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 [分享]Invest in Good Businesses |
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naboo
头衔: 海归少校
声望: 学员
性别:  年龄: 50
加入时间: 2004/02/22
文章: 145
来自: 天津/Tianjin
海归分: 15567
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作者：naboo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
https://biz.yahoo.com/ts/081007/10441196.html?.v=1
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The 'World is Coming to an End' Stock
Very few businesses can offer the type of protection that one insurance company can. And I'm not talking about Berkshire Hathaway , although that wouldn't be a bad place to park your cash.
The "other Berkshire" is Fairfax Financial a P&C insurer headed by brilliant capital allocator Prem Watsa. Fairfax is about as close as you can get to investing in a company that does great in good markets and exceptionally well in disastrous ones.
For insurers, after doing your best at underwriting profitable insurance policies, the next step is to allocate the insurance float appropriately. Watsa's allocation skills have been exceptional: In 15 years through December 2007, Fairfax's common stock holdings have appreciated 19.5% compared to 10.4% for the S&P. But I'm not here to tell you to invest in Fairfax because of common stock returns. Fairfax has prudently assembled a portfolio of credit default swaps that have been pouring in cash. Beginning in 2003, when everyone was riding high from the excess liquidity, Fairfax was buying CDS to protect its balance sheet.
In the third quarter alone, Fairfax realized cash proceeds of $575 million through the sale of $3.22 billion notional amount of credit default swaps that were purchased for $53 million. Fairfax has sold $8.87 billion notional amount of credit default swaps since inception for cash proceeds of $1.85 billion on an original acquisition cost of $197 million -- a cumulative gain (measured using original acquisition cost) of $1.65 billion.
As of Sept. 19, the remaining $12.87 billion notional amount of credit default swaps had a market value of $684.9 million and an original acquisition cost of $238.1 million, representing an unrealized gain (measured using original acquisition cost) of $446.8 million.
And this company only has a market value of $5.6 billion, so in the third quarter alone it netted 10% of the market cap in cash just from the sale of a book of swaps. These swaps alone essentially make Fairfax one big giant "put option" on the market.
On top of that, you get a best-in-breed insurance company that wrote $4.5 billion in net premiums in 2007, has a $19 billion investment portfolio and book value of $4.7 billion. The investment portfolio is of the highest quality: 46% government bonds, 23% cash, 5% corporate bonds, and 26% equities and other investments. So you basically have a 70% cash position, and Watsa has also hedged out 100% of the equity position.
With so much downside protection, huge cash positions, and a very prudent capital allocator at the helm, imagine what this company will look like five years from now.
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作者：naboo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 [分享]Invest in Good Businesses -- naboo - (2794 Byte) 2008-10-08 周三, 04:27 (1307 reads)
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