All Activity

Fairfax Q2 2026 Earnings Preview My very rough guess is earnings will come in around $60/share when Fairfax reports Q2 results. Analyst consensus is about $80/share. I look forward to getting feedback from boar members. . This would put book value at June 30, 2026, at about $1,300/share. BVPS at March 31, 2026: $1,250 Earnings: +$60 Impact of buying back shares above BV: -$12 per share Note, I am not doing this exercise to come up with a high conviction specific number (I know it will be wrong) for EPS or BVPS. Rather, I do it for the build of the individual items - to help prepare me for Fairfax’s earnings release. Below is the logic I used to come up with my forecast. ————— Details Underwriting profit: Q2 2025 Net premiums written: $7.17B CR: 93.3% Underwriting profit: $426.9M Net favourable prior year reserve development: $163.2M Catastrophe losses: $140.1M Q2 2026 Estimate: similar to Q2 2025 Net premiums written: modest growth (low single digit) CR: 93.5% Underwriting profit: $435M ————— Interest income: Q4 2025: $646M Q1 2026: $662M At March 31, 2026: Duration: 2.2 years Average maturity: 3 years Yield: approximately 5%. Q2 2026 Estimate: similar to Q1 2026 $665M ————— Share of profit of associates Waterous Energy III (Greenfire). Q1: $117 million tailwind Q2: $50 million headwind (loss)? Poseidon sale closed May 29. Normal contribution: $75 million per quarter Adjusted for sale: $62 million ($13 million reduction) Sanmar??? (Sale in March) Q1 2026: $372M Q2 2026 Estimate $200M ————— Non-insurance consolidated companies Q2 2025: $120M Q1 2026: $3M (seasonality, AGT IPO costs) My annual estimate is $450M. Q2 2026 Estimate $120M —————— Investment gains (losses) Equities From an accounting perspective, it is only the market to market equity holdings that impact this bucket each quarter. Q2 2026 Estimate for equities loss of $50M Fairfax has been slowly selling down their position in BlackBerry over the past year. BlackBerry was one of the big gainers in the quarter. If Fairfax continued to sell BlackBerry shares in the quarter the gain may be much smaller than $242 million. As a result, the loss estimate for equities of $50 million would be larger. Big movers: Fixed Income Interest rates were higher in Q1. Impact on fixed income? Q1 2026: loss of $364 million Fixed income portfolio at end of Q1: Size: $49.8B Duration: 2.2 years Average maturity: 3 years Yield: approximately 5% “zero traditional private credit exposure” Interest rates continued their move higher in Q2. Q2 2026 Estimate for fixed income: Larger than loss in Q1 loss of $450 million Large one time investment gain Poseidon: $837 million I like to separate this number out in my model. Total investment gains (losses) Q2 2026 Estimate: Equities: -$50M Fixed income: -$450M Poseidon: $837M Total: $337M There are couple of other items that impact investment gains each quarter: Digit Insurance Fairfax India - change in value of the individual holdings Digits share price was flat on the quarter, so no impact of Fairfax. I do not track the holdings in Fairfax India from quarter to quarter, so not sure of the impact here to Fairfax. —————— IRFS 17 and Life Insurance and Runoff This is a catchall bucket for our model. IFRS 17 - Interest rate impact Rising interest rates are a tailwind for IFRS 17. This offsets some of the loss in the fixed income portfolio. Q1 2026: Gain of $180M (about half the loss in fixed income) Q2 2026 Estimate Gain of $225M Total IFRS + Life/Runoff Q1 2026: $329M Q2 2026 Estimate for this bucket $375M This number is low conviction. —————- Interest expense Q1 2026: $212M Q2 2026 estimate: $220M Corporate expense and other Q1 2026: $108M Q2 2026 estimate: $120M Tax rate Q1 2026: 29% Q2 2026 estimate: 20% Q1 was elevated. Not sure why. Q2: Significant gain ($837 million) from sale of Poseidon is likely taxed at lower capital gains rate. Minority interest Estimate is 6%? —————- Share count Shares outstanding Q1 2026; Effective: 20.62M Diluted: $22.25 It appears Fairfax was very aggressive buying back stock in Q2: 675,000? Total: $1.08 billion? Per share: $1,600 Estimate of shares outstanding at June 30, 2026: Effective: 19.95M Diluted: 21.58M —————— Impact on BVPS of share buybacks above book value Shares were purchased above book value: BVPS: $1,250 Difference: $350 per share or $236.25 million Reduction in BVPS due to buybacks above book value: $236.25 million / 19.95 million effective shares = $12/share —————- Excess of FV over CV for associate and non-insurance consolidated holdings March 31, 2026: $3.9B June 30, 2026 Estimate: $4.1B, or $206/share pre-tax or $175/share after-tax (15% tax rate) Quarter over quarter change: $200 million, or $8 per share after-tax Headwind: Sale of 50% of Poseidon was a reduction of $837M. Tailwind: Driven by Eurobank, remaining holdings had a strong Q2. Net result in the quarter: an estimated increase of $200M to $4.1B. Economic EPS estimate: $61 + $8 = $69 Economic BVPS Estimate: $1,300 + $175 = $1,475/share Fairfax share price (July 10): $1,660 P/BV: 1.13x

Agreed, that kind of behavior made me quit football and switch to Futsal.

I think we Buffett nerds need the full interview: https://www.cnbc.com/video/2026/07/15/watch-cnbcs-full-interview-with-berkshire-hathaway-chairman-warren-buffett.html or excerpts as a transcript: https://www.cnbc.com/2026/07/15/cnbc-exclusive-excerpts-berkshire-hathaway-chairman-warren-buffett-speaks-with-cnbcs-becky-quick-on-cnbcs-squawk-box-today.html Cheers!

You forgot the punchline SD. After terrible bombing campaigns, the Nazis and Japan lost the war. Trump has given the IRGC every opportunity to submit. Like Japan and Hitler - they refuse to.. The battle for control of the SOH is now on. That's pretty much all that matters now.

Great post @rajpgokul, highly appreciated insights! many thanks

Quite agree .... as it's not collectable Thing is .... every time a balloon is floated, it's a few more days of diminished traffic through the SOH before it is resolved, and a further draw on global SPR inventory. Jawbone all you want, but you fight against a price rise as that inventory depletes ... and have to fight harder the less inventory you have left. Knocking out the bridges and power stations, just means the Iranians knocking out the same in US friendly states, not Iran magically coming to the table. It just evidences a trapped, drowning man, punching at every/anything, desperately searching for a way out of the tarpit. Let the man tire, and drown. One of the WWII takeaways was that bombing civilian infrastructure to diminish ability to produce more war material, just made the population more resistant ... even when their leadership were Nazi. Arguably, the same thing happening here. SD

Right. Getting rid of the capital gains tax altogether would be a fine solution.

Great post, thanks for sharing. And now I'm curious what clears your local hurdle rate...

My god, Buffett looks so older

The man loves to float trial balloons, as many politicians do. He got his immediate feedback and changed course/strategy. Some would say that this is "pragmatic" behavior.

I did not realize that getting to the truth is now by majority rule. Indeed at one time, the earth was deemed flat and heretics were executed. Rather than put up a coherent argument to me - I suggest you write your detailed thesis and send it off to the Federal Reserve telling them why they are wholly incorrect and that their data is incorrect.

The 20% toll is not "real"... ...it is just his style to negotiate and make people talk about himself...probably in his mind it is smart anchoring to a bad outcome to more easily achieve a "middle" ground (that is not middle but in his favor)...some people do it in negotiations...

I actually agree, it is getting ridiculous. They need to get stricter about all the acting, and about tactical fouls. Players don't give a shit about yellow cards. There should be more time penalties, that put your team at a serious disadvantage, being down to 10 or even 9 players. A tactical foul preventing the opponent from launching a quick counterattack should lead to a 15-minute penalty. Acting seriously hurt, slowing down the game for more than a few seconds, should automatically put the player on the sidelines for 5 minutes, so he can recover from his pain.

@Milu, you're such a troublemaker! , It's sacrilege to post something like that here! [j/k naturally!]

These rules are a huge incentive to build new rental housing (or rehab housing that will otherwise eventually get torn down), and they also encourage more inventory of existing housing stock available for sale. For 1031, if an individual investor can't 1031 they're just going to hold the house until death when the basis steps up. For an institutional investor, they're going to hold the property until they can sell it for 25% higher to meet the same IRR after tax. For bonus depreciation, an investor will need to rent a house for much more in order to meet their IRR hurdle. Maybe there's a better system without 1031/bonus depreciation, but if you just end those two provisions in the tax code the housing crisis will be exacerbated if anything.

Can't believe Cubs is still here despite 95% opposition from the other posters. No one is changing any minds.... for some reason investors prefer parties that want to increase the debt, expand the scope of govt, start more govt programs, because that works, raise taxes and have less control over their lives over time. This surprised me a decade ago but no more. Some survivorship bias going on here. They are from or made money in largely cities/which tend left, they are more social/therefore on a forum, they are from socialist Europe, they are educated into left wing, all their profs were left, idk. On another note, how about those trump accounts? Pretty sweet. Now if we could get the wealthy to leave their money in a private workers citizens fund (no govt) that invests in etf's and gives half the gains to anyone working full time forever, who's a citizen, in equal amounts regardless of wage, we could double down on capitalism again and get everyone involved.

I think that would be the most interesting part for me. How do they fund and structure this deal. $5.7B is not chump change even for Fairfax. I agree they're not buying it dirt cheap during a banking crisis ala Eurobank, but there's likely some more juice in this orange yet to be extracted before growth prospects are considered. The key for me is the loan book, hopefully they had a good look at that, and most of the bad loans have cycled, and the NPL is truly reflective of the current loan book. If so then the secular growth story and Fairfax's in house expertise and opportunities for cross product synergies can be brought to bear on the investment. That would not only benefit Fairfax, but many other stakeholders including the local economy and eventually the government whose residual stake as well as tax receipts will be bolstered. I'm a firm believer that private sector banks outperform state run banks, that's been demonstrably evident throughout history across many jurisdictions. All of that said, something that gives me pause is why there hasn't been much more interest in this investment from other external investors or even international banks looking to get a foothold in an emerging market. Any number of explanations are possible, and certainly I would concede that Fairfax has the best set up to do the deal, but nonetheless, the interest has certainly been tepid. No doubt this will be one of the more interesting chapters in Fairfax's quite colorful history. It also represents a quite sizable investment relative to its current market cap.

My feeling is that Ron Olson was attorney for the principals, and like the Microsoft story, Buffett may have wanted to avoid any accusations of insider information. But that is just my weak opinion.

Analyst estimates for Q2 look too high. They are ignoring bond losses again presumably because other insurance companies don’t include it in their adjusted EPS.

Scenario 1 is easier. P/b for a 17% ROE should be around 2.25-2.5x P/B. IVPS short cut of BVPS + float per share is also easy at $4750. Scenario 2 I don’t understand.

Spek - you need to stop acting like Baghdad Bob - where you deny reality in the face of facts. Housing, whether renting or buying, is an inelastic item - which most sensible individuals, let alone a PHD, easily understands: One must have housing - and faced with fixed supply - you either rent or buy. When renting is high - you move to buying. Either way, PRICES rise for BOTH substitutes. If I need a car - and a Mercedes is deemed too expensive, I move to a Lexus, which gets more expensive due to increased demand. Renting is a "substitute" for buying. Increase demand for one substitute and you increase the demand and prices for the other "substitute". As my economic expert @John Hjorth would say - that's econ 101. Pouring millions of illegal immigrants into your country drives UP prices for an inelastic item. Why don't you just stop making up stuff when faced with non-partisan data. I suppose next thing you will tell me is that the prices in Florida and Tennessee have NOTHING to do with the historic and massive migration to those states.

RBC reaffirmed their Buy rating on Fairfax this week, with target set at $2277US (3200 cdn)

Immutable title. It can be done manually, and very efficiently, but the title specs can be altered at any time (property lines moved a few feet, etc), and there is incentive to bribe to get it done. Once the blockchain block is validated via the second signature, the data (title specs) cannot be changed. Modernisation and lower cost. Stop the land component transferring, taxes drop, and affordability rises. The cost of land + dwelling lease; a lot lower than outright purchase of the land + the dwelling on it. The world, and technology, has moved on; what was a good solution decades ago, is now just acceptable ... but no longer really fit for today's purpose. SD

This logic makes sense to me, but I think there are a lot of other factors that play a role. Couldn't it also have something to do with the fact that renters tend to have less capital so affordability weighs on rents before home sales? Seems like this could have something to do with the "K shaped" recovery everyone talks about. Renting a home is sort of like a commodity, whereas buying a home has a collectible type value layered on top (having pets, growing a garden, painting the walls whatever color you want, etc.) If I've got $10 million and want to buy a new house, I'm not going an indefinite timeframe for a bargain, whereas if I've got $8,000 a month income and I don't have anywhere to live, I'm going to pay market rent while I continue to save for a big enough downpayment to make the numbers work. I also suspect the huge build out of multi family that started around 2020/2021 may have played a role in slowing rent growth over the last 6 years. The replacement cost for homes (not just the price) also went up enormously since 2020, and since those multi family units have all hit the market by now, and the economics don't really make sense to build a lot more multi-family (what with much higher construction costs and carrying costs), I suspect the next 5 years see rent prices increase a lot faster than home prices.

The chart shows that rents increase all the time. Illegals rent - they can’t buy houses unless they come in with a stash of cash which I think few do. So they can’t buy houses, somebody else must drive prices for homes. Besides, even the Dallas Fed paper states that only 30% of the increase is due to illegal immigration , so 70% comes from other factors. This would be a stronger argument if you could show causation and rents rise more than homes prices , which is what you expect if the driving factor would be illegal immigration. But this chart shows the opposite. @cubsfan you need to take chill pills, or some THC gummies - you get too riled up about stuff.