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[Newbie] Investing in Prem Watsa's Fairfax?

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  • Aug 17th, 2018 12:21 pm
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[OP]
Newbie
Oct 3, 2014
54 posts
6 upvotes
Calgary, AB

[Newbie] Investing in Prem Watsa's Fairfax?

Has anyone looked into investing in Prem Watsa's Fairfax Holdings? I don't get the concept of what exactly is a holding company in this context? Is it a ETF or mutual fund which has its own MER%? Their holdings are defined in this document, but I am unable to understand where the investments are probably because I am so new and do not know what I am looking for. [HTML]http://www.sedar.com/DisplayCompanyDocu ... o=00036590[/HTML]
It has had a very solid performance record for the past two decades and he has been tagged as the 'Warren Buffet' of Canada. So is there any interest around here to invest into Fairfax?
88 replies
Deal Expert
User avatar
Sep 19, 2004
21556 posts
3759 upvotes
Waterloo
FFH is like a Canadian BRK (BRK.B), financial holding company basically

I can't believe it jumped from ~$620 to 52-week high ~$780 YTD .... I sold too early (between $680-$740), not sure why it's so high, in the bear market.
My BRK.B is nowhere near 52-week highs :(

but I'd double up FFH next time it approaches $600 again
It is really something to hold on maybe forever??
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Deal Addict
Sep 20, 2014
1148 posts
370 upvotes
Calgary, AB
A holding company is basically a company that takes ownership interests/owns securities for other companies - it doesn't itself produce anything. That's different from a fund (mutual or ETF) which are a collection of stocks and bonds in different companies. Buffett's Berkshire was like this when he was using his insurance business to buy stocks (the insurance business made up a very small component of Berkshire then). Fairfax, at a glance, is similar as it is primarily in the insurance/reinsurance business too and have a fairly good record at growing their earnings.

To know more about this company, you should start here: http://s1.q4cdn.com/579586326/files/doc ... n818c7.PDF

Questions you should be asking:
- What do they do? How does it earn its money?
- Where are the operations based?
- How sustainable are these operations?
- How is the track record in terms of increase in operational earnings?

I'm not overly familiar with Fairfax - have only heard things about them through the internet - so I can only go by numbers. The report presented above touts a 20% yoy compound growth rate in book value and the share price has closely followed that. Pretty good record. Based on the numbers presented, I think they are worth somewhere between $15-20 billion USD so I think they are trading close to fair value. However, keep in mind I'm not overly familiar with the business so my estimate could be way off. You should do your own due diligence before deciding to own a company.
Deal Addict
Jul 3, 2006
1686 posts
320 upvotes
this is a great buy at current prices Prem's avg return over 18 years I think is some where around 17%. Also Fairfax India is a good buy
Deal Addict
User avatar
Aug 9, 2011
1924 posts
311 upvotes
GTA
fairfax india is where it is at.... india's economy is booming as well. Long term hold for this baby!
Deal Addict
Jul 3, 2006
1686 posts
320 upvotes
imflying12 wrote:
Oct 23rd, 2017 10:16 pm
fairfax india is where it is at.... india's economy is booming as well. Long term hold for this baby!
Added today at $17.27
Jr. Member
Aug 20, 2016
147 posts
90 upvotes
Intact Financial.

chart from the bottom left to the top right and it keeps going.
Deal Addict
Jul 3, 2006
1686 posts
320 upvotes
time to buy both fairfax and fairfax India good entry point
Deal Addict
Aug 26, 2004
1666 posts
19 upvotes
J_u_n_i_o_r_3 wrote:
Dec 28th, 2017 6:42 pm
look for double in next year or two Fairfax overhauls BIAL top deck
The only thing that bothers with Fairfax India is the compensation structure:

Investment and Advisory Fee

The per annum investment and advisory fee is calculated as 0.5% of the value of undeployed capital and 1.5% of net asset value less the value of undeployed capital.

For the first six months of 2016, the company has determined that the majority of its assets are invested in Indian Investments, which is considered deployed capital. At June 30, 2016, the 1.5% per annum fee was payable on the net asset value of the Indian Investments and 0.5% per annum fee on the residual of undeployed capital. A fee of 1.5% per annum based on the fair values of the Indian Investments as at June 30, 2016 was accrued for the period. The investment and advisory fee for the three and six months ended June 30, 2016 was $2,703 and $4,844 respectively (2015 - $1,233 and $2,089).

Performance Fee

The performance fee is paid for the period from January 30, 2015 to December 31, 2017 and for each consecutive three-year period thereafter, and is calculated, on a cumulative basis, as 20% of any increase in net asset value (including distributions) above a 5% per annum increase. The company determined that the performance fee was not applicable for the three and six months ended June 30, 2016 and 2015.
Deal Addict
Jul 3, 2006
1686 posts
320 upvotes
CDNPatriot wrote:
Dec 30th, 2017 11:49 am
The only thing that bothers with Fairfax India is the compensation structure:

Investment and Advisory Fee

The per annum investment and advisory fee is calculated as 0.5% of the value of undeployed capital and 1.5% of net asset value less the value of undeployed capital.

For the first six months of 2016, the company has determined that the majority of its assets are invested in Indian Investments, which is considered deployed capital. At June 30, 2016, the 1.5% per annum fee was payable on the net asset value of the Indian Investments and 0.5% per annum fee on the residual of undeployed capital. A fee of 1.5% per annum based on the fair values of the Indian Investments as at June 30, 2016 was accrued for the period. The investment and advisory fee for the three and six months ended June 30, 2016 was $2,703 and $4,844 respectively (2015 - $1,233 and $2,089).

Performance Fee

The performance fee is paid for the period from January 30, 2015 to December 31, 2017 and for each consecutive three-year period thereafter, and is calculated, on a cumulative basis, as 20% of any increase in net asset value (including distributions) above a 5% per annum increase. The company determined that the performance fee was not applicable for the three and six months ended June 30, 2016 and 2015.
Yeah but these fees are paid to Fairfax financial holding company so doesnt matter to me I hold both. This stocks performance beat the performance of other Indian etfs. Also your paying for a good team. Fairfax Financial has avg 17% return over 20 years better then indexs
Deal Addict
Jul 3, 2006
1686 posts
320 upvotes
Fairfax India up big today

Fairfax Financial
Fairfax Financial to invest US $250M in Seaspan
Deal Addict
Jul 3, 2006
1686 posts
320 upvotes
BENGALURU: The Kempegowda international airport in Bengaluru on Tuesday announced a passenger traffic of 25 million in calendar 2017. This represents a growth of 13% over calendar 2016.
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