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  "documentTitle": "Fairfax Financial Holdings Ltd. (FFH)",
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  "authorName": "Muddy Waters Research",
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  "presentationDate": "2024-02-08 00:00:00",
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  "notes": "The slide outlines a specific accounting manipulation case involving de-consolidation and subsequent impairment avoidance.",
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      "kind": "callout",
      "text": "Fairfax's gimmick was to de-consolidate Quess, using a rationale that strains credulity.",
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      "text": "Book Value: $225 million",
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      "text": "Quess IPOed in India in 2016. Fairfax, which owns its stake through Thomas Cook India, owned 49% of Quess when it de-consolidated it.1 Fairfax justified the de-consolidation by claiming it entered an agreement to transfer sufficient control of the company to a 12% shareholder. Since then, Fairfax has changed the accounting policy it applies to its Quess stake two times. These repeated policy changes seem to have been designed to avoid testing the Quess investment for impairment. As of September 30, 2023, Fairfax carries Quess at a $225 million (87%) premium to Quess' market value.",
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      "text": "In Q1 2018, Fairfax used Quess as an accounting lever to create $889.9 million of profit and Book Value. Absent this lever, Fairfax seemingly would have reported a loss in Q1 2018 of ~$205 million (rather than its $684.3 million reported profit). Fairfax's gimmick was to de-consolidate Quess, using a rationale that strains credulity. Through Q3 2023, Fairfax has, in our view, insufficiently impaired Quess, for which we adjust Book Value down by -$225 million.",
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      "text": "1 Fairfax Financial Holdings Annual Report 2018, Pg. 61.",
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      "text": "Quess — Overview",
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