Fairfax2019

[Xerxes]

3.) January: Seaspan: Fairfax’s additional $250 million investment = 37 million shares purchased at cost of $6.75; with shares currently trading at $14.25 paper gain = $278 million.
- 25 million additional warrants exercisable at $8.10 = paper gain of $154 million

Top of my head, i recall FFH ownership was around +35-40% based on common stock (not counting warrants). Significant ownership, yet bizarrely one that is being marked to market as oppose to being under equity method.

I wonder with APR being folded in and an even larger ownership in common stock, if FFH would need to switch the way it accounts for the newly created Atlas Corp. Said differently, is it more advantageous for them to continue to mark to market (capturing the rising valuation) or capture their portion earnings (which would lag the rising valuation).

i understand that the accounting treatment is not done on a whim, but given that FFH public commitment has been a 15% return on equity, and they have been lagging, they do have an incentive to do what they can to capture the "value" into their book value earlier rather (market to market) than later (through equity method earning).     

[Xerxes]

Xerxes, of Fairfax’s current staple of larger investments it looks to me like Recipe may be in the most difficult situation. Their issues is not Recipe specific; restaurant stocks in Canada are really in a tough position. Here in Vancouver they are being hit with the perfect storm:
1.) big increase in property taxes by the city (8%)
2.) big increases in minimum wage of 6-7% every year for the last 3 years straight (with more big increases already confirmed by the Provincial government)
3.) shift with consumers from eating in restaurant to eating at home (with Skip the Dishes, Uber Eats who take as much as 25% of the order value etc)
4.) steady increase in health care costs

What you see across the board is restaurants are unable to increase revenue / cut costs fast enough to offset all the cost increases. 2020 will likely be another tough year for restaurant stocks. The good news for Recipe is the stock has already sold off pretty aggressively in 2019. The question is if we have seen the bottom in profitability or if more bad news is coming in 2020. At some point the sector will be a buy... not sure if we are there yet.

i am glad i do not own Recipe but glad that i own it diluted through FFH.

 And i can definitely see some of the MTY owned entities (Thai Express, Arahova) more or less empty all the time. yet, Allo-mon-coco, the breakfast joint, also owned by MTY is PACKED !!!!
i think for sit-ins the shift is really toward breakfast places.

On Recipe side, the only one that i care to use is The Keg + Harveys now and then.