What percentage of your portfolio is in Fairfax Financial?

[Parsad]

Hi Folks,

 

Just to make clear that kicking Rick_v out was not a knee jerk reaction.  This guy had personal messaged me on several occasions.  Once, when he disagreed with a few posters and wanted to know more about how much money people on the board managed.  He messaged me again and asked how much I manage...I told him we were a small fund...which he subsequently used to insult me (not that I was really insulted).  

 

Finally, he kept bugging me and trying to coerce me into buying stock in MAJC.  I explained that insurance is a tough business if you don't know what types of contracts have been written.  That MAJC was in a precarious position, and it was not our type of company.  He then kept goading me and trying to get me to participate, that his average cost was $0.75...I guess he hasn't made "big money" on this one and neglected to brag about it.  That he would put up the capital and CMC would act as the activist investor.  I politely refused and then finally ignored his private messages.  

 

We have 800 members, and naturally there are going to be a handful of jackasses.  I try and weed them out, but Rick_v's actual posts were pretty good, so I chose to ignore the private messages.  But in this thread it became clear that he could be a very disruptive personality, and I don't want that element on here.  There are some posters that I may have got into it with in the past, but I certainly welcomed back with open arms...Ericopoly for one...and his presence on the board is very much valued.  But Rick_v's, sorry...I don't have time for it.  

 

While we welcome investors and their ideas at CMC and the MPIC Funds, I don't need someone telling me how great an idea is and how much money I could make on it over and over through private messages, and what I would be missing out on.  If Rick_v had the capital and the aptitude, why the hell would he need my help?  Two and two don't equal four here, and Rick_v is gone because his story is full of crap and he was behaving like a spoiled, petulant brat.  Cheers!    

 

 

[stahleyp]

sanjeev,

 

very good post. i'm glad this board is in excellent hands.

 

I thought it was in poor taste for him to insult people based on the amount of assets managed. Thank you for sharing more detail.

[Smazz]

Sanjeev, You have more tolerance than I.

 

OFF WITH THEIR HEADS!!!!!! ;D

 

 

as per this thread - I currently do not own FFH, I last owned in the $390s. I will def own again when i get into those stages where i want to lay back for a while and let Prem and his team take care of me.

 

Ive owned FFH since 98/99 through hedges, bad runoffs - rumour mongerers - Spiros et all and yes, every known Hurrican known to man through the new millenium.. and I still get called a Macro Investor! ;)

 

 

[rranjan]

Hi Folks,

 

Just to make clear that kicking Rick_v out was not a knee jerk reaction.  This guy had personal messaged me on several occasions.  Once, when he disagreed with a few posters and wanted to know more about how much money people on the board managed.  He messaged me again and asked how much I manage...I told him we were a small fund...which he subsequently used to insult me (not that I was really insulted). 

 

Finally, he kept bugging me and trying to coerce me into buying stock in MAJC.  I explained that insurance is a tough business if you don't know what types of contracts have been written.  That MAJC was in a precarious position, and it was not our type of company.  He then kept goading me and trying to get me to participate, that his average cost was $0.75...I guess he hasn't made "big money" on this one and neglected to brag about it.  That he would put up the capital and CMC would act as the activist investor.  I politely refused and then finally ignored his private messages. 

 

 

 

Rick_v must be quite a character to do so.

 

Btw his comment about managing small money was very funny because there are decent number of clueless managers who manage big money and at the same time there are many very smart individuals/managers who simply manage their individual/small portfolio but do very well in long term. I found it funny rather than insulting.

 

Not related but I have seen many times people in various profession use the logic  - I do it for living  so I am must be right.  As result, not surprisingly, most people believe it due to authoritative bias. I fell for it recently but corrected the mistake next day. I promised myself to watch out to avoid the same situation in future ( getting influenced due to authoritative bias even though it goes against my earlier gathered information}

 

Well,  Rick_v was a good riddance. Well, following the logic of invert - We don’t need to focus on attracting quality members rather we should focus on avoiding members who will down grade the quality of forum.

 

 

[Parsad]

Incidentally, MAJC has just announced that it signed a definitive agreement to be acquired by Bayside Capital for $0.45/share.

 

http://finance.yahoo.com/news/Majestic-Capital-to-Be-bw-3472550300.html?x=0&.v=1

 

That now crystallizes Rick_v's average $0.75/share cost with a 40% loss!  But hey, that's 100% academic.  Cheers!

[biaggio]

 

 

That now crystallizes Rick_v's average $0.75/share cost with a 40% loss!  But hey, that's 100% academic.  Cheers!

 

Picking stocks, especially over a short period of time, is very humbling, academic or not

[Dorsia1]

Well put Sanjeev.

Things always have a funny way of working themselves out.

[Rabbitisrich]

I checked out MAJC when it traded around $0.70 and it certainly didn't appear to be an easy win. Even as the new CEO, who was the former CFO, desperately tried to cut costs, the loss reserves didn't seem to be significantly overstated, and the assets seemed unlikely to outgrow the liabilities. I can understand RickV's intent, though, since a capital infusion could have restored a lot of value, but it's really a situation that required face to face time with the likely principals.

[Rabbitisrich]

One thing RickV missed was that alpha doesn't describe an absolute return. If you ignore the mean-variance assumptions behind the CAPM model, alpha is basically an attempt to match return to some measure of risk.

 

RickV's point is well taken if there are boardmembers with a 30% allocation to Fairfax who are expecting 25% returns from today's prices. But I think most boardmembers have a much more realistic appreciation for the likely range of yields, and are comforted by management's rigorous attempts to mitigate failure while looking for risk adjusted returns.

[coc]

Incidentally, MAJC has just announced that it signed a definitive agreement to be acquired by Bayside Capital for $0.45/share.

 

http://finance.yahoo.com/news/Majestic-Capital-to-Be-bw-3472550300.html?x=0&.v=1

 

That now crystallizes Rick_v's average $0.75/share cost with a 40% loss!  But hey, that's 100% academic.  Cheers!

 

Wow. See, I was told it is "very easy" to find securities that massively outperform the market. :D

[netnet]

Incidentally, MAJC has just announced that it signed a definitive agreement to be acquired by Bayside Capital for $0.45/share.

 

http://finance.yahoo.com/news/Majestic-Capital-to-Be-bw-3472550300.html?x=0&.v=1

 

 

Do you know why the market is so skeptical about the transaction?  It's trading at a 22% discount to the offer price.

 

By the way, Sanjeev, your patience with people like Rick_V is way beyond my capabilities.

[twacowfca]

Incidentally, MAJC has just announced that it signed a definitive agreement to be acquired by Bayside Capital for $0.45/share.

 

http://finance.yahoo.com/news/Majestic-Capital-to-Be-bw-3472550300.html?x=0&.v=1

 

That now crystallizes Rick_v's average $0.75/share cost with a 40% loss!  But hey, that's 100% academic.  Cheers!

 

Wow. See, I was told it is "very easy" to find securities that massively outperform the market. :D

 

 

And, from what he said, he bought some Tronox without giving much thought to the downside.

[Rabbitisrich]

Incidentally, MAJC has just announced that it signed a definitive agreement to be acquired by Bayside Capital for $0.45/share.

 

http://finance.yahoo.com/news/Majestic-Capital-to-Be-bw-3472550300.html?x=0&.v=1

 

 

Do you know why the market is so skeptical about the transaction?  It's trading at a 22% discount to the offer price.

 

By the way, Sanjeev, your patience with people like Rick_V is way beyond my capabilities.

 

Bayside doesn't have any disincentive to cancelling the agreement.

 

From the merger agreement:

 

This Agreement may be terminated and the transactions contemplated by this Agreement may be abandoned at any time prior to the Effective Time by Parent if: (a) there has not been any event, condition, change, effect or development that individually or in the aggregate has had or will have a Company Material Adverse Effect; or (b) prior to receipt of the Required Company Vote, (i) there shall have been an intentional material breach by the Company of its obligations under Sections 6.02 or 6.05; (ii) the board of directors of the Company (or a committee thereof) shall have failed to include the Recommendation to Shareholders in the Proxy Statement or shall have withdrawn, modified, qualified or amended, in any manner adverse to Parent, the Recommendation to Shareholders (or publicly announced any intention to do so); or (iii) the board of directors of the Company shall have approved or recommended any Acquisition Proposal (or any committee of the board of directors of the Company with authority to do so shall have approved an Acquisition Proposal).

 

In other words, Bayside can cancel the agreement, penalty free, if there is no material adverse effect. The extension/waiver language from Section 8.07 may enable Bayside to push the closing date and observe the loss developments.

 

Given that Lancer Financial is described as a principal member of Bayside, there doesn't appear to be much pressure to complete the agreement. The proposal is more of a free call option for Bayside than a future agreement.

[naboo]

This is my second post. my first post was: "95% of my entire asset in FFH, 5% in cash."

 

 

Now I have about 40% in FFH,  sold a lot around $260 last year.  Bad move!

 

I have been asking myself couple of questions "Do I have better investment skills than Watsa"? Answer is "Not even close."  "do I fully trust him?" Answer is "Absolutely !".

 

FFH percentage in my portfolio may never reach 95% again, but 60-70% is possible.  

 

 

[coc]

The funny thing is, to me, whether or not you think Prem has better investment skills than you do is almost beside the question, though I can see why people do ask themselves that question. You don't have to view Fairfax as a punt on your investment ability...you can view it for what it is, which is a large diversified insurance company that has earned a very high rate on its float over time and is now going down the road of a global insurance juggernaut.

 

It's my humble opinion that Fairfax has entered this "next stage" of growth. Hamblin-Watsa now has the benefit of 25 years of building and gaining experience, and by all indications, Prem is simply in his prime right now. It wasn't easy, but they've built a very stable and diversified (but not swollen) base in which to sorta run this thing up from an $8B enterprise to an $80B enterprise, a $100B enterprise, and so forth. I see no reason this can't happen over the next decade or fifteen years. H-W has been and continues to be masterful and their insurance operations are only improving. The deals he's striking now...I don't think he could have struck them 10 or 15 years ago.

 

So, if I'm given the opportunity to invest in this growth without paying a premium...to me that's a pretty damn good bet. It would not be irrational in any sense to have a huge position in Fairfax, any more than it would have been to buy Berkshire when it was an $8B company (20 years ago).

 

I think this happens in fits and starts...it will not be a smooth upward progression. Insurance is hard. But the pieces are in place.

 

In my opinion.