Hoodlum

National Bank analyst, Jaeme Gloyn, has upgraded Fairfax from $2700 to $3000. “Fairfax has also delivered strong performance. Fairfax returned to our top picks list as we maintained the view that Fairfax’s operating income guidance was too conservative. We believed Fairfax would deliver consistent results and deploy excess capital to drive ROE accretion, ultimately, sustaining operating ROE in the mid-teens that warrants a valuation re-rate. So far, this view has played out as expected. Fairfax upgraded their annual operating income expectation to $5-billion (up from $4-billion), and we continue to see consistent underwriting results across the business. Additionally, with $2 billion in cash at the holdco and $3.0-billion in excess capital at its insurance subsidiaries, we expect FFH to complete more ROE accretive transactions in the near term. We believe that while FFH historically traded at a discount to peers BRK and MKL, it is actually FFH that deserves the premium valuation given the company’s outperformance on BVPS growth and average ROE over the past five and 10 years.”

Metlen has completed the requirements to list on the LSE. Metlen is expected to start trading on the LSE this coming Monday. https://www.metlengroup.com/news/press-releases/tender-offer-results-announcement/ ACCEPTANCE PREREQUISITE During the Acceptance Period, which ended on 25 July 2025, 129,024,224 Metlen S.A. Shares corresponding to approximately 90.16% of the share capital and voting rights of Metlen S.A. were lawfully and validly tendered, including the 30,899,783 Metlen S.A. Shares which are directly held by Mr. Evangelos Mytilineos and his controlled companies, Frezia Ltd, Kilteo Ltd and Melvet Investments Ltd. As a result, the prerequisite that Metlen S.A. Shares representing at least 90% of the share capital and voting rights of Metlen S.A. be lawfully and validly tendered and not withdrawn, has been satisfied. ADMISSION CONDITION On 25 July 2025 and on 28 July 2025, the FCA and the LSE acknowledged respectively, that the application for admission of the Consideration Shares to the equity shares (commercial companies) segment of the Official List and to trading on the LSE's main market for listed securities has been approved. This approval is subject to, among other things, receipt of a shareholder statement evidencing satisfaction of the applicable minimum free float requirement (10 per cent., which was met as of the end of the Acceptance Period) will be met at Admission and issuance of the Consideration Shares to be issued in the Tender Offer. As a result, the Admission Condition has been satisfied.

so just over a $1B investment by Fairfax. It will be interesting to see how this is invested.

I came across this interview of Caroline Shin, Vacatia CEO. It provides some insight into what they see as the benefits of being a private vs a public company. It also discusses some of the integrations occurring with Berkley group. It could be a while before we see how this plays out due to the more complex nature of this equity and debt structured deal. We will receive our first insight with the 2025 full year results. https://resorttrades.com/vacatias-bold-move-a-new-era-for-independent-resorts/amp/

Not only was the share price low, but the market was about to harden and inflation was about to rise. Rising interest rate provides a big tail wind to insurance companies, especially if you are prepared for it. It would seem that only Fairfax was fully prepared and acted on this. The other insurance companies had the same info but didn’t even sell their long bonds in 2021 when there was ample opportunity to do so. This was from the 2020 Fairfax shareholder letter. Unfortunately, I did not fully understand the full impact on the insurance business during rising interest rates , combined with the hard market. Otherwise, I would have entered a bit sooner with a larger allocation of my investments. “Premium increases accelerated during the year, rising from 12% in the first quarter to 16% in the fourth quarter – mainly due to rate increases. After many years of a soft market, the property and casualty insurance industry is experiencing a hard market accentuated by COVID-19 losses, catastrophe exposures, social inflation and low interest rates. Interest rates were at record lows in 2020 – never seen before even in the depression of the 1930s!”

it would also be interesting to know if the believed at the time of the TRS purchase that inflation/interest would significantly increase in those next few years, understanding how their insurance business would grow under that environment.

Now officially announced for next Thursday/Friday https://www.fairfax.ca/press-releases/fairfax-announces-conference-call-4/

Having significant cash at the holding company helps during an adverse event. Fairfax has been increasing its cash holdings over the past 3 years with last year’s cash holding peaking before the hurricane season. I believe they will do the same again this year. Based on ~20% ROE over the past year, that would translate to holding $3B in cash. There is certainly no formula that I am aware of for this and it would be interesting to see how others compare.

One other item I will watch for is the amount of Holding Company cash/short-term securities. In Q2 2024 it was $2.5B, but at the end of Q1 2025 it had dropped to $2.1B. I would like to see this at $3B+ at the end of Q2.

It will be interesting to see if Fairfax acquired additional CLF stock recently. It is almost back to where it was last fall after a 50% runup this month.

Maybe someone knows something that we don’t. I would be fine with that but seems very unlikely. That is double my estimate!

What I have seen from other peer reporting so far is that earnings are noticeably beating Analyst projections. It would seem much of this is due to much fewer claims than usual during Q2. This along with some Mark to Market realized gains and higher than expected reserve releases will get us to the $50-$59 range. I don't believe we will see much in the way of earning gains from bonds this qtr. But I would certainly not be disappointed with $60+. WR Berkely is reporting after hours today, so we will have another peer for comparison. I am curious to see how the reserve releases are trending and if the foreign currency exchange rate gain this qtr is close to adding $20 to book. I am also interested to see how much of the TRS they closed off (shares bought back) at end of Q2.

Yes, I was referring to the seasonality of reserve releases. I have not been able to find anything to suggest that any one quarter may have higher releases, but wasn’t sure if I was missing something. I have seen some insurers increase their reserve releases this year as they had under reserved from a few years ago. I don’t know if this could be a multi year trend and so far Fairfax has not needed to do this. I do wonder if this could provide a firming of insurance pricing if it does continue into next year.

Analysts need to see a tend before they commit to growing reserve releases, similar to how long it took for the share price to get to 1.6x book based on the locked in earnings. It will be interesting to see how reserve releases grow in the coming quarters. Are there certain quarters where the reserve releases could be greater?

Fairfax is down but that will likely change after their Q2 results are released. I think we are now past the 2-3 days delay in stock appreciation after results and so I expect a jump in Fairfax share price on Friday Aug 1st. Fairfax's stock price is still very much reporting results driven, as there seems be very little appreciation for what is occurring during the quarter, even after analysts spell it out. I am seeing Eurobank stock just off their all-time high, so that will likely continue increasing this quarter. Metlen is expecting to list on the LSE on Aug 4th and that will be interesting to watch as well. I think we will hear more regarding Fairfax's Greek investments over the coming months and year.

Antenna Group is another investment in Greece I haven't found much information on . According to the press release on their web site, Fairfax increase their ownership to 15% in Jan 2023 with additional funding. https://www.antenna-group.com/antenna-group-agrees-with-fairfax-financial-on-investment-in-antenna-plus/ Late last year, Antenna Group tried unsuccessfully to acquire Time Group from Bernie Benioff for $150m. So it would seem this could be a sizable and growing entity, but I have no idea on what the valuation could be. Antenna Group appointed Henning Tewes as new CEO in December, previously having senior roles at RTL Group ($5b media company). It is interesting to see some of the names on Antenna's advisory board. https://www.antenna-group.com/antenna-group-appoints-henning-tewes-as-group-chief-executive-officer/ I do wonder if we will see Antenna get monetized at some point through either an IPO or acquisition.

Thanks @SafetyinNumbers I was thinking the same that this was marked to zero. It looks like Fairfax is working towards monetizing their Greek investments.

Fairfax has sold Praktiker Hellas in Greece for $120Euro. I have not seen this company mentioned since their 2020 report, so I don’t know what value it was carried at on its books. It also looks like Eurobank sold property they owned as part of this deal. https://www.romania-insider.com/dedeman-praktiker-takeover-greece-july-2025?amp

Thanks @SafetyinNumbers for suggesting to check Fairfax India to determine the results timing for Fairfax Financial. I had never considered checking that and had just resided to waiting for the announcement a week ahead of the release.

Recipe has acquired the Olive Garden locations in Canada with plans to expand. https://www.newswire.ca/news-releases/recipe-restaurants-unlimited-acquires-canadian-olive-garden-locations-signs-national-expansion-deal-845292792.html Recipe Unlimited ("Recipe") today announced that it has completed the acquisition of all eight Olive Garden restaurants located in Canada from Darden Restaurants, Inc. (NYSE: DRI). In addition to the acquisition, Recipe has entered into a comprehensive development agreement with Darden to significantly expand the Olive Garden brand across Canada.

The Keg Royalty Income Fund holders will be voting on Aug 1 with respect to the offer from Fairfax. https://financialpost.com/globe-newswire/the-keg-royalties-income-fund-announces-receipt-of-interim-order-and-filing-of-special-meeting-materials-in-respect-of-proposed-transaction-with-fairfax

I would consider loaning out my share for the right price. I would not turn down the extra income, even if it creates some share price volatility.

Thanks @gfp that does make sense now. Maybe they are also including the 2.5B+ of Cash/short-term securities at the holding company to come up with the $6B.

Does anyone know what Stephen Boland is referring to with the below statement. The company has an abundance of excess capital (approximately $6-billion by our estimates)

Raymond James analyst Stephen Boland is predicting a “stellar” quarter for Fairfax. He has upgraded Fairfax from $2600 to $2900. Waiting for the first Analyst upgrade to $3k cdn. https://www.theglobeandmail.com/investing/markets/inside-the-market/article-mondays-analyst-upgrades-and-downgrades-230/ “Many of Fairfax’s largest equity investments (e.g. Eurobank, Fairfax TRS, Digit) have seen considerable share price gains since the close of 1Q25, and while some of these are equity-accounted (and thus market gains excluded from book value), we estimate the fair value gain on Fairfax’s known public equity positions is $2.4 billion for the quarter,” he said. “We also believe the gap between the carrying value and book value for these investments has widened to $2.5 billion as of 2Q25, up from $1.4 billion at the end of 2Q25 and equivalent to 9 per cent of reported book value. However, Mr. Boland also thinks “the market is well aware of this dynamic,” noting Fairfax shares are up 21.5 per cent in 2Q25, and his revised estimates “suggest the company is well on track to deliver a 20-per-cent-plus ROE this year.” “To be clear, the shares still screen inexpensive; if we adjust our 2026 book value estimate for the current gap between reported and investment fair values, Fairfax is trading at 1.2 times 2026E book value – 36 per cent off our chosen peer group despite a superior (and we argue, more reliable) ROE outlook,“ he said. ”Recall this is a company that continues to execute across all facets of the business – solid underwriting performance, exceptional equity returns, and a low-risk, $2.5 billion+ interest/dividend revenue stream that we view as effectively locked-in for the next 3 years." Retaining his “outperform” rating for Fairfax shares, Mr. Boland raised his target to $2,900 from $2,600. The average is $2,680.31. “Unsurprisingly, Fairfax remains our top insurance pick and among our top picks overall,” he said. “The company has an abundance of excess capital (approximately $6-billion by our estimates), continues to buy back shares at attractive prices, and looks a reformed business since ending its shorting/hedging program in 2020. With the other insurers trading close to peak multiples following several years of hard market conditions, Fairfax remains the cheapest insurer in our coverage, notwithstanding a more diversified business mix that leaves it arguably less exposed to a softer North American P&C cycle. We are moving our BVPS and GAAP EPS estimates higher to reflect the strong quarterly investment gains, while increasing our target to $2,900 (from $2,600).”