Viking

@glider3834, thanks for bringing this forward. Ki had kind of fallen off my radar. Yes, it certainly looks like they are getting ready for something…. ————— 20TH MAY 2024 Ki welcomes Jan Christiansen as Chief Financial Officer Ki is excited to have Jan on board to set us up for long-term success. Jan’s role will centre around leading the growing financial function for Ki as well as being a key driver across transformation projects that will shape the strategic direction of the business. Previously to joining Ki, Jan garnered a wealth of experience in financial services businesses across the globe. Most notably he spent 20 years with Fairfax, Ki‘s lead shareholder, including 14 years as Chief Financial Officer for the Odyssey Group. Jan feels that “Ki’s unique value proposition is a once-in-a-lifetime chance to help shape the strategic direction of a business with seemingly endless possibilities. I find the culture at Ki to be very special. The positive atmosphere is contagious and inspires creative thinking, something I believe is critical to our success”.

It blows me away the quality of material that is available today to help/educate small investors. And of course, education is one of the keys to unlocking a great life. It is yet another example of how much better off we are today compared to when i was getting started back in the late 1980’s. Education opportunities are amazing (written/video). Cost have come way down (especially for those who do it on their own). Choices (broad based index funds) now allow small investors to outperform the majority of professional advisers without doing any work (that is nuts). Tax free/deferred accounts (also nuts). The end result is much higher after-tax returns. It’s like an incremental $500,000 just dropped on the lap of the average investor - versus what they would have earned if they were starting out 40 years ago. But here is the really interesting thing. Most people will largely miss it. Like most things in life, with investing you get out of it what you put into it. You do have to put in the work early on - and get your infrastructure set up. And build the proper financial habits, like ‘live below your means’. But once you get that done, you can largely put things on autopilot (learning one or two new things each year as your personal situation changes). We really are living in a golden age for building wealth with financial assets. Of course, young people stand to benefit the most. Because they have the most time ahead of them (thank you compounding). But there are also enormous benefits for people in their 40’s, 50’s, 60’s etc. People living past 100 is a fast growing cohort…

“Market efficiency is a central issue in asset pricing and investment management, but while the level of efficiency is often debated, changes in that level are relatively absent from the discussion. I argue that over the past 30+ years markets have become less informationally efficient in the relative pricing of common stocks, particularly over medium horizons. I offer three hypotheses for why this has occurred, arguing that technologies such as social media are likely the biggest culprit. Looking ahead, investors willing to take the other side of these inefficiencies should rationally be rewarded with higher expected returns, but also greater risks. I conclude with some ideas to make rational, diversifying strategies easier to stick with amid a less-efficient market.” For those with a little lime on their hands and interest in the topic you have two options: Read the paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4942046 Listen to the podcast:

Orla Mining - Planting a Seed Orla Mining is Fairfax’s newest large resource/commodity investment. Fairfax quietly built up their position in Orla over the past 2 years (from Q3-2022 to Q3-2024), spending about $217 million. They own about 18% of the company. The investment today has a market value of US$261 million. The return on Fairfax’s investment to date has been about $44 million or 20%. The real play with this investment: That gold prices stay higher for longer. That the management team at Orla is above average. And will be able to expand the company from a single asset producer to a multi asset intermediate-sized producer. That the strong ownership structure (Fairfax, Newmont, Lassonde, Agnico Eagle) will also provide to be a competitive advantage. This allows the management team at Orla to be strategic and think long-term with its decisions. This should help ensure that the capital allocation decisions made by the management team at Orla are rational and very shareholder friendly (which is what we have seen with Orla's most recent acquisition). With its investment in Orla, Fairfax has planted another seed in its large equity portfolio. This investment has significant upside potential in the coming years. And if gold prices stay elevated, it could turn into a home run (a multi-bagger). Orla recently made a large acquisition - the Musselwhite gold mine in Canada. As part of the financing, Fairfax invested (not sure how much) in the US$200 million convertible note issuance: Coupon: 4.5%; Premium: 42%1; Term: 5 years Convertible at C$7.90 18-month non-call, callable at 130% of strike thereafter Warrant: 0.66x warrant exercisable at C$11.50 – Five-year term from closing This is likely a significant increase in the size of Fairfax’s investment in Orla Mining. The purchase of Musselwhite looks like another solid move by the Orla management team. There appears to be significant optionality to the purchase (significant opportunity for resource growth, which is part of the Pierre Lasonde playbook). Who is Orla Mining? Orla Mining Ltd. is a Vancouver-based company that acquires, explores, develops, and operates mineral properties to produce gold, silver, zinc, lead, and copper: Orla Mining's projects include: Camino Rojo: A 100% owned, operating oxide heap leach mine in Zacatecas, Mexico South Railroad: A feasibility-stage heap leach project in Nevada Cerro Quema: A pre-feasibility-stage heap leach project in Panama Musselwhite Gold Mine: An acquired project in Ontario, Canada CEO: is Jason Simpson, who has over 27 years of experience in mining engineering, project construction, and operations leadership. Non-Executive Chairman, Director: Mr. Jeannes served as President and Chief Executive Officer of Goldcorp Inc. from 2009 until April 2016. Orla recently announced a large acquisition: the Musselwhite Gold Mine Strategic expanansion into Canada. No upfront equity dilution, supported by cornerstone shareholders. Takes advantage of significant disconnect between forward and consensus gold prices. Significant opportunity for resource growth. https://orlamining.com/site/assets/files/6118/orla_acquires_musselwhite_nov_18_2024.pdf Bet on the jockey/partnering with outstanding investors It should be noted that Fairfax is not blindly throwing darts with their resource/commodity investments. They are partnering with other highly successful people / investors - some of whom have extraordinary long term track records. With Orla, Fairfax is partnering with Pierre Lassonde who is ‘recognized as one of Canada’s foremost experts in the area of mining and precious metals.’ Lassonde co-founded Franco-Nevada in 1985. Fairfax is also partnered with Lassonde with its investment in Foran Mining, a copper mining project in Canada. Jurisdiction The vast majority of the production for Fairfax’s resource/commodity investments is located in North America. This is a much lower risk jurisdiction than other parts of the world. My guess is this is not a fluke. All of Orla’s mines are located in North America.

@Castanza , that was one of my favourite posts of the year. It resonated so much because it was a very similar playbook to what me and my wife did to build our grub stake when we were young. I was trying to explain this to my son the other day - that we would likely be able to do the same thing today (he was talking about how ‘tough’ it is for some of his young friends today).

The fact that Markel had the opportunity to take out Allied World but passed was likely an inflection point for both companies. Wonderful for Fairfax. Big mistake for Markel. Why Markel passed (or why Allied World said no thanks) would likely make a very interesting story. I thought it would be interesting to calculate about how much Allied is delivering to Fairfax today…(in terms of underwriting and the return of from its investment portfolio) it has been Fairfax’s top performing insurance business for two years running. Its performance has been top tier - simply amazing. I remember the cat losses the year they bought Allied - Fairfax was very unlucky with the timing of the purchase. But Allied certainly has delivered the last couple of years. I had a chance to talk to the guy running Allied at Fairfax’s 2023 AGM (the dog and pony show before the AGM) - he was a class act.

@nwoodman, great summary. Thanks for sharing. Bottom line, quality insurance companies should continue to do well in 2025. Except most don’t view Fairfax’s insurance business as high quality. And that is what creates the opportunity.

My guess is with Trump we are entering uncharted waters (at least in terms of the last 75 years or so) in terms of what a President will try to do. And people want change. So my guess is he will get a lot of rope, especially early. I think we are likely going to get a lot of different ideas/actions. Kind of like a bunch of science experiments all happening at the same time - where we aren’t really sure how they are all going to work out (individually or collectively). I agree. I think there is a risk inflation could surprise to the upside looking out 12 to 24 months. Except i also think Trump will not tolerate a Fed that does not do what he wants (another science experiment). Bond vigilante's? Like a game of ‘whack-a-mole’, Trump and his team will not sit idly by. But the US seems to want change. I think Trump is going to deliver - in spades. I am cheering for him and the US. I hope it works out / goes as planned. At the end of the day, we want people/countries to succeed. And perhaps there are parts of his plan that other countries can use to their advantage. But the next round of elections are only 2 years away… so pitter patter he better get atter. And i think he will.

@Xerxes Hopefully there are a lot of people on this board who have been able to make a little money on Fairfax's amazing 4-year run. And yes, the run we have seen in 2024 has been epic (after how much it had already gone up in 2021, 2022 and 2023). The crazy thing is the stock is still cheap. Yes, not as cheap as it was... but still cheap. Why is it still cheap? 1.) Its past performance (last 4 years), measured by change in BVPS, has been best in class among P/C insurance companies. 2.) Its P/C insurance businesses are better quality than is generally understood. 3.) Its investment portfolio is poised to delivering a return of +7.5% per year, which is exceptional. 4.) As a result, the company is poised to deliver ROE of 15% for each of the next 3 years. 5.) Its management team has been executing very well over the past 5 or 6 years. Its capital allocation has been exceptional (insurance and investments). This suggests ROE should continue to be very strong looking out 4 or more years. Yet, despite the historic increase, the stock continues to trade below peers (P/BV and PE). Given its past performance, outlook and strong management team, should Fairfax not trade at a premium to peers? The only reason to say 'no' is because it hasn't historically. But that isn't true. For many years, Fairfax traded at a significant premium to peers. Most investors just either don't know this, or they have forgotten. Fairfax has morphed from a turnaround to a value play. It is now morphing right in front of everyone's eyes into a quality play. (That is called multiple expansion for those of you who are not paying attention.) As Fairfax demonstrates that it is indeed a high quality company, it deserves to trade at a higher multiple. And the longer it continues to outperform, the better the multiple it should trade at. This process could run for years. Three things drive a stock price: Earnings Multiple Share count All three are working in Fairfax's favour today. Of the three, multiple expansion is the rocket fuel to the stock price. Just ask a company called Apple - multiple expansion happened continuously over an 8 year period.

@gfp I agree. And I think that is what makes using 'macro' as a core input pretty much a losing proposition for most investors. I think there are times when paying attention to macro matters - like when we get to historic extremes (like the 2006/07 housing bubble). I don't think that is where we are today.

@73 Reds , there is an easy solution to the problem you have highlighted... and it has been what governments have been doing for hundreds/thousands of years... and that is to inflate it away. I don't think it is all that complicated. Who are the losers? Savers/lenders. Who are the winners? Owners of assets - pretty much everything, excluding fixed income. That is bullish for stocks moving forward. Also bullish for commodities. Real estate (housing). And that is what we have seen over the past decade. Asset prices (in general) have been on fire. And I think the US has just elected a president who is likely to enact policies that could accelerate this trend (if inflation accelerates, my guess is he will do his best to not let the Fed increase rates). It really is a super interesting set up. We could get some pretty wicked volatility - which would be normal when you enter uncharted territory. "Everyone has a plan until they get punched in the face." Mike Tyson - modern day philosopher

@73 Reds , my crystal ball is about as good as the next person. Here in Canada, stocks have underperformed for a long, long time. So a 23% move in one year is nothing crazy in my mind. And in the US, if you get lower interest rates, lower taxes, less regulation, return of animal spirits (more business investment), acceleration in onshoring production of goods, and deficit spending from the government… how do stocks not go higher? So i am mildly optimistic for stock returns over the next year (XIC.TO and VOO). I would not be surprised to see a melt-up in stocks. Not my base case. But a possibility. Of course there are watch-outs, like there are every year. Geopolitical would be one. Trump doing something nuts would be another. Super high deficit spending by Western governments would be another - although this is likely more a 2026 or 2027 risk. Perhaps the biggest risk might be a resurgence in inflation later in 2025 or 2026 - this could be a big one because people now hate inflation - and the hand has just been over the flame, so the reaction to a resurgence in inflation from people (and bond/financial markets) could be dramatic. Bottom line, important to monitor. Bit nothing IMHO flashing red today. And looking further out, if Canada elects a Conservative government in October, 2025, that could release animal spirits in the Canadian economy (there are so many important things a new government could do to improve the economy). That would bode well for Canadian stocks for 2026. We could easily see a couple of years of above average returns for Canadian stocks.

Fairfax is up 52% + dividend = 54% VOO is up 26% + dividend = 27% XIC.TO is up 21% + dividend = 23% Making money in 2024 has been like shooting fish in a barrel. Congratulations to all those investors who bought pretty much anything - because that is about all it took to do well this year. And i say that with all due respect…

Well, at least this is good news for Recipe and their +1,000 restaurants in Canada. Does Prem have Trudeau’s ear? “The government is proposing that the GST/HST be fully and temporarily relieved on holiday essentials, like groceries, restaurant meals, drinks, snacks, children’s clothing, and gifts, from December 14, 2024, to February 15, 2025.” The GST on restaurant meals in Canada is 5%. More for provinces with the HST (harmonized federal and provincial taxes). So this is a meaningful reduction. - https://www.canada.ca/en/department-finance/news/2024/11/more-money-in-your-pocket-a-tax-break-for-all-canadians.html# The current federal Liberal government has to be the worst federal government in Canadian history - at least in my lifetime. And we have had some bad ones. The current $250 cheque per adult + 2 month tax break (on a few things) is just the latest in their bat shit crazy management of the Canadian economy, especially over the past 6 or 7 years. I have tried to keep away from politics - but this Liberal government just keeps setting new lows. I am completely dumbfounded by what they say and do. Fortunately, Canada is less than 12 months away from a federal election - my only hope is that Trudeau stays on as leader of the Liberals. PS: My family will now be getting cheques for 5 x $250 = $1,250. Money we do not need. I suppose i should be celebrating…

@modiva , over my investing career I have always been comfortable with cash / cash equivalents. I flex my cash position up at times (when i like the risk/reward set-up). And i flex it back down at times (when i don’t like the risk reward set-up). It continues to amaze me how often ‘once in every 10 or 20 year’ investments come along (often one or two comes along every year). But to capitalize, you often need to have cash on hand. Today my cash weighting is about 15%. If markets continue to rip higher, I will probably increase my cash weighting to 20%. In terms of ‘safe’ assets, when it comes to equities, I think broad based ETF’s/index funds like VOO and XIC.TO fit. But only if you are a long term investor and ok with volatility, sometimes extreme volatility. About 50% of my portfolio is in broad based index funds. I am a new convert to this asset class, making my first purchases about a year ago. So far, I love it. I am also going to be doing some digging to see if I can find a balanced ETF/index fund that is 60% equities and 40% fixed income. My wife is VERY risk averse. A 100% stock ETF/index fund is not a good fit for her (should I no longer be around). So i want to find a fund (perhaps 2) that is a good fit for her and shift some of her assets into it. Just so she knows what to do if I get hit by a bus one day. If we get a melt-up in stocks, i like the idea of shifting into a balanced fund. I think this is also what Boggle did with his portfolio. My views on risk and concentration are evolving. Age and situation are definitely factors. As usual, i am trying to be inquisitive and open minded. Rational. And action oriented. Try stuff, see how I feel, make any necessary course corrections. For me its a pretty dynamic process.

@nwoodman, my problem is i am not an accountant. So it takes me some time (and lots of questions to others on the board) to get some things figured out. But we do get there eventually. As always, thanks for the help.

What i find very interesting is how a person is wired when it comes to things like risk management and portfolio concentration etc largely comes from their life experiences. The people who lived through the great depression (or people who have lost everything) are a great example. The chances of total loss might be small. But if the consequences are going to be severe... My guess is most people think they are being rational when it comes to risk management. More likely, they are unknowingly betting that something really bad doesn’t happen. For most people it won’t. And that will be confirmation for them that they were right. Even though they were actually wrong. They just got lucky. It is such a fascinating topic.

@glider3834 , this makes sense. When Fairfax reports their equity holdings in the AR, when they report non-insurance consolidated holdings they have a zero value for 'other'. It makes sense that is where AGT should be captured... and it looks like it is. Solves a riddle. Another question the Odyssey summary gives us is the approximate total value for Meadow Foods = $250 million (carrying value). I don't think we have ever been told how much Fairfax owns today. On the Q3 conference call, Wade Burton called out Meadow Foods as one of the large private investments over the past 2 years (along with Sleep country and Peak). It's interesting... when running my numbers, the carrying value that Odyssey reports (using US GAAP) did not match up with what Fairfax reports (using IFRS 17) for lots of the holdings. But the market values kind of did match up for most holdings. Which actually makes sense.

@glider3834 , thanks for bringing this forward. So we probably can roughly calculate Fairfax's carrying value at Dec 31, 2024 as; 2023 EBITDA = C$160 million = US$115 million Enterprise value = 6 x $115 = $691 million My guess is enterprise value includes debt. Do I need to net debt out before calculating an estimate for Fairfax's carrying value?

Can someone educate me a little: Fairfax appears to be reducing its preferred share exposure and shifting it to debt (where the capital is held on the balance sheet is shifting). Other than saving a little (or a lot?) on the cost side (after tax), are there also strategic reasons/benefits to what they are doing? Preferred shares are considered equity capital. Fairfax's financial position and earnings trajectory has never been better.

@Hoodlum , thanks for posting the link. This is the part that really got my attention "This sale returns significant capital to AGT." Fairfax took AGT private in 2018. The total company back then was valued at C$436 million. AGT is a large company. Over the years, we have received very little new information on what has been happening at this company - and what its value is today. It makes sense that Fairfax does want to get paid for its significant investment in AGT. Perhaps we see a nice dividend get to sent to Fairfax when this deal closes. ----------- Welcome to 'new Fairfax'. 6 years ago many of the equity holdings were burning cash (at the Fairfax level) and the time of Fairfax's senior management team. 6 years later, after much creativity and effort, Fairfax's equity portfolio has been fixed. New equity purchases since 2018 have been very good (like Stelco). The old portfolio of holdings (from pre-2018) has been completely cleaned up. There will always be a few sub-performers in any equity portfolio - these types of holdings are now de-minimus for Fairfax. This is very bullish for future returns at Fairfax from its equity portfolio (future returns should be much better than past returns). AGT is an example of a legacy company (pre-2018) that Fairfax decided to keep. It will be interesting to learn more about the transaction announced yesterday. After 6 years of ownership, it is likely a good time for Fairfax (and its shareholders) to start to get paid. When you look at Fairfax's current stable of equity holdings... the 'surprises' we are getting are mostly skewed in one direction - we are getting 'good' surprises. Like I said, welcome to 'new Fairfax.'

@yqsun, that was one of the best articles i have read this year. Thank you for posting. So much good stuff to think about… Bernstein is eloquent, opinionated and very rational. And when it comes to investing, wicked smart.

@73 Reds I agree. Fairfax's other 'secret sauce' is not being restricted to bonds when investing. They are currently generating a return of better than 7.5% on their $70 billion investment portfolio. When you combine that with strong underwriting profit... well... +15% ROE is the result. The current fixed income yield of 4.7% is a game changer. As is a 15% return on equities.

@73 Reds , thanks for the feedback As I continue to peel back the layers on Fairfax, the piece that has me the most excited is capital allocation. I call what Fairfax does 'unconstrained capital allocation' - because they have no self-imposed limitations. In this respect they look an awful lot like Henry Singleton. What Fairfax is doing today - from a capital allocation perspective - looks unique in P/C insurance. Some might use Berkshire Hathaway and Markel as comparable for Fairfax but I don't think that works very well. BRK is now a massive conglomerate, with a large P/C insurance business. This now significantly restricts BRK's options when it comes to capital allocation. Buffett also has many self imposed restrictions. For example, up until recently, he refused to do share buybacks. Bottom line, Berkshire Hathaway today is not a good comparable for Fairfax when it comes to business model/capital allocation. What about Markel? If I have to describe Tom Gaynor's approach to capital allocation it would be: he is doing his best trying to convince his shareholders that he is following in BRK's footsteps. What does that mean? I am not sure. And that is the problem I have with Markel. Instead of going down their own road/path, they appear to be much more focussed on trying to clone/mimic Berkshire Hathaway. Trying to convince others that you are Buffett/BRK reincarnate is not my idea of a well run company. Fairfax, on the other hand, is clearly forging their own path. Their structure is similar to a younger BRK - decentralized operation. Capital allocation managed/driven by the senior team. Well run P/C insurance operations. But how Fairfax does capital allocation is completely different than Buffett/BRK - and it always has been. And Fairfax makes no apologies for it. From my perspective, Fairfax is uniquely positioned today in P/C insurance. They are taking the P/C insurance model that has been used so successfully over the years by so many outstanding investors to create enormous wealth: Buffett/BRK, Singleton/Teledyne, Markel family/MKL, Singleton/Teledyne, Davis etc. The difference is almost all of these great companies are gone or, in BRK's case, have morphed into something else. Fairfax looks like it is in its prime - it is executing exceptionally well. They are in the process of writing a brand new book on how to fully exploit the P/C insurance model - using their style of capital allocation - and in the process, they are building enormous value for shareholders. Do they actually pull it off? (Perhaps a better question is 'how long can they continue to deliver outsized returns for shareholders?') We will have to wait and see. But based on what I have seen over the last 6 years, I really like their chances. The challenge for lots of investors today is they are looking for another Buffett/BRK. And of course, that is never going to happen. History never repeats. But, as we learn from Mark Twain, history does have a habit of rhyming. The key for an investor is to be inquisitive and open minded... and to follow the facts. A capital allocation framework that is unique in P/C insurance today: Each year, the management team at Fairfax takes what Mr Market gives it - they are very opportunistic. This year, it was stock buybacks. Growth in insurance. Digit IPO. Sale of Stelco. Purchases of Sleep Country and Peak. Along with a bunch of other things.

Share Buyback History - Fairfax The big picture Three factors drive stock returns over the long term: Earnings Multiple Shares outstanding The last factor is often ignored by investors. Capital allocation Capital allocation is the most important function of a management team and stock buybacks are one of many options that are available. Share buybacks can be very beneficial for shareholders if they are done in a responsible manner (purchased at attractive prices) and sustained over many years. It is counterintuitive, but for long term shareholders a low share price can be a big benefit - if the company is buying back shares and in a significant quantity. Especially if it persists for years. How does Fairfax approach buybacks? Prem laid out Fairfax’s strategy regarding share buybacks in the 2018 annual report: “I mentioned to you last year that we are focused on buying back our shares over the next ten years as and when we get the opportunity to do so at attractive prices. Henry Singleton from Teledyne was our hero as he reduced shares outstanding from approximately 88 million to 12 million over about 15 years.” Prem Watsa – Fairfax 2018AR Fairfax approaches share buybacks from the framework of a value investor: buy back shares when they are cheap and back up the truck when they are really cheap. What has Fairfax been doing in recent years? 2015 to 2017 – Issue shares to fund international P/C insurance expansion. Fairfax’s year-end ‘effective shares outstanding’ peaked in 2017 at 27.75 million. Fairfax issued a total of 7.2 million shares in 2015, 2016 and 2017 to help fund its aggressive international expansion. The new shares were issued at an average price of about $462/share. 2017 to today – Aggressively buy back shares. At September 30, 2024, the ‘effective shares outstanding’ at Fairfax had fallen to 22.0 million shares. Over the last 6.75 years (2018-Q3 2024), Fairfax has reduced effective shares outstanding by approximately 5.67 million shares or 20.8%. The average price paid to buy back shares was about $595/share. That is a significant reduction in shares outstanding. Did Fairfax get good value with its buybacks? From 2018 to 2022, Fairfax was able to buy back 4.4 million shares at an average price of $464/share. The average price paid was the same as the average price of the shares that were issued at from 2015-2017 ($462/share). Fairfax’s book value at September 30, 2024 was $1,033/share. Fairfax’s intrinsic value is well above its book value. Fairfax has been able to buy back a significant number of shares at a very attractive average price – at a significant discount to book value and intrinsic value. Is Fairfax done with buybacks? In the first 9 months of 2024, Fairfax has reduced effective shares outstanding by 1.01 million or 4.4%. That is more than the average for the past 6.75 years of 3.2%. So far in 2024, Fairfax has accelerated the pace of share buybacks. Why is the pace of buybacks picking up? Likely for three key reasons: Robust cash generation: Fairfax is generating an enormous amount of free cash flow. The hard market in P/C insurance is slowing: The P/C insurance companies no longer need capital to grow. In fact, the opposite is happening – the P/C insurance businesses are generating excess capital, which is being sent to Fairfax. Cheap stock: Fairfax’s stock trades at a big discount to its intrinsic value. For the stock repurchased to September 30, 2024, Fairfax has paid an average price of $1,113/share. This price is a slight premium to current book value ($1,033/share). Importantly, book value does not include the following: “At September 30, 2024 the excess of fair value over carrying value of investments in non-insurance associates and market traded consolidated non-insurance subsidiaries was $1,921.4 compared to $1,006.0 at December 31, 2023. The pre-tax excess of $1,921.4 is not reflected in the company’s book value per share, but is regularly reviewed by management as an indicator of investment performance.” Fairfax Q3-2024 Interim Earnings Report This is $1.9 billion, or $87/share (pre-tax), in value that is not captured in book value. Bottom line, in 2024 Fairfax has bought back more than 1 million shares, or 4.4%, at $1,113/share. Which is less than 1 x 2024 year-end ‘adjusted’ book value (if we include excess of FV over CV). That is delivering exceptional value to long term shareholders. ————— Fairfax’s total return swaps (TRS) on 1.96 million Fairfax shares Some investors consider this investment to represent a buyback of sorts. Over the past 4 years, the TRS-FFH has increased in value by about $1.9 billion (before carrying costs). This is turning into one of Fairfax’s best investments ever. ————— What does Warren Buffett have to say about share buybacks? ---------- Tracking the Per Share Change in Net Premiums, Investments and Float - Fairfax Three of the most important metrics to measure the growth of a P/C insurance company over time are net premiums written, total investment portfolio and float. The change in the total values is important. But what is much more important, is the change in per share values over time. How has Fairfax performed? Over the past 9 years, growth at Fairfax across all three metrics has been very strong. Especially when measured per share. Net premiums written CAGR per share = 15% Investment portfolio CAGR per share = 12.3% Float per share CAGR = 12.5% The growth from 2016 to 2018 was driven by acquisitions (and share issuance). The growth from 2019 to 2024 has been driven by the hard market in insurance (and share repurchases). It should be noted that Fairfax has achieved this impressive growth in both soft and hard P/C insurance markets. Perhaps surprisingly, given the slowdown of the hard market, the per share growth in 2024 across all three metrics has continued at a robust pace: Net premiums written YOY growth estimate per share = 17% Investment portfolio YOY growth estimate per share = 13% Float per share YOY growth estimate per share = 13% The per share growth in 2024 is being driven by acquisitions (GIG), a continuation of the hard market and meaningful share buybacks. Fairfax has many levers it can pull to continue to grow its business in the coming years – even if the hard market in insurance slows further. This is further proof of how well the management team at Fairfax has been performing for long term shareholders.