Author Topic: Fairfax2019  (Read 57610 times)

TwoCitiesCapital

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Re: Fairfax2019
« Reply #30 on: April 25, 2019, 09:16:43 AM »
Same math implies the flip side as well, correct?

That is, because of the tilt towards fixed income, particularly high equity returns are necessary to boost the overall returns substantially.  However, mediocre equity returns shouldn't prevent book value from compounding in the high single digits and worse than mediocre equity returns shouldn't stop book value growth from being positive (assuming underwriting and fixed income performs).

Sure, but the argument for owning something for me has to be a higher bar than single digits. Particularly something that itself has the potential to be super-volatioe in a downturn simply due to market sentiment.

My only point wasn't to say FFH will lose money. It's just hitting their 15% ROE target consistently enough to get a rerating in the stock is seemingly a pipedream with interest rates and equity valuations where they're at. There's probably better opportunities out there at this time/price.

I don't have any specific forecasts for Fairfax India other than being generally bullish on EM, generally bullish on EM currencies, taking advantage of a significant pullback in Indian assets, and generally liking the investments they've made in that vehicle.

I don't like the fees, which is why I haven't owned it previously, but the high water mark should ensure I have plenty of upside in the near-to-midterm without paying much for it.


racemize

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Re: Fairfax2019
« Reply #31 on: April 25, 2019, 09:28:05 AM »
I don't like the fees, which is why I haven't owned it previously, but the high water mark should ensure I have plenty of upside in the near-to-midterm without paying much for it.

It's also a PFIC, which sucks for U.S. investors.

TwoCitiesCapital

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Re: Fairfax2019
« Reply #32 on: April 25, 2019, 01:08:34 PM »
I don't like the fees, which is why I haven't owned it previously, but the high water mark should ensure I have plenty of upside in the near-to-midterm without paying much for it.

It's also a PFIC, which sucks for U.S. investors.

Yes, that can be an impediment. 95% of my investable/liquid assets are in tax-free/tax-deferred accounts so I'm less impacted by the PFIC designation.

Luckyone77

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Re: Fairfax2019
« Reply #33 on: April 26, 2019, 10:47:39 AM »
Well, boys, after 10 years of owning this stock I decided to sell my remaining shares today. I'm out. Greatly disappointed in their ability to judge stocks and, in particular, their ability to judge the management of these companies. I simply can't justify their continued underachievement. A dart board would have had greater success of stock picking. I hope my exit proves to be the turning point for the stock, as it so often seems to be (lol), and that you all are greatly rewarded for having hung in there. Hopefully, India will be the salvation.

Nevertheless, I do appreciate the keen insight of many of the posts on this site. Its been informative.
« Last Edit: April 29, 2019, 12:23:11 AM by Luckyone77 »
"The urge to save humanity is almost always a false face for the urge to rule it." - H.L. Mencken

Zorrofan

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Re: Fairfax2019
« Reply #34 on: May 01, 2019, 01:15:05 PM »
Well, boys, after 10 years of owning this stock I decided to sell my remaining shares today. I'm out. Greatly disappointed in their ability to judge stocks and, in particular, their ability to judge the management of these companies. I simply can't justify their continued underachievement. A dart board would have had greater success of stock picking. I hope my exit proves to be the turning point for the stock, as it so often seems to be (lol), and that you all are greatly rewarded for having hung in there. Hopefully, India will be the salvation.

Nevertheless, I do appreciate the keen insight of many of the posts on this site. Its been informative.

I have been a FFH shareholder for longer than some of you may have been alive! I suffered the seven lean years and hoped for seven prosperous ones before Prem put on the hedges during one of  the longest bull runs in our lifetimes.

But facts are facts. At the close of 1998 the book value of FFH was $112.49, rising to $432.46 by the end of 2018. This represents a growth rate of less than 7% for the past twenty years. You can add on a bit for the dividend but it still represents a rather disappointing performance.  Prem is quick to mention the results since inception but frankly the last 20 years have been lackluster and I am seriously questioning the performance we can expect going forward.
« Last Edit: May 01, 2019, 01:46:12 PM by Zorrofan »

petec

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Re: Fairfax2019
« Reply #35 on: May 02, 2019, 04:34:58 AM »
Well, boys, after 10 years of owning this stock I decided to sell my remaining shares today. I'm out. Greatly disappointed in their ability to judge stocks and, in particular, their ability to judge the management of these companies. I simply can't justify their continued underachievement. A dart board would have had greater success of stock picking. I hope my exit proves to be the turning point for the stock, as it so often seems to be (lol), and that you all are greatly rewarded for having hung in there. Hopefully, India will be the salvation.

Nevertheless, I do appreciate the keen insight of many of the posts on this site. Its been informative.

I have been a FFH shareholder for longer than some of you may have been alive! I suffered the seven lean years and hoped for seven prosperous ones before Prem put on the hedges during one of  the longest bull runs in our lifetimes.

But facts are facts. At the close of 1998 the book value of FFH was $112.49, rising to $432.46 by the end of 2018. This represents a growth rate of less than 7% for the past twenty years. You can add on a bit for the dividend but it still represents a rather disappointing performance.  Prem is quick to mention the results since inception but frankly the last 20 years have been lackluster and I am seriously questioning the performance we can expect going forward.

I知 halfway through my annual deep dive. Full disclosure: I致e always liked this company so maybe I知 biased. But the more I read the more I like. Most of the major investments look good, some great, to me, with considerable value on the table. The amount going on under the bonnet is quite incredible and Fairfax has the opportunity to build several major businesses from scratch. This is a very different business to 20 years ago: Fairfax have worked themselves into a position where they can put incredible people in charge of operations and drive change. Putting info together from various sources I知 not worried about the stock buybacks for treasury - I think the buyback is real. And they致e sworn off naked hedging. Lots to like, especially with markets where they are.

wondering

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Re: Fairfax2019
« Reply #36 on: May 02, 2019, 02:54:44 PM »
1st quarter results out.

https://s1.q4cdn.com/579586326/files/doc_news/2019/May/PRFFH-May-2-2019-Q1-Press-Release.pdf

I like the results.

- Shares continue to be bought back 250K + 118K shares for a total $175m
- net capital gains of $700m (a bounce back for the terrible 4th quarter in 2018)
- combined ratio of 97% (I wish it was a little lower, but I can't have everything)
- interest and dividends $235m (we are tracking towards the $1B for the year)
- book value per share 450/share US, increase of 6.7% from Dec

petec

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Re: Fairfax2019
« Reply #37 on: May 02, 2019, 03:39:38 PM »
I知 confused by the AGT transaction. Have they lent money to management for an MBO, or bought it themselves, or both?

gfp

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Re: Fairfax2019
« Reply #38 on: May 02, 2019, 03:54:32 PM »
I知 confused by the AGT transaction. Have they lent money to management for an MBO, or bought it themselves, or both?

Both.  They are both a lender and shareholder (controlling shareholder actually, 59.6% currently plus warrants that would bring it to 80%)

Cigarbutt

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Re: Fairfax2019
« Reply #39 on: May 02, 2019, 04:12:59 PM »
I知 confused by the AGT transaction. Have they lent money to management for an MBO, or bought it themselves, or both?

Both.  They are both a lender and shareholder (controlling shareholder actually, 59.6% currently plus warrants that would bring it to 80%)
FFH exchanged their common and preferred shares of the old entity for a controlling equity stake in the new entity, which likely rendered the "management" buyout possible as the transaction may have been too leveraged otherwise.