Author Topic: Fairfax India new issue  (Read 187756 times)

obtuse_investor

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Re: Fairfax India new issue
« Reply #320 on: December 17, 2019, 03:41:47 PM »
I find it interesting that this group assumed this transaction is an attempt by FFH to draw fees from FIH. Peak pessimism on FFH management?

Has anyone looked into foreign ownership rules? They did decrease beneficial ownership to 49%.
« Last Edit: December 17, 2019, 05:13:54 PM by obtuse_investor »
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lessthaniv

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Re: Fairfax India new issue
« Reply #321 on: December 17, 2019, 04:31:23 PM »
Crazy that this transaction has resulted in the massive pop over the last two days.

Same BIAL that it's always been, but the accounting change allows them to bump up the book value and start charging fees now that book value is above high water mark. If anything, shareholders are WORSE off after the transaction with regard to fees, but that didn't stop the price from ripping 10%.

if you compare BIAL with other publiclty traded airports around the world , it still seems quite a bit undervalued even more so with a second terminal coming up soon.

Absolutely agree. That is, in part, why I was a buyer at $13, and $12, and $11. All I'm saying is this transaction is just an accounting entry - it's the same BIAL it was 2-days ago, but the shares are 10% higher and Fairfax can now charge fees again as this pushes NAV substantially higher.

I get why Fairfax did it. I just don't understand why this would pop the stock or why the people buying it today weren't aware of the value of BIAL two days ago.

For me, a better question is why investors sold the stock so low. At September 30, 2019 common shareholders' equity was $2,064.7 million, or book value per share of $13.53 (us). Add to that the $3.30 (us) for the current revaluation and we have book value $16.83 (us). So, if it's the same BIAL as it's always been, then the low was ~ 65% of book. With clarity on the financials coming, I think a retracement towards book value is in the cards. I'm not scratching my head as the stock recovers back up, I was scratching my head on the way down.
<IV

obtuse_investor

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Re: Fairfax India new issue
« Reply #322 on: December 17, 2019, 05:12:14 PM »
As value investors we know that Mr market has his mood swings. Head scratching moments are the precise opportunities to make money.

Good for you for taking advantage of the situation! :-)
« Last Edit: December 17, 2019, 05:15:22 PM by obtuse_investor »
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TwoCitiesCapital

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Re: Fairfax India new issue
« Reply #323 on: December 18, 2019, 08:58:42 AM »
I find it interesting that this group assumed this transaction is an attempt by FFH to draw fees from FIH. Peak pessimism on FFH management?

Has anyone looked into foreign ownership rules? They did decrease beneficial ownership to 49%.

Why wouldn't we assume that?

They charge fees for performance and deserve to be paid them if they perform. In this case, they performed, but the accounting nature prevented that performance from being realized for fee calculations. This transaction changes that. 

I'm certainly not saying it's a bad thing or an immoral thing - they deserve to be paid. Only that us investors we're getting a free ride before, and we're not now and the stock is up on that news.


Viking

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Re: Fairfax India new issue
« Reply #325 on: February 04, 2020, 11:17:51 AM »
Crazy that this transaction has resulted in the massive pop over the last two days.

Same BIAL that it's always been, but the accounting change allows them to bump up the book value and start charging fees now that book value is above high water mark. If anything, shareholders are WORSE off after the transaction with regard to fees, but that didn't stop the price from ripping 10%.

if you compare BIAL with other publiclty traded airports around the world , it still seems quite a bit undervalued even more so with a second terminal coming up soon.

Absolutely agree. That is, in part, why I was a buyer at $13, and $12, and $11. All I'm saying is this transaction is just an accounting entry - it's the same BIAL it was 2-days ago, but the shares are 10% higher and Fairfax can now charge fees again as this pushes NAV substantially higher.

I get why Fairfax did it. I just don't understand why this would pop the stock or why the people buying it today weren't aware of the value of BIAL two days ago.

For me, a better question is why investors sold the stock so low. At September 30, 2019 common shareholders' equity was $2,064.7 million, or book value per share of $13.53 (us). Add to that the $3.30 (us) for the current revaluation and we have book value $16.83 (us). So, if it's the same BIAL as it's always been, then the low was ~ 65% of book. With clarity on the financials coming, I think a retracement towards book value is in the cards. I'm not scratching my head as the stock recovers back up, I was scratching my head on the way down.

The stock is on sale again :-) trading today at under $12.50. With the second terminal at BIAL scheduled to open next year there is more near term upside for that asset to continue to grow much more in value.

Given the disconnect in where the stock is trading ($12.50) and likely reported Q4 book value ($16.50 to $17.00) it will be interesting to see how Fairfax India (and Fairfax) responds. I see in the past Fairfax India has bought back stock; perhaps they get more aggressive and use some of the proceeds from recent transactions to buy back a big chunk of stock. Or perhaps Fairfax increases its stake?

DocSnowball

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Re: Fairfax India new issue
« Reply #326 on: February 04, 2020, 01:38:48 PM »
are you able to purchase this in the US? I tried via Fidelity but wasn't able to complete the transaction. Thanks in advance for sharing your experience and a solution if there is one!

Viking

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Re: Fairfax India new issue
« Reply #327 on: February 04, 2020, 04:57:29 PM »
Have you tried FFXDF (OTC)? It is very thinly traded.

My issues is i would like to buy on the Canadian side (FIH.U) in a Can$ account but it is traded on the TSX as a US$ stock. So to avoid currency charges i have to buy in my US$ account which it picks up as FFXDF. Not sure why the company listed the stock on the TSX as a US$ stock.

Viking

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Re: Fairfax India new issue
« Reply #328 on: February 14, 2020, 09:47:03 AM »
Fairfax India reported yesterday. As expected, the increase in 'fair value' of BIAL increased BV to $16.89/share (from $13.86 at Sept 30).

Key development: "The net change in unrealized gains on BIAL of $751.5 million are supported by positive operational developments and the finalization of BIAL's real estate development plan."

The other piece of good news with Fairfax India is what is going on with its triplet investments in IIFL (Wealth, Finance and Securities) to start the new year. These three companies had been in a bear market for about 24 months (falling in value by more than 50%). However, they all look to have bottomed in price last Oct and have been moving higher since then. And so far in 2020 (6 weeks) they are up +45% or about $180 million. Fairfax India has 153 million shares outstanding so this increase (more than $1.00 per Fairfax India share) is significant. This will be worth monitoring moving forward. 

Shares are up a little today to $12.94

Attached is an Excel spreadsheet that can be used to track all of Fairfax India's publicly traded holdings (tab 2 of the spreadsheet is a tracker for FFH holdings). Let me know if you see any errors :-)
« Last Edit: February 14, 2020, 09:50:35 AM by Viking »

Xerxes

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Re: Fairfax India new issue
« Reply #329 on: February 14, 2020, 04:29:04 PM »
Viking
Thanks for the posting.

When i added up the gain on the IIFL family capital gains from close of the year through today, it comes to $187 million, which is what you have. But that gain belongs to all IIFL shareholders and not just FIH's 150 million shares.

Did you make that adjustment ?
Or is #shares shown on column Q is number of share owned entirely by FIH ?