Author Topic: Fairfax 2020  (Read 199804 times)

A_Hamilton

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Re: Fairfax 2020
« Reply #550 on: August 19, 2020, 08:21:44 AM »
When looking at book value per share, wouldn't it be fair to adjust the Investments in Associates to Fair Value. ($4,684.7 carrying value - $3,669.0 fair value = $1,087 impact to Common Equity ... $11,458.7 common equity - $1,087 = $10,371.7 adjust common equity divided by 26.487 shares outstanding = $391 adjusted BV per share ... $313 share price / $391 is 0.8x book value). Still cheap at 0.8x but not as cheap. Thoughts?

I think you need to tax effect the loss that you are embedding, but this is how I think about it as well.


ander

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Re: Fairfax 2020
« Reply #551 on: August 19, 2020, 09:06:00 AM »
When looking at book value per share, wouldn't it be fair to adjust the Investments in Associates to Fair Value. ($4,684.7 carrying value - $3,669.0 fair value = $1,087 impact to Common Equity ... $11,458.7 common equity - $1,087 = $10,371.7 adjust common equity divided by 26.487 shares outstanding = $391 adjusted BV per share ... $313 share price / $391 is 0.8x book value). Still cheap at 0.8x but not as cheap. Thoughts?

I think you need to tax effect the loss that you are embedding, but this is how I think about it as well.

Thx. Would have to do that with gains as well. Including share-based payment awards, BV per share is closer to $376 which would be 0.83x BV.

petec

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Re: Fairfax 2020
« Reply #552 on: August 19, 2020, 11:31:09 AM »
When looking at book value per share, wouldn't it be fair to adjust the Investments in Associates to Fair Value. ($4,684.7 carrying value - $3,669.0 fair value = $1,087 impact to Common Equity ... $11,458.7 common equity - $1,087 = $10,371.7 adjust common equity divided by 26.487 shares outstanding = $391 adjusted BV per share ... $313 share price / $391 is 0.8x book value). Still cheap at 0.8x but not as cheap. Thoughts?

I think that’s a valid and necessary exercise, but it does miss the fact that the holdings might be undervalued. I think many are, and I can’t be bothered (or just can’t) to assemble that portfolio myself, so occasionally when I need some good news I calculate Fairfax’s book value on a look through basis for Eurobank and Atlas ;)
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StubbleJumper

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Re: Fairfax 2020
« Reply #553 on: August 26, 2020, 06:11:22 AM »
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



Blackberry shareholders are still up in arms about this: 


https://www.newswire.ca/news-releases/concerned-shareholder-objects-to-blackberry-s-related-party-transactions-with-fairfax-851354230.html



SJ

cwericb

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Re: Fairfax 2020
« Reply #554 on: August 26, 2020, 08:22:21 AM »
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



Blackberry shareholders are still up in arms about this: 


https://www.newswire.ca/news-releases/concerned-shareholder-objects-to-blackberry-s-related-party-transactions-with-fairfax-851354230.html



SJ

Your prior actions tend to form your reputation...

"Fairfax and Mr. Watsa have a history, when presented with a conflict of interest, of working against the interests of minority shareholders and for the benefit of Fairfax. In September 2019, the Québec Superior Court rendered a judgment in which it found that Mr. Watsa and Fairfax, as insiders of Fibrek Inc., acted in a "blatant conflict of interest situation" for the benefit of Fairfax by enabling the acquisition of Fibrek at the "lowest cost possible," to the detriment of Fibrek's minority shareholders who were bought out at an unfairly low price. The Court also found that despite the trust and confidence Fibrek placed in Mr. Watsa and Fairfax, Mr. Watsa purposely refrained from disclosing Fairfax's true intentions to Fibrek management."
Politicians and diapers must be changed often, and for the same reason. - Mark Twain

Parsad

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Re: Fairfax 2020
« Reply #555 on: August 26, 2020, 02:55:46 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



Blackberry shareholders are still up in arms about this: 


https://www.newswire.ca/news-releases/concerned-shareholder-objects-to-blackberry-s-related-party-transactions-with-fairfax-851354230.html



SJ

Your prior actions tend to form your reputation...

"Fairfax and Mr. Watsa have a history, when presented with a conflict of interest, of working against the interests of minority shareholders and for the benefit of Fairfax. In September 2019, the Québec Superior Court rendered a judgment in which it found that Mr. Watsa and Fairfax, as insiders of Fibrek Inc., acted in a "blatant conflict of interest situation" for the benefit of Fairfax by enabling the acquisition of Fibrek at the "lowest cost possible," to the detriment of Fibrek's minority shareholders who were bought out at an unfairly low price. The Court also found that despite the trust and confidence Fibrek placed in Mr. Watsa and Fairfax, Mr. Watsa purposely refrained from disclosing Fairfax's true intentions to Fibrek management."

Your prior actions tend to form your reputation!  More examples please, because if you are going to point to 2 transactions out of some 300-400 conducted over 30 years...please!  The only reason  Blackberry is even around is because of Prem putting John Chen in charge.  Cheers!
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cwericb

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Re: Fairfax 2020
« Reply #556 on: August 26, 2020, 05:06:27 PM »
“The only reason  Blackberry is even around is because of Prem putting John Chen in charge.”

Oh I don’t disagree with that, it’s like when he had Bill Gregson turn around The Brick. However unfortunately, one tends to get remembered for the less savory things one does more than the good one does. Just saying.
Politicians and diapers must be changed often, and for the same reason. - Mark Twain

Parsad

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Re: Fairfax 2020
« Reply #557 on: August 26, 2020, 05:49:31 PM »
“The only reason  Blackberry is even around is because of Prem putting John Chen in charge.”

Oh I don’t disagree with that, it’s like when he had Bill Gregson turn around The Brick. However unfortunately, one tends to get remembered for the less savory things one does more than the good one does. Just saying.

True.  Cheers!
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StubbleJumper

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Re: Fairfax 2020
« Reply #558 on: August 26, 2020, 06:07:51 PM »
For those who subscribe to the Globe (or those who know how to get around the paywall), there is an interesting article which provides BB's explanation of why the complaints about the convertible debs are unfounded:

https://www.theglobeandmail.com/business/article-blackberry-shareholder-asks-regulators-to-order-vote-on-refinancing/


SJ

hobbit

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Re: Fairfax 2020
« Reply #559 on: August 27, 2020, 09:44:24 AM »
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



Blackberry shareholders are still up in arms about this: 


https://www.newswire.ca/news-releases/concerned-shareholder-objects-to-blackberry-s-related-party-transactions-with-fairfax-851354230.html



SJ

Your prior actions tend to form your reputation...

"Fairfax and Mr. Watsa have a history, when presented with a conflict of interest, of working against the interests of minority shareholders and for the benefit of Fairfax. In September 2019, the Québec Superior Court rendered a judgment in which it found that Mr. Watsa and Fairfax, as insiders of Fibrek Inc., acted in a "blatant conflict of interest situation" for the benefit of Fairfax by enabling the acquisition of Fibrek at the "lowest cost possible," to the detriment of Fibrek's minority shareholders who were bought out at an unfairly low price. The Court also found that despite the trust and confidence Fibrek placed in Mr. Watsa and Fairfax, Mr. Watsa purposely refrained from disclosing Fairfax's true intentions to Fibrek management."

Your prior actions tend to form your reputation!  More examples please, because if you are going to point to 2 transactions out of some 300-400 conducted over 30 years...please!  The only reason  Blackberry is even around is because of Prem putting John Chen in charge.  Cheers!

Its not just 2-3 transactions..look at what they are doing with Atlas Mara. In May2020 ATMA controlled by fairfax reported tangible book value around 2.50 and now they are selling it  to themselves for 40 cents . with zero explanation.  They gave a ratchet clause while jacking up value of bangalore airport. With no explanation. There is a reason market does not trust them anymore . FIH, FAH trading at 50% of reported BV and FFH probably off 20-25% too.
« Last Edit: August 27, 2020, 09:46:08 AM by hobbit »