Parsad

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Re: Fairfax 2020
« Reply #516 on: July 22, 2020, 06:49:06 PM »
Whenever I see a run of posts like this on Fairfax, the stock usually does well in the ensuing months...keep it up!  Cheers!



What have you been eating recently?  My portfolio needs that you go out for lunch!


SJ

Frickin' can't until the restrictions are off.  It's no fun when hot waitresses have masks on all of the time!  Cheers!
No man is a failure who has friends!

SharperDingaan

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Re: Fairfax 2020
« Reply #517 on: July 24, 2020, 06:28:52 AM »
This will help keep the price down.
https://www.theglobeandmail.com/business/article-ontario-court-delays-torstar-takeover-after-rival-bidder-raises/

"Torstar lawyer Ryan Morris cast the two objecting parties as “a bitter, failed bidder and a disgruntled former employee who should not be permitted to disrupt a robust process.” He said NordStar increased its offer for Torstar – publisher of the Toronto Star newspaper – twice as the auction played out, securing the support of the five families who control Torstar’s voting stock and of major shareholder Fairfax Financial Holdings Inc."

Most would expect that the FFH presence, and prior history with this kind of thing, was a factor in the court decision.
The obvious resolution is another round of bidding, and sale to the highest bidder - if the existing winner is to remain, they pay up for it.  Put up the winning bid, and put the peeving lawyer away.

There is nothing wrong with fair bidding for an asset. However, it is theft if the selling company doesn't accept the highest bid.
Like it or not, all the sellers common shareholders own the company equally. 

SD






Xerxes

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Re: Fairfax 2020
« Reply #519 on: July 30, 2020, 03:53:03 PM »
Unless I am reading wrong book value had a paltry 3% bounce up of March 31 lows.

The net investment portfolio loss of $1.3 billion at the end of Q1, reverses by half, for the six months period.