Corner of Berkshire & Fairfax Message Board

General Category => Fairfax Financial => Topic started by: ValueMaven on June 15, 2020, 05:10:36 PM

Title: Prem Buying - WoW!
Post by: ValueMaven on June 15, 2020, 05:10:36 PM
Announcement just hit - Prem has acquired about $150m worth of Fairfax shares in the open market!!  Way to step up!!  He is now calling Fairfax ridiculously cheap. 
Title: Re: Prem Buying - WoW!
Post by: StubbleJumper on June 15, 2020, 05:41:18 PM
In fairness to this forum's members, TwoCities and others called it cheap 6 or 7 weeks ago. 


SJ
Title: Re: Prem Buying - WoW!
Post by: Bryggen on June 15, 2020, 05:45:03 PM
Not sure how to interpret that. You rarely see CEO shares purchases announced by a press release. You usually see it through the regulator flings. While this is by any mean a positive event, I feel it is being emphasized to encourage the share price to appreciate. A move out of desperation at a time where share price took a beating the past month or so.

I would be curious to hear from our experienced members.

Maybe I am reading too much into it....

Maybe nothing more than an actual good news!
Title: Re: Prem Buying - WoW!
Post by: Parsad on June 15, 2020, 10:27:45 PM
Not sure how to interpret that. You rarely see CEO shares purchases announced by a press release. You usually see it through the regulator flings. While this is by any mean a positive event, I feel it is being emphasized to encourage the share price to appreciate. A move out of desperation at a time where share price took a beating the past month or so.

I would be curious to hear from our experienced members.

Maybe I am reading too much into it....

Maybe nothing more than an actual good news!

Are you kidding me?!  The CEO of the company puts $150M of his outside money into Fairfax and you think it's an act of desperation.  A bunch of us said that it was dirt cheap back around late March, early April, and we backed the truck up.  Now the CEO is telling you the same thing and you still can't wrap your head around it.  I would stop worrying about Fairfax's price and go back and read Securities Analysis by Ben Graham.  This is a valuation and analytical issue, not a psychological one!  Cheers!
Title: Re: Prem Buying - WoW!
Post by: petec on June 16, 2020, 01:35:28 AM
Not sure how to interpret that. You rarely see CEO shares purchases announced by a press release. You usually see it through the regulator flings. While this is by any mean a positive event, I feel it is being emphasized to encourage the share price to appreciate. A move out of desperation at a time where share price took a beating the past month or so.

I would be curious to hear from our experienced members.

Maybe I am reading too much into it....

Maybe nothing more than an actual good news!

Are you kidding me?!  The CEO of the company puts $150M of his outside money into Fairfax and you think it's an act of desperation.  A bunch of us said that it was dirt cheap back around late March, early April, and we backed the truck up.  Now the CEO is telling you the same thing and you still can't wrap your head around it.  I would stop worrying about Fairfax's price and go back and read Securities Analysis by Ben Graham.  This is a valuation and analytical issue, not a psychological one!  Cheers!

+1

Most buys aren't publicised with a press release.

But most buys aren't $150m.
Title: Re: Prem Buying - WoW!
Post by: Patient Investor on June 16, 2020, 06:35:15 AM
I believe that Fairfax was required to issue a press release regarding the share purchases by Prem Watsa. Per the most recent information circular filed March 6 2020, the Sixty Two Investment Company owns 50,620 subordinate voting shares and 1,548,000 multiple voting shares, representing 41.9 percent of the total votes attached to all classes of shares and Prem Watsa, Chairman and CEO, controls Sixty Two and himself beneficially owns an additional 258,790 subordinate voting shares for a total of 42.5 percent of the total votes prior to the latest purchase. As an insider and a significant shareholder (only one over 10 percent) and as a material event they would be required to make the disclosure.
Title: Re: Prem Buying - WoW!
Post by: Bryggen on June 16, 2020, 06:57:36 AM
Not sure how to interpret that. You rarely see CEO shares purchases announced by a press release. You usually see it through the regulator flings. While this is by any mean a positive event, I feel it is being emphasized to encourage the share price to appreciate. A move out of desperation at a time where share price took a beating the past month or so.

I would be curious to hear from our experienced members.

Maybe I am reading too much into it....

Maybe nothing more than an actual good news!

Are you kidding me?!  The CEO of the company puts $150M of his outside money into Fairfax and you think it's an act of desperation.  A bunch of us said that it was dirt cheap back around late March, early April, and we backed the truck up.  Now the CEO is telling you the same thing and you still can't wrap your head around it.  I would stop worrying about Fairfax's price and go back and read Securities Analysis by Ben Graham.  This is a valuation and analytical issue, not a psychological one!  Cheers!

Take it easy on me! ;)  All I was trying to say is that I have never seen a PR issued to announced a CEO's purchases of the company's stock. This is rather an unusual event and I was questioning the purpose (if any) of doing it that way. I realized I may have used the wrong word (desperation). Thanks to Petec for pointing out the fact that the size of the purchase may be the reason it is announced through PR. That being said, that aside, it is great news for sure and we all (shareholders) benefit from that vote of confident Prem places in FFH as evidenced today with the nice pop in share price. Cheers!
Title: Re: Prem Buying - WoW!
Post by: Xerxes on June 16, 2020, 07:05:53 AM
Key point is that he is putting back money in the franchise worth 6-7 times his annual dividend that he takes out. This is not options/grants or no-cost money. At least I am happy to say that I got some lower than Prem did at $350 CAD.

Somehow I don’t think he is going to do the same thing for Fairfax India.
Title: Re: Prem Buying - WoW!
Post by: TwoCitiesCapital on June 16, 2020, 10:20:25 AM
In fairness to this forum's members, TwoCities and others called it cheap 6 or 7 weeks ago. 


SJ

Lol +1, though I didn't buy $150 million to prove it

Basically just replaced 1/2 of the position that I had closed back in 2018/2019 because I couldn't get the math to work at $500-600 USD. Much lower bar at sub-$300
Title: Re: Prem Buying - WoW!
Post by: ValueMaven on June 17, 2020, 04:45:53 AM
Good for Prem ... the more I thought about this - the more I liked it!!!!

I really wish WEB did something similar w/Berkshire.  IMHO Berkshire is cheaper then FFH
Title: Re: Prem Buying - WoW!
Post by: Xerxes on June 17, 2020, 07:21:26 AM
Not to over analyze this, but:

Can we make the statement that of all the investments that Prem has done either personally or through FFH in the past decade, this one has a high chance of success with risk-reward tilted toward the upside and with good margin of safety, I.e  a classical  B Graham deep value type, in a world where that framework seem antiquated.

Maybe bank of Ireland come close. Though that was before I was following FFH so I wouldn’t know much of it.

Atlas/Seaspan I see that more as a growth investment and not Grahamiah type.
Title: Re: Prem Buying - WoW!
Post by: My Own Personal Hedge Fun on June 17, 2020, 11:55:08 AM
I entered a limit order to sell my Fairfax position at $370, just in case the price popped next day on this news.

Looks like I'm still holding. For now.

Debating if I'm holding just to get back to even, or because there is some actual value in the company and management.
Title: Re: Prem Buying - WoW!
Post by: Parsad on June 17, 2020, 02:38:50 PM
I entered a limit order to sell my Fairfax position at $370, just in case the price popped next day on this news.

Looks like I'm still holding. For now.

Debating if I'm holding just to get back to even, or because there is some actual value in the company and management.

If you didn't know when you bought, you might want to figure it out.  Cheers!
Title: Re: Prem Buying - WoW!
Post by: ValueMaven on June 19, 2020, 08:30:47 AM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?
Title: Re: Prem Buying - WoW!
Post by: Parsad on June 20, 2020, 12:03:43 AM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!
Title: Re: Prem Buying - WoW!
Post by: My Own Personal Hedge Fun on September 10, 2020, 08:38:11 AM
If you didn't know when you bought, you might want to figure it out.  Cheers!

I decided to sell most of my position. I still have Fairfax India and willing to give that more time. Seems like they have a little more preference for quality assets in that portfolio, and I like India's 5-15 year growth potential.
Title: Re: Prem Buying - WoW!
Post by: Parsad on September 10, 2020, 08:46:07 PM
If you didn't know when you bought, you might want to figure it out.  Cheers!

I decided to sell most of my position. I still have Fairfax India and willing to give that more time. Seems like they have a little more preference for quality assets in that portfolio, and I like India's 5-15 year growth potential.

The irony is that Fairfax owns a good chunk of Fairfax India, and more importantly, generates really nice management fees and performance bonuses from Fairfax India.  If Fairfax India does exceedingly well, Fairfax will benefit handsomely.  If Fairfax India does average, Fairfax will still benefit from the fees.  I  would rather own the asset manager!  Cheers!
Title: Re: Prem Buying - WoW!
Post by: undervalued on September 11, 2020, 09:50:40 AM
So comparing FRFHF with JEF for the past 10 years, I own JEF for the past 10 or so years and it has been a value trap for that long. When comparing the 10 year chart with FRFHF, I sees similar behavior. Parsad, I think you also follow JEF and they have been trying to transform it these past two years. I have not been adding to JEF because I don't want to sink new money to it although I am still patient in holding and so far it has been a pretty big mistake as far as opportunity cost.
Title: Re: Prem Buying - WoW!
Post by: bizaro86 on September 11, 2020, 11:28:03 AM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!

The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns.
Title: Re: Prem Buying - WoW!
Post by: lessthaniv on September 11, 2020, 11:29:47 AM
If you didn't know when you bought, you might want to figure it out.  Cheers!

I decided to sell most of my position. I still have Fairfax India and willing to give that more time. Seems like they have a little more preference for quality assets in that portfolio, and I like India's 5-15 year growth potential.

The irony is that Fairfax owns a good chunk of Fairfax India, and more importantly, generates really nice management fees and performance bonuses from Fairfax India.  If Fairfax India does exceedingly well, Fairfax will benefit handsomely.  If Fairfax India does average, Fairfax will still benefit from the fees.  I  would rather own the asset manager!  Cheers!

I think the upside on both is good. I give the nod to FIH.U as a deeper valuation opportunity but I own both!  ;D
Title: Re: Prem Buying - WoW!
Post by: Bryggen on September 11, 2020, 01:58:33 PM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!

The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns.

...and one to ask: ''is 15% a realistic expectation?''.

I am approaching a decade of holding FFH and I am seriously wondering if this is a realistic target as recent shareholders (10 years or less) are yet to benefit from such appreciation. It sure attracts new ( and naive) investors. I am tired of hearing the 30 years track record and while I focus on the last 10 years, I can only come to the realization that shareholders fell short of expectations.

yeah , yeah ... I am still around and will for quite some time, but I needed to vent and share ;)
Title: Re: Prem Buying - WoW!
Post by: Parsad on September 11, 2020, 02:32:23 PM
So comparing FRFHF with JEF for the past 10 years, I own JEF for the past 10 or so years and it has been a value trap for that long. When comparing the 10 year chart with FRFHF, I sees similar behavior. Parsad, I think you also follow JEF and they have been trying to transform it these past two years. I have not been adding to JEF because I don't want to sink new money to it although I am still patient in holding and so far it has been a pretty big mistake as far as opportunity cost.

Yes, we owned quite a bit of JEF in the fund before Covid...we sold about half when BAC fell to $18 and bought that.  We still own the rest of our JEF...it was bought around $18 as well a couple of years ago.

Like FFH, I think JEF is in great shape now, and has turned the corner.  Both should be trading at book value or better.  Cheers!
Title: Re: Prem Buying - WoW!
Post by: Parsad on September 11, 2020, 02:38:54 PM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!

The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns.

...and one to ask: ''is 15% a realistic expectation?''.

I am approaching a decade of holding FFH and I am seriously wondering if this is a realistic target as recent shareholders (10 years or less) are yet to benefit from such appreciation. It sure attracts new ( and naive) investors. I am tired of hearing the 30 years track record and while I focus on the last 10 years, I can only come to the realization that shareholders fell short of expectations.

yeah , yeah ... I am still around and will for quite some time, but I needed to vent and share ;)

Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount.  Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him.  And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. 

Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years!  Cheers!
Title: Re: Prem Buying - WoW!
Post by: Spekulatius on September 11, 2020, 04:55:26 PM
If you didn't know when you bought, you might want to figure it out.  Cheers!

I decided to sell most of my position. I still have Fairfax India and willing to give that more time. Seems like they have a little more preference for quality assets in that portfolio, and I like India's 5-15 year growth potential.

The irony is that Fairfax owns a good chunk of Fairfax India, and more importantly, generates really nice management fees and performance bonuses from Fairfax India.  If Fairfax India does exceedingly well, Fairfax will benefit handsomely.  If Fairfax India does average, Fairfax will still benefit from the fees.  I  would rather own the asset manager!  Cheers!

https://tv.getyarn.io/yarn-clip/71cf3f54-184e-4143-b723-0bdce2921b4c/gif#LfJMAgFkOU.copy (https://tv.getyarn.io/yarn-clip/71cf3f54-184e-4143-b723-0bdce2921b4c/gif#LfJMAgFkOU.copy)
Title: Re: Prem Buying - WoW!
Post by: Bryggen on September 12, 2020, 07:04:16 PM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!

The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns.

...and one to ask: ''is 15% a realistic expectation?''.

I am approaching a decade of holding FFH and I am seriously wondering if this is a realistic target as recent shareholders (10 years or less) are yet to benefit from such appreciation. It sure attracts new ( and naive) investors. I am tired of hearing the 30 years track record and while I focus on the last 10 years, I can only come to the realization that shareholders fell short of expectations.

yeah , yeah ... I am still around and will for quite some time, but I needed to vent and share ;)

Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount.  Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him.  And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. 

Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years!  Cheers!

Feeling better... thanks for your always valuable input. Patience and trust are key here.
Let wait and see...and look back at this thread in 2-3 years!
cheers
Title: Re: Prem Buying - WoW!
Post by: Viking on September 12, 2020, 08:13:39 PM
I have once again started buying some FFH. I like the insurance businesses and we are definitely in an insurance hard market. That side of the business should do very well the next few years.

What is stopping me from backing up the truck? The investing side of the business. Based on the terrible results from the past 10 years. Having said that it does look to me like the worm is slowly turning. Atlas looks like the real deal and it is a massive position within Fairfax. Digit in India looks like another star and the runway is long; this investment alone could be another $1 billion home run for Fairfax over the next decade. I like Fairfax India and am ok with the volatility. Quess looks like a solid long term hold. I like some of the smaller equity positions.

Most importantly, the terrible performing holdings continue to shrink in size (Blackberry, Recipe, Resolute etc). They look more than discounted with Fairfax trading at less than 0.7 x BV.

It also looks to me like Fairfax has slowly been dealing with its Investing issues. The process started when all the short positions were removed after the Trump election win. Problem children are slowly being dealt with: Fairfax Africa, APR Energy being the most recent 2 examples.

I think Prem also mentioned on the most recent conference call that they are looking to continue to monetize some of their assets. (Blackberry would be ideal, especially in this environment.) Fairfax has been VERY creative over the years in this regard. First Capital and European Runoff are two large examples but there are also many smaller examples. I expect more to come in this regard.

So solid insurance franchise combined with improving investment results should get the stock back close to BV. Perhaps it will take a year or two. From current prices ($290US) investors might actually see a couple of 10-15% returns the next couple of years :-)
Title: Re: Prem Buying - WoW!
Post by: Xerxes on September 15, 2020, 04:49:12 PM
Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount.  Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him.  And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. 

Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years!  Cheers!

Parsad,
While this may seem like a great trade in the next 2-3 years. I think the narrowing the discount will only come on the back of a rising book value, so you would get a double-lift in absolute and relative terms. But then what ...

Do you see it as having a real "growth" engine once the discount narrows ... past these relatively speaking low hanging fruits.

Maybe we should make it a thread. Where do folks see FFH ten years from now !!!!
- size of the float
- outstanding shares (hopefully 40% bought back)
- the size and growth of FIH
- the size and growth of Atlas
- book value
- share price
- hopefully Resolute and Stelco long gone. I like BB converts.
 
Can Prem pull a Microsoft out of his hat
Title: Re: Prem Buying - WoW!
Post by: investmd on September 16, 2020, 07:18:45 PM
Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount.  Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him.  And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. 

Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years!  Cheers!

Xerxes, would love to see this thread of where FFH is in 2030 and have it updated yearly :)

Parsad,
While this may seem like a great trade in the next 2-3 years. I think the narrowing the discount will only come on the back of a rising book value, so you would get a double-lift in absolute and relative terms. But then what ...

Do you see it as having a real "growth" engine once the discount narrows ... past these relatively speaking low hanging fruits.

Maybe we should make it a thread. Where do folks see FFH ten years from now !!!!
- size of the float
- outstanding shares (hopefully 40% bought back)
- the size and growth of FIH
- the size and growth of Atlas
- book value
- share price
- hopefully Resolute and Stelco long gone. I like BB converts.
 
Can Prem pull a Microsoft out of his hat
Title: Re: Prem Buying - WoW!
Post by: ValueMaven on January 14, 2021, 04:37:19 PM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!

The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns.

...and one to ask: ''is 15% a realistic expectation?''.

I am approaching a decade of holding FFH and I am seriously wondering if this is a realistic target as recent shareholders (10 years or less) are yet to benefit from such appreciation. It sure attracts new ( and naive) investors. I am tired of hearing the 30 years track record and while I focus on the last 10 years, I can only come to the realization that shareholders fell short of expectations.

yeah , yeah ... I am still around and will for quite some time, but I needed to vent and share ;)

Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount.  Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him.  And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. 

Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years!  Cheers!

What is the thesis on ATCO?
Title: Re: Prem Buying - WoW!
Post by: Thrifty3000 on January 14, 2021, 06:36:02 PM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!

The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns.

...and one to ask: ''is 15% a realistic expectation?''.

I am approaching a decade of holding FFH and I am seriously wondering if this is a realistic target as recent shareholders (10 years or less) are yet to benefit from such appreciation. It sure attracts new ( and naive) investors. I am tired of hearing the 30 years track record and while I focus on the last 10 years, I can only come to the realization that shareholders fell short of expectations.

yeah , yeah ... I am still around and will for quite some time, but I needed to vent and share ;)

Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount.  Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him.  And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. 

Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years!  Cheers!

What is the thesis on ATCO?

David Sokol
Title: Re: Prem Buying - WoW!
Post by: Parsad on January 14, 2021, 10:15:51 PM
Question: roughly how cheap was FFH trading when Prem bought? price to tangible BV?  price to normalized earnings?


It looks like he bought at an average cost of $308 USD roughly or about $420-425 CDN per share.  It says he bought in the last few days before the press release...I would imagine it was around the 9th, 10th, 11th and 12th, where the stock was around $425 CDN or less and volumes rose.  If he is buying there, then I would imagine he is expecting a return of better than 15% annualized or more over the next few years.  Cheers!

The question then becomes is Prem expecting a 15% return a good predictor of future 15% returns.

...and one to ask: ''is 15% a realistic expectation?''.

I am approaching a decade of holding FFH and I am seriously wondering if this is a realistic target as recent shareholders (10 years or less) are yet to benefit from such appreciation. It sure attracts new ( and naive) investors. I am tired of hearing the 30 years track record and while I focus on the last 10 years, I can only come to the realization that shareholders fell short of expectations.

yeah , yeah ... I am still around and will for quite some time, but I needed to vent and share ;)

Even during the depths of the hedge fund crisis, when Fairfax stock fell to $53 USD, I don't remember Prem buying shares in such a significant amount.  Frankly, I'm shocked that he put $150M of outside capital into Fairfax...that would be a decades worth of dividends for him.  And if he didn't borrow the money, I would imagine that's probably half his net worth outside of what is held in Sixty-Two Corporation. 

Then again, I've got half my net worth outside of Corner Market Capital in Fairfax and Atlas Corp right now, so maybe I shouldn't be surprised...and I'm very comfortable with both and think both have 50-100% upside over the next 2-3 years!  Cheers!

What is the thesis on ATCO?

David Sokol

I think that was the original thesis, but Bing Chen is an extraordinary manager himself too.  Very impressed by what he's been able to do, how he leads and his investment/finance acumen.  Sokol picked a winning CEO!  Cheers!
Title: Re: Prem Buying - WoW!
Post by: Xerxes on January 15, 2021, 06:29:36 AM
Here is a video that i watched over the Holidays from Chen. The video was filmed right before Atlas holding was formed.
For those interested to see how he is like, this should serve.

https://www.youtube.com/watch?v=-AYf22NC1ws

WARNING: this was filmed pre-Covid, therefore, it might cause you anxiety to see two people so close together. It caused me discomfort.