RE:valuation and other commentsHi 20,
Fairfax started buying Torstar in late 2006 and bought large amounts in 2007 and 2008 at prices in the mid to high teens. I believe they took a write-down a few years ago on their books to reflect the value of the shares at the time. Their average invested including these recent share purchases is probably in the high single digits.
Your valuation at $5 on the basis of the dividend is probably reasonably accurate. I get a slightly higher valuation when I estimate the value of their assets and factor in both synergies and market rationalization opportunities.
Averaging down is a hard call when you have $40K already committed to a company that has disappointed for more than a decade. Difficult to predict where the bottom is, but following the smart money is usually a good strategy. I keep buying because something has to be going on and even if it isn't, the dividend appears to be solid for some time into the future.
I think many who have hung on this long will resist jumping ship as they are underwater and why not wait until the final card is played. In the short-term this could force the share price up as investors chase fewer sellers which should make current investors sleep better at night.