Subject: Total return swaps
From Morningstar analyst report:

“Fairfax did take a $386 million investment loss in the quarter. That included a $342 million loss from total return swaps on its own shares. While these swaps were a big winner for the company last year, this quarter showed the potential negative of this move.”

From reading analysts comments, I believe the above was the main reason for the sharp sell-off following earnings release. As I understand it, TRS allowed the company to gain leveraged exposure to gains from stock for a small premium payment. The company believes its stock is undervalued, and this a leveraged bet that its stock price will rise. This is in lieu of or in addition to accelerated stock repurchases.

These kinds of bets that Watsa frequently makes scares off many investors, even though he has a great track record of growing book value. But it does give you more occasions to buy on dips.