Fairfax stock positions

[treasurehunt]

On 8/23/2025 at 2:36 PM, SafetyinNumbers said:

I like this table to show the ROE decomposition. I think a 96 combined is way too conservative. More likely to be under 94 than 96 over the next 5 years, in my opinion as reserve releases ramp and they benefit from scale. Also, net premiums are closer to $28b and growing. 
 

 

I have a question regarding the calculation of underwriting leverage in this table. The table uses NPW (net premiums written) to calculate this number. But isn't the standard to use net premiums earned? Fairfax mentions specifically in their latest earnings release that they calculate the undiscounted combined ratio as underwriting expense expressed as a percentage of net premiums earned. Also, given the Q2 underwriting profit of $426.9 million and CR of 93.3%, net premiums earned works out to $25.5B. So underwriting leverage should be 1.0, and not 1.1 as claimed in the table.

 

Obviously this is a small difference (0.8% pre-tax), but I'd like to know if I am understanding this correctly.

[Hoodlum]

Peak Achievement is securing new debt to partially replace debt due in 2027.  S&P provides an interesting summary of their analysis of Peak Achievement.  

 

https://sgbonline.com/peak-achievement-athletics-to-pay-down-term-loan-with-new-debt-offering/#:~:text=“We anticipate that Peak's leverage,term loan due December 2027.

 

“We anticipate that Peak’s leverage will improve to below 4.0x in F2026 as acquisition-related one-time charges roll off. The company plans to issue C$250 million (US$179 million) unsecured notes due August 2033, using the majority of the proceeds to pay down existing US$339 million term loan due December 2027. Pro forma the transaction and based on S&P Global Ratings-adjusted EBITDA for the 12 months through June 30, 2025, the company’s leverage will be about 5x. However, for the fiscal year ending March 31, 2025, there were significant one-time costs related to Fairfax acquiring Peak. As those one-time transaction-related charges phase out, we expect EBITDA margin to return to a more normal 19 percent–20 percent in F2026. As a result, we project S&P Global Ratings-adjusted leverage will improve to the 3.5x-4x area by year-end fiscal 2026.

“Our ratings incorporate a one-notch uplift for group support. Peak is 100 percent-owned by and fully consolidated with the financials of its parent, Fairfax, but it will operate as a stand-alone business. We view Peak as moderately strategic to Fairfax. Therefore, we don’t expect any ongoing financial support from Fairfax, and only under extraordinary circumstances would we expect Fairfax to assist financially. We also believe Fairfax will be a long-term investor in Peak and maintain a prudent financial policy with respect to dividends. As a result, our ‘b+’ SACP on Peak receives a one-notch parental uplift, resulting in a ‘BB-‘ ICR.

 

“Robust pricing power and solid demand for hockey equipment will support near-term growth. Q1 2025 sales growth stemmed primarily from price increases. It raised prices earlier this year due to tariffs, and there was minimal customer backlash. Hockey and lacrosse consumers generally have relatively high household incomes and tend to be more inclined to pay for quality and premium products. This and Peak’s well-established brand equity give the company significant pricing power. Across all of its categories, the company offers products at multiple price tiers, broadening its potential customer base. And to better attract and support beginner players, it didn’t raise the prices of entry-level products this year. We expect top-line growth of approximately 7.5 percent in 2026, primarily driven by price increases. The remainder will come from volume growth, bolstered by the launch of the Vapor FlyLite collection in June, contracts with the Professional Women’s Hockey League and Hockey Canada, and the continued expansion of its custom products line.

 

“Even with tariffs, we believe the company’s profitability will remain above the industry average. Absent one-time items related to the sale to Fairfax, Peak’s 2025 S&P Global Ratings-adjusted EBITDA margin was 19 percent to 20 percent. This exceeds the 16 percent to 17 percent generated by Topgolf and TaylorMade Holdings Inc. (B/Stable/–). With most of Peak’s manufacturing based overseas and significant sales in the U.S., it remains highly exposed to tariffs; however, management has indicated that these costs have been passed on to customers through price increases. The company is also working with key suppliers to reduce its exposure to China by relocating production elsewhere in the region. We expect Peak to maintain these margins in the near term, even when taking into account tariff-induced macroeconomic headwinds in Canada. However, the risk remains that a further increase in tariff rates could compress EBITDA margins and pressure the company’s creditworthiness if EBITDA declines substantially.

 

 

Edited August 28, 2025 by Hoodlum

[This2ShallPass]

On 8/23/2025 at 2:02 PM, dartmonkey said:

Seconded. Safety has posted this table before but I hadn’t appreciated how elegant it was. It clears up nicely the question about how much it is reasonable to estimate that underwriting contributes to ROE, and how much of a drag there is likely to be from overhead, financing, tax, and preferred shares (7.9% total, by my calculation.)

 

Maybe there’s a companion table that breaks down how they come up with a pre-tax investment yield of 7.0%? At year end 2024 they had a bond portfolio of $46.8b earning 5.2% pre-tax, and a $17.5b stock portfolio, along with some cash, for a total investment portfolio of $67.4b. Assuming the cash is earning nothing, that would mean that to get to 7.0% pre-tax from investments (close to the long-term average of 7.7%), we would need $4.72b, with $46.8*0.052 = $2.43b of that coming from the bond portfolio, and the rest, $2.27b, coming from the equity portfolio. That would mean the equity portfolio would have to return $2.27/$17.5=13.0%. If they hit that mark, they would get an overall post-tax ROE of 18.8%, like in Safety’s chart. 

 

To hit their 15% ROE target, at a tax rate of 24.4%, they would need a pre-tax ROE of 15%/(1-.244)=19.8%, instead of the current 25.2% pre-tax, 5.4% lower. That would mean that if underwriting, interest and expenses, and bond returns stayed the same, equity investments would only need to return 14.4%, and given the 2.8x leverage, that means we would only need 5.1% from equity investments. This seems almost impossible to miss, given the investments like Eurobank 6x earnings, so a yield of about 16-17% at year end, obviously a bit lower yield now) or Poseidon (carried at $1.9b, which was 7x 2024 earnings according to the annual report.) And this is without considering the possibility that Fairfax gets even better returns by selling opportunistically, like they have done recently with Stelco or the bond portfolio. 

This is really nice. I used your method / RBC assumptions and decided to plugin CR of 97% (assume hard market ends) and Fixed income yield of 4% (lower int rate scenario). 93% used by RBC is not reasonable imo. Last 10 yr average CR is 95.2% and without the benefit of hard market, 97% is safer to model with (anything better is gravy).

 

To still get 15% after tax ROE, equity returns need to be 14.6%. They're shooting the lights out now on the investment side. But we have to assume few down years, so consistent 15% return seems like will be difficult for Fairfax to achieve.

 

Thoughts?

 

Details

 

Combined ratio = 97%

Underwriting return = 3% (using Net earned premiums, leverage is 1x).

 

Other income/(Expense) = -0.8 (using same numbers as RBC)

 

Financing drag = -1.5% (assume lower than -1.8% as lower rates will provide some benefit)

 

Non-investment return = 0.8%

 

To hit 19.8% pre-tax ROE, investment returns need to be 19%

 

Investment yield needed to hit 19% = 6.8% (2.8x leverage)

 

Fixed income return = 4% (lower interest rate scenario, $1.9B return on $47B)

 

Equity returns needed to hit 6.8% yield = 14.6% (6.8%*$67B =  $4.5B - $1.9B = $2.6B. Equity portfolio $17.8B)

 

 

[Maverick47]

8 minutes ago, This2ShallPass said:

This is really nice. I used your method / RBC assumptions and decided to plugin CR of 97% (assume hard market ends) and Fixed income yield of 4% (lower int rate scenario). 93% used by RBC is not reasonable imo. Last 10 yr average CR is 95.2% and without the benefit of hard market, 97% is safer to model with (anything better is gravy).

 

To still get 15% after tax ROE, equity returns need to be 14.6%. They're shooting the lights out now on the investment side. But we have to assume few down years, so consistent 15% return seems like will be difficult for Fairfax to achieve.

 

Thoughts?

 

Details

 

Combined ratio = 97%

Underwriting return = 3% (using Net earned premiums, leverage is 1x).

 

Other income/(Expense) = -0.8 (using same numbers as RBC)

 

Financing drag = -1.5% (assume lower than -1.8% as lower rates will provide some benefit)

 

Non-investment return = 0.8%

 

To hit 19.8% pre-tax ROE, investment returns need to be 19%

 

Investment yield needed to hit 19% = 6.8% (2.8x leverage)

 

Fixed income return = 4% (lower interest rate scenario, $1.9B return on $47B)

 

Equity returns needed to hit 6.8% yield = 14.6% (6.8%*$67B =  $4.5B - $1.9B = $2.6B. Equity portfolio $17.8B)

Thanks for the scenario @This2ShallPass!

 

I might suggest a few ways that the metrics might change in the future that could impact/increase the likelihood of achieving a long run 15% ROE, perhaps without requiring a long term equity return quite as high as the 14.6% level.

 

First, given that Prem always mentions the expectations that returns will be lumpy, I think it’s all right if some years produce ROEs below 15% as long as they are balanced by others with returns exceeding the target.  There will likely be years with CRs above 95%, but if they are balanced with enough years below 95%, maybe it’s still reasonable to assume a long term CR of better than the 97% in the above scenario.

 

In addition, the net underwriting leverage ratio of 1.0 is fairly conservative for an insurance company.  If we assume it continues at this level, to me it implies that the company is not taking a huge amount of risk on the underwriting side of the house, meaning that over time, with future retained earnings, they can probably afford to take some incremental additional risk on the investing side…so that the invested financial assets will grow beyond the current level of about $67 billion, and that along with this, the percentage invested in fixed income instruments may gradually drop, with the percentage invested in equities increasing a bit.  That might also help to increase the chance of a 15 ROE without requiring an equity return quite as high as 14.6%

 

But I really like your thought process of inserting some more conservative values into the calculations to get an idea of the range of future results that could occur if things aren’t as rosy as they appear today.  It’s important for me to be able to think of possible downsides to any investment thesis, as a way of offsetting my human tendency to only look for data points that confirm a positive view of my holdings— so thank you for this!

 

 

[This2ShallPass]

2 hours ago, Maverick47 said:

But I really like your thought process of inserting some more conservative values into the calculations to get an idea of the range of future results that could occur if things aren’t as rosy as they appear today.  It’s important for me to be able to think of possible downsides to any investment thesis, as a way of offsetting my human tendency to only look for data points that confirm a positive view of my holdings— so thank you for this!

Thanks @Maverick47. I was also a bit surprised at how much swing in equity returns is needed (makes sense since it's only 25% of the portfolio).

 

With the current setup, it's a one foot hurdle and I would worry about them increasing the equity portion vs. fixed income. Though the last 5 years have been great, we know they also have made big mistakes. I'll sleep well if they're not taking bigger risks trying to get to 15% ROE. 

 

As we're on the topic of downsides, does everyone think pouring a billion into a timeshare company a good idea? Is it 2020 Fairfax or the 2015 version? I don't know much about the industry, but screams low quality to me.

 

 

 

[Maverick47]

42 minutes ago, This2ShallPass said:

As we're on the topic of downsides, does everyone think pouring a billion into a timeshare company a good idea? Is it 2020 Fairfax or the 2015 version? I don't know much about the industry, but screams low quality to me.

@This2ShallPass  I also am not fond of timeshare sales companies, but I think this investment may be somewhat removed from the primary,less savory sales practices of timeshares and perhaps geared more towards optimizing management of the resort properties themselves once a company has already sold timeshare rights to unit nights in the facilities.  Not all timeshare owners can use their properties so many of the resorts may not be close to fully occupied all the time.  I thought the business Fairfax invested in works to rent out unused units.  I believe they loaned money to their partners who used it to purchase management rights to some timeshare resorts, and those partners have a track record increasing occupancy rates of the resorts previously.  If I’m anywhere close to gleaning the business model it may be seen as akin to trying to maximize seat sales on airplane flights?

 

Timeshare owners buy points that can be traded for nights in a number of resorts and they may well not own and operate the resorts themselves.  If some of the resorts are not as attractive to timeshare owners than others, then the timeshare dedicated units in those resorts may not be fully occupied, and if not occupied, the resort would receive no maintenance related fees for them from the timeshare company?  In such cases, the resort may post the units as available for occupancy/rental to people for cash instead of to timeshare owners.

 

Some years back, my in-laws owned points in a timeshare company, and provided them to my family so we could stay at a resort a few miles from where they lived each year.  The timeshare company only owned or reserved some units in the resort, not the entire thing.  I found out that if I wanted to, I could reserve rooms at that same resort on Expedia or some other online reservation service, even though I wasn’t a timeshare owner myself.  Maybe that’s the part of the business model Fairfax’s partners are involved in?

Edited August 31, 2025 by Maverick47

[Viking]

5 hours ago, This2ShallPass said:

This is really nice. I used your method / RBC assumptions and decided to plugin CR of 97% (assume hard market ends) and Fixed income yield of 4% (lower int rate scenario). 93% used by RBC is not reasonable imo. Last 10 yr average CR is 95.2% and without the benefit of hard market, 97% is safer to model with (anything better is gravy).

 

To still get 15% after tax ROE, equity returns need to be 14.6%. They're shooting the lights out now on the investment side. But we have to assume few down years, so consistent 15% return seems like will be difficult for Fairfax to achieve.

 

Thoughts?

 

Details

 

Combined ratio = 97%

Underwriting return = 3% (using Net earned premiums, leverage is 1x).

 

Other income/(Expense) = -0.8 (using same numbers as RBC)

 

Financing drag = -1.5% (assume lower than -1.8% as lower rates will provide some benefit)

 

Non-investment return = 0.8%

 

To hit 19.8% pre-tax ROE, investment returns need to be 19%

 

Investment yield needed to hit 19% = 6.8% (2.8x leverage)

 

Fixed income return = 4% (lower interest rate scenario, $1.9B return on $47B)

 

Equity returns needed to hit 6.8% yield = 14.6% (6.8%*$67B =  $4.5B - $1.9B = $2.6B. Equity portfolio $17.8B)

@This2ShallPass, it is an interesting exercise to think through some of these metrics. I have a couple of questions:

1.) What time frame are you using for the inputs for your model? Is it an average for the next 5 years? I.E. 2026 to 2030? Or is it what you expect in a specific year, like 2027 or 2028?

• Average CR = 97?
• Average yield on bond portfolio = 4%

2.) For your CR estimate of 97, what is your estimate for reserve releases? My guess is  Fairfax’s reserves are in pretty good shape today… which suggests reserve releases might be pretty healthy in the coming years. 
3.) How are you thinking about all the ‘hidden value’ currently residing on Fairfax’s balance sheet. Excess of FV over CV for associate and consolidated holdings is sitting at $2.4 billion at June 30, 2025. This doesn’t include holdings like BIAL, which appear undervalued today. This suggests we should see pretty sizeable realized gains in the coming years. 
4.) What is your expectation for interest rates? To use an average yield of 4% from here (it is 5% today) suggests you expect the average yield on Fairfax’s fixed income portfolio to drop well below 4% in the coming years (to get to a 4% average). 

Edited August 31, 2025 by Viking

[This2ShallPass]

5 hours ago, Maverick47 said:

@This2ShallPass  I also am not fond of timeshare sales companies, but I think this investment may be somewhat removed from the primary,less savory sales practices of timeshares and perhaps geared more towards optimizing management of the resort properties themselves once a company has already sold timeshare rights to unit nights in the facilities.  Not all timeshare owners can use their properties so many of the resorts may not be close to fully occupied all the time.  I thought the business Fairfax invested in works to rent out unused units.  I believe they loaned money to their partners who used it to purchase management rights to some timeshare resorts, and those partners have a track record increasing occupancy rates of the resorts previously.  If I’m anywhere close to gleaning the business model it may be seen as akin to trying to maximize seat sales on airplane flights?

 

Timeshare owners buy points that can be traded for nights in a number of resorts and they may well not own and operate the resorts themselves.  If some of the resorts are not as attractive to timeshare owners than others, then the timeshare dedicated units in those resorts may not be fully occupied, and if not occupied, the resort would receive no maintenance related fees for them from the timeshare company?  In such cases, the resort may post the units as available for occupancy/rental to people for cash instead of to timeshare owners.

 

Some years back, my in-laws owned points in a timeshare company, and provided them to my family so we could stay at a resort a few miles from where they lived each year.  The timeshare company only owned or reserved some units in the resort, not the entire thing.  I found out that if I wanted to, I could reserve rooms at that same resort on Expedia or some other online reservation service, even though I wasn’t a timeshare owner myself.  Maybe that’s the part of the business model Fairfax’s partners are involved in?

Agreed, that seems like a better business model than selling timeshare. Thanks for the explanation. It's still not clear if it's a high quality opportunity, but I guess the Fairfax guys have done so well recently that they deserve the benefit of doubt. Having been a Fairfax owner since 2011, I do have some ptsd:)

 

[This2ShallPass]

3 hours ago, Viking said:

@This2ShallPass, it is an interesting exercise to think through some of these metrics. I have a couple of questions:

1.) What time frame are you using for the inputs for your model? Is it an average for the next 5 years? I.E. 2026 to 2030? Or is it what you expect in a specific year, like 2027 or 2028?

• Average CR = 97?
• Average yield on bond portfolio = 4%

2.) For your CR estimate of 97, what is your estimate for reserve releases? My guess is  Fairfax’s reserves are in pretty good shape today… which suggests reserve releases might be pretty healthy in the coming years. 
3.) How are you thinking about all the ‘hidden value’ currently residing on Fairfax’s balance sheet. Excess of FV over CV for associate and consolidated holdings is sitting at $2.4 billion at June 30, 2025. This doesn’t include holdings like BIAL, which appear undervalued today. This suggests we should see pretty sizeable realized gains in the coming years. 
4.) What is your expectation for interest rates? To use an average yield of 4% from here (it is 5% today) suggests you expect the average yield on Fairfax’s fixed income portfolio to drop well below 4% in the coming years (to get to a 4% average). 

@Viking here are my responses

 

1. Definitely thinking next 5 or 10 years (not an individual year).
 

2. On CR, I took 2015-24 average (95%) and wanted to add margin as hard market ends. We know this is a cyclical industry, during soft markets lot of capital comes in chasing yield and Fairfax has shown that they will walk away from business (which btw will negatively impact returns as float is smaller, but I haven't considered that in my analysis). Even with their conservatism, it's likely their CRs will be higher in soft markets. 

 

Also, I assumed more than one high catastrophe year. Here's what Prem had to say about 2017 (when their CR was 107%)

 

"The second half of 2017 reminded us yet again that ours is a risk business. During the third quarter of 2017, the insurance industry experienced some of the largest catastrophe losses in its history as a result of Hurricanes Harvey, Irma and Maria and earthquakes in Mexico. During the fourth quarter, the industry suffered losses from the California wildfires, resulting in total catastrophe losses of about $130 billion for the industry in 2017 – close to the largest losses the industry has suffered in its history."

 

On reserve releases, Fairfax has had positive reserve releases most years and I assumed that's included in the last 10 year avg CR. Do you see a higher positive impact (than the past) from releases?

 

3. Agreed, we have lot of embedded optionality today. This is what makes investing in Fairfax today a one foot hurdle. But, still getting 15% from equity portfolio would be hard imo. For next 5 years, 15% returns mean they need to have total gains of ~$12B. Say BIAL doubles (which I think it will), that's roughly a $1B gain.

 

On the flipside, if Poseidon struggles (could happen given that industry) that will be a big drag on results.

 

4. I don't have a view on how interest rates will change (it's a futile exercise for most of us and I certainly don't have the expertise). I was just modeling a scenario where they're 1% lower than today. You could argue low interest rate environment is bad for FI but good for equities. There's a natural counterbalance which might end up working out for us.

 

 

 

[Viking]

7 hours ago, This2ShallPass said:

@Viking here are my responses

 

1. Definitely thinking next 5 or 10 years (not an individual year).
 

2. On CR, I took 2015-24 average (95%) and wanted to add margin as hard market ends. We know this is a cyclical industry, during soft markets lot of capital comes in chasing yield and Fairfax has shown that they will walk away from business (which btw will negatively impact returns as float is smaller, but I haven't considered that in my analysis). Even with their conservatism, it's likely their CRs will be higher in soft markets. 

 

Also, I assumed more than one high catastrophe year. Here's what Prem had to say about 2017 (when their CR was 107%)

 

"The second half of 2017 reminded us yet again that ours is a risk business. During the third quarter of 2017, the insurance industry experienced some of the largest catastrophe losses in its history as a result of Hurricanes Harvey, Irma and Maria and earthquakes in Mexico. During the fourth quarter, the industry suffered losses from the California wildfires, resulting in total catastrophe losses of about $130 billion for the industry in 2017 – close to the largest losses the industry has suffered in its history."

 

On reserve releases, Fairfax has had positive reserve releases most years and I assumed that's included in the last 10 year avg CR. Do you see a higher positive impact (than the past) from releases?

 

3. Agreed, we have lot of embedded optionality today. This is what makes investing in Fairfax today a one foot hurdle. But, still getting 15% from equity portfolio would be hard imo. For next 5 years, 15% returns mean they need to have total gains of ~$12B. Say BIAL doubles (which I think it will), that's roughly a $1B gain.

 

On the flipside, if Poseidon struggles (could happen given that industry) that will be a big drag on results.

 

4. I don't have a view on how interest rates will change (it's a futile exercise for most of us and I certainly don't have the expertise). I was just modeling a scenario where they're 1% lower than today. You could argue low interest rate environment is bad for FI but good for equities. There's a natural counterbalance which might end up working out for us.

@This2ShallPass, as investors, we all need to find mental models that work for us. 
 

I find the simpler I can keep things the better. I also try to focus on what I think I know. Here are some top line thoughts:

At a very high level, over the past 10 years I think Fairfax has been modestly improving the quality of its overall P/C insurance business. This suggests they should post better results moving forward (over the next decade) than they posted over the previous decade (CR). 
 

At a very high level, the quality of Fairfax’s equity holdings (as a basket) is much higher than what existed back in 2017 (as a basket). Management. Balance sheet. Profitability. This is a big, big deal. Bottom line, the equity portfolio is positioned to deliver solid to strong returns in the coming years (like they have been in recent years).

 

In terms of capital allocation, I think Fairfax is best in class among P/C insurance companies. Their execution the past 5 years has been exceptional. My guess is they continue to make good decisions. This will drive significant value creation in the coming years. 

 

I terms of trying to forecast specific numbers, my crystal ball looks out one, maybe two years. My guess is Fairfax is currently generating a ‘normalized’:

• CR = 94% (reserve releases = 1 or perhaps 2 CR points)
• Total return on its investment portfolio of 8% (including excess of FV over CV). 

‘Normalized’ = in a normal year (which rarely happens).

Edited August 31, 2025 by Viking

[This2ShallPass]

1 hour ago, Viking said:

@This2ShallPass, as investors, we all need to find mental models that work for us. 
 

I find the simpler I can keep things the better. I also try to focus on what I think I know. Here are some top line thoughts:

At a very high level, over the past 10 years I think Fairfax has been modestly improving the quality of its overall P/C insurance business. This suggests they should post better results moving forward (over the next decade) than they posted over the previous decade (CR). 
 

At a very high level, the quality of Fairfax’s equity holdings (as a basket) is much higher than what existed back in 2017 (as a basket). Management. Balance sheet. Profitability. This is a big, big deal. Bottom line, the equity portfolio is positioned to deliver solid to strong returns in the coming years (like they have been in recent years).

 

In terms of capital allocation, I think Fairfax is best in class among P/C insurance companies. Their execution the past 5 years has been exceptional. My guess is they continue to make good decisions. This will drive significant value creation in the coming years. 

 

I terms of trying to forecast specific numbers, my crystal ball looks out one, maybe two years. My guess is Fairfax is currently generating a ‘normalized’:

• CR = 94% (reserve releases = 1 or perhaps 2 CR points)
• Total return on its investment portfolio of 8% (including excess of FV over CV). 

‘Normalized’ = in a normal year (which rarely happens).

@Viking Agree with most of what you have said. Keeping it simple is usually better, that's why I only changed CR and FI rate. Not sure if these are the right numbers, but gives a range of potential outcomes. 

 

On the 15% ROE, Fairfax won't reach for this if conditions worsen (soft market, high catastrophe year etc.). They will play it safe.

 

I do think there's some level of recency bias, we are valuing / extrapolating their recent performance more. This is a call each of us have to make individually. I feel their performance is a mix of good execution / great investment decisions + industry tail wind (no one predicted the hard market to last this long).

 

But, what happens in a soft market? We know that low interest rate env -> capital flows into insurance -> soft market. I don't believe Fairfax will have CR <95 in a soft market. Even if they get there, it will be at a significantly reduced premiums. Those are just my thoughts.

 

 

[Maverick47]

10 hours ago, This2ShallPass said:

Agreed, that seems like a better business model than selling timeshare. Thanks for the explanation. It's still not clear if it's a high quality opportunity, but I guess the Fairfax guys have done so well recently that they deserve the benefit of doubt. Having been a Fairfax owner since 2011, I do have some ptsd:)

I hear you on the ptsd!  I’ve also owned Fairfax since 2011 or even a bit earlier, though then it was a much smaller holding for me than it is now and I recall rationalizing it to myself as being a hedge given the CPI derivatives they held, to offset the rest of my portfolio which was built presuming that the future would be completely different from Fairfax’s assumptions.

 

BTW, the Vacatia business model is not something I’m tremendously well versed in, and it seems they may also allow for some buying or selling of timeshares as well as just managing the properties and optimizing rental occupancy.  However, even that might represent a bit of an improvement over the practices of the industry which made it quite difficult to dispose of or sell timeshares.  When my in-laws passed away and I served as executor for their estate, no one wanted their timeshare and it was like pulling teeth for me to simply give it back to the company they originally bought it from.  Until I did so, I was on the hook for annual maintenance fees of a bit over $2,000 a year, even though the timeshare was not being used.  That money must have gone to the timeshare company that sold them the points, not to any of the particular resort properties, since no reservations had been made at any resort property.  That might be the part of the business Vacatia is connected to — the resort properties themselves.  If no timeshare owners reserve days of stay at a particular resort, then either no, or at least no significant amount, of the maintenance fees could be expected to be earned by the resort.  Fairfax made loans to Vacatia, secured by the underlying resort properties.  If Vacatia manages the resorts well, and improves vacancies, then they should be able to well afford to pay the interest rates on the loans from Fairfax, which exceed the 5% Fairfax earns on safer government bonds.  There probably is some common equity interest or options for same in Vacatia, but I think the main part of the Fairfax investment was in the form of loans/preferred equity, to help Vacatia pay for their most recent resort acquisitions.

[Viking]

For those who might have missed it when it was initially posted, below is a summary of Fairfax's investment in Blizzard Vacatia.

 

Blizzard Vacatia – Partnering with an Entrepreneur / Boosting Yield of Fixed Income Portfolio

 

August 1, 2025

 

Update from Wade Burton on the investment in Blizzard Vacatia.

 

 It’s early days in the timeshare investment, Berkeley, run by Caroline Shin, but so far, it has exceeded expectations. Berkeley has approximately 125,000 available room nights per month. They started the year at virtually nil occupancy for overnight stays. In month one, Caroline brought that number to 10%, the next month 20%, and the third month 35%. I’m happy to report year to date operating income has already reached our full year expectations. Again, outstanding and capable partners doing an excellent job for Fairfax shareholders. Wade Burton – Fairfax Q2-2025 conference call

 

—————

 

July 30, 2025

 

One of Fairfax’s largest investments in 2025 (January) was the purchase of the Berkley Group, one of the largest independent timeshare companies in the US. With this deal, Fairfax partnered with Caroline Shin and her team at Vacatia. The partnership is called Blizzard Vacatia. This is a private holding that is equity accounted by Fairfax. 

 

Fairfax provided the majority of the financing to acquire the Berkley Group. Vacatia is providing the operational expertise to run and maximize the value creation from the assets of the Berkley Group.  

 

 “Blizzard Vacatia, through its subsidiaries, is engaged in the development, sales, marketing and rental of timeshare resorts.” Fairfax 2024AR

 

Fairfax invested a total of $835 million in Blizzard Vacatia, as follows:

 

 

Fairfax’s investment is structured in an interesting way. It is a combination of debt and equity. The annual interest income is meaningful. And there is additional upside potential with the equity. 

 

Growing the average yield on their fixed income portfolio

 

This investment (along with the acquisition with Kennedy Wilson of the real estate loan portfolio/infrastructure from PacWest) provides a couple of good examples of how Fairfax is over time thoughtfully shifting some of their fixed income portfolio from government bonds to higher yielding corporate securities. This helps improve the average yield on their fixed income portfolio. 

 

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Who is Vacatia?

 

Below is an article that discusses Vacatia’s recent purchases and emerging capabilities. 

 

 Vacatia’s Bold Move: A New Era for Independent Resorts

 

- https://resorttrades.com/vacatias-bold-move-a-new-era-for-independent-resorts/amp/

 

The timeshare industry is undergoing significant change with Vacatia’s acquisition of The Berkley Group and Daily Management, a move that strengthens its position as a key player in the independent resort sector. With the acquisition, Vacatia’s portfolio now includes 460,000 owners, 2,500 associates, and over 11,000 units across 13 states. This means Vacatia is now one of the top five vacation ownership companies in the United States.

 

The acquisition combines Berkley’s expertise in sales, Daily Management’s experience in resort operations, and Vacatia’s technology and rental solutions. Shin sees this integration as a way to provide independent resorts with more flexibility and support.

 

“Independent resorts now have a partner that has every capability of helping an independent resort, large or small,” she says. “We are celebrating the independent resorts, giving them the ability to remain independent, but at the same time leveraging the scale that comes with Vacatia having their back.”

 

One key area where Vacatia sees opportunity is in technology-driven efficiencies, which have historically been more difficult for independent resorts to implement. Shin points to maintenance, housekeeping, reservations, and owner services as examples of areas that can be improved with better digital tools.

 

Who is Caroline Shin, CEO and Co-founder of Vacatia?

 

 Caroline co-founded Vacatia to bring innovation and new ideas to timeshares. As a seasoned technology and hospitality executive, Caroline already pioneered well-known travel programs that are now mainstays in the hospitality industry. She was a member of the founding team of Hotwire.com, where she led product and technology functions to develop one of the first online travel agencies in the world. She led CRM and revenue management for Starwood Hotels & Resorts Worldwide, launching a first-of-its-kind pricing and marketing platform that empowered hotels to make impactful, data-driven decisions. At Sentient Jet, she delivered industry-leading customer service by cultivating deep client relationships combined with algorithmic analysis of each flight plan to forecast service issues before they occur. She was also a technology and strategy consultant at Accenture and Scient, advising both Fortune 500 and startup clients to adapt their business online. Caroline is a member of the Board of Directors of the American Resort Development Association (ARDA) and holds a degree in nuclear engineering from MIT.

- https://www.vacatiapartnerservices.com/blank

 

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On Feb 13, 2025, the Fairfax’s investment in Blizzard Vacatia was discussed on the investing forum ‘Corner of Berkshire and Fairfax.’ Click the link below for more:

• https://thecobf.com/forum/topic/16427-fairfax-stock-positions/page/94/#findComment-601100

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Comments from Wade Burton about Blizzard Vacatia from Fairfax’s Q4-2024 conference call.

 

 Second, I wanted to discuss an investment that closed just after year-end 2024. We invested in the largest independent timeshare company in America called the Berkeley Group. Caroline Shin and her team at Vacatia are Fairfax partners here. The investment is underpinned by asset value, where we directly own 4,950 full-service vacation units mostly located in Las Vegas, Orlando, and other high-traffic vacation areas in the U.S. The opportunity here is for Caroline and her team to generate overnight rental income from the huge stock of nightly vacancies. Her experience designing Hotwire online booking software and then as an executive at Starwood is perfect for what Vacatia is trying to do with Berkeley.

 

In fact, prior to this acquisition, her group at Vacatia made investments in five smaller timeshare assets from 2019 to 2024, and in each case, they were very successful at significantly growing EBITDA in a short period of time. The total deal was $835 million, which we funded with a $275 million five-year preferred note at 13.5%, a $365 million seven-year senior secured note at 9.5%, and $170 million mortgage warehouse loan with a five-year maturity at SOFR plus 400. The $50 million equity is funded 50% by Fairfax and 50% by Caroline and her partners. We are absolutely thrilled to be her partner on this.  Wade Burton – Fairfax Q4-2024 Conference Call

 

Comments from Prem about Blizzard Vacatia from Fairfax’s 2024AR. 

 

 Early in 2025 we invested in the Berkley Group, the largest independent timeshare company in the United States. Caroline Shin and her team at Vacatia are partners with us on this investment. This investment results in us owning 4,950 full-service vacation units mostly located in Las Vegas, Orlando and other high-traffic vacation areas in the U.S. There is great opportunity for Caroline and her team to generate additional overnight rental income from the huge stock of nightly vacancies. In fact, her group at Vacatia made investments in five smaller timeshare assets from 2019 to 2024 and this strategy helped to generate strong growth in EBITDA and free cash flow. Her experience designing Hotwire online booking software and as an executive at Starwood is perfect for what Vacatia is trying to do with Berkley. Our total cash investment was $835 million comprised of a senior secured loan, preferred shares, a mortgage-backed loan and common shares. We are very excited to work together with Caroline and her team at Vacatia on this investment. Prem Watsa – Fairfax 2024AR

 

Edited August 31, 2025 by Viking

[Hoodlum]

Fairfax has increased its ownership of JKH to 24.2%, approaching the 25% threshold which I believe will impact reporting going forward.  Based on the stock hitting a new 12 month low today, they will likely get over 25% this week.   

 

https://www.ft.lk/front-page/Largest-shareholder-Fairfax-picks-up-additional-1-3-JKH-stake-for-Rs-5-2-b/44-781144#

[TwoCitiesCapital]

14 hours ago, Hoodlum said:

Fairfax has increased its ownership of JKH to 24.2%, approaching the 25% threshold which I believe will impact reporting going forward.  Based on the stock hitting a new 12 month low today, they will likely get over 25% this week.   

 

https://www.ft.lk/front-page/Largest-shareholder-Fairfax-picks-up-additional-1-3-JKH-stake-for-Rs-5-2-b/44-781144#

 

A Sri Lankan conglomerate for anybody, like myself, who had never heard of it before. 

 

Involved in hotels, insurance, banking, IT services, food and beverage, and supermarkets business lines. 

 

[Parsad]

1 hour ago, TwoCitiesCapital said:

 

A Sri Lankan conglomerate for anybody, like myself, who had never heard of it before. 

 

Involved in hotels, insurance, banking, IT services, food and beverage, and supermarkets business lines. 

 

 

It pretty much is one of Sri Lanka's most dominant conglomerates...has its hands in everything!  Literally everything!  Cheers!

[SafetyinNumbers]

Looks like Fairfax sold some Metlen 

 

https://www.athexgroup.gr/sites/default/files/hermes_3/2025-09/el/c8d604f8-a1f1-4fe5-9604-f8a1f1cfe5be/1528_6356_2025_Greek_English_1.pdf

[Hoodlum]

17 minutes ago, SafetyinNumbers said:

Looks like Fairfax sold some Metlen 

 

https://www.athexgroup.gr/sites/default/files/hermes_3/2025-09/el/c8d604f8-a1f1-4fe5-9604-f8a1f1cfe5be/1528_6356_2025_Greek_English_1.pdf

it looks the increase and then decrease percentage ownership was related to the squeeze out of shares when they transitioned to the LSE.  This was completed on 8/29.  

 

https://www.metlengroup.com/news/trading-announcements/corporate-actions/listing-and-admission-to-trading-of-new-shares-of-the-company-on-the-main-market-of-the-london-stock-exchange-the-lse-and-on-the-regulated-securities-market-of-the-athens-exchange-the-athex/

 

 

[Hoodlum]

Agnico Eagle sold their 11.2% interest in Orla Mining to investors at $10.70US on Tuesday.   This should provide a floor for Orla's share price and helps to provide greater liquidity.  This also provides confidence that Fairfax could easily sell their interest in Orla when the time comes.   Gold set new highs above $3600US this week.

[Hoodlum]

ORLA hit a new high today. Gold seems to have broken through its ceiling. I have no idea of how high the gold price could go.  

[SafetyinNumbers]

KW doing an interesting transaction with help with some friends which I assume includes Fairfax. Hopefully adding some higher yielding fixed income to the portfolio.

 

https://www.businesswire.com/news/home/20250918957991/en/Kennedy-Wilson-to-Acquire-Toll-Brothers-Apartment-Living-Platform-for-%24347-Million-Adding-Over-%245-Billion-of-Assets-Under-Management

[glider3834]

On 9/18/2025 at 9:57 PM, SafetyinNumbers said:

KW doing an interesting transaction with help with some friends which I assume includes Fairfax. Hopefully adding some higher yielding fixed income to the portfolio.

 

https://www.businesswire.com/news/home/20250918957991/en/Kennedy-Wilson-to-Acquire-Toll-Brothers-Apartment-Living-Platform-for-%24347-Million-Adding-Over-%245-Billion-of-Assets-Under-Management

Yes I was wondering same (see 2nd last para below)-  at a high level it looks to be accretive for KW & strategically aligned with KW growing their asset management business/fees

 

 

 

 

 

 

 

 

 

[petec]

On 9/18/2025 at 6:57 AM, SafetyinNumbers said:

KW doing an interesting transaction with help with some friends which I assume includes Fairfax. Hopefully adding some higher yielding fixed income to the portfolio.

 

https://www.businesswire.com/news/home/20250918957991/en/Kennedy-Wilson-to-Acquire-Toll-Brothers-Apartment-Living-Platform-for-%24347-Million-Adding-Over-%245-Billion-of-Assets-Under-Management

 

$347m deal with KW funding ~$90m and partners the rest.

 

This is equity, and KW's share of the complete or near-complete assets drops from 37% to 5-10% as part of the deal. In other words what the partners are buying is 27-32% of the equity in these assets for ~$257m. The partners get a better deal on these assets because KW is also getting the development pipeline and team.

 

If there is a fixed income opportunity it is likely later as the completed assets get refinanced, and as the development pipeline needs to be financed.

[Hoodlum]

I guess this is how Seaspan planned to get around the US port fees.  
 

https://www.linkedin.com/posts/shippingwatch-com_seaspan-relocates-hq-to-singapore-and-reflags-activity-7376158212548632577-NkwB

 

Seaspan Corporation moves its HQ from Hong Kong to Singapore to sidestep the upcoming US port fees, sources confirm to ShippingWatch. The shipowner, a top lessor of vessels to the container majors, will also move around 100 ships to the Singapore register, the sources say

[dartmonkey]

54 minutes ago, petec said:

 

$347m deal with KW funding ~$90m and partners the rest.

 

This is equity, and KW's share of the complete or near-complete assets drops from 37% to 5-10% as part of the deal. In other words what the partners are buying is 27-32% of the equity in these assets for ~$257m. The partners get a better deal on these assets because KW is also getting the development pipeline and team.

 

If there is a fixed income opportunity it is likely later as the completed assets get refinanced, and as the development pipeline needs to be financed.

Dixit KW in its 2024 annual report: " Our biggest partner over the last 15 years has been Fairfax Financial." But given the fact that there has been no announcement on Fairfax's side, I am presuming that one of these KW partners is not Fairfax this time.

 

Still good for Fairfax, though, since Fairfax has a 10% stake in KW itself (worth about $120m) plus preferred stock.