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Anybody see the news that caused this to pop 20% today on 3x average volume? Saw it at the open, assumed it was fluke but didn't see any news, so put in a limit order for my small position to sell and it filled. And price seems to have remained elevated the whole day so now curious what is driving it.

Is Europe becoming uninvestable? European regulators and leaders sure seem to want it to be uninvestable as far as technology (and chemicals, oil & gas, heavy industry) is concerned...

Love it! So their target price is for the share price to go from 12.5 to 13.7 x Q2 earnings? Anyone know what their earnings forecast is for the whole year?

I have a follow up question for the board. How many business engines do you think Fairfax has? Is it two: Insurance Investments Or is it three: Insurance Investments: fixed income + mark to market equities Non-insurance associate + consolidated companies Or is it some other number? I keep going back and forth on the question (between 2 and 3). We know Fairfax has no desire to become a full-blown conglomerate like Berkshire Hathaway. My guess is Fairfax views non-insurance associate + consolidated companies primarily as investments - not permanent holdings. They will likely be monetized one day (like the recent sale of 50% of Poseidon). So on a practical basis my current view is Fairfax has two basic business engines: insurance and investments. However, in terms of understanding the business, I think it is helpful to use three business engines, and split investments into two buckets. How do you analyze Fairfax?

Which is the highest in ~18 months, but still below the highs set in 2023 and has topped out in this range multiple times since. Additionally, it's not the 10-year that matters to Fairfax, but more so the 3-5 which are also below 2023 highs and have consistently been setting "lower highs" on each subsequent spike - this current one included. Not to say they can't go higher, but they haven't been for three years and I think energy and war inflation, like we're seeing today, precedes economic contractions and not inflationary expansions. I tend to agree it's a good time for bonds - 3% real yields have historically been great buying opportunities for TIPS even if not immediately. You can get 2.25-2.5% in shorter duration TIPS which is still pretty good historically. 5-6% on agency mortgages with limited prepayment risk at this time given home values falling/stagnating? You're getting mid-single digit returns before even considering any sort of credit/duration/pre-payment/leverage pick-up and a 5-year TIP is going to have quite a bit less duration/inflation risk than equities @ 20x + earnings. We saw in 2022 that it takes YEARS for index earnings to recover in real terms - and much of that recovery was in AI infrastructure/chip spend which is still up in the air if it was real earnings or is just gonna come out in depreciation/write offs over the next 5-years.

Article 4 in our deep dive into Fairfax's business model. This is the final article in the series. An Income Stream View of the Business Model Following the Money The previous articles explained how Fairfax's business model works. This article examines the same business from a different perspective: where it earns its money. Understanding Fairfax's income streams provides an accounting view of the business model. It connects insurance, investing and capital allocation to the company's reported financial results. Most investors analyze Fairfax as though it were a conventional property and casualty insurer. That framework is incomplete. Another way to understand the business is through its six income streams. Viewed through this lens, Fairfax has multiple sources of earnings and multiple drivers of long-term intrinsic value. The Six Income Streams Fairfax generates six distinct income streams. The first five are recognized in reported earnings. The sixth is an economic measure of value creation that accounting rules do not yet recognize. Together, these six income streams map directly to Fairfax's three business engines. Accounting Income Streams Engine 1: Insurance Underwriting profit Engine 2: Investments – Fixed Income and Mark-to-Market Equities Interest and dividend income Engine 3: Associates and Non-Insurance Operating Companies Share of profit of associates Earnings from non-insurance consolidated companies Generated by All Three Business Engines Unlike the other income streams, net gains (losses) on investments can be generated by all three business engines. Net gains (losses) on investments As Fairfax creates value across its insurance operations, investment portfolio and operating businesses, management can choose when to realize that value. When assets are sold, the accumulated gains are recognized in reported earnings. Importantly, realized gains are not limited to the investment portfolio. Fairfax has also generated significant gains by monetizing insurance businesses. Recent examples include the sale of its pet insurance business, Ambridge, and the public listing of Digit Insurance. Beyond Accounting Earnings As Warren Buffett has often observed, accounting earnings provide an excellent starting point. They do not, however, capture all of the value a business creates. Fairfax therefore reports another measure that deserves attention: 6. Annual change in excess of fair value over carrying value (FV–CV) for associates and publicly traded consolidated companies. Like income streams 3 and 4, this measure is generated by Engine 3. It captures value that has already been created by Fairfax's associates and publicly traded consolidated companies, but has not yet been recognized in reported earnings. Importantly, this is not management's estimate of intrinsic value. It is based on observable market values and is reported every quarter. Although this measure captures an important source of hidden value within Engine 3, it does not capture all of the unrealized value being created. As a result, it provides investors with a transparent and conservative measure of economic value creation that is likely to become reported earnings over time. Mapping the Income Streams The exhibit below illustrates how Fairfax's three business engines generate the company's six income streams. "Normalized" 2026 Estimate: This is not my forecast for Fairfax's actual 2026 results. Rather, it is a thought exercise that estimates what the company could earn in a normal year. Fairfax Versus a Traditional P/C Insurer Most property and casualty insurers rely primarily on two sources of earnings: Underwriting profit Interest income That is the traditional insurance model. The objective is stable, predictable earnings generated through disciplined underwriting and conservative investment portfolios. Fairfax's earnings profile is fundamentally different. Today, underwriting profit together with interest and dividend income account for approximately 56% of normalized earnings. The remaining 44% is generated through capital allocation activities, including associates, non-insurance operating companies, investment gains and the realization of hidden value. Insurance remains the foundation of Fairfax's success. Increasingly, however, long-term shareholder returns are driven by how management allocates the capital generated by that insurance platform. The Investor Takeaway Many analysts continue to evaluate Fairfax using the framework applied to a conventional property and casualty insurer. As a result, they focus primarily on two income streams: underwriting profit and interest income. That approach is incomplete for two reasons. It overlooks four income streams that together account for roughly 44% of Fairfax's normalized earnings power. More importantly, it underestimates the role of capital allocation in driving long-term shareholder returns. For Fairfax, the insurance cycle is important. Capital allocation is even more important. During soft insurance markets, capital does not remain trapped inside the insurance business. Management can instead redeploy it into public equities, private businesses, credit investments, acquisitions or share repurchases. Fairfax's six income streams demonstrate that management has built a diversified set of capital allocation capabilities, allowing it to pursue attractive opportunities wherever they arise. This flexibility has been a defining characteristic of Fairfax throughout its history. It also helps explain why comparisons with traditional property and casualty insurers are often incomplete. In many respects, Fairfax's economic model more closely resembles Berkshire Hathaway during the 1980s and 1990s than it does a conventional insurance company. Soft insurance markets did not prevent Berkshire from compounding capital over that period because insurance was only one component of a broader capital allocation model. The same principle applies to Fairfax today.

I have trouble believing that this is true. Tilson’s questions were always sensible, in marked contradistinction to 90% of the audience questions which were puerile or which had already been answered so many times previously. Tilson actually wrote chapter 3 in the book about Munger, and it seems unlikely that he would have been asked to do so if anyone thought Munger harboured any personal animosity against Tilson. For some reason I have never been able to fathom, many people seem to harbour an intense dislike of Tilson, despite his pretty good track record, his sensible ideas, and his strong support of value investing and Berkshire in particular. Nor does he have any association with the attack on Fairfax. I don’t expect you to be able to prove that Munger ever rolled his eyes at Tilson’s questions, just as I can’t prove that he didn’t, but I find it highly unlikely. I think you should prove it, or withdraw your accusation, which is beneath you, but I’m not holding my breath.

Whatever average mix they have they've been generating 5% without reaching too much for duration. Thats from a mix of maturities, the Pacwest portfolio impact and other corporates. Thats a perfectly good outcome without too much duration risk in this volatile environment, if you ask me. Whatever they do they will be fairly measured so as not to take on too much risk and keep optionality open in case of a market dislocation. I think as long as they keep generating cash, from their 3-4 engines. Deploying it in this environment will continue to be a nice problem to have.

Maybe China can find a way to manufacture some brain cells and send em our way.

Why can't Trump just stick to the funny stuff, like posting pictures of himself as AI Jesus? That is so funny. The Iran war is not funny.

While I'm extremely bullish on oil prices over the long term, the more immediate concern to me is how surging inflation might affect credit markets.

In the United States today, even amidst record levels of domestic production and factoring out unsustainable SPR drawdowns, we remain a net importer of around 798 million barrels of crude oil annually. Our country's overall consumption of the black gold is roughly 6 billion barrels a year. Given there are approximately 343 million Americans, that's 17.5 barrels consumed for every man, woman, and child in our nation. At 300 pounds a barrel, that works out to nearly 5,300 pounds of crude oil for each person. For perspective, the combined weight of all food and fluids consumed by the average American is only about 4,500 pounds a year. So crude oil is important. Some other points: A. Since the start of the new millennium, global reserve replacements have run at roughly a sixth of current production levels. The world is simply not finding more oil. Furthermore, the small quantities being found often lie in locations requiring high extraction costs. B. Shale wells lose most of their output within their first year, forcing continuous drilling just to keep production flat. This makes shale production an accelerating treadmill driven by steepening decline rates, which continue to increase as operators are running out of prime drilling locations. C. The world's geopolitical situation is fracturing. This has an untold number of effects, not least of which involve the relative value of currencies. Oil prices have an inverse relationship to the strength of the USD, making future monetary policy and the balance of payments increasingly important. But politics remains a great risk to many things, oil investment of course being only one of them. I don't even blame the socialists at this point. That's how you know they're dangerous.

I've owned Fairfax since 1994 and I did add small amounts about 25 times in the period where we here on the COBF forums were obsessing over the valuation. I do not think about Fairfax very often but when I do I always have the same thoughts, much like those I have given I inherited Berkshire in 1975. Here goes: When the price of Fairfax is consistently rising investors obsessively think long term and increasingly get both satisfied and comfortable holding the stock and even consider or act to increasing their holdings. When the stock isn't rising or declines, and this can come both justified and not justified, investors obsess with short time horizons and also they get extremely valuation focused. This valuation focus is generally either PE or price-to-book, but it goes micro focused. My view, one I've shared previously, is that insurance is very much a skill business and the best managements simply are destined/guaranteed to outperform those with less skill. I rank Fairfax very high or even at the top of the skill parade both underwriting and on the investment side. The safest thing in my view isn't to buy the one Berk vs Fairfax selling at the best perceived value, the best thing is to figure out, maybe even model, how much fear and need to escape you'll experience in a price falling atmosphere and judge your level of holdings based on that. The price falling can be both Mr. Market's manic-depressive mood or an event - internal or external - or a cycle or whatever. But if you can profile yourself as well as you can value the business then you can extend your time horizon. Simply put, I would not own more stock than I can stomach for a downtrend. If you can extend your time horizon and manage yourself, your stomach turmoil, then you have a huge probability of doing well owning Fairfax.

I don't do weightings but if I did, higher conviction = more overweight.

With 2-Year Treasuries currently at 4.35%, I think that sacrificing 0.35% of yield for the optionality of being able to redeploy at maturity makes sense, but I’m not in Brian B’s stratosphere in terms of bond investing. -Crip

And yet BMO has a target of $2500 cdn.

Hearing its BMO with the estimate but I haven’t seen the note.

Curious what this board thinks of allocation weight to Fairfax. The dilemma is that I'm already overweight (by quite a bit) Fairfax and Fairfax India - so without going to deep into the details, is investing a huge chunk of your portfolio into Fairfax as "safe" as BRK (I'm tempted to say arguably safer given it's relatively cheaper, but we've also seen Fairfax's past mistakes which have been a bigger drag than what BRK has experienced in its history)

its worked out pretty good with 10 year touch 4.7% today

Yes, I don't think FFH thinks this is an "ideal market for investment grade bond investors". If they did, I think they would extend duration.

FFH is less I think around 2

I listened to the Chubb call yesterday. I thought it was interesting that their Chief investment officer said " This is an ideal environment for investment-grade bond investors" . I will be curious to see what Fairfax is doing on the bond front. I think CB average maturity is around 5 years.

Whole market is down, seems GOOGL's capex guide + middle east flare ups spooked the market

Relentless selling here. If we go below $2000 again, hopefully they lean even harder into the buyback and exhaust it early.