Viking

Here is another update of Fairfax's equity positions Sept 30-Nov 20. In aggregate my math says total equity positions are now tracking up over $1 billion (+26.4%). Big move in 7 weeks. The good news is the increase is broad based (all holdings are up except CIB). I've attached my excel spreadsheet; please let me know if you see any big errors :-) Yes, most of the gains do not flow through to earnings. However, as the gap between 'fair value' and 'carried value' for Investments in Associates closes this makes reported book value more meaningful (shrinking the discount to BV shares trade at). - Stocks + $104 million (mark to market) - Atlas warrants + $71 (mark to market, I think) - Associated and Consolidated equities + $827 - Total + $1.001 billion Biggest individual movers: - Atlas shares = +$254 million - Atlas warants = +$71 - Fairfax India = +$133 - Recipe = +$117 - Eurobank = +$109 - Thomas Cook = +$72 - Blackberry = +$55 - Stelco = +$43 - Quess = +$32 Fairfax_Equity_Holdings_Nov_20_2020.xlsx

I second that. I'm definitely more careful with clients' money than my own. Lots of great thoughts on a wickedly complicated topic with obvious benefits (for others) and large risks (for the manager). As the years go by i have slowly been reducing my contact with family and close friends over money topics (like offering investment advice and stock picks). The main reason is i found it actually added another overlay into my investment decision process. And what i learned over time is this was not a good fit for me (the more complexity the worse the results). A second reason is i find people want the reward and do not want to put in the work. What they want is pretty simple: tell them stocks to buy and when they go up then tell them when to sell. Rinse and repeat. Simple. But not realistic. How you invest is probably a key input to this decision as well. If you are a ‘traditional’ type of investor with an easily explained investment process that you religiously follow then managing other peoples money might be pretty straight forward. My style is not ‘mainstream’. As one example, I like to concentrate my portfolio at times. This works for me (and i am ok with the risk/reward tradeoff) but would not work with other peoples money. Best of luck :-) PS: hat tip to those who are able to do this successfully

I love it when i encounter this type of thinking when it comes to investing. It is like taking candy from a baby. Not so great when in the middle of a pandemic and the health consequences can be extreme. Effectively managing the virus is just a tad more complex than you are suggesting (my uneducated opinion). As i have been saying since March, the virus is in control (until a vaccine is available). Do stupid things and the virus will love it. Develop a fatalistic mind set and the virus wins. It is pretty straight forward. It is not black and white. Not go out or stay home. Not open up or lock down. Not left or right. Not Democrat or Republican. But just like thumb sucking when young i guess this is the easiest most comforting way for most people to think about the virus. Just like trying to play checkers when you are in the middle of a game of chess. Well in regards to both investing during this manufactured "crisis", and handling the virus, I am pretty certain I'm doing quite well in both categories....much better than most I would imagine. It isn't totally black and white, but in many aspects it is. If you run around chicken shit scared or impair your life, well, that sucks. If you choose not to, well, thats your choice. And then even in the worst case, despite the liberal loveliest for headlines like "he dismissed the virus and then he got it!"...most people, even who fall into the later category, end up just fine. Bottom line is if you're so damn scared of this thing, your only surefire way to avoid it is to sit in your house and avoid any contact with people. If you do that, you'll never get it. For the rest of us, its pretty reasonable to just go about living our lives to the extent that the corrupt and power-hungry politicians dont interfere. Not much more to it. Greg, as you can see above, I did change my initial response. Too cranky. As we have been learning for the past 10 months dealing with the pandemic is complicated.... :-)

Effectively managing the virus is complex. There are many layers involved. . As i have been saying since March, the virus is in control (until a vaccine is available). Do stupid things and the virus will love it. Develop a fatalistic mind set and the virus wins. It is pretty straight forward. It is not black and white. Not go out or stay home. Not open up or lock down.

First off I want to say I am of the view that there isn't currently conclusive evidence that masks are effective. There is also not conclusive evidence that masks are not effective. In this regard we may be in agreement (at least partially). Now for the sample size. It is not large. This is clear from the confidence intervals (potential range of possible outcomes in 95% confidence interval is very large). Typically you get large intervals when sample size is small. There is another very important reason why I say this. Look at the sample size of Pfizer/BioNtech or Morderna trials. They are 10X the size of this trial. Pfizer trial had ~44000 participants. The goal was very similar, to assess whether an intervention (in this case a vaccine as opposed to masks) is effective in preventing future infections. The reason why this large sample size (~44000) is needed is to be able to power the study enough to convincingly make a call one way or another in this infectious disease setting. Same is true for any other intervention study (vaccine, therapeutic or non pharmaceutical interventions such as masks). Every country that has brought the virus under control has a couple of common factors. One is widespread mask wearing. It is obvious wearing a mask helps. Now exactly how effective? We will know much more in a few years. (But i think that will be a little too late to help us today :-) Social distancing is a second. Effective contact tracing is a third (this lets you know where the clusters are breaking out and why which is super important to know). Now we could wait a few more years and wait for irrefutable scientific evidence before implementing any of these measures. Kind of like what happened back in February and March in South Korea, Iran and Northern Italy. The virus loves stupidity. Now is wearing a mask a silver bullet? No, of course not. Managing the virus well is your classic example of a multivariable event. You need to get a bunch of things right at the same time for an extended period of time. And the trade offs are difficult and of huge impact. And there will be a need for constant course corrections (as new information becomes available). It totally cracks me up how people completely miss the forest for the trees. ——————————- miss the forest for the trees: to not understand or appreciate a larger situation, problem, etc., because one is considering only a few parts of it

Great question. There is still so much we do not know. Like what happens if the virus mutates? So while the news from Pfizer and Moderna is certainly encouraging there remain many forks in the road ahead.

And so you should! By way of explanation, I think it will ooze cash in upcycles, not lose much in downcycles, and allocate capital well. I think through-the-cycle cash flows will allow for a 10 (good) to 15% (great) return on the price paid, with very low risk because there isn't much debt; and I think the real estate is a nice option on the side. My view is that Prem paid a very low multiple of peak free cash flow and a reasonable multiple of average cash flow. The reason the price collapsed was that the cycle collapsed just afterwards. That does not make this a bad long term investment necessarily, but it does make it look badly timed. Then again, it wouldn't have happened any other way. Kestenbaum is not stupid and wouldn't have sold at the bottom of the cycle. Just listened to the Stelco Q3 conference call (only 30 minutes; very informative). The company looks to be positioned VERY well. They have spent $1 billion in the past 3 years to get the company positioned to supply the right market segments and be a low cost provider (not funded with debt). Very strategic. Moving forward the company will be shifting capital allocation to focus on shareholders via stock buybacks and dividends. And steel prices have jumped in Q4. Timing for Stelco could not have been better. Earnings should be very good. The general perception when Fairfax made this purchase was it was another mistake. Shitty industry (too cyclical). Overpaid. It looks like Stelco might actually work out well for Fairfax. The Stelco management team looks very good and the strategic plan they are executing is coming together and looks well thought out and is being executed well. Nice to see. We are quick to shit all over Fairfax when it looks like they have made a mistake (i am pointing at me); Stelco is shaping up to be a solid investment. Petec, thanks for keeping it on everyones radar :-) In terms of position size, i think Stelco is around US $145 million for Fairfax. Number 9 largest equity holding in terms of size. Q3 conference call: https://investors.stelco.com/events#past Historical steel pricing: http://steelbenchmarker.com/files/history.pdf

I would just ask how much has Fairfax lost on shorts since this article was published? I agree that Fairfax has its warts. The question is what size of discount should reasonably be applied to shares to account for those warts. My view is the current discount is too large and likely far too large. Fairfax shares are trading today (US$320) at the same level they were trading at in February 2008. That is simply crazy. Fairfax is not just ‘undervalued’ it is being historically undervalued. My view is the extreme undervaluation today is being driven primarily by sentiment (yes, the pandemic is also a factor). Fairfax has, at certain times in its history, made investors lots of money. 2003 was one. 2006-08 was another. Today looks like another. Why? I look at Fairfax as three buckets: 1.) insurance businesses - it looks to me to be as well positioned today as at any time in the companies history. Odyssey, Northbridge, Crum and Zenith are solid. Allied looks good (after a rough first year post acquisition). Brit has had its challenges but Fairfax seems to understand this and has been working for the past year to improve. Runoff, which historically was viewed as the most ‘shitty’ insurance business within Fairfax (a perennial money loser) has morphed and Fairfax was able to spin a large chunk of it off for a bucket of cash; where Riverstone UK goes from here will be interesting to follow. Most importantly, we are in the beginning of an insurance hard market. And this time Fairfax has good insurance businesses. This is a huge deal that investors are completely missing. Investing is the other key variable. When looking at Fairfax I break this into two buckets: fixed income and equities (stocks, associates and wholly owned companies). 2.) investments - fixed income. Historically, Fairfax has a very good track record when it comes to this bucket. A good recent example of this was the $5 billion? they put to work in corporates in April/May. Bottom line, Fairfax has proven to be a better than average managing fixed income investments. 3.) investments - equities. This is the bucket that for the past 7-8 years has driven long term investors in Fairfax crazy. Bad decisions combined with bad management (of those non-insurance companies they control) combined with poor communication to shareholders = a stock trading at a historically low discount. My view is Fairfax has been slowly ‘fixing’ its equity errors. Part of this fix is the slow recognition that they are not a turn around shop (for equities or wholly owned businesses) - Fairfax head office is not equipped to oversee businesses especially poorly performing businesses. But Fairfax made so many purchases/mistakes over many years it is now taking a long, long time (years) to right the ship. And it is not a straight line (so there will be steps backwards). So we are not seeing the net benefits... yet. To look at Fairfax equities as of Nov 2020, lets start by looking at Atlas. This is Fairfax’s largest investment, by far. This one company is more than 20% of the equity portfolio. And it is performing very well. We are in the middle of a pandemic and it is in a highly cyclical industry and how is its business doing? Very well. Solid top line growth. Solid earnings growth (remember, we are in a pandemic). Future prospects? Very good with lots of growth ahead. Stock is undervalued and every 10% move in shares is a $130 million ‘benefit’ to Fairfax. This stock alone could be a + $1 billion winner for FFH in the coming years. CIB is a solid bank. Kennedy Wilson is a solid real estate company. Quess is a solid company. The IIFL triplets are all solid companies. Digit looks like it could be a home run. Bangalore Airport is a trophy asset. Fairfax India is well managed. Other companies will be interesting to watch. Stelco looks to be well managed (yes, tough industry). Horizon North/Dexterra seems to have stabilized and it will be interesting to watch in the coming year. As we exit the pandemic Recipe will be ideally positioned (lots of mom and pop restaurants have closed so the big chains that Recipe owns will likely be the big winners in the short run). Blackberry debentures were renewed at terms very favourable to Fairfax shareholders. Blackberry the company has value given it is involved in many of the right technology verticals. Of all of Fairfax’s investments, Eurobank has been hit the hardest due to the pandemic. Pre-pandemic Eurobank had been making a great deal of progress (spinning of non performing loans) and the Greek economy was improving. Fairfax continues to deal with its problem children. APR was sold/spun into Atlas. Fairfax Africa will hopefully get folded into Helios. (Last year Dexterra did a reverse takeover of Horizon North). These are examples of admission by Fairfax that they messed up (or the asset they purchased needed a new home to thrive), recognition of the mistake and the remedy. Fairfax has communicated there is more work to be done on this front. So i expect more companies to get spun out of the Fairfax black box and put in a position to sink or swim: Toys R Us/real estate, Performance Sports (Bauer), Farmers Edge etc. And then of course, we have the equity shorts that (again) hit results in Q3 and came up again and again (rightly so) on the conference call. This was an example of the step back. Fairfax messed up. Again. But i think the message is getting though. Bottom line, i think they are making alot of the right moves with the investment portfolio. But Fairfax has said they are not done... lots more work to do. And it will take time. So when i put the three together (insurance + fixed income investing + equity investing) and shares trading at US$320 i see a $20 bill lying on the ground in plain sight :-)

Roberts1001, welcome. Being open minded and inquisitive is a good thing :-) Below is an article I was re-reading recently that i think provides a solid framework for looking at Fairfax as an investment. Fairfax today is trading at a much larger discount to BV than when the article was written. The stock sell off this year sucks for long term shareholders but provides a very attractive opportunity for new investors / new money. Especially if the news on the vaccine front the coming months is positive. The question for me is what combination of CR and investment return will Fairfax need to hit to deliver a 10% ROE moving forward? What do people think is achievable over the next couple of years? —————————— The Horse Story (Sept 2019) - https://www.woodlockhousefamilycapital.com/post/the-horse-story Most of the investors I’ve talked to about FFH will bring up Watsa almost immediately as, basically, someone they no longer trust to make good decisions or deliver good returns. I can understand why. (The baffling macro bets of some years ago cost FFH shareholders billions of dollars. Watsa said he not would make such bets again. But the damage was done.) The insurance side of the operation has been strong for FFH in recent years. But even there, operations are below Watsa’s target of a 95% combined ratio. FFH’s Q2 number was 96.8%. Profitable – anything below 100% is profitable – but below target. So, as you can see, the valuation is not such a cut-and-dried matter. FFH has had some issues. Nonetheless, we own the stock at a price below book value. The most important reason is that the downside seems low. The valuation protects you, the company appears well-financed and management seems honest and well-intentioned. These are not small things. Moreover, I think the assets collectively could generate a ~10%-type ROE. Watsa has made a public goal of hitting 15%. (FFH’s ROE was 15% in the second quarter, thanks to investment gains). He says a 95% combined ratio and a 7% return on FFH’s investments gets to a 15% ROE. But in a low-interest rate environment, and given a large bond portfolio, a 7% return seems unlikely. But possible. Sustaining a double-digit ROE is key. (FFH can reach 10% by following a number of roads. For example, one road requires a ~95% combined ratio and ~5% return on its portfolio. That seems do-able.) Anyway, a consistent 10% would grow book value at a decent clip and then you’d likely get an additional lift from the valuation even if the stock moved just to 1.2x book. As RayJay reports, a comparable set of North American insurers with an 11% ROE trades for 1.7x book value per share. I admit, FFH is not exciting. It’s not fake meat or pot or sending billionaires into space. But it shouldn’t hurt you and has potential to deliver a very nice return. The current disappointing share performance could be, in the spirit of the horse story, a gift.

Here is an update of Fairfax's equity positions Sept 30-Nov 11. In aggregate my math says total equity positions are tracking up almost $600 million. Big move in 6 weeks (and larger than I expected). I've attached my excel spreadsheet; please let me know if you see any big errors :-) Yes, most of the gains do not flow through to earnings. However, as the gap between 'fair value' and 'carried value' for Investments in Associates closes this makes reported book value more meaningful (shrinking the discount to BV shares trade at). - Stocks + $69 million (mark to market) - Atlas warrants + $50 million (mark to market, I think) - Associated and Consolidated equities +$471 million - Total + 590 million Biggest movers: - Atlas shares = +$181 million - Atlas warants = +$50 million - Recipe = +$129 million - Fairfax India = +$97 million PS: I added Astarta, Atlas Mara and Horizons North to the spreadsheet. Fairfax India is in tab 2; I have NOT updated yet Fairfax_Equity_Holdings_Nov_11_2020.xlsx

Big chunk of FFH. With insurance hard market, despite the recent run yp, the stock is still cheap. If vaccine news is positive in coming weeks then stock is crazy cheap (if there is a reasonable chance life/economy will get back to normal in 2H 2021 this should be positive for their equity holdings).

The Fed will remain on their current path until unemployment is much, much lower. The vaccine will be the first step in a long, long road back. My guess is Fed does not change much until 2022 and only then if the economy is on fire.

Crazy 1 day moves. Atlas + 11% Eurobank + 26% Fairfax India +10% Recipe + 10 Should see a spike in Indian investments overnight. If this shift in equity positioning has legs (if the news on the vaccine front continues to be positive, my guess is yes) Fairfax will do exceptionally well moving forward. Can we put a pitchfork in the ‘7 lean years’ trend?

SAP.to

My view is the virus news today is very encouraging. Very. If other companies report similar efficacy results then we will be in a good place. My guess is we will limp along until spring or perhaps even summer. But if we are able to get to a new normal by May or June that will be phenomenal. There is a lot of pent up demand out there. The sectors that have been crushed should do very well (perhaps by mid 2020). Near term the virus and economic news will be terrible. However, my guess is that will not matter much IF the news on the virus front improves from here. I will likely continue to add to my equity positions.

John, i am sitting at a little over 50% cash as of today. I have been opportunistic this year moving in and out of positions (mostly BRK, although i do not own any right now). Lately i have been building positions in pipelines, utilities, and companies i view as pretty safe (SAP the most recent example). I am in no hurry to get more fully invested as i have had a good year (return wise) and, as i have said before, capital preservation is more important to me right now than portfolio return. I am struggling with two competing narratives: rising virus case counts and a slowing economy (double dip) versus positive news on the vaccine front. We also are in the honeymoon phase of a Biden Presidency. The risk is if Republicans and Democrats continue to war and we get limited fiscal support moving forward. Looking out a little further i am also trying to understand the secular disinflation/mild deflation trend. My current view is i think rates will be much lower for longer with the very real possibility rates could go negative in the US. I think there is a scenario where we get: 1.) continued spike in virus numbers into January or February 2.) slower than expected news on the vaccine front (delays and/or not very effective) 3.) gridlock in US resulting in limited fiscal stimulus 4.) a second economic contraction as we begin the new year No idea how this all plays out. I will continue to be cautious with my portfolio until i get some more clarity. If i was younger and holding down a full time job (with growing savings) i would likely be fully invested and aggressively buying more with new money on any big sell offs. Buy my current positioning fits my objectives and allows me to sleep well at night :-)

Global liquidity trap. Here is the original article. Is this the pink elephant in the room that nobody sees? Solution? Global fiscal stimulus? Watch out? Countries using currency devaluation as policy tool in attempt to get domestic economic growth? ———————————- Source article: Global liquidity trap requires a big fiscal response - https://app.ft.com/content/2e1c0555-d65b-48d1-9af3-825d187eec58 Fighting the worst economic downturn in living memory, policymakers around the world have responded forcefully. Discretionary fiscal support of about $12tn has eclipsed previous records. Central banks, by going big with monetary easing, liquidity injections and asset purchases, have prevented financial catastrophe. Now we are in a global liquidity trap. The ascent back from what I have called “the great lockdown” will be long and fiscal policy will need to be the main game in town. For the first time, in 60 per cent of the global economy — including 97 per cent of advanced economies — central banks have pushed policy interest rates below 1 per cent. In one-fifth of the world, they are negative. With little room for further rate cuts, central banks have deployed unconventional measures. Despite this effort, persistently low inflation — and in some cases intermittent deflation — has raised the spectre of further monetary easing to achieve negative real rates if another shock strikes. It has led to the inescapable conclusion that the world is in a global liquidity trap, where monetary policy has limited effect. We must agree on appropriate policies to climb out. The central banks’ measures have been essential to meet the liquidity needs of businesses and households and to preserve jobs. Yet such policies are limited in their ability to stimulate demand. Solvency risks now predominate. Vulnerable but viable firms require support, a problem that is much better addressed by fiscal policy. Before the pandemic, there was a worrying consensus that low-for-long interest rates had promoted excessive risk-taking that heightened financial stability risks. The striking disconnect of financial markets from real activity in the recovery from the Covid-19 crisis reinforces these notions. There is also a greater risk of currency wars in a global liquidity trap. When interest rates are near zero, monetary policy works to an important extent by weakening currencies to favour domestic producers. With the pandemic already testing the limits of multilateralism, the world can ill-afford the escalation of tensions that competitive devaluations are likely to generate. Fiscal policy must play a leading role in the recovery. Governments can productively counter the shortfall in aggregate demand. Credit facilities installed by monetary authorities can only assure the power to lend but not to spend, as US Federal Reserve chair Jay Powell has noted. Fiscal authorities can actively support demand through cash transfers to support consumption and large-scale investment in medical facilities, digital infrastructure and environment protection. These expenditures create jobs, stimulate private investment and lay the foundation for a stronger and greener recovery. Governments should look for high-quality projects, while strengthening public investment management to ensure that projects are competitively selected and resources are not lost to inefficiencies. Many economies can lock in historically low interest rates now and keep debt servicing costs low. The IMF’s latest projections are for economic growth to increase at a faster rate than debt service costs in many countries — and by an even bigger margin in absolute terms than before the pandemic. This implies that debt service costs could fall. That would provide room in many economies for investment in inclusive, strong and sustainable growth, without compromising debt sustainability or bond market access. The importance of fiscal stimulus has probably never been greater because the spending multiplier — the pay-off in economic growth from an increase in public investment — is much larger in a prolonged liquidity trap. For the many countries that find themselves at the effective lower bound of interest rates, fiscal stimulus is not just economically sound policy but also the fiscally responsible thing to do. While all countries will need to deploy fiscal policy, the stimulus size will clearly vary. Those that entered the crisis with elevated debt and weak growth prospects will need to prioritise spending and seek financial support. Those whose debt is unsustainable should restructure as soon as possible to free up resources to fight this crisis. All countries should build medium-term fiscal frameworks to ensure debt remains sustainable, including through structural reforms, revenue-raising measures and cuts to wasteful spending. This is a once in a lifetime crisis. Policymakers have responded strongly, averting an even deeper recession. Monetary policy has and will remain central to this effort, but with the world in a global liquidity trap it is time for a global synchronised fiscal push to lift up prospects for all.

SAP.to (now a large position) Sold BAM (up 12% in a week) and a few other smaller positions.

Here is how i would vote based on Trust: 1.) BRK 2.) BAM 3.) FFH Here is how i would vote if i had to buy and hold for the next 10 years: 1.) BAM - Flatt is young and in his prime 2.) BRK - Buffett is very old 3.) FFH - Prem’s best years, i think, are in the rear view mirror

Listened to the WR Berkley conference call. Like all insurers they are having problems with where to invest. As bonds mature they are building cash. They anticipate higher interest rates in the future. On the conference call lots of questions and concerns from analysts about trying to time bond market purchases and what that does to earnings visibility and predicability. As bonds mature, insurers are going to really struggle to reinvest at acceptable yields. If low rates persist insurance companies will be looking for yield. BAM is positioned ideally and ready to help them out :-) ——————————— RBC had this to say in its weekly report on insurance industry: “It’s really simple – margins go up after rate increases. Some improvement happens quickly, some takes longer to leverage but rate increases are good and we’re getting to the part of the rate story that is turning into the earnings story. ——————————- We have been seeing rate increases for 12-18 months. Q4 results might be when we see improving CR’s, improving operating results and improved earnings. But because investment results will be under continued pressure (due to low rates) the hard market should continue to run for some time.

FFH (fortunately at open), SAP.to, BAM

Coronavirus is a large topic. I thought it might make some sense to have a couple of threads on the topic so comments can be grouped a little better. The idea behind this thread is when will we see recovery, what will it look like, how fast, and what are some investment opportunities / suggestions to take advantage? There will likely be lots of mis-pricing by Mr Market given all the uncertainty. Given we are on the cusp of multiple vaccines getting approved i am now starting to think about what the next phase of living with this pandemic will look like. The flip side of the equation is we are also going in to flu season and we are seeing another spike in cases / hospitalizations / more government restrictions. So we are going to be getting very divergent news flows in the coming months. My view is the current spike in cases will be a short term issue. The vaccine, however, will be the more important development over time. My guess is the vaccine news flow will eventually win the day. But it might take some months to play out (or not?). My guess is the vaccine will also be a step in the right direction but not a ‘cure’. The key will be getting though the current flu season and into March / April with as little damage as possible. Once we hit spring with favourable seasonality, likely vaccines, likely better treatments, better testing (hello 15 minute test at airports) we should be in a better place. By mid summer we should see even more improvement. What are people thinking? Is this a realistic scenario? Too optimistic? Why? Too pessimistic? Why? And, most importantly, what are some investment opportunities? Where is the most pent up demand? - Travel? Airlines? Air Canada, north of the border, or Southwestern in the US? Ryanair in Europe? - Hotels? - Eating out? Restaurant stocks? - Banking? RY or TD in Canada; JPM or BAC in US? - Oil? CNQ or SU in Canada or CVX in US? - Emerging markets? Or is there a better way to think / invest? To be clear, i am not expecting Covid to disappear. Rather, with multiple vaccines (therapeutics and better tests) i expect the world to begin the next chapter of living with covid. And i am trying to understand what will be written in that chapter and understand what behaviour change that will bring about. And what the likely best investments opportunities are :-) I am thinking this might be a good time to get positioned/buy a couple best in class companies in industries that might recover the quickest should we get some good news on the medical front in the coming months that allows people (and economy) to get to the next phase of normalcy.

My vote: 1.) Fairfax 2.) BAM 3.) BRK I picked Fairfax because it looks the most undervalued and it is in a hard insurance market. RBC has forecast $35 in operating earnings in 2021. Shares are trading at $263. When equity earnings turn positive (they will :-) the stock should be an easy double. The risk for Fairfax is theirvcurrent leverage profile and if we get another 30 or 40% decline in the stock market in the next 12 - 18 months. BAM looks undervalued. But it is such a big pig i really have no idea how undervalued. It is the classic example of ‘trust management’. How much it goes up will depend on 2 variables: 1.) if interest rates stay low for long 2.) the PE multiple Mr Market gives the company over time BRK will likely deliver 1 or 2% under the S&P 500 over the next decade. Solid.

Hey, if everyone wants to own an insurance company right now perhaps someone can introduce Prem to Flatt. Imagine FFH investments managed by Brookfield :-) Just think what kind of value that pairing could create for Fairfax shareholders over the next 5-10 years from todays price :-)

That is the single largest reason to buy FFH at current levels. Lower bond yields / lower investment results are not Fairfax specific... every insurer will see lower returns from investments moving forward. The hard market could run some time (years).