Not at the moment, but perhaps I'll add a transcript.
In the past I tended to write long pieces of analysis that took months to research. Rather than thanking me, many Substack readers complained about the length of the post - clearly they couldn't be bothered to invest 30 minutes to reading it. So I am trying to record my analysis as a podcast/video that people can listen to rather than reading.
It's kind of ironic that now I'm being asked for a written transcript. I guess you can't please all the people all the time (wasn't it Bob Marley that sang that?).
Either way, I am delighted you enjoyed it. Are you invested? Do you agree with me, or is there anything you would disagree about? I would love to start a discussion on Fairfax India.
The only reason I asked about the transcript is that I want to share it with a family member who is not good at understanding verbal English but could use translate in the browser :). Also, I could save a transcript and highlight a few parts or add notes and later find something more easily.
You shouldn't be bothered about Tik-Tok attention span crypto investors messing with real equities. If you share a research like this for free and someone complains, that's literally a joke.
I am invested in FFH, actually a 20%+ holding. I haven't invested in Fairfax India yet. All statements are factual so there is nothing to dispute. I totally agree that it provides a long-term probably safe exposure to India's growth.
One thing I missed is mentioning that Ben Watsa's Marval Capital Fund (also chairman of Fairfax India) is Canada's best performing funds with 30%+ CAGR in 5 years, so this is also a side-car investing case.
BIAL is probably a mid-term catalyst but the investment probably requires a long and patient holding for decades, with possibly 1-2-3 years until it starts appreciating significantly.
A transcript has been added. You should see the icon in the bottom right of the media player on your screen.
I hope this serves your needs.
Marval Capital is entirely different.
Fairfax India is a publicly listed holdco (holding company) that makes long-term equity investments. Its mandate is to invest long-term capital in core infrastructure and established, high-quality businesses in India. Examples include the Bangalore International Airport, a significant stake in the National Stock Exchange of India (NSE), and Sanmar Chemicals. It targets companies that are already established, often market leaders in their field, and require substantial capital for growth or acquisitions. It acts as a long-term anchor shareholder, providing stability and strategic support to its portfolio companies.
In contrast, Marval Capital is a private investment firm. It raises capital from private investors, family offices, and institutions. Its capital base is not publicly traded. More specifically, it provides capital for specific situations and is deeply involved in the operational turnaround or strategic execution. It is an advisory and investment operco (operating company). It focuses on special situations, distressed assets, turnarounds, and complex corporate transactions. It provides strategic capital and, crucially, hands-on operational expertise to navigate challenges and create value. It targets companies that are underperforming, facing complex financial or operational issues, or are in need of specialized strategic guidance.
I think of Fairfax India as a long-term, blue-chip investor building a portfolio of trophy assets. Think of Marval Capital as a specialized surgical team brought in to fix complex problems.
While Ben Watsa is engaged at a senior level at both, the firms are legally separate entities with their own management teams, employees, and operational structures. The most important safeguard is that the two firms do not compete for the same deals. Each has clear and distinct mandates. When the Fairfax group (including Ben and his father, Prem Watsa, who is Chairman of Fairfax India) identify an opportunity, the critical governance step is that the opportunity is routed to the appropriate vehicle based on its pre-defined mandate.
I would say that each attracts a different type of investor. For those interested in compounding long-term wealth through programmatic acquisitions by deploying permanent capital in high quality cash generative assets, Fairfax India is the best choice. For those interested in special situations and turnarounds, Marval may be more interesting.
Alex, I tend to avoid ETFs. They are a basket of stocks - some good, some not so good - some fairly priced, others over priced - etc. Since ETF managers try to outperform benchmarks in the short-term, there is an incentive for them to chase momentum popular stocks, which kind of runs contrary to the ethos of being a contrarian investor.
In relation to FMQQ specifically, it has 35 holdings and they are global - not India specific. As such, it is not a pure play on the Indian economy.
Its largest three holdings are NuBank, Sea Ltd and MercadoLibre. That's exposure to Latin America and Singapore.
Interestingly, of its 35 holdings, 14 are companies in India. For a fund that can invest anywhere in the world, the fact that it has heavily weighted in favour of India supports my thesis in this podcast/video.
The downside with FMQQ is that its investments are all in public companies, most of which trade at eye-watering multiples. So although it appears to be trading close to NAV, beware that the calculation of NAV is based on prevailing public market share prices. If all of its stocks are trading at double intrinsic value (just a hypothetical number to demonstrate the point), then the fund trading at NAV will itself be hugely overvalued by a factor of 2x. Said differently, for most of these holdings, much of their future success is already in the price.
The beauty of Fairfax India as a holding company is that you get 100% exposure to India, 70% of the companies it owns are private businesses that you are unable to invest in yourself, it has a unique monopoly asset in BIAL and the portfolio is trading at about a 17% discount to NAV and that NAV is about 66% of intrinsic value. So you are able to buy into a wonderful portfolio which is currently on sale in the market - you are almost buying every dollar of value for 50 cents. That suggests 100% upside before factoring in growth - which is strong.
Given the choice of FMQQ or Fairfax India, for me it's a no-brainer (as my friends in the US like to say).
I really liked this comprehensive analysis, thank you! I was familiar with Fairfax and Fairfax India already. Is there a transcript available?
Not at the moment, but perhaps I'll add a transcript.
In the past I tended to write long pieces of analysis that took months to research. Rather than thanking me, many Substack readers complained about the length of the post - clearly they couldn't be bothered to invest 30 minutes to reading it. So I am trying to record my analysis as a podcast/video that people can listen to rather than reading.
It's kind of ironic that now I'm being asked for a written transcript. I guess you can't please all the people all the time (wasn't it Bob Marley that sang that?).
Either way, I am delighted you enjoyed it. Are you invested? Do you agree with me, or is there anything you would disagree about? I would love to start a discussion on Fairfax India.
Then here's a dissenting voice: I prefer long reports to podcasts. Nevertheless, thanks for the content!
The only reason I asked about the transcript is that I want to share it with a family member who is not good at understanding verbal English but could use translate in the browser :). Also, I could save a transcript and highlight a few parts or add notes and later find something more easily.
You shouldn't be bothered about Tik-Tok attention span crypto investors messing with real equities. If you share a research like this for free and someone complains, that's literally a joke.
I am invested in FFH, actually a 20%+ holding. I haven't invested in Fairfax India yet. All statements are factual so there is nothing to dispute. I totally agree that it provides a long-term probably safe exposure to India's growth.
One thing I missed is mentioning that Ben Watsa's Marval Capital Fund (also chairman of Fairfax India) is Canada's best performing funds with 30%+ CAGR in 5 years, so this is also a side-car investing case.
BIAL is probably a mid-term catalyst but the investment probably requires a long and patient holding for decades, with possibly 1-2-3 years until it starts appreciating significantly.
A transcript has been added. You should see the icon in the bottom right of the media player on your screen.
I hope this serves your needs.
Marval Capital is entirely different.
Fairfax India is a publicly listed holdco (holding company) that makes long-term equity investments. Its mandate is to invest long-term capital in core infrastructure and established, high-quality businesses in India. Examples include the Bangalore International Airport, a significant stake in the National Stock Exchange of India (NSE), and Sanmar Chemicals. It targets companies that are already established, often market leaders in their field, and require substantial capital for growth or acquisitions. It acts as a long-term anchor shareholder, providing stability and strategic support to its portfolio companies.
In contrast, Marval Capital is a private investment firm. It raises capital from private investors, family offices, and institutions. Its capital base is not publicly traded. More specifically, it provides capital for specific situations and is deeply involved in the operational turnaround or strategic execution. It is an advisory and investment operco (operating company). It focuses on special situations, distressed assets, turnarounds, and complex corporate transactions. It provides strategic capital and, crucially, hands-on operational expertise to navigate challenges and create value. It targets companies that are underperforming, facing complex financial or operational issues, or are in need of specialized strategic guidance.
I think of Fairfax India as a long-term, blue-chip investor building a portfolio of trophy assets. Think of Marval Capital as a specialized surgical team brought in to fix complex problems.
While Ben Watsa is engaged at a senior level at both, the firms are legally separate entities with their own management teams, employees, and operational structures. The most important safeguard is that the two firms do not compete for the same deals. Each has clear and distinct mandates. When the Fairfax group (including Ben and his father, Prem Watsa, who is Chairman of Fairfax India) identify an opportunity, the critical governance step is that the opportunity is routed to the appropriate vehicle based on its pre-defined mandate.
I would say that each attracts a different type of investor. For those interested in compounding long-term wealth through programmatic acquisitions by deploying permanent capital in high quality cash generative assets, Fairfax India is the best choice. For those interested in special situations and turnarounds, Marval may be more interesting.
Do you agree?
Thank you very much, I was searching for a long time how to be exposed to India. Fairfax India is certainly a compelling thesis.
Agree, it's better for a pure play exposure.
BTW, it would be interesting to hear your opinion, if you have time to look at, about Kaspi.kz (KSPI). Wondering if it fits you investing framework.
For my view on Kaspi, please see: https://rockandturner.substack.com/p/kaspi-fin-tech-super-app-business
Very interesting, thank you very much!
What is your view on India-dominated emerging market internet economy FMQQ ETF as an alternative way to be exposed to India?
Anyhow, I expect further rate cuts in the US, potentially back to zero rate regime that could benefit emerging markets.
Alex, I tend to avoid ETFs. They are a basket of stocks - some good, some not so good - some fairly priced, others over priced - etc. Since ETF managers try to outperform benchmarks in the short-term, there is an incentive for them to chase momentum popular stocks, which kind of runs contrary to the ethos of being a contrarian investor.
In relation to FMQQ specifically, it has 35 holdings and they are global - not India specific. As such, it is not a pure play on the Indian economy.
Its largest three holdings are NuBank, Sea Ltd and MercadoLibre. That's exposure to Latin America and Singapore.
Interestingly, of its 35 holdings, 14 are companies in India. For a fund that can invest anywhere in the world, the fact that it has heavily weighted in favour of India supports my thesis in this podcast/video.
The downside with FMQQ is that its investments are all in public companies, most of which trade at eye-watering multiples. So although it appears to be trading close to NAV, beware that the calculation of NAV is based on prevailing public market share prices. If all of its stocks are trading at double intrinsic value (just a hypothetical number to demonstrate the point), then the fund trading at NAV will itself be hugely overvalued by a factor of 2x. Said differently, for most of these holdings, much of their future success is already in the price.
The beauty of Fairfax India as a holding company is that you get 100% exposure to India, 70% of the companies it owns are private businesses that you are unable to invest in yourself, it has a unique monopoly asset in BIAL and the portfolio is trading at about a 17% discount to NAV and that NAV is about 66% of intrinsic value. So you are able to buy into a wonderful portfolio which is currently on sale in the market - you are almost buying every dollar of value for 50 cents. That suggests 100% upside before factoring in growth - which is strong.
Given the choice of FMQQ or Fairfax India, for me it's a no-brainer (as my friends in the US like to say).