Author Topic: Fairfax stock positions  (Read 36120 times)

wondering

  • Full Member
  • ***
  • Posts: 131
Re: Fairfax stock positions
« Reply #70 on: February 10, 2020, 06:44:44 AM »
Perhaps you missed Resolute.  Although the stock has fallen quite a bit, so it might be grouped in the "misc" category


Viking

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1998
Re: Fairfax stock positions
« Reply #71 on: February 10, 2020, 10:07:41 AM »
Wondering, i was trying to list only the largest holdings (over $200 million). Yes, these are a bunch more (values at Dec 31):
- Resolute         $128
- Stelco            $102
- IIFL Finance     $55 (the three IIFL co’s are also held in Fairfax India)
- IIFL Securities  $16
- IIFL Wealth      $70
.... and more smaller holdings

Xerxes

  • Full Member
  • ***
  • Posts: 187
Re: Fairfax stock positions
« Reply #72 on: February 10, 2020, 04:47:52 PM »
One interesting thing to note about FFH' equity portfolio is that it has very low cross asset correlation between its major tent poles.
What does Blackberry, Eurobank, Toys R Us and Seaspan have in common (aside their common shareholder) ?  .. nothing, in fact serving very different industries and often very focused geographical location in some cases.

Viking

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1998
Re: Fairfax stock positions
« Reply #73 on: February 10, 2020, 05:43:26 PM »
One interesting thing to note about FFH' equity portfolio is that it has very low cross asset correlation between its major tent poles.
What does Blackberry, Eurobank, Toys R Us and Seaspan have in common (aside their common shareholder) ?  .. nothing, in fact serving very different industries and often very focused geographical location in some cases.

A large chunk of Fairfax’s equity holdings are being negatively impacted by the Coronavirus risk off environment: Eurobank, Seaspan, Emerging Markets equities (Fairfax India, Fairfax Africa, Thomas Cook India).
« Last Edit: February 10, 2020, 05:49:49 PM by Viking »

omagh

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 357
Re: Fairfax stock positions
« Reply #74 on: February 11, 2020, 06:33:36 AM »
A large chunk of Fairfax’s equity holdings are being negatively impacted by the Coronavirus risk off environment: Eurobank, Seaspan, Emerging Markets equities (Fairfax India, Fairfax Africa, Thomas Cook India).
Coronavirus is looking increasingly contained.  Logarithmic scale shows the rate of increase is tailing off.
https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

At most, coronavirus could impact the 1st quarter of 2020 for just about any global business as a fraction of sales.  Will it really harm any business models?  Of course not.

mcliu

  • Hero Member
  • *****
  • Posts: 747
Re: Fairfax stock positions
« Reply #75 on: February 11, 2020, 12:41:35 PM »
A large chunk of Fairfax’s equity holdings are being negatively impacted by the Coronavirus risk off environment: Eurobank, Seaspan, Emerging Markets equities (Fairfax India, Fairfax Africa, Thomas Cook India).
Coronavirus is looking increasingly contained.  Logarithmic scale shows the rate of increase is tailing off.
https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

At most, coronavirus could impact the 1st quarter of 2020 for just about any global business as a fraction of sales.  Will it really harm any business models?  Of course not.

Hopefully that's the case and not because of the definition change.

https://www.taiwannews.com.tw/en/news/3874490
"China changes counting scheme to lower Wuhan virus numbers"
China stops counting confirmed asymptomatic patients in Wuhan virus statistics

Kaegi2011

  • Full Member
  • ***
  • Posts: 233
Re: Fairfax stock positions
« Reply #76 on: February 12, 2020, 11:50:37 AM »
Anyone have any information on the company and/or the Oak Fund (what it owns)?


They're pretty secretive and they're probably the most under the radar PE firm out there.  And the model is fairly unique - they basically source deals from their own network of high net worth individuals who own businesses and promise to hold them for a long time.  Not forever, but also not flipping it three years down the road.  Very Buffettesque way of doing business (e.g., proprietary sourcing, stable capital, etc.) and it seems to be working.  Whether the deals are good or not I have no clue as they don't seem to be targeting institutional money (at least any that I could find), so no disclosure on performance at places like Calpers, etc. 

Viking

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1998
Re: Fairfax stock positions
« Reply #77 on: February 12, 2020, 04:13:08 PM »
Anyone have any information on the company and/or the Oak Fund (what it owns)?


They're pretty secretive and they're probably the most under the radar PE firm out there.  And the model is fairly unique - they basically source deals from their own network of high net worth individuals who own businesses and promise to hold them for a long time.  Not forever, but also not flipping it three years down the road.  Very Buffettesque way of doing business (e.g., proprietary sourcing, stable capital, etc.) and it seems to be working.  Whether the deals are good or not I have no clue as they don't seem to be targeting institutional money (at least any that I could find), so no disclosure on performance at places like Calpers, etc.

Thanks for the info. BDT Capital looks like a quality operation which is nice to see especially given its large size in Fairfax’s equity portfolio. The position increased nicely in size from $355 at Dec 31, 2017 to $443 million at Dec 31,2018. No idea if they added capital to the position or if the increase was all gains. Hopefully they once again do the same disclosure (top equity positions) at the AGM this year.

steph

  • Jr. Member
  • **
  • Posts: 92
Re: Fairfax stock positions
« Reply #78 on: March 17, 2020, 07:41:45 AM »
How far can the equity positions go down, before FFH is in danger?

StubbleJumper

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1319
Re: Fairfax stock positions
« Reply #79 on: March 17, 2020, 09:55:11 AM »
How far can the equity positions go down, before FFH is in danger?


Your question might require a bit more explanation.  There are a number of potentially bad/dangerous outcomes of a collapse in equity prices:

1) Reduced underwriting capacity in the subs: if equities are held in the insurance subs, lower equity prices are marked to market and that increases the premiums:statutory capital ratio.  This would fall under the category of a "bad" outcome rather than dangerous.

2) Line of credit covenants: FFH holdco and several of the subs maintain lines of credit, some of which are partially drawn.  Each of those revolvers likely has a lengthy list of covenants.  The holdco covenants require a maximum debt:capital ratio and a minimum shareholders equity total.  My rough math suggests that FFH holdco could take about a $5b haircut on its equity before violating its covenants, but what are the other covenants that have not been disclosed?  What covenants are present in the subs' revolvers?  It would be highly inconvenient if the credit lines were pulled...this might be a "dangerous" outcome.

3) Bond/notes indentures: FFH and the subs have floated dozens of debt instruments, all of which have indentures.  Presumable these are far less restrictive than the credit line covenants?  Do falling equity prices constitute a risk?  This might be a "dangerous" outcome, but from the outside it's hard to estimate the risk.

4) Management fees: one of the ways that the holdco finances its operations is through management fees related to Fairfax India, Africa, and Hamblin Watsa's management of the subs' portfolios.  A smaller portfolio means smaller management fees, and perhaps a cashflow challenge for the holdco.  This would probably be a "bad" outcome but not dangerous.

5) Refinancing risk: either by good management or by good luck, FFH holdco doesn't have any bullet maturities during 2020.  However, holdco must continuously float new debt to replace maturing debt, with about US$300m needing to be refinanced by May 2021.  A collapse in the equity portfolio would not be helpful for credit availability or terms.  Similarly, if the need to issue shares arises, it is virtually certain that the price that FFH could obtain for a share issuance would be considerably lower after a collapse of the equity portfolio.  This is merely "bad" rather than dangerous.



At this point, I'd say that equity prices are not really a "danger" for FFH, but they do constitute yet one more trip to the woodshed for shareholders.



SJ