Author Topic: Fairfax India new issue  (Read 154621 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.