Author Topic: Fairfax India new issue  (Read 168352 times)

matts

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Re: Fairfax India new issue
« Reply #390 on: March 28, 2020, 11:46:38 PM »
Of all the things I own right now, FIH certainly looks the cheapest right now.

If the book value growth is about 6-8% per annum for next 10 years, with current discount to book you can lock in a very healthy rate of return even after fees. Book should grow at a higher rate than that.

What's your estimate for the current book value though?


bizaro86

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Re: Fairfax India new issue
« Reply #391 on: March 29, 2020, 08:24:33 AM »
Of all the things I own right now, FIH certainly looks the cheapest right now.

If the book value growth is about 6-8% per annum for next 10 years, with current discount to book you can lock in a very healthy rate of return even after fees. Book should grow at a higher rate than that.

What's your estimate for the current book value though?

Yeah, I still own this (worst mistake this year) but given the shenanigans with the airport mark, makes it pretty tough to trust their mark on the other private positions. And if you can't trust the external manager in a reasonable way, then why wouldn't this trade for a 40% discount permanently? There are lots of permanent capital vehicles that do and have lower fees.

Frustrating, as I think the assets are great. But trust is hard to get back, imo.


obtuse_investor

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Re: Fairfax India new issue
« Reply #392 on: March 29, 2020, 05:09:25 PM »
Of all the things I own right now, FIH certainly looks the cheapest right now.

If the book value growth is about 6-8% per annum for next 10 years, with current discount to book you can lock in a very healthy rate of return even after fees. Book should grow at a higher rate than that.

What's your estimate for the current book value though?

I don't have any fancy models. Two of their biggest assets are the airport and IIFL (finance & banking). Both these are going to get hit severely due to COVID, but we also know that the impact would not be forever. People will fly again and use their financial institutions again.

Do a DCF of a sample company... even if first two years there is zero earnings, the value drops much less than 30%.

If I simply assume that their Q4 book value has dropped ~30% similar to overall Indian stock market, then it will be around 11.8/shr. As of this writing FIH is selling at P/B of 0.57. If the underlying businesses return nominal 10% p.a. then at current price buyer is earning ~18% p.a.
Value Investor who manages his personal portfolio with a 25-45 year time horizon | @obtuse_investor