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A financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management.
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TMFWBuffettJr (99.39) Submitted: 2/22/08 2:50 PM : Start Price: $299.49 FFH Score: 33.55
A decent finance/insurance firm with an improving business...but the real story is the absolute fortune they will make on their credit default swaps. They purchased CDS with a notional value of $18 billion for around $300 million. They're now worth around $700 million or so to the market, but I expect That over the next five years FFH will recover more money from these than their current market cap. In other words, I expect them to recover $5 billion or more, with current market cap being right around $5 billion. That's a pretty good formula for beating the S&P IMHO, and I've put some real money into this one.
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muunkky (41.15) Submitted: 5/21/08 10:58 AM
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That's great news, where did you find this info? in the blogosphere? I'd like to follow it up.
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hey4ndr3w (99.02) Submitted: 5/25/08 1:37 PM
I disagree. The value of the swaps are now notoriously volatile, and I have doubts that they're going to be able to unload those huge CDS positions and convert the unrealized gains. If you back investment income out of 2007 pretax earnings, you get only $520MM, which is a heck of a long ways away from the $2.6BB it recorded. I'm not looking for their insurance business to help out too much, either. Premiums declined 6.1% YOY in 2007, and Fairfax reported an underwriting loss of $7.7MM in 1Q08, compared to a profit of nearly $50MM a year earlier.
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