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  "documentTitle": "Fairfax Financial Holdings Ltd. (FFH)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Muddy Waters Research",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2024-02-08 00:00:00",
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  "notes": "The slide uses a specific accounting critique to frame the target's behavior as deceptive.",
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      "kind": "callout",
      "text": "By consistently manipulating EXCO's Fair Value to an unreasonably high level, Fairfax appears to be attempting to avoid impairment testing of EXCO.",
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      "text": "MUDDY WATERS RESEARCH",
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      "text": "Because Fairfax treats EXCO as an associate, it uses the equity method of accounting. The equity method provides that investments should be carried at cost, with proportionate shares of gains (or losses) added to (or subtracted from) the cost bases. However, equity method investments should be tested for impairments when events or changes in circumstances indicate that the investment may not be recoverable. By consistently manipulating EXCO's Fair Value to an unreasonably high level, Fairfax appears to be attempting to avoid impairment testing of EXCO. Fairfax might argue that because its orientation is that of a long-term investor, Fairfax is justified in not impairment testing EXCO. However, Fairfax has already been a significant shareholder in EXCO for ~11 years, which in our view, would make a mockery of such a justification.",
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      "text": "https://kpmg.com/us/en/articles/2023/ias-28-impairment.html#:~:text=Like%20IFRS%2C%20an%20equity%20method,and%20US%20GAAP%20are%20similar",
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      "kind": "title",
      "text": "How Does Fairfax Justify its Overvaluation of EXCO?",
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      "evidence": "Repeatedly highlighting contradictions and discrepancies in Fairfax Financial's accounting and valuation practices",
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