Partner24

Hey, welcome back John! Long time no see. I'm glad to see you post here once again :)

Guys, if you are good at timing the stock market as a whole and FFH stock price too and it serves you well, that's very fine for you. I'm not good at predicting "when will the screwdrivers at Canadian Tire will be at a discounted prices from today". But that's not to say that I've tried that before. Regarding the numbers, I take a look a price/estimated intrinsic value per share. That dictate if I keep shares of a business or not. Cheers!

"Even Fairfax will go down in a dramatic correction". The fact is nobody can really predict that for sure. What will be mostly important is not what the scoreboard says, but what truly happens on the baseball field.

Hi giofranchi, either your aim is to protect capital, or your aim is to increase capital Or both! There is ways to grow that are safer than others (ex.: quality businesses, good moat, good managers, good price vs. speculation on penny stocks). If you think rationally, you know there is a time when the first policy is right, and another time when the second policy is right. Easy said, but to time these things is a very hard job. It's easy to believe in your crystall ball. Like one fellow said, the only time I made money with a crystall ball is when I sold it on Ebay. I am absolutely sure that there will be a recession. When? I don't have any idea! I try to build arks that will do fairly well when the sun shines and will do ok when it rains. Do you, instead, know a way to increase capital, should the sun shine, and at the same time to protect capital, should rain come?! That's mostly the Berkshire Hathaway way IMO. No sophisticated ways to protect capital, but good streams of income from good businesses, lot of cash and equities from good businesses on the balance sheet. They will intrinsicaly do ok if it rains, and fairly good if the sun shines. But I don't want to complain about FFH style. It's their style, they have done well with it on the long run and I keep the long term view with this company...and all the companies in wich I have put my money. Like I said, I'll see what happens over the next few years and decide then if I have to keep the faith or not. Cheers!

So far, what happened with Fairfax is the scenario that I have underlined here for a few years. Fairfax built an "ark" with their hedges and other sophisticated investments like that and lot of people tought that we were safe. It is an ark that protect us from rain (deflation, bad economy, stock market downside, etc.), but what happen if the sun shines? We might get thirsty. It seemed that this scenario was not the one that most FFH vocal fans here were seing... ...but that is exactely what happened over the last few years. The sun have shined, we did not have a lot of rain, and obviously you guys are now thirsty. It could have been far worse, but this is what happened overall. I'm not in the business of "forecasting weather" (macro things). This is the kind of things that FFH do, not me. Personaly, I just take a look at a situation and try to see the two sides of the coin. I'm still happy and optimistic with FFH over the long term and keeping my shares. You have to be very patient with FFH and let them do what they have proven to do well over the long term. But like you said guys, over the last few years, their "cautious" view haven't paid off. Let's see what happen over the mid-term. If I don't see anything interesting over the next 2 to 3 years, I could change my opinion. Cheers!

My favorite part is the part where they wrote that despite their differences, the pofessional and personal issues they had over the decades, C&S obviously like each other very much. That's a partnership that is terrific to have with someone. I wish them well. They've done great for their long term shareholders.

Unfortunately, businesses are theoricaly permanent, but people are surely not. Don't care about stock splits, but I would like to split the age of C&S in two! A very good "Farewell" letter, but I agree that I would have liked to have more information regarding the new managers of the business. I first tought that the letter would be splitted in two...a section by C&S and a section for the new managers.

Invest in a small business that is already operating and profitable. One business or split in few ones like that.

Every single share that I own can be for sale. That being said, I do not sell cheap ;) You can buy things you plan to own for a very long period of time (FFH, MKL, etc.) because you think they'll do well for the long run, but in the end if the price become too high I would sell them in the hope that they would go back to good prices in the not too distant future. None of the businesses that I own shares are in that price range, so in the meantime, they keep compounding their instrinsic value per share and I'm a happy owner. So all that being said, I think that buy and hold fundamental investing approach is a far more succesful (and lousy) way to make money than to trade frequently It's very easy to think that you can time the market and make stupid decisions. Like Warren used to quote in it's annual chairman letters: All men's miseries derive from not being able to sit in a quiet room alone Blaise Pascal Cheers!

Regarding Fairfax case, sorry for the translation, but once a law teacher told us: They should rename "Courts of Justice" this way: "Law administrative centers" A little sad, but sometimes true.

Hi Al, Fair enough. Unlike FFH, I'm not in the macro predictions business because that's outside of my circle of competencies. I let them do that. I keep the long term view and let's see what will happen over the next few years. Like I said here a few times, people were saying that FFH is an ark that were being protected very well if we would have rain, but didn't ask themselves much what would happen if we would have sunshine and no water (we could then become a little thirsty). But, like I said, that's in their circle of competencies, not mine, and I'll let them do their job with patience. Cheers!

Hi Jack, I remember you very well. It's been nice to meet you more than 5 years ago at the FFH AGM and the diner before it. I'm happy to see you post. Cheers!

I've been a shareholder of MKL since a few years. I really like their attitude and the way they manage the company. They take the "silver medal", less risky approach to investing. Unlike FFH, they do not make macro bets. That "silver medal" in equities investing produced a 2 percentage points outperformance to the S&P 500 over the last 5 years. It is good, but not as good as I would have expected. They have the benefit of permanent capital, so it maximize their flexibility. I may sound too demanding, but I would expect that these competitive advantages produce higher returns than that. 4-5 percentage points outperformance over the long term would be more satisfactory. Cheers!

Unfortunately, last time I heard him, it was at a WTM conference call when he came back (shortly) in the company. It was a bad quarter and he seemed sad. He said something like "It's a sad chapter of a long story". Well, Jack, no matter that very short sad chapter...the long story has been obviously very good and you can rest in peace. Cheers!

Let's put it simply. The numbers aren't exact, but it will simplify the rationale about BRK/FFH respective book values. To me: A dollar of BRK book is (slightly less) two birds in your hand that will hopefully give birth to 3 birds each over the next decade. A dollar of FFH book is (slightly more) one bird in your hand that will hopefully give birth to 4 birds each over the next decade.

Hi Giofranchi, the safeness of an investment is not the safeness of the business you invested in. It is quite different. I think we all agree on that. I do not agree. A stock is a share of ownership in a business. If you have 1/1 000 000 of a business that is not safe, you shouldn't think that what you own is safe. I'm not talking about Fairfax here. Just a concept. 1) A lower multiple: not the most important thing, probably the least important thing, but I like it anyhow. Price is what you pay, value is what you get. 1 dollar of FFH book value is not worth 1 dollar of book of Berkshire. But I'm sure you understand that. 2) FFH is much smaller than BRK, and Mr. Watsa could be at the helm for the next 20 years, while Mr. Buffett surely will not. Less capital to invest, more room to grow. The longer the founder stays at the helm compounding capital, the better I like it. I am not saying BRK won’t find the right solution. I am just saying that, as far as a good business is concerned, I HATE CHANGE. We are talking about risk, right? That's a good point. A business is not just it's assets. It is run by people. So, to me, you have a good point here and I agree with it. That being said, to me actual and future intrinsic value of Berkshire is less dependant on it's actual CEO than Fairfax. Berkshire subsidiaries are very independant. I mean, will people stop buying DQ ice creams when Buffett is no longer at the helm? People will not stop buying insurance at FFH subsidiaries neither, but investment acument is crucial at FFH. 3) In a down market no one will shine like FFH, either in the short and in the long term. In a up market (and no market stays exuberant forever…) I believe FFH will lag behind BRK in the short term, while still being profitable, but it will do at least as good as BRK in the long term, probably even better! No one will shine like FFH, not sure about that, but yes they are well protected. In a up market, it depends a lot on their own investments. If they do not go up with the market, we will get hurt, that's for sure. That's a risk. Regarding your long term prediction about FFH/BRK I do agree, mostly because FFH is a smaller business and have larger room to grow. Cheers!

Just a prediction, real numbers will be out soon. But still, they tend to be right with their pre-releases. So, in few words, they keep making dust. I've been an owner since more than 5 years now and I'm very satisfied with the business intrinsic performance and it's management. If the stock get cheaper (12x headlines earnings per share or so), I will add to my actual position significantly (watering the flowers like Peter Lynch said). Cheers!

Yes, I've received them two days ago in my Scotia ITrade account.

Congragulations and thank you so much Sanjeev! Looking forward for the next 11! For the "old timers" here, I do remember the 2003-2006 years so much on this board. Remember the not so pretty MSN BRK colors, but the great culture we had then. I think you can still see most of the culture here...but you know, maybe it's just nostalgy...but even if it was tough to be a FFH shareholder, I miss those years and some of the people who were there. Happy to see that Sanjeev and some others are still there. Looking forward to keep posting and reading you guys for the next 11 years! Cheers!

These hedges are a two edged sword. It is defensive, but in no way it is fully safe to do so. If the markets go up and our investment portfolio don't, we get hurt. Think about Noah ark. If it rains, we float while the others are underwater. If the sun shines, it get dry and we are thirsty. I'm not complaining at all. It's just a fact that people need to remember.

Suing for having too much cash, suing for having not enough cash. Complaining because Uncle Sam used taxpayers money to save the system and then complaining because Uncle Sam made some profits in some transactions. What's next? Suing because the company did not make XX.XX earnings per share last quarter as analysts tought? When will suing will replace baseball as the national sport?

Fairfax is not the strongest ark that I've ever seen. Being defensive does not necessarely mean having a strong ark. What if the sun shines too much (inflation goes up, interest rates go up, stock indexes go up, etc.)? Not the strongest ark in that scenario. No comparaison with Berkshire. It's very shiny? No problem. It rains a lot? No problem. That does not making me staying away from being a Fairfax shareholder (10 years and still counting), but you have to understand that it is not as safe as Berkshire. Cheers!

I certainly hope it doesn't! Opened my first position in the name both ALTE and MKL. Long-term hold and I expect to see returns. Well, as long as you are a buyer, you hope to buy cheap and sell expensive. Ask Costco and Walmart managers about their customers ;-) So that's why if you plan to keep adding to your position, you hope that intrinsic value goes up and price stay the same or better yet, go down. Cheers!

Bidvest has done a very good job over the last few years. We were in a very tough economical climate. Joffe has been able to grow the business while returning back a lot of capital to it's shareholders. When you take a look at the long term growth, you have to factor in the dividend they pay, wich is more or less 50% of the earnings. They didn't leverage a lot because they haven't found businesses to buy at a price level they want. Joffe is the kind of investor that can be patient and convervative, but opportunistic when needed. Given the context, I'm very satisfied with it's performance and his attitude. Regarding the price, sure it could be better, but a good business like that deserve a higher valuation than that. I'm surprised that this business is not more followed by the investment community. Maybe because it comes from Africa? I put Joffe in the same league as the other great investors that we follow.

Doh! No, I didn't have time to do it, because I'm starting few new positions, but still MKL is cheap enough. I'll cross my fingers that it will stay at that level or so over the next few years, but who knows...