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Berkshire Hathaway Inc. Message Board

  • bdparts bdparts Jan 18, 2003 6:32 PM Flag


    knowing zip about this company....(FFH)
    my curiosity is now raised a bit......
    and since there is nothing shown on Yahoo
    about this company like a Profile page.........perhaps....someone
    has a figure for the guestimated book on
    this outfit........or does someone have
    a calc of I might get a quick
    feeling ......

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    • Hawkins:"Cleary we've had certain assumptions about what that couple of billion dollars of float would be invested in and what it would earn. But it has not run through his GAAP income statement.

      Well it's going to start running through his GAAP income statement. That's going to be very helpful to those people that what to see GAAP earnings as opposed to "earnings power". And within a couple of quarters of big GAAP earnings and the price increases we're seeing in policies, we think the ratings could swing dramatically the other way next year."
      (Editors note: So far, half the predictions has come through. Earnings were $19.31 in the third quarter, their highest quarterly profit ever. But the ratings have not yet been upgraded, In fact, on December 16th, S&P took them down to a negative credit watch from stable.)

      Hope this gives you some insight.



    • Gidday bd.

      See you taking some interest in FFH. I looked at it about 6-12 months ago after reading an excellent article in OID by Mason Hawkins of Longleaf Funds. He's a big fan and a large stakeholder. At that time the company was trading at about $195 and he placed a valuation on it at between $350-400 a share.

      I sorta lost track of it since then as I felt I was pretty well invested in insurance with Mr Buffett. However the price has really come down since that time even more and has got to be worth a look.

      Just this morning I was reading through my latest copy of OID (Outstanding Investor Digest) and came across more mention of FFH by Mr Cates of Longleaf. He says, and I quote; "The stock price weakness is not related to anything going on in our appraisals because, frankly, we think they're BETTER positioned to take advantage of these markets....We think Prema Watsa is now (able to) take advantage, on a micro basis, of a bad macro environment."

      Hawkins: "Fairfax had $2.1 billion of T-bills on the investment side-and they have been looking at some very attractive bonds. They had virtually no common stocks and, as Staley indicated, $600 million worth of S&P puts....They took off half of that position and booked a huge gain. So as we look at P&C or non-life insurance companies around the world, we would say that Fairfax has the best investment flexibility of any insurance company anywhere."

      Hawkins:"One of the reasons why the earnings at Fairfax have been somewhat lacking is because he has been so determined and disciplined on the investment side of his insurance company. And that couple of billion dollars in cash should be going into some very attractive yields today. (continued)

      • 1 Reply to dazznshazz
      • I was reading the same issue of OID.

        It starts with a criticism of the current trend of "forensic shorts".

        It also says how Longleaf spend 90 per cent of the time assessing the management.


        1). They got the management wrong here. The Morgan Keegan report would indicate that the company is criminially under-reserved. I think that might be a bit tough - but the company professes to conservatism in the letter and then presents some of the least conservative accounts I have ever seen.

        2). There is no question there is a "forensic short" going on here.

        I do not think Fairfax is up to much. But as plenty of people have observed here... to own this you have to trust Prem Watsa.


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