djokovic1

It's good to be a harsh critic of your investments but as a new (2025) investor in Fairfax this would be my riposte: 1) I see 15-20% close to locked in EPS / book value compounding for the next 4 years. You get that at 10x earnings. Hard to find something this attractive with very low risk currently (if someone has something better please let me know!, I am all ears). 2) Fairfax even after this huge run-up is hugely mispriced. Take a look at this table I created a few weeks ago, Note all numbers from CapitalIQ. And table was created before Fairfax earnings. They have the best 5 year track record (ROE) but are trading at a significant discount to peers. Gives a nice margin of safety and potential for multiple expansion. For me the biggest longterm risk > 5 years out is if we go to a very low rate environment again

@SafetyinNumbers completely agree with the below Related to this I find BMO’s next 2 years consensus nonsensically low. “I try to focus on the big picture because it’s hard to see how ROE doesn’t average above 15% over the next 5 years. I use a 90% confidence interval which is based on my judgement so it may not be worth much to you! In the past 4 years, no individual investment decision made me consider selling my shares so I’m doubting something will over the next 4 years. That being said, it’s still important to analyze every capital allocation decision and consider both the downside and the upside. There is a big difference between a 15% ROE and a 25% ROE over the next 4-5 years and the odds of each outcome are probably closer than most people think. I think I have this framing because hedging is off the table and I think they are focused on quality. Perhaps most investors don’t believe that part and those will be the ones who sell below 2.5x book value. “

Overall looks good to me. Humming on all fronts.

FFH usually has 1-1.5% exposure of the total cat loss. The $50bn wildfire estimate also includes losses that are insured by the California State (If I recall correctly). My best guess would be ~$300m on the wildfires.

@Crip1 I hear you. Everyone makes mistakes in investing (and life), just have to learn from them. The mistake of overlooking FFH in 2023 (which was the first time I came across it), was regrettable because it has all the elements I look for. Great capital allocation, 10/10 culture and a strong financial engine. And I was just lazy to not dig deeper at the time / too quick to say no. Well that’s been corrected. On the FFH train now.

Yes I agree with your assessment. It's very surprising that analysts dont use a 40 year track record for their inputs for arguably the biggest driver of ROE!! Common sense is again, not that common.

FYI Intact posted pretty solid results today. They trade at ~2.5x Fairfax's valuation.... I have a couple of questions. It's pretty clear that Fairfax can earn 15-20% ROE for the next few years given the locked in fixed income yields assuming normalised combined ratios and equity returns. 1. Then why are consensus expectations for 2025 and 2026 so low? In my view it doesnt require more than common sense to say, they will do much better than that assuming normalised cat losses and equity returns. 2. How do you think Fairfax would do in a very low interest rate environment. It doesnt seem likely that happens in the near term but for whatever reason if rates go down below 3%, Fairfax's ROE likely finds it much harder to get to 10%-15% ROE? Of course at current valuation, and the fixed income yields locked in, not a big issue for a few years.

I am the newest addition to the Fairfax shareholder list, as of this month. Yes, stupid and late I know But better late than never! I posted this on the Fairfax2025 thread but adding here for posterity: @Viking Firstly, I have to say thanks so much for your 550 page compendium. It is such an amazing piece of work. I love it. I have gone through it in detail. Me + 1 run a long only fund from the UK. I looked at Fairfax early 2023 and like an idiot didn't spend time on it because of the 2010 to 2018 period. Could I trust their capital allocation, this idiot said. Well I think it's not too late to correct that mistake. I have fallen in love with Fairfax over the last 2 months and you have helped a lot. So thank you! We now (finally) have a position in this beautiful company. As you and others on this forum allude to, even with the stock run up I think the risk reward on Fairfax right now is unmatched. I look forward to participating in this forum albeit, I wish I was smart enough to have found it at least a few years ago.

@Viking Firstly, I have to say thanks so much for your 550 page compendium. It is such an amazing piece of work. I love it. I have gone through it in detail. Me + 1 run a long only fund from the UK. I looked at Fairfax early 2023 and like an idiot didn't spend time on it because of the 2010 to 2018 period. Could I trust their capital allocation, this idiot said. Well I think it's not too late to correct that mistake. I have fallen in love with Fairfax over the last 2 months and you have helped a lot. So thank you! We now (finally) have a position in this beautiful company. As you and others on this forum allude to, even with the stock run up I think the risk reward on Fairfax right now is unmatched. I look forward to participating in this forum albeit, I wish I was smart enough to have found it at least a few years ago.