FFH AGM 2020

[investmd]

Does anyone know timing of FFH AGM this year? Was originally scheduled for April 16th.  Their website says it will be webcast but no further details as how to sign up or time of event. Would like to block the time off on my calendar.

thanks,

 

[bearprowler6]

Does anyone know timing of FFH AGM this year? Was originally scheduled for April 16th.  Their website says it will be webcast but no further details as how to sign up or time of event. Would like to block the time off on my calendar.

thanks,

 

https://www.fairfax.ca/news/press-releases/press-release-details/2020/FAIRFAX-ANNOUNCES-ANNUAL-MEETING-WEBCAST-DETAILS/default.aspx

[wondering]

https://www.fairfax.ca/news/press-releases/press-release-details/2020/Fairfax-Donates-US2-Million-for-COVID-19-Relief/default.aspx

 

Can I assume that since Fairfax has the wherewithal to make a donation, that the company is not going to hell in handbasket as the stock price would indicate ;)

[Xerxes]

https://www.fairfax.ca/news/press-releases/press-release-details/2020/Fairfax-Donates-US2-Million-for-COVID-19-Relief/default.aspx

 

Can I assume that since Fairfax has the wherewithal to make a donation, that the company is not going to hell in handbasket as the stock price would indicate ;)

 

I offer a different perspective on FFH buybacks ...

 

Notwithstanding their limited financial capacity to do all the things that they want to do, if the market is discounting FFH book value by a large margin, them deciding to prioritize buyback of their own shares ahead of everything else (i.e. other financial obligations), is akin to them averaging down on their current equity portfolio picks indirectly since it is the drop in their equities picks that overwhelm FFH own share price to begin with.

 

So, the question for FFH management would be … is their current equities picks (larger ones anyways) are worth indirectly "averaging" down (through FFH buyback) given the new market paradigm shift or has there been a permanent loss of intrinsic value on same major names, where the trade-off to do FFH buyback (i.e. averaging down their equity picks across the board indirectly) is no longer worth it,,, and it makes since to average down on specific names or open new position.

 

I suspect, we all also have the same dilemma in our own portfolio, … given all we know now, do we buyback our own portfolio in its entirety as a lower price, or be opportunistic on key names and new names. So FFH buyback calculus might revolve around the same thing … looking forward to Thursday :-)

 

 

 

 

[Bryggen]

Any ways to get the Webcast after the meeting? I missed half of it. It isn't on their website.

Thanks!

[petec]

Any ways to get the Webcast after the meeting? I missed half of it. It isn't on their website.

Thanks!

 

There is a link under news -> events and webcasts. I haven’t tried it for Fairfax, but the equivalent link on the Fairfax Africa site gave me a playback this morning.

[york]

This is the link that I used:

 

https://www.gowebcasting.com/events/fairfax-financial-holdings-limited/2020/04/16/fairfax-financial-holdings-limited-annual-meeting-of-shareholders/play

[investmd]

For those not on the call, here is a summary of what I took away from the call:

• Prem remains very optimistic

• Fair and Friendly culture are the deep value pillars of FFH that will see it through bumps

• Lots of focus on results over 34 years of company existence and being part of the 1% to increase share price by >15%/yr

• Value investing has not done well over past 10 years but over 50+ years it has and will come back in vogue

• Admitted disappointed at what Covid19 crisis has done to FFH share price

• Nil to acknowledge 10 & 20 year results below index ( I think Watsa considers these shareholders to be shorter term holders)

• Insurance business is doing well and has tailwinds

• Equity portfolio will perform better going forward than when Watsa managed it

• Due to large spread, have sold treasuries to buy high quality corp bonds yielding on average 4% with duration of 4 years

• Buy backs: FFH is undervalued and buy backs are good but to me it appeared that Watsa suggested they were a 3rd level priority after ensuring the financial position was solid and taking advantage of opportunities in insurance markets. He did say they do buybacks and will continue to do so but are not going to telegraph when.

• Insurance is the crown jewel in the holding company

• During Covid19 downturn, FFH bought some XOM at a dividend yield of 10% and bought Alphabet

 

[steph]

First time I heard Prem acknowledge that he had made bad stock selections, which is very positive.  Stock portfolio is now divided between different persons, which will lead to a more diversified and probably more large cap portfolio. 

They were very bullish about the hard market in insurance. Especially bullish about Allied World.

 

[petec]

First time I heard Prem acknowledge that he had made bad stock selections, which is very positive.  Stock portfolio is now divided between different persons, which will lead to a more diversified and probably more large cap portfolio. 

They were very bullish about the hard market in insurance. Especially bullish about Allied World.

 

They also said premiums wouldn’t grow for a few quarters. I found that a bit contradictory. But overall it was positive.

[Bryggen]

This is the link that I used:

 

https://www.gowebcasting.com/events/fairfax-financial-holdings-limited/2020/04/16/fairfax-financial-holdings-limited-annual-meeting-of-shareholders/play

 

Thanks for sharing!

[Parsad]

First time I heard Prem acknowledge that he had made bad stock selections, which is very positive.  Stock portfolio is now divided between different persons, which will lead to a more diversified and probably more large cap portfolio. 

They were very bullish about the hard market in insurance. Especially bullish about Allied World.

 

They also said premiums wouldn’t grow for a few quarters. I found that a bit contradictory. But overall it was positive.

 

I think he meant that in the short-term we are seeing a contraction, but will see premiums increase as the expansion restarts later on. 

 

I think alot of insurers are taking a significant hit presently...can't see how we do not see a hard market when premium pricing renews around November.  We were already starting to see dramatic increases in some lines before Covid-19.  I know that strata fees on the West Coast had jumped 300-700% and insurers were no longer offering coverage for many or deductibles had jumped 200-300%.  I'm also seeing huge increases in D&O Insurance and some other non-casualty lines.  Cheers!

[petec]

First time I heard Prem acknowledge that he had made bad stock selections, which is very positive.  Stock portfolio is now divided between different persons, which will lead to a more diversified and probably more large cap portfolio. 

They were very bullish about the hard market in insurance. Especially bullish about Allied World.

 

They also said premiums wouldn’t grow for a few quarters. I found that a bit contradictory. But overall it was positive.

 

I think he meant that in the short-term we are seeing a contraction, but will see premiums increase as the expansion restarts later on. 

 

I think alot of insurers are taking a significant hit presently...can't see how we do not see a hard market when premium pricing renews around November.  We were already starting to see dramatic increases in some lines before Covid-19.  I know that strata fees on the West Coast had jumped 300-700% and insurers were no longer offering coverage for many or deductibles had jumped 200-300%.  I'm also seeing huge increases in D&O Insurance and some other non-casualty lines.  Cheers!

 

Thanks. What’s a strata fee?

[drzola]

Hint as by asking this you may have put yourself in the 10%  lowest percentile here?  ( just kidding )

Soldier own.

[petec]

It’s not a term I’ve ever heard in the UK but I’m happy to be educated.

[Cigarbutt]

It's condominium or condo (i guess commonhold property for you) insurance.

Premiums have rocketed higher recently in some parts of Canada.

http://www.ibc.ca/on/home/types-of-coverage/condominium-or-strata-coverage

[petec]

Thanks! Commonhold isn’t common here.

[petec]

Lord but this replay is clunky. I keep getting cut off, and there's no easy way to navigate back to where you were. If anyone from Fairfax is reading this, please put out a transcript or at least load the audio onto a webcast system that allows navigation.

[petec]

My AGM notes FWIW.

 

1Q. BV down 12% in 1Q20 but bear in mind they don't mark consolidated or associate-accounted investments, which includes big ones like FIH, Recipe, Eurobank, so this doesn't capture the full drawdown. 

 

Capital. Implies ratings agencies are unconcerned - no discussions on being downgraded. No covenants on bonds, and they are well within the 35% debt:equity covenant on the bank line. No holdco maturities for 4 years. Buybacks yes, but not at the expense of growing insurance subs or making good investments.

 

Investing. Last few years "we have not made good selections - first to admit that." But only one of their 5-y time periods did not show investment gains (2011-16) and they are confident they have a good team looking at opportunities globally and across asset classes (bonds, equities, PE, real estate). Have some very good people - Wendy Teramoto was Wilbur Ross' right hand woman for 20 years. Most of the portfolio is still managed by Prem/Roger/Brian (with input from the others which has improved analysis) but the portion delegated to team members is growing. PMs get oversight from Wade (day to day) and Prem/Roger/Brian on a less frequent basis. This is working well and will naturally lead to a less concentrated and more liquid portfolio. Have bought $2.9bn of 4y investment grade corporate bonds at 4.25% yields - mentioned DIS spread as having gone from 50bps to 250bps. May not do much more as spreads have closed somewhat. Also looking at put bonds and pref+warrant deals. And bought some high quality stocks like XOM, "the most financially sound oil company, with a 100 year record, at a 10% yield", and GOOG. Monetisation of private investments continues - "at least $1bn" to come, but over time, no rush.

 

Insurance. Premium growth will now be flat for "several quarters" but underlying hard market developing. "Continued strong rate improvement" e.g. DD at Allied, DD and accelerating at Northbridge and HSD at Odyssey, Crum. Allied is at the leading edge of the hard market and has plenty of capital. Crum growing premiums over 20%. Riverstone UK has huge opportunity because Lloyds is restructuring and has put many portfolios into runoff (hence the OMERS deal, although nobody asked why OMERS buying a stake from Fairfax, rather than via an equity injection, helps RSUK to grow). Xenith is the only major platform not seeing rates moving the right way but is reporting strong CRs and they know exactly how to handle this market. Business interruption not an issue as nearly all of Fairfax's exposure is standard contracts which require physical damage to property - courts would have to overturn contracts for these contracts to provide broad based coverage. Highly unlikely they will have to pay anything significant but it might end up going to the supreme court. Scott Carmilani's new role is to encourage cooperation and transfer of best practice - e.g. knowledge about insuring long haul trucking in one geography may be transferrable to others.

 

[Xerxes]

i had sent them an email during AGM asking them about the position sizing of Exxon vs. say BB's common shares.

My question wasn't answered. Hopefully when the 13F comes out, (i think May) we see if they really bough the dip meaningfully or not.

 

Overall, i think it was a good AGM, not a reassuring one that would put a floor under the stock but was happy to hear that they bought Alphabet and Exxon.

 

On Alphabet also like to know what is the position sizing on that ? i personally own Alphabet for some years now, so i am not missing out on it, but wether they made $30 million purchase vs. a blackberry size tells me something about the change in their investment philosophy.

 

i could do without the historical perspective of various indices. i like history but like to know how you performed and what are you are doing about it than knowing that crash happens. Totally agree with them that building intrinsic value through insurance liquidity injection has more value than buyback.

 

Found it funny when Prem lost track of his thought as he was answering the question about deflation hedges. Reminds me of my dad, who likes to speak in public gathering and doesn't really listen to the question. :-)

 

 

[racemize]

Found it funny when Prem lost track of his thought as he was answering the question about deflation hedges. Reminds me of my dad, who likes to speak in public gathering and doesn't really listen to the question. :-)

 

He's also hard of hearing, so he often just never heard the question right.

[Daphne]

Curious what you find funny. If you had a quarter of what Prem has...packed in your head, I’d be surprised!

[petec]

If either XOM or GOOG are the size of BB I'll be amazed.

[Xerxes]

I didn't mean it in a bad way, … just that his answer (which was about COVID 19 testing … I think) had nothing to do with the question. I understand that sometimes he needs to talk through his reasoning (like we all do sometimes) to get to his point and walk you through it.

 

I don't think this was it, so yeah he probably heard wrong.

 

 

[Cevian]

It was funny to listen to the conference though. Prem is definitely such a nice guy. He always answers any question by "That's a great question...". He seems like a real team player type of leader who gives his managers plenty of space and loves making deals.

 

Proud to be a shareholder.

 

The only downside I see is that, with all the high-fiving going on sometimes, it may lead to a lot of groupthink.