Investment Q&A

Q: Can you please comment on FFH series C Pref. The last 2 dividend payments the Pref. paid out was less than the previous 20 dividend payments dating back to Dec. 2009. I did not see any news release stating the Board of Directors voted to reduce the dividend. If their was a news release would management have stated WHY they cut the dividend ? Would we have received something in the mail ? The share price closed at $19.40 today,down significantly from the $25 issue price. I thought the dividends on prefs are pretty much a safe thing.

Q: Hi Team,

I just noticed a headline (http://business.financialpost.com/news/fp-street/fairfax-financial-holdings-ltd-says-insider-trading-probe-of-prem-watsa-tied-to-fibrek-inc) about possible insider trading at FFH. It seems this is not "new" news. Do you have any comments on the implications for holding stock in this company?

Many thanks.

Michael

Q: Hi Peter and Team,

Would you consider Fairfax Financial Holdings a good buy at today's price? I has been down in recent weeks. Would it be better to wait a bit longer in case the downward trend continues? The company reports on April 30th.

Thanks, as always, for your insight.

Michel

Q: What is your opinion of this company? It's PE ratio looks attractive and it has been able to deliver consistent results over time. Is my first impression accurate? Does it deserve a second look?

Thanks a million...Alastair Allan

Q: Hello, I would like to have your thoughts on Fairfax preferred share issue. The 4.75% yield seems appealing. What is the major risk ? If rates go up could I be stock with a capital loss and not be able to sell the shares in 5 years at par ? I think that is what stopped me from buying preferred in the past. The reset rate seems appealing to me.

http://www.fairfax.ca/news/press-releases/press-release-details/2015/Fairfax-Announces-Preferred-Share-Issue/default.aspx

I also saw a TRP issue at a yield of 3.8%. Can you please comment on this one as well.

I am considering buying a good position of FFH and some TRAP for the fixed incomre portion of my portfolio. Thank you.

Q: I own the above reference rate reset preferred shares,. All of the share were bought at the issue price of 25.00 and all are now underwater. It appears that recent rate reductions by the Bank of Canada have pushed their value further down. My question ,are these shares permanently impaired or if the five year rate were to increase, significantly, in five plus years would they return to their 25 dollar value. Is there in effect a type of " option" not reflected in the current price. Thanks

Q: Hello Peter,
Fairfax has been on a roll lately. The fundamentals are good from PE and ROE, but the technical now are over bought (RSI). Any reason why the stock continues upward? I do not see any news other than Fairfax india IPO and potential Blackberry takeover (as Fairfax owns 10% of the company). Any comments. Also, to de-risk my portfolio, if I am to put more money in Fairfax, is it better to add to FFH or use those proceeds to invest in FIH (Fairfax india ) once the IPO stables (as you had indicated in prior replies about potential of fee covering of 8% from brokers etc from IPO). I have seen your replies on Knight Therapeutics that is a sector and management bet. When it comes to companies like these, does one simply go on technical charts to buy and sell as there is not much in terms of fundamentals to base the buying decision (what price to pick it up at). Also, BioSyent has been referenced as the next potential Paladin Labs. If so, can you see a potential of Knight buying BioSyent? Thanks again and appreciate the detailed replies you provide.

Q: What do you think of buying a 5% position in FFH as a hedge against shocks to the market? It seems to be negatively correlated with the general market. Also what do you make of its recent significant rise?
Thank you for your advice.

Q: Peter; Im sure you and staff try and read all the biz papers but just in case you missed todays G&M , Pge. B10 by Mr.Rothey, he comments on Momemtum investing. Thanks. Rod

Q: Greetings Team 5i,
With it looking like an increase in interest rates coming soon, and understanding that insurance companies appreciate higher interest rates, I would like to add to my holdings in that sector. I realize you like Sun Life SLF and I'm thinking of taking a position but I'm also interested in Fairfax Financial FFH. I would appreciate your opinion of FFH and the wisdom of taking a position in it at this time.
As always, thanks for your guidance.

Q: ajx has recently reported what are your thoughts??

Also ffh is it worth a look for a small position maybe 100 shares?

Q: Hi There
FFH.PR.E has fallen off a cliff since June - I wonder where the bottom may be. Other than Fairfax's interest in Blackberry, is there something I am missing? I have a modest amount and I am thinking of buying some more. Is Fairfax still sound?
Many thanks.

Q: I am considering FFH.pr.e and aqn.pr.a for tax efficient income investments. Both are attractive rate reset preferreds of reputable companies. Both trade at a discount to their $25 issue rate. Are these not appropriate investments for conservative investors?

Q: Hi Peter- This question is about Fairfax Financial Rate Reset Preferred Shares. FFH.C can be called in Dec./2014. Between now and then you will get 8 dividend payments totalling $2.88. It currently trades at $25.87. There will be a loss of 87 cents meaning that your profit is $2.01 share or 3.9% over 2 years.
FFH.G gets called in Sept/2015. There will be 11 payments totalling 3.44. It is trading at $24.70, so add a 30 cent gain for a profit of $3.74 a share or 5.5% per year over 2.75 years.
The one that seems to be too good to be true is the FFH.PR.E which expires in between these two in March 2015. It trades currently at only $23.11. A gain of $1.89. With 9 payments totalling $2.67, you have a total gain of $4.56 on an investment of $23.11 or an amazing 8.8% average annual return over 2.25 years. What am I missing? You have 3 pref issues with a relatively close annual dividend and relatively close call date but with extremely different market values. Same company. All Rate Reset. Is FFH.E a buy?

Q: Any thoughts on Fairfax? Hold some already and thinking of adding some more. Suspect shares are being impacted by RIM investment. Woudld you view Fairfax as a more defensive name? Thx

Q: hello,could you please analyze the FFH situation at this moment around 361.thanks