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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: This is not a question but a guide to the entire history of FFH, which answers on the questions today. It's published in the annual report every year where the Dec. 31 book value and share value are compared. The reader should note he trend in the book value, in particular. Also Watsa's comments over and over are that book value and share value will not necessarily follow each other. I am a long term holder of FFH, sold out at $600 purely to buy a house and then by pure blind luck (not skills) I had the opportunity to by back in with ACB of $175 a couple of years later!

http://s1.q4cdn.com/579586326/files/doc_financials/2017/annual/WEBSITE-Fairfax-Financial's-Corporate-Performance-page.pdf
Read Answer Asked by John on March 23, 2018
Q: No question here, but my comment on FFH. I owned FFH In the 80’s. I recall the stock trading at 600.00. Please correct me if I am wrong. It is now 600.00 plus. How Prem Watsa can be compared to Buffet is like my golf game being compared to Tiger Woods. Watsa makes big bets against the market which on balance I would think have been horrible , to be stand corrected.
What am I missing??
Regards, Bill
Read Answer Asked by Bill on March 22, 2018
Q: hello 5i:
clarification please. "Chris" asked about the big 5 Canadian banks, but I only see 4 listed. Where does BMO fit in this mix?
thanks
Paul L
Read Answer Asked by Paul on March 19, 2018
Q: Untangling the relationship between ECN and EFN is above my pay grade, but hopefully not above yours. Are there any lingering connections which would keep these entities tied together, where fundamental problems in EFN could leech into ECN? Or are they now completely and absolutely separate? Thanks again!
Read Answer Asked by Alex on March 19, 2018
Q: Hello 5i
I own ECN Pref shares and continue to suffer I expect due to EFN business performance and the close link investors may create between EFN and ECN.

The question here is about the recent globe article and fan fair related to insider buying of CEO (at ECN). Normally I would be pleased to see the buying except for the bad taste created when the same thing was said about CXR (Concordia) CEO buying - He was buying with the banks money. As soon as the stock dipped, the bank took back their capital through a forced margin call and all of a sudden the skin in the game was gone.

Any way to determine whether the stock being purchased ($6M) by Mr Hudson is real or just a facade; zero risk for him as the bank holds him on a short margin call leash?

Dave
Read Answer Asked by David on March 19, 2018
Q: I need to unload one of the 5 big banks. How do you rate the 5 on a scale from best (keep) down to "worst" (sell)? Thanks for the continuing great service!
Read Answer Asked by Chris on March 19, 2018
Q: hi folks:

not a question; just a PSA for the membership

executive summary: mgmt is likely the most important issue when buying shares in a business

in the case of EFN (as with newcourt) it sure seems like mr Hudson learned nothing

a sad loss of capital

(this from august 2015 )
Asked by Robert on August 27, 2015
Q: hi folks
further to an earlier email on element with respect to mgmt
I remember when newcourt and steve hudson had their heyday in financing in the 1990's and early 2000's

from my recollection there was a lot of 'creative accounting' (a term updated recently to "financial engineering")

question: in light of this 2.2BB issue today (which increases the company capital structure by almost 40%) what makes anyone believe that this mgmt is any more competent than when they near bankrupted newcourt?

one thing of interest being they didn't borrow the whole 2.2bb

comments?

thanks for your insight

robert

5i Research Answer:
Element learned some very good lessons at Newcourt, and has not repeated them in companies since. It was not perfect, but if management takes away valuable lessons we can still support them (Tourmaline management had some issues at Berkley Petroleum in the 1990s, and learned lessons there also). While the ending was not what some expected, keep in mind that Newcourt was still successfully sold (for more than $2.4 billion). We have quoted a Globe article below: We think the key is the short term borrowing switch. This issue does underscore that shift.

Mr. Hudson says he has learned his lessons from Newcourt. Don't expand too fast with acquisitions. Use the most conservative accounting. And perhaps most crucially, don't borrow short-term and lend long-term.

Newcourt funded itself in the commercial paper market, borrowing for a few days or weeks at a time, while lending money for months or years. As a result, the company constantly had to roll over its financing. When markets shut down because of a financial crisis in Russia and Asia, Newcourt was on thin ice.



Read Answer Asked by Robert on March 18, 2018
Q: Hi 5i, I would appreciate some more info in relation to your recent comments on Callidus (CBL), which I still hold. I don’t want to take issue with them; I just want to get clearer on whether and how they should impact my own view. I took the company’s report last summer (along with management’s comments) to indicate that improvements were needed to both loan portfolio growth and the balance sheet in order to motivate sufficient interest for the company to be taken private. I interpreted the company’s report last fall as confirming that view. At the time of the last report it seemed to me unlikely that CBL would be able to show much improvement on either aspect before their next report (March 31?) or possibly the following one. Accordingly, I determined to hang on to the shares for the next couple of reporting periods (subject to new information), to see whether there were emerging signs of the required improvements. Since then, this is what I am wondering about, I have seen no news reflecting on the company’s business performance. I can understand people becoming fatigued with the stock and its treatment by the market and I can understand the passage of time eroding peoples’ confidence in the prospect for a profitable go-private transaction. But that aside, is there any fundamental business information you are aware of, which has come available since their last report and reflects negatively on CBL’s business and its related prospects? Thanks.
Read Answer Asked by Lance on March 16, 2018
Q: Good day Ryan, I'm still trying to wrap my head around the latest earnings release. Their fourth quarter and annual net income benefited from a one time recovery of 9.4 million and going forward they benefit from an estimated 3 million annual net income due to lower U.S. corporate tax rate. So if you take away the one time 9.4 mill is the 3 million enough to increase their growth going forward? Will they be able to increase their dividend or pay a special dividend? A couple questions here thanks much AEO
Read Answer Asked by Alan on March 16, 2018
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