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Strategies & Market Trends : Value Investing
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To: James Clarke who wrote (6391)3/22/1999 12:08:00 PM
From: Freedom Fighter  Read Replies (1) of 78493
 
James,

>>On Fairfax, a company which at first glance looks just like Berkshire Hathaway (a fact
the CEO exploits by mimicking Buffett in his own annual report) - don't get seduced by
the language. I'd go a step beyond Wayne, and call the company's financials borderline
fraud. Highly misleading, at the very least.<<

I am concerned about the insurance operations. I agree that they had a very poor 1998 and are generally not profitable from underwriting. Underwriting profit is something I really like in the insurance/ investor model. A BRK the company is not. But the investment management seems fine to very good and the company has turned around other insurance operations they bought according to a report I received. I need to research the matter further. The shareholder letter is also quite open about the insurance risks and poor performance. The main issues to me are valuation and the insurance. It is quite expensive right now if you back out the capital gains and look just at earnings from operations. So I'm not interested yet. But I don't think all these capital gains reflect some sort of attempt at deception. My own investment portfolio looks the same. I've been cashing out a lot of overvalued securities too. I think management is just restructuring the portfolio in a way I agree with. I'm not tossing in the towel just yet. It may still make my list of prospects.

Wayne Crimi
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