Subject: Re: FAIRFAX /FFH
I'm a Fairfax shareholder and purchased additional shares this morning on the decline. I read the Muddy Waters report and watched his interview on CNBC. He gets a lot of stuff wrong, doesn't seem too up to date on anything at all going right, has basically done zero work on the company before 2020 and lets us know that the company should be properly valued at a 4x or less after-tax earnings multiple. There are assets on Fairfax's balance sheet that have been written up and others that are carried at far below "fair value." Overall, BVPS is not out of line (and is about to get marked a lot higher for year-end).

His big example Digit has the 49% equity stake held on the books at $130 million and is accounted for under the equity method. Mandatorily convertible preferred shares that Fairfax owns (which will take the ownership level up to 74% of Digit) were written up in connection to an 'observable market transaction' where Sequoia put a $3.5 Billion mark on Digit. Is that too high? Who knows until they come public. But if 49% of the equity is in FFH book value at $130m I really don't think that is a smoking gun. Basically his entire analysis of Digit was errors.

Block's understanding of the IFRS accounting change focuses on why Fairfax had a bigger increase in book value (+6%) compared to other Canadian insurance companies. He doesn't attempt to understand why. (Fairfax had an extremely short duration bond portfolio at the time, something like 1.6 years avg. duration). Carson doesn't try to understand the rules. It's lazy analysis.

I wonder what figure he has penciled in for Q4 earnings one week from today? I have a huge number penciled in. But I spent more than 2 weeks on it.

That's what makes a market. Fairfax can't say much in the quiet period until the conference call a week from tomorrow.

One thing I know for sure is that I know more about the company than Carson Block.