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Hi Folks, This board will actually cease to exist from Wednesday, when I will be terminating all memberships and archiving the old posts, as I have only till Saturday to move them all. So if you haven't applied for membership at the new board (www.cornerofberkshireandfairfax.ca/forum) then you should do so right away. Fairfax's quarterly results come out on Thursday as well, so I don't want anyone to get messed up and miss out on discussing the performance. Berkshire's comes out a week later. I'd like to thank everyone for their contributions over the last seven years, and it was my pleasure to run this forum. Cheers!
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| We can learn a lot from the CDS contracts Fairfax purchased, risk-reward was between 30-40:1, compare that to 6:1 with the 350 call and thats assuming some damn good growth+ mild multiple expansion. |
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Hi Folks, Just a reminder, MSN will be shutting this board down in a little over a week. So if you have not transitioned over to the new board... www.cornerofberkshireandfairfax.ca/forum , then you probably should do so soon. With Fairfax and Berkshire's annual reports around the corner, and their respective AGM's thereafter, you will probably miss a fair amount of discussion. The new board is running smoothly and we have a very good base of members. They have been very active in the last couple of weeks. Our first interview with John Linnartz of Mustang Capital will be on the new blog by the end of the month at www.cornerofberkshireandfairfax.com . If you have not submitted questions for John and would like to, please post your questions on the new board as I will be sending all of them to him Sunday night. Cheers! Sanjeev |
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I haven't been able to access deepcapture.com for a day now. Is anyone else having this issue?
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Very interesting stuff. I'm happy to see this case going for...show/hide message
Very interesting stuff. I'm happy to see this case going forward and to see the beginning of evidence.Cheers!
has anyone other than me read the most recent posts at Deep ...show/hide message
has anyone other than me read the most recent posts at Deep Capture this stuff is completely unreal .
http://www.bloomberg.com/apps/news?pid=20601109&sid=a1g...
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Great article. Just curious: 1) how can I buy LVLT debt? 2) what is the minimum I need to put up to buy it?
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I find it interesting that when I talk about real estate, people who favor gold as an inflation hedge simply talk about house prices in California and then repeat the line about gold being stable in price for hundreds of years back when it was real currency and therefore stable in price. Ah, those days are not with us anymore, and thus no longer stable in price. No matter, it's fun to talk about the good old days of gold. Is there more to real estate than California? There is farmland, there is timberland, there are parking lots, etc... I noticed Fairfax bought CRESY in 2008: |
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Dear Boardmembers, Unfortunately, the MSN BRK Board is going to close on the 21st of February. We have a limited number of days till then, and if you have not registered on the new message board you should do so - www.cornerofberkshireandfairfax.ca/forum . Fairfax's year-end results come out on the 19th, so there will be an enormous amount of discussion regarding their results just as this board closes. Berkshire's results come out shortly thereafter, and at that point this forum will no longer exist. As I will be working furiously to archive the old posts from here onto there, my time will become more limited as that date nears...so the earlier you apply, the faster I can get you registered and the more likely you will have somewhere to post at that time. Thanks again for all your support! Sincerely, Sanjeev Parsad Manager |
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Thanks alot Sanjeev. Paul Ianni From: SanjeevParsad@shaw.ca To: BerkshireHathawayShareholders@groups.msn.com Subject: Re: Ok, New Board is Ready! Date: Wed, 4 Feb 2009 11:29:19 -0800
Ok, New Board is Ready!
Windows Live Messenger. Multitasking at its finest. |
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receive emails on all posts on that board. If you want emails from the "Fairfax Financial" and "Berkshire Hathaway" boards, do the same thing. Then go to "Profile" and ...show/hide message
Hi Luvbrka,That feature is active. What you have to do is once you log-in, go to the specific board(s) you want emails from. For example, go to the "General Discussion" Board. Then on the right hand side is a small tab that says "Notify". Click that and approve it, and then you will start to receive emails on all posts on that board. If you want emails from the "Fairfax Financial" and "Berkshire Hathaway" boards, do the same thing. Then go to "Profile" and select "Notifications and Email". Make sure you have ticked "Receive forum announcements and important notifications by email."Also under "Profile", you will be able to activate or disable various aspects of the email feature. For example, you may only want replies to your posts emailed, or you may want all replies emailed. You can adjust these things to suit your needs. At the bottom of that same page, you will see exactly which boards you will be receiving emails from. Cheers!
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Yes al, I was there too and I said to everybody that it would be the beginning of 7 lean years for Fairfax. How about that? (Just a joke P.S.: In 1998, if I heard the word "Fairfax", I would have guessed that it was fax company or a food for pets company.
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Well, I think if Whitney is using the software, he should probably acknowledge it, but the rest of the "crimes" you are listing are somewhat dubious. The real crime was shorting Fairfax and then jumping on the wagon like there was no tomorrow. Also what about all his appearances on "Fast Money". Isn't that the antithesis of Berkshire's philosophy? Cheers!
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If it occurred equity prices would need to drop severely I thought prices were down right now to account for deflation fear. Without deflation, isn't the current multiple close to where it was in the 1970s during inflation? that is maybe the last 5% on the probability spectrum ? Anyways, it truly doesn't matter. Fairfax has been a holding company for over 20 years and you are acting like the market is going to suddenly figure that out and the stock will plunge. It's okay to be dissonant, but you are ignoring a pretty major point.l |
drop in operating income due to falloff in consumer demand. But as long as Fairfax's operating income is driven by fixed income, you don't have that fear, thus ...show/hide message
I think we should pay for the repeatable earnings stream (not one-time gains)... The repeatable earnings stream is about to go through the roof in my opionionThat's exactly right in my opinion too.A year ago Cardboard thought so too -- many times saying the market would pay for operating earnings. Now that operating earnings are going up, people are talking about a big discount. I don't get it.I think the market will discount what it is afraid of -- like equities that might see a big drop in operating income due to falloff in consumer demand. But as long as Fairfax's operating income is driven by fixed income, you don't have that fear, thus no discount.
the "extensive investment literature" is casting a generalization about an average situation, but that Berkshire, Fairfax and Leucadia are not necessarily average due to the fame of their capital allocator. ...show/hide message
There is extensive investment literature that both proves & quantifiesI believe my point is that the "extensive investment literature" is casting a generalization about an average situation, but that Berkshire, Fairfax and Leucadia are not necessarily average due to the fame of their capital allocator. Watsa's star is on the rise, Berkshire and Leucadia are currently out of favor due to expected longevity issues as well as recent 12 month performance.You might also dig up extensive investment literature that shows passive investing beats actively managed portfolios. Well, you might as well give up entirely and buy and index fund given this "proof and quantification".
nbsp; So is this "proof" that Berkshire has historically traded at a discount, and that Fairfax didn't IPO at 2x book and remained at a huge premium to book most ...show/hide message
There is extensive investment literature that both proves & quantifies the size of the hold coy discount in various situations. Major factors are the presence of a controlling shareholder, the projected UW costs of liquidating underlying subs & portfolios, & whether the underlying investments trade publicly.So is this "proof" that Berkshire has historically traded at a discount, and that Fairfax didn't IPO at 2x book and remained at a huge premium to book most of it's listed days?Does it further prove and quantify the discount that Leucadia has enjoyed over the years?
discussion is September that sounded just like this one? Where is the catalyst for Fairfax? ***** (person I won't name) mentioned that it's not like FFH ...show/hide message
In a poor economy the discount increasesIt's not whether what you are saying is incorrect, but whether it was more correct 12 months ago vs today. To the extent that the discount is already there, no worries -- it will be a tailwind as it diminishes.but their near term results will still get dragged down by a weak economy.Already priced in? I get what you are saying -- LVLT, DELL, etc will see lagging stock prices in a weak economy. They might be cut in half or worse... but wait, that already happend. They might not see a big rebound for a while -- that's likely your point.Liquidation World; a much more poorly run coy, that will probably do rather well over the next 12 months.Like Buffett said in a recent interview, Berkshire's insurance earnings are not being hurt by the weak economy.How are the Eurodollar futures contracts coming? How about them bond gains? Remember that discussion is September that sounded just like this one? Where is the catalyst for Fairfax? ***** (person I won't name) mentioned that it's not like FFH will go up $100 anytime soon. Well... maybe sometimes we get too confident on our abilities to know what catalyst is coming down the pipe. Just a few days later there were another $600m in CDS gains, just two months later some big bond gains, then a net gain on the short positions in equities, then a play in Eurodollar futures (have no idea what they made on this). Tell me, of all those catalysts, how many of them did you smart guys guess accurately?
develops, so it will be a tailwind not a headwind. There is, (other than Fairfax's size), nothing stopping Prem from putting 100% of book value into Cardboard's holdings.&...show/hide message
There are a number of other available investments where the underlying business & economic cycles are not working at such cross purposes to each other.Can't FFH load up shareholder equity with those opportunities, and when they are realized as 5 baggers by the market won't that accrue to book value growth vastly in excess of 15-20%, expecially when you account for float?I know the answer will be... JNJ will never be a 5 bagger in a few years. And I think that's the problem that will hold the stock back relative to whatever 5 bagger Cardboard is finding.& the hold coy discount rose to 15%The holding company discount (if there is one) is surely already priced in, and won't get bigger as Cardboard's holdings recover. If anything (if it exists) it will diminish as a new bull market develops, so it will be a tailwind not a headwind.There is, (other than Fairfax's size), nothing stopping Prem from putting 100% of book value into Cardboard's holdings. But a portion of it is allocated to tiny companies that will be 5 baggers. Another portion is allocated to slower growers like JNJ, but then there is all that float with potential for large capital gains on corporate bonds and other fixed income that they pick up -- and high yields while we wait I suppose. So add that float tailwind to the slow growing JNJ side and things aren't as bad as they seem. And for goodness sakes, they can grow vastly in excess of 15-20% "for the next few years". That kind of growth target made more sense before the stock market collapsed and dividend and fixed income yields went through the roof.
in October and November. If the declining trend or pattern had not been broken in Fairfax shares, it is quite possible that it would have traded down well below $200. ...show/hide message
Ericopoly,It did one big thing and it was to reverse the course of trading in a major way. From a technical perspective it was huge and even dipping to $240 afterwards did not mean a resuming of a declining trend. I know that technicals are a iffy topic on this board, but it cannot be denied that a great deal of traders use that stuff. I would argue that it dominates trading right now.You can watch many charts from 2008 of different stocks and you will see how painful it was in October and November. If the declining trend or pattern had not been broken in Fairfax shares, it is quite possible that it would have traded down well below $200. It would have been great value, but there is nothing to stop a stock on the way down once panic settles in. No matter how attractive it becomes.Cardboard
Hi Zorrofan, It is true that I hold no Fairfax position or Odyssey Re at this point. I thought about buying some FFH calls to "...
in late February, but did not pull the trigger so far. I sold my Fairfax shares simply because I believe that I have found other companies with more upside potential ...
currently accumulating blue chips and plan to live off the dividends and growth for life. Fairfax now looks as such. I prefer going for the cheapest stocks or investments available and ...
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Hi Zorrofan,It is true that I hold no Fairfax position or Odyssey Re at this point. I thought about buying some FFH calls to "speculate" on the market direction once the bond gains are released in late February, but did not pull the trigger so far.I sold my Fairfax shares simply because I believe that I have found other companies with more upside potential or a much larger gap between trading price and value. 2008 has created major dislocation in the marketplace especially for small caps. There are many companies trading for 3 times earnings or less and with a good future. There are cyclicals trading like they are bankrupt while they have little debt. There are companies trading for half of net cash. Not half of net-net working capital, but half of net cash with a decent business attached to it.Statistically my stocks are very cheap and should outperform massively once buyers return to the stock market. However, it has been painful. You buy something at 3 times earnings and watch it go to 2 times or less and wonder what is going on. Some may also die if the economy enters a depression. So it is a strategy that should pay off, but sticking my neck out has hurt so far.It also depends on what you want to do with your money. Some guys are currently accumulating blue chips and plan to live off the dividends and growth for life. Fairfax now looks as such. I prefer going for the cheapest stocks or investments available and trading them for better opportunities as they develop. I want very high and immediate upside potential especially as we get out of this crisis.Fairfax is a good company and I would say in a much better position than it has been at any point over the past decade. If you had a very large position in this company in 2008, you have likely outperformed the market by a long shot. Their good results have been recognized in some ways by the market and if you are a Canadian, the exchange rate has provided a big extra boost. I would say that the odds of outperformance are still quite high.The temporary ban on short selling somehow helped their share price as well. I say that the ban helped since having been a Fairfax shareholder for many years prior to now, I know that better results do not always translate into a decent share price right away. It was heading down pretty fast prior to that SEC move despite the improvements. So for the price to have behaved as such so far, I think that you have to consider that a fortunate event. For many companies that have still improved their businesses in 2008, Mr. Market ignored it and killed their share price.Cardboard
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Hi Al, No I don't write for the Post. I have looked at the possibility of investing in U.S. banks and every time I end up thinking along these lines: 1- Banks had a chance up until September 08 to issue shares at a decent price. I can't recall one who did and now the window is shut unless they are willing to almost completely wipeout existing shareholders. 2- Their assets (mortages, CDO's, various investments) keep losing value in this market. This leads to loan loss provisions which decreases their book value or reduces their ability to write new business. 3- Their liabilities are not decreasing (deposits) and some increasing (CDS) in this environment. In a way, this kind of looks like Fairfax in 2002, 2003. The thing is that Fairfax had more control (and better timing) over its future than what these guys have. They had friends which helped with #1. They were excellent investing in treasuries which lead to massive gains with #2 and the economy was getting better at that point which helped their equities. They were benefiting from a hard market in insurance which helped eliminating bad policies and replacing them with good ones fixing #3. So the solution for the banks is not obvious. Cardboard |
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As I suggested in a previous post, we don't really need to set up alternative boards to the one I'm setting up. MSN has announced that they will not close until February 21st. That gives me more than ample time to have the second board (message board format) up at www.cornerofberkshireandfairfax.ca . We already have the existing board (blog format) at www.cornerofberkshireandfairfax.com . Members from here can register on that board presently. I will automatically enroll everyone onto the message board format once it is established without you having to do anything further. It will be a very smooth transition. I'm actually leaning to keeping both boards running. The message board format board will be for our regular use and posting in a real-time forum. It will operate like the existing MSN BRK Board. The blog format board I will leave open as a case study board...perhaps people who want to post ideas specifically on Fairfax or Berkshire. As well as, if and when Corner Market Capital distributes a scholarship, we will use that board for application processing. Perhaps, potential applicants can submit specific case studies or something and post it on there. But that will be some time off. Both boards will remain completely free. I will also be archiving many of the posts on the MSN BRK Board between now and closure. So, we will retain many of the quality posts for posterity and reflection. Below you will find MSN's message they sent out today. Dear MSN Groups Customer, As a valued MSN Groups or MSN Communities Web Folders customer, we want to notify you that the MSN Groups service will close on February 21, 2009 and you will have the opportunity to move your group to our new partner service, Multiply. We understand the importance of keeping your group together, so we partnered with Multiply to create a migration process that moves your group to their service to preserve your online community and its history. Read on to find out about how to kick off the automatic migration of your group to Multiply. We realise this may be unexpected, so before presenting your options we want to briefly share why we've made this decision. Why? Options for moving your group to a new service
Options for MSN Communities Web Folders users Your Next Steps
What to Expect between now and the closing date Where can I learn more? Our support staff are equipped to answer your questions and guide you through issues that may arise as you decide what to do with your group. They are ready to help so don't hesitate to contact them at MSN Groups Customer Support with your questions. We thank you for using our services and regret any inconvenience this may cause. MSN Groups, Microsoft Corporation Microsoft respects your privacy. To learn more, please read our online Privacy Statement. Microsoft Corporation, One Microsoft Way, Redmond, WA 98052 |
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Any ideas on Fairfax's investment in International Coal. It is one of the larger equity holdings in their portfolio. In addition earlier in the year Fairfax changed the filing from a 13-G to a 13-D and put Sam Mitchel (of Hamblin Watsa) on the board. I've read through the financials and reports and don't see tremendous value here. Anyone have any insights on this particular investment. -Speculation on direction of coal pricing, locked in pricing, strategic alliances, improving operations, etc...? -Relatively small company that they own a growing significant percentage in. |
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I've known Peter Lindmark of Lindmark Capital for several years. When I met him in Omaha a few years ago, I was taken by his earnestness, honesty, humility and his knowledge of Buffett. What he lacked was a bit of conviction in his own instincts. Something not easily honed, but absolutely necessary to be a superb investor. I knew there was something there. If I had the capital, I would have certainly taken a shot at seeding him. I really would not have done that for any other young investor I've ever met.
This is a very tough business, where raising capital can be very difficult. After a couple of years of struggling to raise funds, Peter went to Mohnish and asked for some advice. Mohnish was perfectly frank and said something that no one else was willing to do..."Peter your results aren't very good!" They weren't horrible, but they certainly didn't distinguish him from many other young value managers. It was definitely something he needed to hear to seperate himself from the herd. After that, Peter buckled down and started to focus on what he knew, rather than watching what others were doing. Last year, he came to Toronto, and I spent a great deal of time with him. We went for a tour of Fairfax's offices which was a neat event, restaurants, a baseball game and just chatted. He and his wife Rachael have become good friends. He also listened intently to what Mohnish had to say. Needless to say, Peter's results improved markedly! To date, Peter has absolutely demolished the S&P500. He returned 64.8% gross in 2008, and 47.1% net to partners! His annualized return since inception in November 2005 is 18.1%, while the S&P500 TR has lost 6.8% annually. He is a remarkably humble and ethical human being. There aren't many young managers I would recommend. Actually outside of Sardar, I don't think I've recommended any! But I would urge investors to get to know Peter. He has the skillset, and he has something that is even harder to find...character! If you would like to know more about him, his site is www.lindmarkcapital.com . Cheers and congratulations Peter! |
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Markel (first) and Fairfax (second) finally led the poll! It does not change their intrinsic value by a dime, it does not change my opinion on these companies neither (I was a shareholder of both well before that), but they are getting recognized for their talent. |
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But in the meantime, if we don't find something, we could lose a lot of members. So, if it has to be done, I'll go to your message board temporarely when this one will shut down and will keep trying to post something on the actual blog format that Sanjeev has created. Actually, about three hundred members have already switched over. And many more are still joining. The current blog board (www.cornerofberkshireandfairfax.com) may be a temporary site. The problem is that if other people create more message boards, the people who have already joined at the blog board are going to have to join some more sites. Once I get the message board format up and running (weeks, rather than months), all I have to do is input the existing information I already have on members and they will be good to go on the message board site. They don't have to apply again if they've already joined the blog site. Once I've gotten everyone switched over to the message board site, I'll terminate the blog site. The blog site is there for continuity until the message board site is up. So, if you haven't joined the blog site, you will be out of luck some time in February. But one thing that is important is to not create more than one other temporarely message board, because if we do people will get confused and this asset that we have will be diluted. Members make the board, but membership is also often in transition. People come and people go. We have a very good relationship with Fairfax, and other investment managers and companies. There is significant added value on our site compared to many others because of the goodwill we share with those managers. We also already have certain gatherings that others do not hold, such as the Fairfax Shareholder's dinner, or the gathering during the Pabrai Funds AGM. The membership base will be fine once things are up and running. Cheers! |
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Fairfax Financial Holdings Limited announces that it has declared a dividend of US$8.00 per share on its outstanding multiple voting and subordinate voting shares, payable on January 27, 2009 to shareholders of record on January 20, 2009. I believe FFH may have chose the 20th as T+3 from expiration date on the calls. Cheers |
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I am going to try and migrate the posts over to the new site. If that doesn't work, then I will archive the best posts I can in some other format (in particular many of the ones on Fairfax), since no one else will have such a clear collective record of events during 2003-2008. First I want to get the memberships going, so that there is some continuity in the boards, then I can spend the last week or so of the month working on the archive. Thanks!
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"You're correct. I think the biggest lesson that anyone should take from Fairfax and Prem isn't the swaps or the investment process. It's that you just don't give up in life! "It would have been very easy for Prem to just walk away when things got tough or look for any easier way out like all of the Wall Street fatcats just did. Hell, he had at least 10% of his networth outside of Fairfax, so if he was worth $500M, then he had at least $50M outside of Fairfax...he could have easily continued his lifestyle without his family suffering one iota. Especially when people weren't just losing money, but calling him a crook, a cheat and a wannabe. Why take that abuse! "But he couldn't. He had a responsibility to his shareholders, to his employees, assistants, his faithful lieutenants, and all the friends and family that put their trust in him. He would never take the easy way out...he had to rebuild and make it right. As an investor or just an ordinary human being, that's the lesson that should be taken from Fairfax first and foremost! You just don't quit, no matter how painful." Sanjeev, this is one of the most articulate, coherent three paragraphs on Prem I have read. Your example, Prem, versus the unfortunate suicide, puts me in mind of Munger. To paraphrase: tell me where I'm going to die and I won't go there. In this case it is not a metaphor or hyperbole. You should never go to a place, in this case, leveraged to the point of bankruptcy, especially if you are already rich! |
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but 4-5 years out its not really sustainable unless the underlying business is quite a bit bigger. I think you are referring to the float leverage declining if they cannot grow their insurance business at the pace of book value growth. They could just increase the distribution to shareholders (buybacks and dividends). We'll therefore still get our 15% ROE if we use our dividends to buy more shares... unless the shares are trading at a premium to book value, which is not the worst thing of course. Or not increase the distribution -- who is to say that they cannot earn 15% without a tailwind from float... how has Leucadia managed over the years? I think historically Fairfax has done better than 15% before the effects of float -- you can get that just by looking at their equities performance (even after taxes). |
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After a few days, Fairfax and Markel lead the poll. Who could have said that just 1 or 2 years ago? |
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Sidestep will actually screen through all the best offers available at GTA, Priceline, Hotwire, etc. It's terrific! Cheers!
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I have found that GTAHotels has some nice deals, but all the ...show/hide message
I have found that GTAHotels has some nice deals, but all the other usual suspects of Priceline, Hotwire, etc... are good too.
http://www.gtahotels.com/cities/toronto_on.htm
Cheers
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I must say I sort of feel the same way! but I guess I must have faith!! Why not buy stocks from high quality and low debt company? I guess this is the question that everybody will want to ask to Prem Watsa at the fairfax annual shareholder meeting!! |
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Do you know of a good place to stay in Toronto for the FFH meeting? Thx. Hi Keith! I like to use www.sidestep.com to find hotel deals. You can find a bunch for Toronto right now around the meeting date...anything from $50-60 US per night for a 3-star to $300 US per night for a 5-star. You want to find something fairly close to the MTCC (Metro-Toronto Convention Centre), which is where the Fairfax AGM is. Joe Badali's is only a couple of blocks from there as well. The Airport Shuttle directly from Pearson International is also a very reasonable way to get to the City Centre. It will stop in front of about ten of the different major hotels and areas of the City Centre: http://www.torontoairportexpress.com/pdf/AirportExpress-Schedule.pdf . Cheers!
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http://realtravel.com/f-122714-north_york_restaurant-joe_bada...show/hide message
http://realtravel.com/f-122714-north_york_restaurant-joe_badalis_italian_restaurant_bar
Cheers,
-O
Sanjeev, Do you know of a good place to stay in Toronto for ...show/hide message
Sanjeev,
Do you know of a good place to stay in Toronto for the FFH meeting? Thx.
Keith
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I think the author here is absolutely delusional. Northbridge's second largest shareholder after Fairfax had this to say at the roundtable for the Financial Post last month: "A long-standing favourite is Toronto-based Northbridge Financial Corp. (NB/TSX), which is a property and casualty insurer. Next to Fairfax Financial Holdings Ltd. (FFH/TSX), we are the largest shareholders in Northbridge. At the beginning of December, Fairfax announced that it was going to buy the 36.9% of Northbridge that it did not already own. At the time, Northbridge was trading at 1.1 times book value per share, had $9.80 per share in cash and no debt. The market was valuing it at a 50% discount to our estimated intrinsic value per share of $49. Fairfax is buying this stock at the bottom of Northbridge's operating cycle. This illustrates why I am picking Fairfax. Through its interest in Northbridge, Fairfax is one of the largest property and casualty insurers in Canada. It also has Crum & Forster Holdings Corp. in the United States. Fairfax has been increasing its exposure to the reinsurance business. It has a majority stake in Odyssey Re Holdings Corp. It also provides investment management services through Hamblin Watsa Investment Counsel. Before taking in the increase in its Northbridge holdings, the stock was trading at 25% below our estimated intrinsic value per share in Canadian dollar terms of $475 and 1.12 times book value per share of $320. The company has a good balance sheet, with a large holding in cash of $100 per share. It will be made stronger by taking in what it does not already own of Northbridge." http://tinyurl.com/8yc5ca So, why the heck is the author pulling bait and switch? He's full of crap. |
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Fairfax is one of five selections for "Most Foolish" (that's foolish with a "ph", meaning good) companies for 2008 at the Motley Fool. Along with Fairfax are nominees Costco, Disney, Markel and Google. Incidentally, Fairfax currently leads with about 37% of the vote. Cheers! |
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Fairfax Announces Acquisition of Additional Units of Jazz Air Income Fund
TORONTO, ONTARIO--(MARKET WIRE)--Jan 8, 2009 -- Fairfax Financial Holdings Limited (Toronto:FFH.TO - News)(NYSE:FFH - News) announced today that it has acquired, through its subsidiaries, 2,478,800 units of Jazz Air Income Fund, bringing its total holdings in the Fund to 18,619,600 units or approximately 15.15% of the total units outstanding. The units were purchased through the facilities of the Toronto Stock Exchange for investment purposes. Fairfax continually reviews its investment alternatives and may purchase additional units of Jazz Air Income Fund from time to time in accordance with applicable laws. Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management. |
| Its not like you can't buy FFH for less than 1.3x Q3 book, I'd take the exchange! If you can do it without major realized gains, I probably wouldn't hold Orh considering they could cap your gains and make you sell, there is more upside if you hold Fairfax. |
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I remember meeting Greenberg at the first VIC in New York. He's one of those perpetually sweaty individuals...or perhaps he was just sweating because I was asking him how he did his due diligence on Fairfax before writing his articles. Cheers!
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Me thinks I am going to reverse my offer to tender the shares and see what happens. Ah Al, now who's the shark?
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as CEO of the Year and writing an article about it (without any input from Fairfax, Prem also did not want the award), DeCloet goes and writes a far less flattering ...show/hide message
"I actually thought it was a somewhat disingenuous article written by DeCloet. A month after picking Prem as CEO of the Year and writing an article about it (without any input from Fairfax, Prem also did not want the award), DeCloet goes and writes a far less flattering article."I suspect DeCloets ego is a little 'bruised', re our recent 'representational reporter analogy'.
as CEO of the Year and writing an article about it (without any input from Fairfax, Prem also did not want the award), DeCloet goes and writes a far less flattering ...
article. Fairfax offered 1.3 times 3rd Q book value. That is neither a ...
would have been very easy to do, since defacto control of the board is Fairfax's to begin with. Perhaps, what Prem could have done was offer Fairfax shares ...
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I actually thought it was a somewhat disingenuous article written by DeCloet. A month after picking Prem as CEO of the Year and writing an article about it (without any input from Fairfax, Prem also did not want the award), DeCloet goes and writes a far less flattering article.Fairfax offered 1.3 times 3rd Q book value. That is neither a significant premium, nor is it a discount...it's fair. Prem could have continued to buy the shares in the open market for around $30. That's what it was trading at before the offer. Or Northbridge could have continued to pour money into repurchases. Which would have been very easy to do, since defacto control of the board is Fairfax's to begin with.Perhaps, what Prem could have done was offer Fairfax shares instead of cash, that way Northbridge shareholders would continue to benefit from the purchase with no tax consequences. But I think the offer was very fair for both parties, as it was highly unlikely that Northbridge's market price would ever reflect true intrinsic value, since Fairfax holds such a substantial control position. Cheers!
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http://money.cnn.com/news/newsfeeds/articles/marketwire/0464405.htm Fairfax Announces Successful Completion of Offer for Polish Reinsurer Marketwire January 07, 2009: 05:02 PM ET Fairfax Financial Holdings Limited (TSX: FFH)(NYSE: FFH) announces that all regulatory and other conditions to its public tender offer to acquire all of the outstanding shares of Polskie Towarzystwo Reasekuracji Spolka Akcyjna ("PTR") at a price of 1.60 Polish zlotys per share were met today. As a result, the offer has been successfully completed, with shareholders holding 100% of the outstanding shares of PTR tendering to the offer. Fairfax will be taking up and paying for the tendered shares promptly. Any questions on the payment process should be directed to Fairfax's financial advisor, ING Securities S.A. Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management. Contacts: Fairfax Financial Holdings Limited Greg Taylor Chief Financial Officer (416) 367-4941 Media Contact: Fairfax Financial Holdings Limited Paul Rivett Chief Legal Officer (416) 367-4941 (416) 367-4946 (FAX) |
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I did not know this individual, and really do not want to seem insensitive to the recently deceased (or his family), but if one believes that a CEO are a steward for the shareholders, it looks like this gentleman acted in a highly irresponsible fashion. Hell, we've all been wrong before but we did not bet our a**es on it. But not only did he bet his a*, but he bet the a**es of his shareholders. Then, when it went south, rather than face the music and look those shareholders in the eyes, he opted otherwise. Again, I do not want to be insensitive as this is certainly a horribly difficult time for the friends and family, with whom I empathsize. But...he was able to live the high life when times were good, but could not bear to exist when times were going to be tough. You're correct. I think the biggest lesson that anyone should take from Fairfax and Prem isn't the swaps or the investment process. It's that you just don't give up in life! It would have been very easy for Prem to just walk away when things got tough or look for any easier way out like all of the Wall Street fatcats just did. Hell, he had at least 10% of his networth outside of Fairfax, so if he was worth $500M, then he had at least $50M outside of Fairfax...he could have easily continued his lifestyle without his family suffering one iota. Especially when people weren't just losing money, but calling him a crook, a cheat and a wannabe. Why take that abuse! But he couldn't. He had a responsibility to his shareholders, to his employees, assistants, his faithful lieutenants, and all the friends and family that put their trust in him. He would never take the easy way out...he had to rebuild and make it right. As an investor or just an ordinary human being, that's the lesson that should be taken from Fairfax first and foremost! You just don't quit, no matter how painful. Cheers! |
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What a difference 2 months make: Ostk: Was $7 now $11.70 SSW: Was $4.90 now $10.40 (dividend remains) HR.un: Was $4.90 now $8.43 (dividend halved as expected. still represent 10%. Fairfax saw the value here too and stepped in with a debenture/warrants. Nice way to start off the year!! <IV
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Text from the link in my earlier response . . . TORONTO, ONTARIO--(MARKET WIRE)--Jan 6, 2009 -- Fairfax Financial Holdings Limited (Toronto:FFH.TO - News)(NYSE:FFH - News) announces that it has declared a dividend of US$8.00 per share on its outstanding multiple voting and subordinate voting shares, payable on January 27, 2009 to shareholders of record on January 20, 2009. Applicable Canadian withholding tax will be applied to dividends payable to non-residents of Canada. Consistent with the practice of prior years, the amount of this dividend was determined taking into account the current operating results of Fairfax and its insurance and reinsurance companies and the current cash position at the Fairfax holding company. Consequently, as each year's circumstances are different, this dividend should not be regarded as indicative of the amount of any future annual dividends. |
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I have no position in both companies at the moment, so I will give you my perspective from an "outsider". Odyssey Re is benefiting from the possibility of a privatization. The odds are high considering that the company has been agressive at buying back its shares leaving only a small public float, Fairfax has bought already its other public subsidiary (Northbridge) and it still has the financial capacity to acquire the rest of ORH. Fairfax on the other hand is seen as the acquirer which means less cash available if they do it. That creates uncertainty in the market place and a typical trade is to buy the acquiree and to short the acquirer. It could have happened with Northbridge and some could be putting on this trade already expecting the same to occur with Odyssey Re. Another issue is the treasury market having dropped quite a bit over the last few days. The 10 year went from 2.1% to 2.56%. If Fairfax has followed the advice of Hoisington and kept most of its position including the very volatile zero coupon bonds, then the market is right to be worried about the evaporation of large gains. It is possible that they have sold a large chunk, but we just don't know. So the market is selling instead of giving the benefit of the doubt. On the other hand, Odyssey Re is kind of protected from this malaise since there is a conviction that they will be taken over, especially if the price was to drop. Cardboard
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Fairfax Declares Annual Dividend TORONTO, ONTARIO--(MARKET WIRE)--Jan 6, 2009 -- Fairfax Financial Holdings Limited (Toronto:FFH.TO - News)(NYSE:FFH - News) announces that it has declared a dividend of US$8.00 per share on its outstanding multiple voting and subordinate voting shares, payable on January 27, 2009 to shareholders of record on January 20, 2009. Applicable Canadian withholding tax will be applied to dividends payable to non-residents of Canada.
Consistent with the practice of prior years, the amount of this dividend was determined taking into account the current operating results of Fairfax and its insurance and reinsurance companies and the current cash position at the Fairfax holding company. Consequently, as each year's circumstances are different, this dividend should not be regarded as indicative of the amount of any future annual dividends. Fairfax Financial Holdings Limited is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance |
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We agree $5 to $7 bucks.... We are expecting an announcement at the dividend press release of 4th quarter gains. We feel it is appropriate considering the size...they are material. We also feel it is important that the market realizes that Fairfax was not a one hit wonder...credit default swaps are all we are hearing about. The Globe article only mentions the swaps and the $2 billion number. We are glad to see them recognized but feel the market is missing oil shorts, hedges, Massive Treasury portfolio...gains likely equal the $2 billion number. Is it not time for Fairfax to at least get the average price to book value of 1.4 times fort he insurance industry? Prem let the world know what your team has been doing. you guys deserve the credit. Dazel. |
| It would be great if Joe Badali's could stay open past 9:00p. Several of us struggled over after the FFH management dinner to find the doors locked. |
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http://www.theglobeandmail.com/servlet/story/LAC.20090103.RCOVERSTARDOGS03/TPStory?cid=al_gam_globeedge FAIRFAX FINANCIAL (STAR) An oasis in a sea of despair In a year when having the word "financial" in your name virtually guaranteed your stock would be cut in half - or worse - Fairfax Financial's shares did something remarkable: They rose. A lot. How? By profiting from the misery of others, of course. Using credit default swaps, CEO Prem Watsa had the good sense to bet against bond insurers and banks that were up to their necks in toxic mortgage sludge. So, while U.S. financial giants such as Lehman Brothers and AIG were going down, little old Fairfax was raking in a $2-billion (U.S.) profit. Hey Prem, thanks for tipping us off to your brilliant call. See if we do you any favours. John Heinzl I love that final paragraph. "Thanks for tipping us off..." They tipped off all their shareholders very publicly and anyone else who follows Prem and Co. No one listened for almost 5 years. Did J. Heinzl do any research for this? Why not just communicate with some of the other G&M columnists? They know the record...but they didn't believe it either until it came true so don't sweat it. |
| I ended 2008 up about 10% only because of fairfax and getting lucky on a few option trades. My portfolio is leveraged about 1.5:1 and when ffh dropped to 220 and below I put a little over half my chips into it. |
2008 saw my portfolio up 14.8% Thanks only to the fact that Fairfax made up a large portion of my holdings. I bet big with Prem and Company ...show/hide message
2008 saw my portfolio up 14.8% Thanks only to the fact that Fairfax made up a large portion of my holdings. I bet big with Prem and Company and it paid off - as compared to the dismal -35% or so of the TSE. I will admit that I sold a 1/3 of my FFH in the last month in order to purchase what I think are fantastic short term opportunities - the other 2/3 will stay fully invested with whom I think are (and have proved to me) to be the most prescient investors of the early 21st century. It's the ethics and morals of his team that really wins me over - and I can't think of anyone else I would rather trust my retirement savings with.
record, my portfolio was down just under 10%. Thanks to my friends at Odyssey Re, Fairfax and whomever allowed me to buy more FFH at US$220 several months back. &...show/hide message
As we all know, 2008 was the worst investing year over the last umpteen years with the S&P down close to 40%. The obvious question is how did we do in comparison. It would be interesting to see how the group here maneuvered through the past 12 months. Some of the more popular names mentioned on this board did better, though some did only marginally better (ORH up 35%, FFH up a few points, BRK down 30%) and some did worse (SNS down 47%, LUK down 60%).For the record, my portfolio was down just under 10%. Thanks to my friends at Odyssey Re, Fairfax and whomever allowed me to buy more FFH at US$220 several months back.Yes, I know that a year does not an investing record make, but it is useful to look back to evaluate what does and what does not work to either validate or cause one to re-examine their methods.All the best for 2009 and beyond.-Crip
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Fairfax Financial Annual Shareholder's Dinner I thought I would start planning for this a bit earlier this year, as we will probably have slightly more people than last year. For the last couple of years, Sam Mitchell and Francis Chou have come and spent well over an hour with shareholders, discussing a myriad of subjects. If we are fortunate enough to have them attend this year again, I'm sure investors will have a ton of questions for them regarding the worst annual market correction in over 70 years! Last year was especially terrific. The subject matter we discussed would have helped just about any investor avert the disaster that occurred this year. They were absolutely wonderful! Fairfax was gracious enough to make sure every shareholder left with a Fairfax baseball cap as well! If you would like to attend, please RSVP me at sanjeevparsad@shaw.ca and include your MSN BRK Board nickname as well if you don't mind. Details for the dinner are below: Where Joe Badali's 156 Front St. W Toronto, Ontario M5J2L6 416-977-3064 Map: http://tinyurl.com/3a6wt7 When Tuesday April 14th, 2009 - cocktails from 6:45-7:15pm, and once everyone gets there we'll sit down for dinner! We've held the dinner there for the last three years. It started with about 12 people three years ago, and we had around 33-35 people last year. It's a casual Italian eatery, with good food and decent prices. One of the other reasons we do the dinner there is they can handle very large groups, and we expect the dinner to grow significantly year after year. The reservations will be under: "Fairfax Financial Shareholders Dinner" and/or "Sanjeev Parsad". I'll follow up on this post every few weeks until the day of the event. Cheers! |
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I've heard before that Prem often stays at his cottage home during the weekends, and doesn't take meetings on Mondays, so perhaps he did. We'll let him slack off a bit after the year he had in 2008! God only knows that all of Fairfax deserves a 4-day weekend for their work over the last year. Brian Bradstreet can have one extra day more than everyone else for the swaps idea! Cheers!
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Fairfax may increase its stake in Polish insurer Parkiet. Cheers! |
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Another Deep Capture post regarding Fairfax/Bethany McLean today, this one from Byrne himself. It is a major smackdown to Fortune over their lack of forthrightness in dealing with her, leaving questions surrounding her departure unanswered. In it, he asks his readers to write to Fortune and encourage public answers to his questions for them. Many people have already responded, posting to the blog the letters they've sent to Fortune. Even if nothing ever comes of this, it sure is fun holding their feet to the fire. |
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Did the defendants submit their statement of defence?
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ha, priceless: "Given such a deep commitment to...show/hide message
ha,priceless:"Given such a deep commitment to cheating, I find it surprising Rocker Partners never managed to be a more successful hedge fund."Btw, what ever happened to good ol Hank?
The thing I still can't understand is, this has been going on...show/hide message
The thing I still can't understand is, this has been going on since Long Term Capital. There is a Pulitzer Prize in this for any journalist with the guts to report it. Are there none left in America?
Profile) provided against MI4, while they were running their own sting operation on a Fairfax employee at the alledged behest of Exis Capital. Cheers! http://www.deepcapture.com/ &...show/hide message
Deep Capture has put out a story regarding Spyro Contogouris' involvement, and they show a piece of the evidence (Intelligence Profile) provided against MI4, while they were running their own sting operation on a Fairfax employee at the alledged behest of Exis Capital. Cheers!
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Hi Folks, Could the boardmembers who have been here through Fairfax's heyday, and during the whole hedge fund and media attacks please contact me directly at: Thanks very much! Cheers! |
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Clues from Crum... Crum lists hybrid financial securities (fixed income securities designated for trading). I am assuming these are zero coupon treasuries? They were in a loss position at Sept 30! Berkshire Hatahway is insuring the muni debt they are buying...I m sure that this is likely the case across the board and you will see a large move from from Treasuires to insured muni and corporates...to the future! Crum lists Northbridge as part of the derivative group they will show a gain on the sale unless Fairfax got the Northbrige shares in the dividend in the 4th quarter. If that was the case fairfax will show the gain. Crum has taken $41m in mark to market losses on their North bridge holdings this year. Interest rates drop 200 basis points $693m 100 basis points $324m wow. Are we ever happy they did not take this company public! We think Crum has been forgotten. If you add the parts ORH, NB and CRUM..the rest of Fairfax is trading for less than free. Dazel. |
In 2002 and 2003 bond gains and unrealized gains were announced...(The first was because Fairfax employees and Fairfax itself was repurchasing shares. The second was the fact that Crum was ...show/hide message
In 2002 and 2003 bond gains and unrealized gains were announced...(The first was because Fairfax employees and Fairfax itself was repurchasing shares. The second was the fact that Crum was doing a bond issue. This time they are purchasing their own shares as well buying out Northbridge.) These are more realistic gains than CDS' were last year because of liquidity on the market for cds'...as you know the market did figure in these gains until they were realized. For one we know the swaps were realized..Treasuries are liquid.Dazel.
This message has been deleted by the author.show/hide message
This message has been deleted by the author.
I would expect an announcement from Fairfax regarding gains (likely when the dividend is announced). They will be purchasing large amounts of ...show/hide message
I would expect an announcement from Fairfax regarding gains (likely when the dividend is announced). They will be purchasing large amounts of stock back at theselevels and the gains on hedges and Treasuries are very materail as they are likely half of the market cap of the company!Hi Dazel,Just like the CDS, I wouldn't expect any announcement unless the gains are significant and realized. Maybe the gains are significant, but who knows if they are realized or not?Cheers!
"Velocity is outside the Fed’s control, and is d...show/hide message
"Velocity is outside the Fed’s control, and is determined by the rate of change in financial innovation. To say financial creativity has ceased would be an understatement; thus, it is logical to assume that velocity will continue to plummet"The amount of liquidity in circulation is the amount of money x the velocity at which it passes between people (essentially M2). The fed can directly increase the amount of money (open-mkt operations, bail-outs, etc.), but in normal circumstances the velocity (or 'multiplier') is primarily driven by the willingness of financial parties to 'lend' to one another (bank lending, short-term paper, repo's, etc.). The more willingness to lend, the greater the impact of every $ of federal injection.Technically a fed/government "CAN" change the velocity - by nationalizing the nations primary financial institutions, then as majority owner order them to lend (by lowering credit standards, targeting markets, etc) as directed. A 'nuke' option equivalent to lighting a match to a massive open pool of gasoline (total of all fed $ injected to date) that relies on the resulting hyper-inflation to pull the economy out of depression, & keep the shaky loans performing.Can it happen here ? Keep in mind that the UK has nationalized all major Irish banks, the primary Scottish banks, a good chunk of the English financial system, is looking at a 2009 depression rivalling the pre WWII era, & has a massive & growing unemployment problem. Much of the High Street & Commercial Property sector is financially collapsing, & institutions are hoarding cash for fear of shareholder 'prudent person' legal action. How long can an ex-chequer really hold out for ? - when there are multiple South American precedents."The loss in stock market wealth has exceeded the fall in housing sector wealth. In the third quarter alone, the losses in stock market values actually exceeded those on homes by a ratio of about 2.4 to 1. Ultimately, the damage to housing wealth should be far worse since a massive overhang of unsold homes remains on the market, suggesting that the bottom of house prices remains in the distant future."Keep in mind that the 'wealth effect' also works backward.(1) A wealthy investor feeling poor (market losses, etc) is more inclined to sell their investments & hoard their cash, than spend it on additional investments/refinacings - starving companies of investment capital when they need it most, driving prices down, & triggering more selling/hoarding. Good news is that there aren't that many people (2) A household gets poorer every day that the value of the house continues to decline, as every $ fall is a $ less of available credit line (ie: if your unused credit is 100K you might be willing to spend up to 50K of it - but if it's only 50K you might not be willing to spend any at all). As pricing cannot stabilize untill demand = supply, the outlook is bleak, & there are literally millions of folks with houses.The negative real return in most bond markets is saying that material deflation is expected over the short/medium term.We would humbly suggest that if the 'nukes' are used we're looking at significant and growing inflation by Q4 2009. Do you feel 'lucky' ?SD
Excellent work. That explains it. Zero coupons Treasuries! I would expect an announcement from Fairfax regarding gains (likely when the dividend is announced). They will be purchasing large amounts of ...
like that. The part Hoisington is managing will not be touched or talked about at Fairfax as they will likely not know the full extent of gains until quarter end...a ...
couple of days! What a New year it will be for Fairfax! The $97m in gains at ORH is impressive but not as impresive as what is ...show/hide message
Excellent work. That explains it.Zero coupons Treasuries!I would expect an announcement from Fairfax regarding gains (likely when the dividend is announced). They will be purchasing large amounts of stock back at theselevels and the gains on hedges and Treasuries are very materail as they are likely half of the market cap of the company! It appears that they again have hit the ball out of the park! We knew the gains in treasuries were big... but this is really something else. They willbe going on the buying spree of a lifetime as they will not be hoding zero coupons that long after a move like that. The part Hoisington is managing willnot be touched or talked about at Fairfax as they will likely not know the full extent of gains until quarter end...a couple of days! What a New year it willbe for Fairfax!The $97m in gains at ORH is impressive but not as impresive as what is possible with other $10 billion in bonds!Dazel.
Roughly $75 million in profit as of today. Phenomenal. Ratchet those results up to Fairfax size and that's real money Pricing came from http://online.wsj.com/mdc/...show/hide message
Not to get things back on topic or anything, BUT........let's see what they could have made on these recently purchased Zeroes.The 2/15/26 with par value of 69 million cost them 31.134 million on 9/25. Today, they are quoted at 61.182, or a value of $42.22 million. A quick 30%+ profit.They bought $164 million par of 11/15/26 zeroes for $71.884 million. Today they are worth $97.6 million. That's 36%..........in less than three months.Another batch of 2027's, cost 25.575 million, now worth 35.2 million.The 2028's cost 73.5 million, now worth $102 million.Those are all the newly purchased zeroes in Odyssey Re's portfolio as of 9/30/08. Roughly $75 million in profit as of today. Phenomenal. Ratchet those results up to Fairfax size and that's real moneyPricing came from http://online.wsj.com/mdc/public/page/2_3020-tstrips.html
Do you think we are at an inflection point for housing? ...show/hide message
Do you think we are at an inflection point for housing?I will keep saying "no" until the day when I'm wrong -- but it won't be clear without hindsight.During the years of rapid appreciation it was said that mortgage payments should be competitive with rents.Median price on a nationwide basis is $183,000. 30 yr fixed rates are about 4.75%.Assume 80% financing and fully-amortized monthly payment is $977 (includes 1.25% property tax).What is the median rent equivalent?
Do you think we are at an inflection point for housing?show/hide message
Do you think we are at an inflection point for housing?
since the inventory/sales equation is bad, prices need to...show/hide message
since the inventory/sales equation is bad, prices need to fallThere will be an inflection point where the equation will still be bad but prices will fall no further.
"Therefore, the damage from the housing market should be wors...show/hide message
"Therefore, the damage from the housing market should be worse than in the stock market. (Therefore, diamonds will fall in value more than tulip bulbs.)"
I think you mischaracterizing the statement. As I read it, it says that since the inventory/sales equation is bad, prices need to fall. So, the ultimate loss of housing wealth will be much larger than today's losses.
The point on money velocity is not clear. I agree.
The main issue that Hoisington raises is general debt level is going to fall, and since each dollar of debt added 86 cents to GDP, there is a lot of pain to go.
That being said I think there are some other fallacies, like the tax rebate checks. It may be true that they didn't save the economy. However things may have been worse without them. If households need to rebuild savings, weren't they beneficial even if they weren't spent?
I think if it bothers you, why not email Hoisington? I bet they would answer, and if they don't that would say something too.
I have only seen Hoisington express a view that goes out&nbs...show/hide message
I have only seen Hoisington express a view that goes out 2 or 4 years at most, but he is buying the long term bonds. Expressed differently, he is buying a long term investment on short term fundametals. Unless he is really harboring longer term doubts but just not expressing them?This differs from Rogers who is shorting the long term to reflect his view that while there may be deflation for a short period, he thinks a 30 yr instrument is the wrong vehicle for expressing that deflationary trend, givn the next 26+ years will carry inflationary risks (in his view).So, for whatever it's worth, it looks to me like Rogers is thinking with the long term in mind and Hoisington is just looking for short term movements.
The odd thing about the Hoisington quarterly review is that ...show/hide message
The odd thing about the Hoisington quarterly review is that the fellow keeps saying that things follow logically, that don't follow logically.For example,Velocity is outside the Fed’s control, and is determined by the rate of change in financial innovation. To say financial creativity has ceased would be an understatement; thus, it is logical to assume that velocity will continue to plummet.
He's roughly saying here "the temperature is falling. It's definitely not true that we're at absolute zero. Therefore, it's logical to assume that temperatures will continue to fall.".
Then he says,
The loss in stock market wealth has exceeded the fall in housing sector wealth. In the third quarter alone, the losses in stock market values actually exceeded those on homes by a ratio of about 2.4 to 1. Ultimately, the damage to housing wealth should be far worse since a massive overhang of unsold homes remains on the market, suggesting that the bottom of house prices remains in the distant future.
I don't see a logical chain here. He's saying:
- Stocks have fallen more than houses. (Tulip bulbs have fallen more than diamonds.)
- There is an overhang of unsold homes. (There are excess diamonds on the market)
- Therefore, the damage from the housing market should be worse than in the stock market. (Therefore, diamonds will fall in value more than tulip bulbs.)
- Therefore the bottom in the housing market is in distant future. (Therefore, the bottom in the diamond market is distant.)
This reasoning doesn't make sense. Does anyone know if it's because he's just having a problem expressing his reasoning, or if his reasoning is actually this clouded?
Richard
http://money.cnn.com/galleries/2008/fortune/0812/gallery.mark...show/hide message
http://money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/5.html
Jim Rogers is taking the opposite view:
"... I have covered most of my short positions in U.S. stocks, and I'm now selling long-term U.S. government bonds short. That's the last bubble I can find in the U.S. I cannot imagine why anybody would give money to the U.S. government for 30 years for less than a 4% yield. I certainly wouldn't. There are going to be gigantic amounts of bonds coming to the market, and inflation will be coming back. ..."
Cheers,
-O
Paints a fairly stark picture...interesting read. Hoisingto...show/hide message
Paints a fairly stark picture...interesting read.
Hoisington Quarterly Review
And why are rates going so low? Here comes 2009 and the reta...show/hide message
And why are rates going so low? Here comes 2009 and the retail bankruptcy wave, to be followed by the Alt-A wave, to be followed by......?"More Bankruptcies: Corporate-turnaround experts and bankruptcy lawyers are predicting a wave of retailer bankruptcies early next year, after being contacted by big and small retailers either preparing to file for Chapter 11 bankruptcy protection or scrambling to avoid that fate. Analysts estimate that from about 10% to 26% of all retailers are in financial distress and in danger of filing for Chapter 11. AlixPartners LLP, a Michigan-based turnaround consulting firm, estimates that 25.8% of 182 large retailers it tracks are at significant risk of filing for bankruptcy or facing financial distress in 2009 or 2010. In the previous two years, the firm had estimated 4% to 7% of retailers then tracked were at a high risk for filing. Retailers are particularly vulnerable to a recession because of their high fixed costs.
The most vulnerable retailers are those with debt coming due, says AlixPartners Chief Executive Fred Crawford. "There are companies in virtually every retail sector in distress, whether it's a jeweler or a high-end luxury store. But if they have a lot of debt and it's coming due soon, that's probably a better predictor that they may need to file," said Mr. Crawford. Several turnaround experts said retail lenders including General Electric Co.'s GE Capital, CIT Group and Wachovia Corp. are dialing back lending to retailers. CIT, which lends money against vendors' receivables, recently withdrew coverage for orders to Bon-Ton Stores Inc., of York, Pa. Bon-Ton spokeswoman Mary Kerr said, "We are in the process of contacting those affected vendors with whom we have good relationships in order to work directly with them." A CIT spokesman declined to comment.
Recent changes in the bankruptcy code make it more difficult for retailers to emerge from bankruptcy reorganization. The changes, passed in 2005, shortened to 210 days the time retailers have to determine whether or not to assume real-estate leases, limiting the amount of time they have to complete their restructuring. Lawrence Gottlieb, a New York bankruptcy attorney at Cooley Godward Kronish LLP says that only two retailers have successfully emerged from bankruptcy proceedings since the amendments to the code were passed. In turn, because the debtor-in-possession market for financing bankrupt companies remains squeezed, many bankrupt retailers could quickly turn into liquidations -- as was the case earlier this year with chains Linens 'N Things, Mervyn's and Steve and Barry's.
Store Closings: The International Council of Shopping Centers estimates that 148,000 stores will close in 2008, the most since 2001, and it predicts that there will be an additional 73,000 closures in the first half of 2009. This underscores a sea change in retailers' business strategy. "Generally speaking the way retailers have grown is to get more volume, and open more stores," says Greg Maloney, chief executive of the retail practice at real estate services firm Jones Lang LaSalle. Despite the closures, the U.S. is still likely to see a net gain in square footage mostly due to projects under way before the credit crisis hit. Barclays Capital analyst Jeff Black says growth in retail square footage will slow to 5% in 2009 from 8% in 2008. Some retail sectors likely to see growth include specialty teen stores while cutbacks are coming in the women's apparel sector.
Already a number of specialty retailers have said they are closing stores, including AnnTaylor Stores Corp., Talbots Inc. and Charming Shoppes Inc. Those that aren't closing stores will likely curtail expansion to conserve capital. J. Crew Group Chief Executive Mickey Drexler said that the company is "revisiting all new store openings" and plans to cut square footage growth in half in 2009, excluding a new concept. Liz Claiborne Inc. is postponing store expansion until the economy improves."I feel sorry for those who will lose their jobs, but am awed at how well FFH is positioned for all of this.CheersZorro
I think I will be opening my champaigne after newye...show/hide message
I think I will be opening my champaigne after newyears and getting a xmas present a bit later this year
Interestingly, in Odyssey's NAIC filing for Q3, Hoisington I...show/hide message
Interestingly, in Odyssey's NAIC filing for Q3, Hoisington Investment Management is listed as an investment advisor "acting on behalf of broker/dealers that have access to the investment accounts, handle securities, and have authority to make investments on behalf of the reporting entity." So, results may track Hoisington even more closely than we think!Of bonds acquired during Q3, Odyssey filings shows Zero Coupon Bonds(US Treasury Bond Stripped Principal Payment) maturing 2026, 27, and 28, bought on 9/25/08 or thereabouts, with par values totalling $479 million, and a cost of ~$200 million. In late July/early August, they acquired ~$55 million par value of long dated Treasuries(2028-2037) for ~$60 million. There are a zillion misc. bonds of the mortgage backed variety, all acquired in August/September, and all dated 2037-2047. with a cost of $7 million, and par value $177 million. They appear to have been trolling in the trash. They disposed of ~$400 million in Treasury Bonds dated 2020 to 2029. They did indeed switch out of Treasuries and into Zeros.
the 30 year was at 2.57% yield and we are at 2.60%. Fairfax may have done better than I thought. Take a look at this ...show/hide message
If the above Van Hoisigton portfolio has done 41% this year when the 30 year was at 2.57% yield and we are at 2.60%. Fairfax may have done better than I thought.Take a look at this article:Here is the part I want you to see:To play this hunch he's put half the portfolio at Hoisington Investment Management into long-term zero coupon Treasurys. Zeros rise faster--and fall faster--when rates change.
the 30 year was at 2.57% yield and we are at 2.60%. Fairfax may have done better than I thought. They have praised Hoisington for many years ...
they were likely adding to their long postions all year. In our assumptions from Fairfax's annual statement on interest rate risk we do not take into account ...
the movement of maturity dates. Fairfax had not shown large Treasury gains in the first 9 months of the year when ...
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Are we low in estimates?"Van Hoisington, president of Hoisington Management, which oversees $4.5 billion, say there is no bubble and that long-term Treasury yields have room to fall. His long-term bond fund, The Wasatch-Hoisington U.S. Treasury Fund, returned 41 percent this year, beating 96 percent of its peers."
If the above Van Hoisigton portfolio has done 41% this year when the 30 year was at 2.57% yield and we are at 2.60%. Fairfax may have done better than I thought. They have praised Hoisington for many years and stated that they were in the same camp as them regarding Treasuries and inflation. I am speculating here but if Hosington were to do 41% (I have not checked this number) they were likely adding to their long postions all year. In our assumptions from Fairfax's annual statement on interest rate risk we do not take into account the movement of maturity dates. Fairfax had not shown large Treasury gains in the first 9 months of the year when shorter term Treasury bonds were rising. A possible conclusion was that Fairfax changed their strategy to the long end of the curve. Adding to their position as Hoisgnton must have to return 41%.
Odyssey Re had a 7 year term to maturity at the end of quarter 3. In the past number of years this meant more of a barbell strategy. However, if Fairfax were to sell 2,3,4,5 year treasuries allocating some to cash equivalents and some to their long bond position they would maintain a 7 year maturity schedule. I will dig deeper but it would much more profitable to Fairfax had they done this. In 2002 they bet huge on the long bond in a deflationary period. Did they do it again? As Hoisington did?
Anyone have more info on Crum and ORH SEC filings? ORH stated in their 3rd quarter report that even though they did not have significant claims of longer term nature they were sticking by a longer maturity bond portfolio.
If this thesis is true..they will not be selling any long bonds yet as they see what Hoisington does...they will take the higher liquid income stream and possibly hedge it. The bond portfolio would look like year end 2002...lots of cash and lots of long term treasuries nothing in between. Move the cash into equity and corporate bond opportunities as they pop up. They made a kiling in corporate bonds in 2003. I will look at some more but if this is the case do not expect a bond sale windfall for a few more months!
Dazel.
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Keep in mind that this is only the start of the 'roll-up' to the top. Some of the names will end up doing deals to minimize their time/losses & retrieve reputations, etc as the SEC noose tightens on them further. Especially as there is relatively little public at this point as to the 'guiding minds'. It is public knowledge that SAC set up offices near the 'hill' in roughly Fall 2007. A prudent person might reasonably speculate that a least a part of this offices activity is lobbying for the entire group. A good lobbyist might suggest that SAC (1) keep their name out of the press (2) cease & desist for a time (3) incentivise leglislators to change laws/provide pardons, and (4) throw bodies to the wolves as neccessary, to appease the public. It is becoming clear that Wall Street was systemically corrupt over the last 5-10yrs, and that certain firms were particularly egracious. The political times are a changing - & now we need heads. The last time something similar in the US occurred, was Chicago during prohibition - Al Capone went to prison, & Elliot Ness became a hero. A good prosecutor would suck the oxygen out of each level, force roll-overs, & keep going up the chain. 2008 brought each of the US I-Banks down, & by default - pretty much elevated SAC to the top of the 'bad-boy' list. In todays age it is difficult to safely secrete proceeds abroad (too many governments have the ability to 'steal' it back), & Enron demonstrated that the top guy pretty much has to drop dead before the mess goes away. We would suggest that we're watching history |
What is scary is: how the HECK do you even track email corres...show/hide message
What is scary is: how the HECK do you even track email correspondence between parties being an outsider?
This seems scary stuff...who are the investigators hired?
What is stupider is that all of this occurred after the Micr...show/hide message
What is stupider is that all of this occurred after the Microsoft antitrust trial where MSFT's internal E-mails were used to prosecute. If MSFT cant cover their tracks then how would a bunch of hedgies and journalists actually expect to cover theirs.Arrogant, and not particularly bright. Unfortunately, by the time FFH gets to court there wont be much in the way of settlement money left. Hopefully enough to cover all the legal costs over the last 5 years.
Has anyone seen anything else on Bethany outside of Deep Capt...show/hide message
Has anyone seen anything else on Bethany outside of Deep Capture?
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Level 3's balance sheet is highly levered. The probability for a chapter 11 reorg certainly isn't immaterial. If chapter 11 materializes, Fairfax is going to lose a large portion of their $100 million investment. Does anyone have an opinion regarding Level 3 being able to survive for several years without a ch 11 or prepack bankruptcy filing?
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North River Insurance Company, $20.062 million aggregate principal amount of Notes is held by Fairfax (Barbados) International Corp. and $5 million aggregate principal amount of Notes is held by Falcon ...show/hide message
Notes from the Form 4 filing:
1. The Notes are convertible into Shares based on an initial conversion price of $1.80 per Share (equivalent to an initial conversion rate of 555.5556 Shares per $1,000 principal amount of Notes), subject to adjustment under certain circumstances.
2. The Notes are convertible into Shares at the option of the holder thereof at any time prior to the close of business on January 15, 2013, the maturity date of the Notes, unless the Notes are earlier purchased by the issuer or automatically converted.
3. $45 million aggregate principal amount of Notes is held by Odyssey America Reinsurance Corporation, $30 million aggregate principal amount of Notes is held by North River Insurance Company, $20.062 million aggregate principal amount of Notes is held by Fairfax (Barbados) International Corp. and $5 million aggregate principal amount of Notes is held by Falcon Insurance Company (Hong Kong) Limited.
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http://finance.yahoo.com/news/Fairfax-Announces-Acquisition-iw-13912896.html TORONTO, ONTARIO--(MARKET WIRE)--Dec 24, 2008 -- Fairfax Financial Holdings Limited (Toronto:FFH.TO - News)(NYSE:FFH - News) announced today that it has acquired, through its subsidiaries, 300,700 units of Jazz Air Income Fund, bringing its total holdings in the Fund to 15,316,900 units or approximately 12.47% of the total units outstanding. The units were purchased through the facilities of the Toronto Stock Exchange for investment purposes. Fairfax continually reviews its investment alternatives and may purchase additional units of Jazz Air Income Fund from time to time in accordance with applicable laws. |
| This announcement will send shares of H&R upwards as well, as the unit price was languishing over concerns that financing for their company breaking "the Bow" development was in jeopardy of falling through. This investment is as solid as Encana's covenant and at 11%... woopeee. |
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Suppose you have a bond portfolio that dwarfs your equities portfolio, yet you have the bond portfolio mostly allocated to govt bonds. Then suppose you can identify some companies heavily debt laden with equities discounted due to the fear of a protracted credit freeze and percieved inability to refinance their debt. Now, suppose these companies individually are small relative to the ammo you have in your large bond portfolio. Can't you then buy the equity and use your bond portfolio to refinance these companies when debt comes due, but making the terms especially favorable to yourself (convertibles and high interest rates)? Maybe that's not what they are doing, but it seems like it to me. The equity investments aren't really as risky (from Fairfax's perspective) as the market believes -- it's kind of like buying equities with insider's knowledge, except the insider's knowledge is that you can just keep these companies on life support for a very long time to wait for the credit markets to improve. This makes these businesses less risky to Fairfax provided that their debt financing needs aren't large enough where Fairfax couldn't handle it -- therefore you can manufacture a low risk investment from an initially high risk situation.... a form of making your own luck. Well, it's just a theory -- could be far wrong.
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