Business Overview
Textainer (NYSE: TGH) is a leading global lessor of intermodal shipping containers, operating in a cyclical industry with three subsectors: liners, ship lessors, and container lessors. Textainer’s business model involves leasing containers on long-term fixed-rate contracts, generating stable cash flows. Its balance sheet reflects = containers (assets) and fixed-rate debt (liabilities).
Investment Thesis
Textainer is undervalued due to the container industry’s recent boom-and-bust cycle, offering a margin of safety at current prices. Long-term leases ensure predictable revenue, while fixed-rate debt shields margins from rising interest rates. The company delivers a robust ~28% ROE, driven by operational efficiency and disciplined capital allocation. Despite strong fundamentals, the stock trades at a discount, likely due to cyclical concerns and limited management engagement with investors.
Risks
Valuation –
Business Overview
IDT Corp (NYSE: IDT) is a holding company with a portfolio of businesses in telecom, fintech, and technology, run by serial entrepreneur Howard Jonas. Structured as a “mini-Berkshire,” IDT focuses on incubating high-growth subsidiaries and spinning them off tax-efficiently (e.g., Straight Path Communications). Key holdings include National Retail Solutions (NRS), a fast-growing point-of-sale platform.
Investment Thesis
IDT offers asymmetric upside due to its undervalued portfolio and Jonas’s track record of creating shareholder value through spin-offs. The market cap (~$600M) is arguably justified by NRS alone, which is scaling rapidly in the U.S. retail sector. A pending $1.1B lawsuit (assumed related to historical telecom disputes) is a potential catalyst; a favorable or neutral outcome could drive a 25%+ stock price increase. Hedging with short-term, out-of-the-money put options mitigates downside risk.
Valuation –
Market cap of ~$600M, with NRS’s growth trajectory potentially exceeding this value. Sum-of-the-parts valuation suggests significant undervaluation, with other segments (e.g., telecom, fintech) as “free” upside. P/E ratio not meaningful due to conglomerate structure; focus on asset value.
Risks
Business Overview
Fairfax Financial (TSX: FFH) is a global property and casualty insurance and reinsurance company with a diversified portfolio of subsidiaries. Led by CEO Prem Watsa, often compared to Warren Buffett, Fairfax generates income from:
Insurance underwriting profits.
Investment returns on its float (premiums held before claims are paid). Operating income from wholly or partially owned subsidiaries (e.g., in media, retail, and real estate).
Investment Thesis
Fairfax is a compelling long-term investment due to Watsa’s 40+ year track record of delivering high returns on equity (historically ~15% annualized). The company’s disciplined underwriting and opportunistic investments (e.g., distressed assets, emerging markets) provide resilience across market cycles. Its diversified income streams reduce reliance on any single segment, while float amplifies returns via investments in bonds, equities, and private companies.
Valuation –
Risks
