Leaderboard

These days I give a decent amount of credit to Prem for his capital allocation decisions and opportunities. Buying back stock like Singleton of Teledyne, at book value or below, is something that few other CEOs are willing or able to do in a rational, shareholder friendly fashion. He also has the ability to buy back portions of associates that he has sold off to OMERS to raise the capital needed for previous buybacks (10% of Odyssey). The longer term focus on shareholder value, and maintaining franchise value of the insurance subs by not laying off staff in times of crisis (COVID) is also a differentiator from competitors. I used to work for a competitor that wasn’t able to maintain capital levels sufficient to support the writings of premium levels when they rose from the inflation shock of the last few years, and their capital levels dropped because they were reaching for yield on their bond portfolio. I got laid off recently as the staff cuts began, in an effort to return to profitability so that capital levels could be rebuilt. (I am able to view the early retirement with equanimity because I have over 70% of my retirement assets in Berkshire and Fairfax.) The less experienced staff that has been retained will be cheaper, but most of the value I added over the years was in using my experience to help the company avoid self inflicted wounds through poor business decisions. Fairfax’s insurers will have a continuing and expanding advantage over the company I used to work for because they have a solid balance sheet, and a growing insurance business, which gives them the best of both worlds — experienced staff and opportunities for professional growth for the newer employees that are added each year. Don’t underestimate the value of the corporate culture that has been created at Fairfax. That can be part of a company’s enduring moat just as much as more easily understood business model advantages can be….