{
  "docId": "019dd923-622c-750b-8b97-92c6b164e5b0",
  "docSlug": "b0d582a40bc2",
  "documentTitle": "Fairfax Financial Holdings Ltd. (FFH)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Muddy Waters Research",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2024-02-08 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.7777778,
  "pageNumber": 17,
  "pageCount": 72,
  "prevPage": 16,
  "nextPage": 18,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 1,
  "notes": "The slide uses a Bloomberg terminal screenshot to visualize the share price decline of Quess during 2018.",
  "elementsJson": [
    "headline_text",
    "paragraph",
    "line_chart",
    "footnote"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b97-92c6b164e5b0/17",
  "deckHref": "/decks/019dd923-622c-750b-8b97-92c6b164e5b0",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b97-92c6b164e5b0.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b97-92c6b164e5b0#slide-17",
  "components": [
    {
      "bbox": null,
      "kind": "callout",
      "text": "This change to the Equity Method enabled Fairfax to avoid booking a $372 million loss during Q2 – Q4 2018.",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
      "confidence": null,
      "componentId": "019dd953-25b5-768c-bb2f-c9cedc78ad4f",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.45,
        "w": 0.37,
        "x": 0.31,
        "y": 0.45
      },
      "kind": "chart",
      "text": "Bloomberg chart showing Quess share price decline in 2018",
      "attrs": null,
      "subkind": "line",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "0581e0ec-bf88-42d6-a904-0d8f58366cf2",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.09,
        "x": 0.87,
        "y": 0.03
      },
      "kind": "image",
      "text": "Muddy Waters Research logo",
      "attrs": null,
      "subkind": "logo",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "43639b90-7952-4b92-81d1-180e76c7535f",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "loss avoidance: $372 million",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-25b5-768c-bb2f-cd617655dbd6",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.25,
        "w": 0.92,
        "x": 0.04,
        "y": 0.18
      },
      "kind": "paragraph",
      "text": "When Fairfax de-consolidated Quess, it accounted for its stake at FVTPL. FVTPL required Fairfax to adjust the carrying value to Quess' market price. However, after de-consolidation, Quess' shares lost ~39% (below). Rather than booking losses, during Q4 2018, Fairfax changed the accounting method to the Equity Method. Under Equity Method accounting, Fairfax kept the initial fair value as its basis, and was required to add proportional shares of profits (or subtract losses). This change to the Equity Method enabled Fairfax to avoid booking a $372 million loss during Q2 – Q4 2018. However, the Equity Method also requires Fairfax to test for impairments if there are indicia the investment is impaired (e.g., a significantly diminished market value).",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "cbac5231-d08f-4a4f-b8ea-b01d76ffafc8",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.3,
        "x": 0.04,
        "y": 0.87
      },
      "kind": "source-note",
      "text": "1 Fairfax Financial Holdings Annual Report 2018, Pg. 61. 2 Fairfax Financial Holdings Annual Report 2018, Pg. 59.",
      "attrs": {
        "numbered": true
      },
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "cd87d137-39bf-490e-9651-f8069d181ddc",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.12,
        "w": 0.65,
        "x": 0.04,
        "y": 0.04
      },
      "kind": "title",
      "text": "Q2–Q4 2018: Changing Accounting Method to Deny Market Reality",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "25e56c3a-e3f6-4d39-b961-752c7404913d",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "3095a61f-940d-4334-ad0f-551185006b29",
      "evidence": "The slide explicitly accuses the company of changing accounting methods to hide losses.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 72,
      "from": 4,
      "beatId": "e9a96546-1054-431c-aa6b-9c2a5e0f1f43",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "Expose Contradiction",
      "beatSlug": null,
      "evidence": "Repeatedly highlighting contradictions and discrepancies in Fairfax Financial's accounting and valuation practices",
      "position": 0,
      "confidence": 0.8,
      "parentBeatName": null,
      "parentBeatSlug": null
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}