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  "documentTitle": "Fairfax Financial Holdings Ltd. (FFH)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Muddy Waters Research",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2024-02-08 00:00:00",
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  "notes": "The slide highlights a discrepancy between Fairfax's carrying value and market price, as well as a valuation gap between auditor-reviewed financials.",
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      "text": "We believe this allowed Fairfax to avoid taking $251 million in losses in 2022.",
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      "text": "MUDDY WATERS RESEARCH",
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      "text": "carrying value: $251 million",
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      "text": "Fairfax's 2021 financials, which are audited by its long-standing auditor PwC Toronto, showed Recipe's goodwill and intangibles at a level 1.9x that of Recipe's own financials, which KPMG audited. We suspect this to be an example of Fairfax exercising an aggressive approach to valuation / impairment at the parent level.",
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      "text": "Since Recipe (a chain of restaurants) went public in 2015, Fairfax has consistently overvalued its Recipe equity, carrying it at a premium to the observable market price. From 2015 – 2021, the delta between the public price and Fairfax's carrying value increased. Despite the deteriorating macro conditions for restaurants, Fairfax took the business private at a 53% premium, paying C$20.74 per share (slightly below where Fairfax carried it). We believe this allowed Fairfax to avoid taking $251 million in losses in 2022. Fairfax has continued to carry Recipe above its estimate of fair value, while the business' operating income has continued to shrink. Nevertheless, Fairfax has taken no impairment.",
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      "text": "Recipe — Introduction",
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