Parsad

Hey Guys, be careful on the hedges! It's one thing for Fairfax to be buying swaps on the CPI, but it's another thing for all of us. These hedges have real frictional costs, especially if you are wrong...take a look at Fairfax's equity hedges over the last six months. The best strategy to protect investment capital is knowing one's own limitations and circle of competence. That will save you more money than any hedge. Cheers!

As James Montier showed in his slides, money manager sentiment is flowing in the wrong direction, and small investors are piling in slowly according to this article. Cheers! http://finance.yahoo.com/news/2-years-after-market-low-the-apf-2492075628.html?x=0&sec=topStories&pos=main&asset=&ccode=

Hi Netnet, I think the best lesson is as you've suggested to read Berkshire's letters. I would also suggest reading Fairfax's letters from the first annual report in 1985 when it was still called "Markel"! Fairfax is almost entirely an insurance and investment business, so it would probably be a better case study in insurance than Berkshire. With Prem's successes and lumps, your nephew will also learn alot about what works and what doesn't. Cheers! http://www.fairfax.ca/financial.htm

Very good article! Cheers!

Hi Smallcap, Whenever you are posting a new message or reply, under the message title, there is a "Message Icon" box. You can choose whatever icon suits your mood or the post. So really, it is a user preference thing, and serves no real function other than that. Cheers!

Actually, Francis' US funds seem to have more of a hedge-fund structure in operation. He told me a couple of years ago that he was planning on possibly starting something along these lines. At the time, I told him that it would be great, because then people would really get to see how good a manager he is when not under mutual fund restrictions and allowed to compete head-on with other hedge-fund managers. I didn't realize that this is the vehicle until I read the annual report, but he has the fixed fee structure like a mutual fund. With his historical track record regarding reducing his fixed fees in years he is dissatisfied with his performance, this could be a fantastic hybrid vehicle for U.S. investors. As I've said before, he is one of the most ethical people I know, and in this business, finding someone you can trust is pretty much more important than anything else. Just remember...this vehicle is probably going to be more volatile as it is concentrated, but I would imagine his long-term results will be better than the Canadian Chou Funds. Cheers!

Hi Folks, As most of you know already, the dinner this year sold out really fast...all 70 seats were gone in a week. So I put together a waiting list in case anyone cancelled, but that list has already grown to 15 people. So I feel bad not being able to get everyone in. I spoke to the restaurant and we've arranged suitable plan. All those people that reserved initially, the first 70 people, will be seated in our regular private room area. There is a movable see-through partition that separates our room from the room next door, so we will slide that partition away for the dinner portion, and will seat the people on the waiting list on the tables alongside the partition and next to the other dinners. After dinner, the original 70 guests will have the first right to move their seat closer to the presentation, and then we'll fill in the back with the people that came in on the waiting list. That way everyone can enjoy the dinner buffet and the presentation, and we don't have to exclude anyone this year. I will definitely find a bigger location for next year! Thanks very much for all of you who have already paid...roughly 85% are paid to date! I would ask that those that haven't paid, please do so, as well as any guests that are on the waiting list and would like to join us. Details for the dinner are below. Thanks very much! 2011 FAIRFAX FINANCIAL SHAREHOLDER'S DINNER The Fairfax Financial Shareholder’s Dinner we hold each year, is set for April 19, 2011 at Joe Badali’s in Toronto. We’ve always enjoyed support from Fairfax, and last year our guests were Sam Mitchell, Brian Bradstreet & Peter Furlan. As well, our dear friend Francis Chou of Chou Associates was there to answer questions. It was a terrific evening where investors asked virtually anything they wanted, and came away with some tremendous lessons. The dinner is held in memory of JoAnn Butler, who was our biggest supporter and Prem Watsa’s executive assistant for many years. JoAnn passed away on May 12, 2009 from colon cancer, and she was instrumental in the success of our dinners each year. We’ve changed the structure of the event a bit, as the guest count was at capacity last year, and the ordering process for dinner became quite a challenge. This year the ticket price is $45 per person, which includes an expansive buffet dinner, dessert, coffee & tea, as well as a third of the ticket price goes to the Crohn’s and Colitis Foundation of Canada, in memory of JoAnn. Corner Market Capital Corporation will once again match that donation. Last year, through your generosity, we raised $4,870! Please get your RSVP’s and payments in early, as we will be limited to 70 people attending this year. Fairfax Financial Shareholder’s Dinner Tuesday April 19, 2011 Joe Badali’s 156 Front Street West Toronto, Ontario (416)977-3064 Meet & Greet: 5:30pm-6:00pm Dinner Buffet: 6:00pm-8:00pm Q&A: 8:00pm-9:30pm Tickets: $45/person RSVP: cornermarketcapital@gmail.com Paypal: cornermarketcapital@gmail.com Memo: FFH Shareholders Dinner Checks: Corner Market Capital Corporation Suite 1620, Box 36 1140 W. Pender Street Vancouver, BC V6E4G1 JOE BADALI’S FRESH PASTA BAR BUFFET ~SALAD BAR~ * 1 HOUSEMADE SOUP * CAESAR SALAD WITH ROASTED GARLIC DRESSING * BADALI SALAD WITH FRESH LEMON HERB VINAIGRETTE * TOMATOES * CUCUMBERS * LEMON WEDGES * SLICED OLIVES * SLICED RAW MUSHROOMS * CROUTONS * BACON BITS * ROMANO CHEESE * 5 ANTIPASTI ITEMS (ASSORTED VEGETABLE & FRESH PASTA SALADS) ~ENTRÉE ITEMS~ * CHEF'S CARVERY (ROAST BEEF) * 2 FRESH HOT PASTAS (1 VEGETARIAN) * FRESH P.E.I. MUSSELS * ROASTED CHICKEN * RICE PILAF OR ROASTED POTATOES * ASSORTED STONE BAKED PIZZAS ~DESSERT ITEMS~ * FRESH FRUIT PLATTER * CHOCOLATE CAKE * COFFEE or TEA Cheers!

The thing I'm most proud of, is that during the heat of the battle, it would have been very easy for many of us to sell our Fairfax shares. But I believe virtually everyone I knew during the old MSN BRK Board days, when all of this was happening, held on to their shares. On top of that, as James said, we were shooting down one argument after another. Perhaps, that's why Prem supports all of the shareholders that stuck by him so much. As that Jewish friend of Buffett's stated after living through the Holocaust...how many people do you know that would hide you from the Nazi's? I think Prem realized that all of his staff would, many of his long-time friends, and the many Fairfax shareholders on our board. Cheers!

Also, there were a number of anonymous posters who were showing up on the old MSN BRK Board and other message boards, and stating things about Fairfax which almost immediately showed up in articles by Peter Eavis, Fabrice Taylor, Herb Greenberg and other writers. We were one of the first people to warn Fairfax that something very nefarious was going on, and that somebody was coordinating an attack against its stock. From what we eventually traced, it was John Hempton, an analyst at Platinum Asset Management in Australia who was behind the posts. He was also the one feeding information to John Gwynn, the analyst at Morgan Keegan who wrote several very negative reports about Fairfax, and subsequently had fed these reports to people working closely to Jim Chanos and Daniel Loeb, ahead of Morgan Keegan publishing them publically. Gwynn was subsequently fired for that. Hempton also was the one feeding information to former Street.com writer Peter Eavis, who wrote some 50+ articles about Fairfax in a 6-month period. Peter Eavis once openly posted on the Stockhouse.com FFH Board that he would like to speak to anyone who works for Fairfax or worked for the company in the past. Hempton also contacted a number of other Fairfax shareholders, telling them they should sell because Fairfax was using finite reinsurance to bolster its balance sheet. Hempton was subsequently let go from Platinum as well. Gwynn mysteriously passed away before the courts could depose him! In my opinion, Deepcapture may go over the top at times in their prose, but they have been more accurate than anyone else. Cheers!

Like 'em all, especially Wayne Knight. Who plays Spyro Contogouris? How about Charlie Sheen? Since Spyro is apparently "winning", like Charlie Sheen. And of course, Peter Eavis and Fabrice Taylor can both be played by blocks of clay, since they are so moldable and terrific at reinventing themselves after huge lapses in judgement. Cheers!

Not sure exactly who, but I believe some may be Best Buy, Apple, Microsoft, Oracle, Danaher, Leucadia, Dell & Home Depot. Cheers!

Hi Woodstove, I buy mine through BCAA, and I buy for the entire year. I can go on any number of trips in a year, as long as they aren't more than 8 days each, $5M coverage, $300 deductible, and I pay about $65/year. For longer trips, you just go in or phone in, and they will extend the coverage for the number of extra days you need for a fee. I chose 8 days, because I usually go on lots of short trips, but you can buy other durations too...shorter or longer. Cheers!

At some point wouldn't this make a great subject for Fifth Estate, W5, 60 Minutes, Dateline, etc unless it becomes too complicated for them, but it has a great story line with all the intrigue of any novel. In fact there is more in this than in a lot of movies like Wall Street, etc. So for a movie, anyone want to suggest who we would cast as Prem, etc? I think that there are so many villains here we could employ half the bad guys in Hollywood. And I think we could even find a place for Charlie Sheen. Well, Prem would obviously be played by Ben Kingsley! ;D I think the cast of Seinfeld could play some of the other players...Michael Richards (Kramer) would be Herb Greenberg...Peter Eavis could be played by Jason Alexander (George from Seinfeld) and Wayne Knight (Newman) could play Steve Cohen! Cheers!

I'm quite certain that Vancouver real estate, and to some extent other overextended areas of Canada, will have a real estate correction when China's own bubbles correct. When that is? I haven't the foggiest, but it will happen. The average home price in the suburb of Richmond, which is predominantly Asian, hit $1.1M this week...up from $880K in September 2010! The culprits behind the rise...wealthy mainland Chinese buyers. This is no different than when the Japanese were buying up everything in the late 70's and 80's, or the Hong Kong/Taiwan exodus that was buying up everything in the 90's. Correct me if I'm wrong, but wealthy American's were buying a few years ago and pushing up Vancouver and Whistler prices. They are all gone now and it is the mainland Chinese buyers left. Guess what? They won't be buying by the end of this decade either! Maybe the eventual wealthy Indian middle-class will be coming, and Vancouver prices will remain inflated for another decade! ;D Cheers!

I agree! If the courts eventually decide in favor of Fairfax, I think this will be the biggest scandal since Madoff. And the bigger question, how can the average investor, or even CEO, not assume that the game is rigged against them. Cheers!

Bloomberg article that discusses Fairfax's claims against Third Point, including that Daniel Loeb did not know what finite reinsurance was in his deposition! http://www.bloomberg.com/news/2011-03-05/fairfax-financial-claims-in-suit-that-third-point-s-loeb-lied-to-investors.html How could he not know? Everyone on the old MSN BRK Message Board knew what finite reinsurance was after the whole naked-short attack, yet this guy who runs $5.6B and was shorting Fairfax after EXTENSIVE research didn't know what it was? Cheers!

It looks like a typical distressed company bet. They seemed to have adequate assets on hand, but their losses kept compounding. T2 was betting that the bleeding could be stemmed and they would recover more than their cost. I think they paid too much at $1.50 back in December considering the company's position at the time, yet I could see why they were buying at much lower prices at later dates. Looks like the company's finances were so stressed in early 2011, that the board felt that they had no option but to transition their teams to other buyers, and then pay off their creditors. That's part of investing...you make calculated bets, buy with a margin of safety, and it is still possible that you will be wrong. Cheers!

I'll check with Fairfax and find out whether they may make the book available online in some form after the AGM is over. Perhaps, solely on Overstock.com! ;D And yes, it is a book and it's a fantastic tribute to Prem and all of Fairfax. All the shareholders attending will love it, and I suspect Prem will be signing alot of autographs at the AGM this year! Cheers!

I just finished reading the letter. I thought it was excellent, and addressed many questions we all probably had. And no, I had no insight whatsoever what would be in the letter. I do know that on a number of things, Prem and I do think alike...be it building shareholder value, corporate governance, ethics, and most importantly, how you treat other people. Perhaps, that's why emotionally and intellectually, I attached so much of myself to him...it was like finding a long-lost relative the first time I met him! Although most of you who have known me for some time already knew that, simply by all the damn exclamations we both use! ;D Cheers!

Can someone still update me as to what indication there is that FFH will buy non-insurance businesses? There is nothing to indicate that they will do so. My hypothesis is based simply on that Prem once told me that they would consider buying entire businesses, but not for some time...that was about seven years ago. Their asset base is getting pretty large. At some point, you are going to find that the universe of opportunities is shrinking as Fairfax's capital base gets larger and larger...their portfolio is now $22B! Add in their other current assets and they are over $29B! Prem is getting older, Roger Lace is getting older, Brian Bradstreet is getting older...everyone on Hamblin-Watsa's investment team that has generated the stellar returns for the last 25 years is getting older. You have Paul Ianni, Peter Furlan, etc and some of the other young leaders at Hamblin-Watsa on the analyst side, but they have yet to be given more significant roles. Wayne Cadawallader has gone to his own fund. Where are the ideas going to come from 10 or 20 years from now? Insurance as Buffett says is a business built on the trust of your customers knowing that your checks will clear. I would like to see Fairfax have at least an AA-credit rating. They've already got runoff under control, and they've reduced both their asset/equity and debt/equity leverage. The next step would naturally be to strengthen their underwriting across the board...I think adding Andy Barnard to oversee that adds that little bit of extra attention to the already terrific group of insurance executives the company has running their subs. Finally, the next logical step, at least in my little mind, is that you want an extra leg supporting the stool...adding stability to cash flows and less reliability on the Hamblin-Watsa team having to allocate forever more capital. Berkshire knew this, Markel figured it out and I think Prem knows this too. But at the same time, you don't want to leave your circle of competence. So I think the next step may be to start wading into this...buy small companies...$100M-250M valuation...$15-30M in earnings. Who knows? Only Prem and his team know what they are going to do, but hey...if I can generate enough interest in the idea, maybe they will consider it more deeply! ;D Cheers!

Biglari Holdings has upped their stake even in the face of a poison pill. Cheers! http://www.sec.gov/Archives/edgar/data/93859/000092189511000434/sc13da107428007_03032011.htm

Does anyone have Od. Re's average combined ratio for the past 10+ years handy? After a quick look, it seems to move between 95% and 110%, but that's just at a glance. You can take a look at past Fairfax annual reports on their website. From what I understand, when Prem acquired Odyssey, it was primarily because he got Andy with it. Since then, even with 9/11, Hurricane Hugo, earthquakes, etc., I believe Odyssey has a combined ratio close to or below 100%. He's a terrific leader and putting him in charge should allow Fairfax to focus on the one last facet that left them open to criticism and kept them out of that top tier with Berkshire...underwriting! Cheers!

I also suspect we aren't that far away from seeing Fairfax acquire entire non-insurance businesses or at least majority stakes. Cheers!

Fairfax has put out a press release stating that Andy Barnard, CEO of Odyssey Re, will now oversee all of Fairfax's insurance operations. I think you will see zero cost float in the next few years on a regular basis at Fairfax! Cheers! http://finance.yahoo.com/news/Personnel-iw-4054867507.html?x=0&.v=1

Noticed in the paper that Apple has dropped be cost for the original iPad by $100. Know some of you have been waiting on the new tablet to come out before buying one. Seems like the only real difference between the two versions are the cameras. No, there are a bunch of differences...faster chip, two cameras for facetime and video, thinner, lighter, HDMI port so you can view your pictures on your big screen or do a powerpoint. Battery life is the same 10 hours. I think the new one is well worth paying the $100, rather than buy the old iPad. Cheers!