Author Topic: Fairfax Africa  (Read 15558 times)

hobbit

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Re: Fairfax Africa
« Reply #30 on: March 27, 2020, 02:04:25 PM »


bearprowler6

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Re: Fairfax Africa
« Reply #31 on: March 27, 2020, 02:10:10 PM »
This stock is very thinly traded. At the first annual meeting, 2 years ago now, management indicated they would be taking steps to address this issue. Nothing has been done. Depending on the size of your investment this may become a problem down the road should you wish to or need to liquidate. I believe this to be a major knock against the stock and one of the major reasons it has drifted towards zero since the IPO. You will never get major buying or institutional support for this stock until this issue is addressed.

petec

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Re: Fairfax Africa
« Reply #32 on: March 28, 2020, 01:09:30 AM »
This stock is very thinly traded. At the first annual meeting, 2 years ago now, management indicated they would be taking steps to address this issue. Nothing has been done. Depending on the size of your investment this may become a problem down the road should you wish to or need to liquidate. I believe this to be a major knock against the stock and one of the major reasons it has drifted towards zero since the IPO. You will never get major buying or institutional support for this stock until this issue is addressed.

Maybe not, but equally it will go up a lot if performance improves because *any* buying will move the stock.
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bearprowler6

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Re: Fairfax Africa
« Reply #33 on: March 28, 2020, 05:51:23 AM »
This stock is very thinly traded. At the first annual meeting, 2 years ago now, management indicated they would be taking steps to address this issue. Nothing has been done. Depending on the size of your investment this may become a problem down the road should you wish to or need to liquidate. I believe this to be a major knock against the stock and one of the major reasons it has drifted towards zero since the IPO. You will never get major buying or institutional support for this stock until this issue is addressed.

Maybe not, but equally it will go up a lot if performance improves because *any* buying will move the stock.

Petec.....respectively, the issue is not whether the stock price goes up or not on good performance. The lack of liquidity of the stock makes it impossible for all but he smallest investor to take a position in the stock and have any hope at all of exiting when they need or want to. The traded volume yesterday was 3509 shares (closing share price is $3.01). So sure a very small retail investor can accumulate a couple of thousand shares at the current price and then trade out when/if the price recovers to...lets say even the IPO price of $10. But honestly, is this really what we are trying to do here?

Fairfax Africa shares cannot be accumulated in any meaningful amount without dramatically moving up the share price. Also, once accumulated, a significant number of  shares cannot be disposed of without greatly influencing the share price downward.

In my view, why bother. There are simply too many other opportunities out there where similar profit opportunities exist without the constraint of trading liquidity to worry about.

Furthermore, management did say they would address this issue (lack of liquidity for the shares) and have not done so. Perhaps this alone is reason enough to avoid these shares.

matts

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Re: Fairfax Africa
« Reply #34 on: March 28, 2020, 06:04:00 AM »
This stock is very thinly traded. At the first annual meeting, 2 years ago now, management indicated they would be taking steps to address this issue. Nothing has been done. Depending on the size of your investment this may become a problem down the road should you wish to or need to liquidate. I believe this to be a major knock against the stock and one of the major reasons it has drifted towards zero since the IPO. You will never get major buying or institutional support for this stock until this issue is addressed.

Maybe not, but equally it will go up a lot if performance improves because *any* buying will move the stock.

If you look at it as a multi-year hold, it's less of an issue. In 3 years either the fund is successful, which means it will have a much higher market cap and likely more liquidity, or it will keep languishing and possibly even get liquidated.
Petec.....respectively, the issue is not whether the stock price goes up or not on good performance. The lack of liquidity of the stock makes it impossible for all but he smallest investor to take a position in the stock and have any hope at all of exiting when they need or want to. The traded volume yesterday was 3509 shares (closing share price is $3.01). So sure a very small retail investor can accumulate a couple of thousand shares at the current price and then trade out when/if the price recovers to...lets say even the IPO price of $10. But honestly, is this really what we are trying to do here?

Fairfax Africa shares cannot be accumulated in any meaningful amount without dramatically moving up the share price. Also, once accumulated, a significant number of  shares cannot be disposed of without greatly influencing the share price downward.

In my view, why bother. There are simply too many other opportunities out there where similar profit opportunities exist without the constraint of trading liquidity to worry about.

Furthermore, management did say they would address this issue (lack of liquidity for the shares) and have not done so. Perhaps this alone is reason enough to avoid these shares.

If you look at it as a multi-year hold, it's less of an issue. In 3 years either the fund is successful, which means it will have a much higher market cap and likely more liquidity, or it will keep languishing and possibly even get liquidated.

It seems to me like you are looking at it as some levered ETF that you want to get out of once it pops, and in that case, you are right, it's not going to do a good job at that.


petec

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Re: Fairfax Africa
« Reply #35 on: March 28, 2020, 06:38:22 AM »
This stock is very thinly traded. At the first annual meeting, 2 years ago now, management indicated they would be taking steps to address this issue. Nothing has been done. Depending on the size of your investment this may become a problem down the road should you wish to or need to liquidate. I believe this to be a major knock against the stock and one of the major reasons it has drifted towards zero since the IPO. You will never get major buying or institutional support for this stock until this issue is addressed.

Maybe not, but equally it will go up a lot if performance improves because *any* buying will move the stock.

If you look at it as a multi-year hold, it's less of an issue. In 3 years either the fund is successful, which means it will have a much higher market cap and likely more liquidity, or it will keep languishing and possibly even get liquidated.
Petec.....respectively, the issue is not whether the stock price goes up or not on good performance. The lack of liquidity of the stock makes it impossible for all but he smallest investor to take a position in the stock and have any hope at all of exiting when they need or want to. The traded volume yesterday was 3509 shares (closing share price is $3.01). So sure a very small retail investor can accumulate a couple of thousand shares at the current price and then trade out when/if the price recovers to...lets say even the IPO price of $10. But honestly, is this really what we are trying to do here?

Fairfax Africa shares cannot be accumulated in any meaningful amount without dramatically moving up the share price. Also, once accumulated, a significant number of  shares cannot be disposed of without greatly influencing the share price downward.

In my view, why bother. There are simply too many other opportunities out there where similar profit opportunities exist without the constraint of trading liquidity to worry about.

Furthermore, management did say they would address this issue (lack of liquidity for the shares) and have not done so. Perhaps this alone is reason enough to avoid these shares.

If you look at it as a multi-year hold, it's less of an issue. In 3 years either the fund is successful, which means it will have a much higher market cap and likely more liquidity, or it will keep languishing and possibly even get liquidated.

It seems to me like you are looking at it as some levered ETF that you want to get out of once it pops, and in that case, you are right, it's not going to do a good job at that.

Exactly.

Separately, I’m sceptical management can really do much about liquidity.
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elliott

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Re: Fairfax Africa
« Reply #36 on: March 28, 2020, 08:30:02 AM »
FAH seems to be trading quite below reasonable cash and cash equivalent values with no fund level debt.

At this stage, what are the risks associated with investing at this point in time? Here is a short list that I can see:
a) Sudden increasing inflation in the countries they are in
b) Default risk of their underlying loans and bonds especially with CIL
c) Poor future capital allocation of cash and cash equivalents
d) For us Canadians, US-Canadian exchange rates
e) Falling interest rates causing it to not be able to cover fund expenses

Anything else?

several of the companies they hold are not making money, at least in a significant amount.  I think what they need is for the businesses to become profitable, or at least for investors to believe that will happen. I exited some months ago because I simply could not see that moment coming.  And I like the way they do things, the common sense they bring into the companies they invest in...

petec

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Re: Fairfax Africa
« Reply #37 on: March 28, 2020, 11:42:57 AM »
FAH seems to be trading quite below reasonable cash and cash equivalent values with no fund level debt.

At this stage, what are the risks associated with investing at this point in time? Here is a short list that I can see:
a) Sudden increasing inflation in the countries they are in
b) Default risk of their underlying loans and bonds especially with CIL
c) Poor future capital allocation of cash and cash equivalents
d) For us Canadians, US-Canadian exchange rates
e) Falling interest rates causing it to not be able to cover fund expenses

Anything else?

several of the companies they hold are not making money, at least in a significant amount.  I think what they need is for the businesses to become profitable, or at least for investors to believe that will happen. I exited some months ago because I simply could not see that moment coming.  And I like the way they do things, the common sense they bring into the companies they invest in...

I agree with this and also exited. I think the gems are Nova Pioneer, UBN, and ABC Botswana. There may also be gems in AFGRI but the overall business has not performed. I suspect there are some very good bits of CIG too. But both CIG and AFGRI need the economy to work, especially in SA, and that’s a long way away sadly. In the end I decided the good bits were too small to move the needle. But that was at more than twice the current price. I suspect there are good returns to be had from here. But I suspect that’s also true of a lot of things. I recently re-bought FIH. That has more visibility for me.
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elliott

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Re: Fairfax Africa
« Reply #38 on: April 15, 2020, 01:00:11 PM »
during the webcast of today Wilkerson admitted that they learned some lessons from Atlas Mara and CIG
specifically, he said they were up against too many challenges there, and he summarized the idea quoting Buffett

Quote
I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.

at least, thats something

Xerxes

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Re: Fairfax Africa
« Reply #39 on: April 15, 2020, 05:29:39 PM »
during the webcast of today Wilkerson admitted that they learned some lessons from Atlas Mara and CIG
specifically, he said they were up against too many challenges there, and he summarized the idea quoting Buffett

Quote
I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.

at least, thats something

IMHO, the difference between buffet wannabes and buffet is that the former quotes him a lot, while the latter stick to their guns no matter what. I think the initial idea of an African investment fund is great thing and a potential call option on Africa growth, but I would have never made that a separate ship from the rest of the FFH family.

FIH is different as I think there is enough concentration and is large enough.

incidentally, here is a great article in The Economist on Africa

https://www.economist.com/special-report/2020/03/26/africa-is-changing-so-rapidly-it-is-becoming-hard-to-ignore

My favorite part of the article "After centuries on the periphery, Africa is set to play a much more important role in global affairs, the global economy and the global imagination. Asia’s economic and population booms may continue to dominate the first part of this century, but Africa’s weight will grow in the second half....Demography is a big part of it. Africa’s population will almost certainly double by 2050, giving it more than a quarter of the world’s total. That alone commands attention. But if accompanied by matching growth in GDP, economies such as Nigeria could overtake France or Germany in size …."