US$1,000 - Fairfax vs. Markel

[Tommm50]

Still have a long way to go to catch them, never mind pass them. Wouldn't it be wonderful. (I hear music....)

[FFHWatcher]

February 3, 1999 and Fairfax hits $610/share. (Prem is worth about $1B on paper)

March 12, 2003 and Fairfax hits $69/share. (Prem is worth $100M on paper)

December 3, 2014 and Fairfax hits $610/share. (Prem is again worth about $1B on paper)

In 15 years and 10 months FFH goes from $610 to $69 to $610.

In 2003 FFH hits $69/share and in 2008, 5 'short' years later FFH hits $79/share....in earnings

A few of us have been around for all of it.

Here's to hoping we see more earnings of $69+/share vs. a share price of $69/share.

Say what you want about Multiple Voting Shares but without them, not sure 2014/2015 would have ever come to fruition.

 

I sometimes think of the gentleman who stood up at the FFH AGM back in the lean years .... ?2005-6? and said he had invested 100% of his family's investments into FFH stock and had 100% confidence in Prem.  Prem was almost speechless but as I recall he thanked him for the trust that he was putting in Prem. I would think that would have hit a nerve to Prem as to the degree of responsibility he has (right or wrong) to his investors.

 

[Cageyone]

Hi FFH Watcher!

Although I'm a Newbie on this Board, I've probably been around as long as almost anyone, having acquired my first FFH shares in 1990 at under $14 CDN.  I've only made it to one AGM, about 6 years ago, when I spoke personally to Prem and told him that because of his philosophy and principles I was over 40% in FFH.  He responded that he was over 90%, which as given me a lot of confidence to stay with the "lumpy ride" both up and down.  However, I'm realistic enough to accept that the exceptional performance over the past year or so won't necessarily be repeated again over the short term!

 

[Partner24]

Ladies and gentlemen, finally, we have the answer. MKL just hit 1000$ this morning.

 

A very interesting graph (starting point: June 10th, 2014):

 

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=mkl&time=100&startdata-ipsquote-timestamp=6%2F10%2F2014&enddata-ipsquote-timestamp=7%2F3%2F2017&freq=1&compidx=SP500&comptemptext=ffh&comp=ffh&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=2&x=45&y=17&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=12

 

Still, I don't know what to say...I would guess it depends somewhat on what will happen with the general stock market. If it goes down, you'll likely see FFH do better on a relative basis than MKL. If it's the contrary, MKL should do better.

 

[investmd]

February 3, 1999 and Fairfax hits $610/share. (Prem is worth about $1B on paper)

March 12, 2003 and Fairfax hits $69/share. (Prem is worth $100M on paper)

December 3, 2014 and Fairfax hits $610/share. (Prem is again worth about $1B on paper)

In 15 years and 10 months FFH goes from $610 to $69 to $610.

In 2003 FFH hits $69/share and in 2008, 5 'short' years later FFH hits $79/share....in earnings

A few of us have been around for all of it.

Here's to hoping we see more earnings of $69+/share vs. a share price of $69/share.

Say what you want about Multiple Voting Shares but without them, not sure 2014/2015 would have ever come to fruition.

 

I sometimes think of the gentleman who stood up at the FFH AGM back in the lean years .... ?2005-6? and said he had invested 100% of his family's investments into FFH stock and had 100% confidence in Prem.  Prem was almost speechless but as I recall he thanked him for the trust that he was putting in Prem. I would think that would have hit a nerve to Prem as to the degree of responsibility he has (right or wrong) to his investors.

 

To the experienced members on the board: I've only been following FFH since 2005'ish and have been confident in its long term prospects. Was not aware of the valuations prior to 2003. Why did FFH decrease 90% from 1999 to 2003??? Did it have to do with the shorting of the stock by a US hedge fund?? Was a $600/share "fair" value in 1999 or was it massively overvalued from a metrics point of view?? Do current investors need to be worried about a >50% correction in FFH stock price? One of the reasons I got into FFH was the fact that it is a diversified holding that should provide safety, combined with the fact that insurance float is attractive if you have folks who know how to invest $s.

[Parsad]

February 3, 1999 and Fairfax hits $610/share. (Prem is worth about $1B on paper)

March 12, 2003 and Fairfax hits $69/share. (Prem is worth $100M on paper)

December 3, 2014 and Fairfax hits $610/share. (Prem is again worth about $1B on paper)

In 15 years and 10 months FFH goes from $610 to $69 to $610.

In 2003 FFH hits $69/share and in 2008, 5 'short' years later FFH hits $79/share....in earnings

A few of us have been around for all of it.

Here's to hoping we see more earnings of $69+/share vs. a share price of $69/share.

Say what you want about Multiple Voting Shares but without them, not sure 2014/2015 would have ever come to fruition.

 

I sometimes think of the gentleman who stood up at the FFH AGM back in the lean years .... ?2005-6? and said he had invested 100% of his family's investments into FFH stock and had 100% confidence in Prem.  Prem was almost speechless but as I recall he thanked him for the trust that he was putting in Prem. I would think that would have hit a nerve to Prem as to the degree of responsibility he has (right or wrong) to his investors.

 

To the experienced members on the board: I've only been following FFH since 2005'ish and have been confident in its long term prospects. Was not aware of the valuations prior to 2003. Why did FFH decrease 90% from 1999 to 2003??? Did it have to do with the shorting of the stock by a US hedge fund?? Was a $600/share "fair" value in 1999 or was it massively overvalued from a metrics point of view?? Do current investors need to be worried about a >50% correction in FFH stock price? One of the reasons I got into FFH was the fact that it is a diversified holding that should provide safety, combined with the fact that insurance float is attractive if you have folks who know how to invest $s.

 

No, $600 was massively overvalued in 1999...about 4 times book!  2003 was a completely different matter...fair value was closer to $300 or so, and you had this massive attack by hedge funds and their cronies after problems with TIG/C&F became fully apparent.  The company then...even 10 years later in 2013...is very different than the company you have today. 

 

The insurance businesses are as good as any other company in the world over all.  The company has significant non-insurance investments, and those will grow.  The stock is well below fair value today.  While they didn't reap the benefits of their stock market investments due to their hedges the last few years, they are now in a somewhat enviable position of having significant dry powder when asset prices all over the world are not accounting for risk. 

 

The funny thing about Fairfax is that while the company has always preached a culture of defense first, you can see by their stock chart that they have an incredibly volatile stock price over the last 20 years.  Some of it created by others, but some of it their own making. 

 

I don't think you go wrong at all with either stock...Markel or Fairfax long-term.  On a pure valuation basis, and where Fairfax is now, I think Fairfax is cheaper and will do better over the next few years.  Long-term, they are fraternal brothers that will always meet somewhere down the road!  Cheers!

[Partner24]

Fairfax and Markel are two businesses that are operated differently. Markel look more like the "reach the silver medal" goal oriented. Don't speculate too much on macroeconomics and focus on the business model. Conservativeness with opportunity seeking. Easier to follow as a shareholder.

 

Fairfax look more like the "gold medal" oriented business. More speculation on the macroeconomics. Can say one thing a year and the opposite the next one. Require more flexibility, tougher to follow as a shareholder. Can have terrific results for some years when it works, and mediocre when it don't. The road's been more volatile over the last years, but NOT better.

 

Long term, difficult to say. Markel is easier to predict to me. Reach for and will probably get the "silver medal". Satisfactory results, but not terrific ones. 9%-13% CAGR is a reasonable expectation to me. Fairfax is tougher to predict. Will depends more on what Prem wants and feels to cook. I guess it should do fine too...maybe better, maybe worst than Markel. May be a more volatile road, but that does not necessarely mean that it will be a better one.

 

From this point, time will tell.

 

 

 

[Guest longinvestor]

True test would be who weathers mega cat events. We've been fortunate that it's been benign.

[ScottHall]

I've thought of buying some Fairfax at around current prices. Already own Markel.