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Yes, that’s it. One of my favorite Blogs ValueAndOpportunity posted about it and bought it a while ago. I did not buy at that time but checked the results and like what I saw. Welcome to CoBF !

Welcome to CofB&F, @MadeItSquare ! -Please don't be a stranger!

I think that’s right, the key is the high quality insurance operations although I still find investors who don’t think FFH has high quality insurance businesses. It’s worth searching Buffett and float on YouTube. Lots of great clips from the AGMs over the years.

You didn’t ask me but that has never stopped me before. I think this is a question that’s really about estimating intrinsic value. I use three methods to triangulate FFH’s intrinsic value range. 1. Normalized PE. 15x is generally considered a fair market multiple and FFH is a better than average business so 15x FTM EPS seems reasonable. While consensus is $155, it’s probably too low, it still gives us $2325 or ~66% above current prices around $1400. 2. Relative P/B multiple. There is an exponential relationship between P/B and ROE which makes sense. A high ROE compounds much faster so it makes sense to pay more than 2x for a 20% ROE vs a 10%. When looking at FFH peers, an ROE between 15-20% should command a P/B closer to 2.5x. With so much in the multiple we can just use trailing BV instead of making the adjustments to FV etc. 2.5x BV is ~$2585. 3. Buffett method. This is the sum of BVPS and float per share. Buffett has made it pretty clear that float in the hands of a high quality insurer is worth at least the amount of the float. This makes sense because the income associated with the float accrues to the insurer and consistently grows over time. For FFH this is ~$2800. That leaves me with an IV range of $2325-2800 which is wide but well above the current price offering large margin of safety.

@mananainvesting , that is a great question. I will admit that ‘multiple’ is the most difficult part of the valuation process for me. Back in 2021 and probably 2022, I probably would have said i would be happy with a P/BV multiple of 1.3 x. But that would have been largely built off of Fairfax version 2010-2020. Much has changed regarding Fairfax over the past 4 years. As a result, my view today is a P/BV multiple of 1.3 x is too low. What is an appropriate valuation/multiple today? My short answer is higher than where we are at today. How high? I’m not sure. My guess is I will know it when we get there (ora least get closer to ‘it’).

Google trends for "Fairfax Financial". Looks like MW broke the downtrend in interest in the company.

Aside from the continuous and amazing break downs and analysis in Fairfax. One of Vikings most important points to not overlook is the change in investment style of Fairfax from “turn around” to “value” to “quality”, and how investors who identify as pure value really need to pay attention. This is something I have been breaking out of over the years. We have all had investments that have transitioned through the various investment styles over time,. right before your eyes you watch multiples expand and you can’t imagine buying more shares at this new re-rated market quotation. This is what has been happening with Fairfax as Mr. Market gains confidence in the consistency of earnings, begins to have more “proper” historical earnings to go off with each passing successful quarter - and realizes that Fairfax is trading to “cheap”. Fairfax has low institutional ownership compared to companies of its size trading on the market, wether it gets added to the TSX 60 or not (the 60 add another long term tailwind) the consistency, growth and quality in the operating earnings stream will/should continue to generate the type of numbers that will have institutional investors who control many billions look at its previous say 5 year track record, look at its weight in the index, realize they are very underweight this stock, and the “demand” for shares are very likely to increase. These institutions will have to buy from someone to get the exposure. We are in the midst of creating the new “historical” track record institutions will use and build into models, imo. Of course, many people have been hesitant, skeptic, nervous and even extremely pessimistic about Fairfax, and some peoples negative hopes and dreams are finally thrash now as the company continues to execute well and shut the haters out. Without a spotty track record, shares would have spiked much faster. So the net acquires over the years and more so recent years should be thankful really. As the thesis proved correct and you have been able to buy at a still cheap valuation. To me even at this date to establish an “exit price” or “exit multiple” is too simplistic and.. even early. The thing is, we all know once the market gets something into its teeth the re rating of shares can be extremely large. If the market decides to re rate this a bit faster then you’ll never catch the share price… (then you might get the chance to come here and say “okay now its frothy”). It’s been hard enough to keep pace the past couple of years however. With important earnings stream locked in, the near term results and investment thesis is of course an extremely good bet going into 2025/26. No guarantees of course, as everyone has heard - but good enough odds for me. It is not only value that is important - but value/growth/quality all in one package, and it’s a rare combination.

Annoucement, if there is one, will be on Dec 6 at around 5pm. Dec 20 is also options and futures expiry so volume is normally quite high. They pick the third Friday of the month for a reason.

Purchasing over-valued stocks in businesses that use their shares as currency is fought with risk and I would agree that most of the time this does not work in the long run. I think the primary danger of these roll-ups is the people element ie it gets really addictive to see those revenues, cash flows, and stock prices go up and to the right over time. Doing this as the only business strategy will most likely end in failure ie conglomerates in the 1960s (ITT, Litton), Mississippi Bubble, South Seas Bubble, etc. Similarly, Cathie Woods' business of pumping world-changing tech companies based on a story, is also not investing but gambling/speculating. However, that said, I think we can learn something from everyone including her (ie she introduced me to the mental model of Wright's law which I later read in Bionomics - which was an interesting read btw). But for the few truly good allocators out there, using their stock as an acquisition currency, is a lever that can be sometimes pulled or repetitively pulled in the right situation for the long-term. Other examples that come to mind (please correct me if I'm wrong about the details) - Buffett issuing shares to purchase GenRe during the height of the dot.com mania - Prem issuing shares to purchase undervalued insurance companies during the early 2000s - Singleton during the 1960s using Teledyne shares to serially acquire companies (see link below) The reason I started this thread was not promote buying over-valued growth stocks especially when the market feels toppy (and Buffett is a net seller, holding lots of cash), but better understand the rare situations when this is actually rational and why. Just like buying low PE stocks without discrimination and concentrating them in your portfolio, isn't intelligent either. Eliminating ALL over-valued growth stocks without discrimination could result in a significant opportunity cost. PS: found this case study about Teledyne that people might enjoy reading Teledyne Technologies—A Conglomerate Phoenix That Rose from the Ashes with Henry Singleton’s Corporate DNA Intact

Can't vote for them. Irony is they've also always been batshit crazy until recently and now may be the most sane of the four parties. Although if I move to a beautiful cottage outside of either Quebec City or Montreal on some acreage, it might be worth voting for them. I'm thinking about it! Cheers!