Fairfax stock positions

[dartmonkey]

53 minutes ago, roundball100 said:

What would be the best approach to accounting for the float?

 

As long as you believe the float is permanent, its value is already included in the stocks and bonds valued in step 1. Typically, Fairfax is constrained as to how it has to invest the float, and it is all in the bond portfolio, while Fairfax's own equity is largely invested in stocks and in operating businesses (Poseidon, Sleep Country, Recipe, etc.). Float was $36.9b at the end of 2024, with equity at $23.0b, so the question of whether you count 100% of float as assets which effectively belong to Fairfax, as I do, or some lesser percentage, makes a pretty big difference. 

[roundball100]

19 hours ago, dartmonkey said:

 

As long as you believe the float is permanent, its value is already included in the stocks and bonds valued in step 1. Typically, Fairfax is constrained as to how it has to invest the float, and it is all in the bond portfolio, while Fairfax's own equity is largely invested in stocks and in operating businesses (Poseidon, Sleep Country, Recipe, etc.). Float was $36.9b at the end of 2024, with equity at $23.0b, so the question of whether you count 100% of float as assets which effectively belong to Fairfax, as I do, or some lesser percentage, makes a pretty big difference. 

Yes, that's the issue that I was getting at.  To be more precise, the question is whether you consider the entire float an asset, and your clarification is that you prefer to treat 100% as an asset.  (That's one choice; but over the long-term we expect most of the float to be paid out, albeit replenished by new float).  Would it be better to treat is as a perpetual 0% interest-rate loan (conservatively estimating a combined ratio of 100%, which we now do better than)? That would seem another reasonable choice, as the value of the float (prinicipal) is not really an asset but a loan.  If you wound up the business we'd have to return float (via runoff of equivalent); if the company continues forever, in essence it's an asset that produces annual returns (loss in bad years possible).  In either case it helps to be explicit in order to come up with some rough estimate of intrinsic value - lest implicit assumptions are interpreted differently by different individuals trying to understand your model.  So I now understand that you prefer to treat 100% of the float as an asset.     

 

Not trying to be critical here, just looking to understand/clarify your intended model.

[MMM20]

On 1/1/2026 at 1:31 PM, roundball100 said:

Yes, that's the issue that I was getting at.  To be more precise, the question is whether you consider the entire float an asset, and your clarification is that you prefer to treat 100% as an asset.  (That's one choice; but over the long-term we expect most of the float to be paid out, albeit replenished by new float).  Would it be better to treat is as a perpetual 0% interest-rate loan (conservatively estimating a combined ratio of 100%, which we now do better than)? That would seem another reasonable choice, as the value of the float (prinicipal) is not really an asset but a loan.  If you wound up the business we'd have to return float (via runoff of equivalent); if the company continues forever, in essence it's an asset that produces annual returns (loss in bad years possible).  In either case it helps to be explicit in order to come up with some rough estimate of intrinsic value - lest implicit assumptions are interpreted differently by different individuals trying to understand your model.  So I now understand that you prefer to treat 100% of the float as an asset.     

 

Not trying to be critical here, just looking to understand/clarify your intended model.

Instead of a loan at ~6-8%, it’s a loan at ~0%… or maybe even -5%, in which case it’s obviously an asset, right? Imagine if you got a 5% mortgage to buy a house, but the bank paid you the 5% interest. You’d still account for it as a liability on your balance sheet… but is that really right?

 

Edited January 3 by MMM20

[SafetyinNumbers]

6 hours ago, roundball100 said:

Yes, that's the issue that I was getting at.  To be more precise, the question is whether you consider the entire float an asset, and your clarification is that you prefer to treat 100% as an asset.  (That's one choice; but over the long-term we expect most of the float to be paid out, albeit replenished by new float).  Would it be better to treat is as a perpetual 0% interest-rate loan (conservatively estimating a combined ratio of 100%, which we now do better than)? That would seem another reasonable choice, as the value of the float (prinicipal) is not really an asset but a loan.  If you wound up the business we'd have to return float (via runoff of equivalent); if the company continues forever, in essence it's an asset that produces annual returns (loss in bad years possible).  In either case it helps to be explicit in order to come up with some rough estimate of intrinsic value - lest implicit assumptions are interpreted differently by different individuals trying to understand your model.  So I now understand that you prefer to treat 100% of the float as an asset.     

 

Not trying to be critical here, just looking to understand/clarify your intended model.

Framing the float as an asset for a well run insurance business like Fairfax has was discussed by Buffett in the 1996 AGM. BV + float is a good way to measure intrinsic value.
 

 

 

[dartmonkey]

38 minutes ago, SafetyinNumbers said:

Framing the float as an asset for a well run insurance business like Fairfax has was discussed by Buffett in the 1996 AGM. BV + float is a good way to measure intrinsic value.

It’s worth pointing out that if you take Fairfax’s BV + float, you get $60b at the end of 2024, compared to its market value of $30b. Market cap is now $42b, a bit closer, but BV + float is up too. 

 

Buffett didn’t really answer the question as to how much the float was worth, because he just said he wouldn’t accept an offer to buy the insurance businesses for the same number of dollars as the float. Because the insurance businesses have always made substantial underwriting gains, in addition to the return on the invested float, this is a low bar. 

 

The way I see it, the insurance businesses have two components of value : the growing underwriting earnings (4-5% of premiums, in an average year) plus the stream of earnings from having the float invested in fixed income investments (mostly treasuries.) It is true that the float does not belong to Fairfax, but in my opinion, that does not lessen its value, as long as you think it is quasi-permanent (or even, growing.) And you could say the same thing about the underwriting- it is only worth a multiple like 15x as long as it is not going away in a few years. Since I think this is a tiny risk, I would assign 100% value to both of these earnings streams. 

[SafetyinNumbers]

38 minutes ago, dartmonkey said:

Buffett didn’t really answer the question as to how much the float was worth, because he just said he wouldn’t accept an offer to buy the insurance businesses for the same number of dollars as the float

This implies it’s worth more than its dollar value as an asset because float with a quality insurance business attached is always growing. A growing revolving liability that in theory (and practice) may never have to be paid back is better than the asset itself. The risk is mitigated by the culture. 
 

Framed another way given the history of reserve redundancy, arguably over the fullness of time float will eventually become equity albeit after taxes. 

[sholland]

more on float being worth more then equity:

[ValueNation]

56 minutes ago, SafetyinNumbers said:

Framed another way given the history of reserve redundancy, arguably over the fullness of time float will eventually become equity albeit after taxes.

 

Very interesting way to frame it - had never thought of it like this, but this does make sense. I suppose the time frame and average CR over time would determine this, and it is probably something you can actually calculate given some input assumptions.

[Hoodlum]

On 12/31/2025 at 10:26 AM, Hoodlum said:

 

Based on the latest Form 4, Fairfax now owns 38.2M share (~$190M) 

 

https://www.sec.gov/Archives/edgar/data/915191/000094787125001099/xslF345X05/ownership.xml

Fairfax continues to acquire UAA shares, including the latest on 11/30 that was above $5/share.  They now own 51.5M shares (12% of outstanding) with market value of $272M. 

 

https://www.sec.gov/Archives/edgar/data/915191/000094787126000006/xslF345X05/ownership.xml

[Hoodlum]

On 12/19/2025 at 1:31 PM, dochood said:

I think it's 9% of the "A" shares, around 4% overall.  

 

It's also interesting that BDT owns 65 million "C" shares (non-voting) since 2023.  Roughly 15% economic interest.  Perhaps BDT shared some insights about UAA with Fairfax.

 

I noticed from Fairfax's 2024 newsletter that Fairfax had $729M invested with BDT.   I wonder if Fairfax indirectly owns additional UAA shares through BDT as well.  With CEO Kevin Plank owning ~12% of shares (but still >50% voting control), both BDT (15%) and Fairfax (12% and increasing) are providing a vote of confidence in his direction for UA.  I wonder if they are considering taking UA private.   

 

 

Edited January 3 by Hoodlum

[Hamburg Investor]

On 1/2/2026 at 3:33 AM, SafetyinNumbers said:

This implies it’s worth more than its dollar value as an asset because float with a quality insurance business attached is always growing. A growing revolving liability that in theory (and practice) may never have to be paid back is better than the asset itself. The risk is mitigated by the culture. 

But how much more is float worth?

I haven't found a good formula for that question yet, it's more like a rough idea, but I still find float fluid and difficult to grasp. My thoughts:

1. In my view, an insurance company with consistently free float (combined ratio: 100) and no growth is likely to be worth less than the same amount of equity. The reason is that, in practice, float is invested entirely in bonds. It will therefore only achieve bond-typical returns, i.e. below equity.

2. The float of an insurer with a negative combined ratio but no further float growth is worth exactly as much as equity if the total return from bond returns and profits from the insurance business over the years generates equity-like returns. To put it simply, a 4% bond yield and a combined ratio of 94% (i.e. a 6% yield) result in a total return of 10%, which I would consider to be equity-like. Such float would therefore possibly be just as valuable as the same amount of equity.

3. If the float also grows, it is worth more than the same amount of equity. But how much more exactly? Certainly more if growth is strong and less if it is weak. Price leadership, as in the case of Geico, has historically often led to particularly strong growth. Can annual growth simply be added to the return? So 4% bond yield plus 6% profit from the insurance business plus 5% growth/year, i.e. 15% total return overall? Of course, all of this is always intended as an average value (CAGR) over many years.


But: Float and inflation make it more complex (I)

But float and insurance business have a special relationship with inflation. It is said that, ideally, float grows at least in line with inflation. After all, every insurer will strive to pass on the inflation of insured items directly to its customers. The fact that this is possible is interesting and actually rather atypical for equities and other sectors. Most companies cannot simply raise their prices in line with inflation; only those with a moat – and well-managed insurance companies. 
 

But that's not all about Float and inflation - it gets even more complex (II)
When inflation rises, bond yields also rise. Insurers therefore benefit twice when inflation is high or rising: the float grows more strongly AND yields grow. Low inflation, on the other hand, leads to low float growth and low yields (which was clearly evident a few years ago). While most sectors (and the economy as a whole) benefit from low inflation of around 2%, insurers grow when inflation is high and benefit from the resulting rise in bond yields plus float growth (which was also clearly evident a few years ago). 
 

Sorry, but there's even more to float and inflation (III)
And it gets even more complex: Berkshire, Markel and Fairfax all invest according to value principles. In other words, they prefer to invest when markets are undervalued. This is typically the case when inflation is high and bond yields ("risk-free interest rates") are also high. And what typically happens to the stock markets when risk-free interest rates rise? That's right: valuations within stock markets come under pressure. If I can earn 6% interest on my money without risk, then a company with a PE ratio of 40 looks extremely expensive. Ideally, this causes stock valuations to fall. Insurance companies therefore generate large amounts of cash precisely when the "risk-free interest rate" rises, stocks potentially fall and buying opportunities for value investors arise. So from the perspective of a value investor this anti cyclical behavior of insurance business matches exactly their investment principle: Buy low. How do you value that?
 

So, bottom line: What is that float worth (especially in the hands of a value investor)? Buffett says his insurance business is worth more than the respective float. But how much more? 110% or 120% seems too little to me (otherwise Buffett would surely not have been so explicit). Perhaps 130% or even 150% - or even more?

I don't know, but maybe valuing "high quality float" like FFHs with 130% of float shouldn't be completely off the mark, from Buffets words alone. What do you think?

Two additional general thoughts:
1. Berkshire and Buffett would never have been so successful without the "discovery of float". He is a brilliant stock picker, but so have others been (albeit few as good, which is very obvious in Buffett's early years). What is unique is that he discovered the value of float, consistently used it and made it known. Shelby Davis probably understood it too, but hardly anyone knows him.
2.  "Float plus equity investment plus value investing" remains Buffett's legacy as a formula for high returns. This is demonstrated by Berkshire, Markel and Fairfax. These three are by no means the same, but they are related. It is no coincidence that these three are among the best performers on the stock market over 40 years (MKL, FFH) and 60 years (BRK) respectively. Berkshire might be Number 1 of all stocks since Buffet took over, FFH is number 8 since it started and Markel clearly must be amon the top 1%. That speaks a language. So maybe the value of float is even much higher, than I anticipate. One reason might be, that the earnings from no cost float are not equity related. Think about that for a moment. So BRK, MKL, FFH all get extra returns from a machine (think: float), that claims zero equity and that no other business has. That clearly pushes ROE. And - as Munger said: Over the very longterm you get the ROE of any investment as your return.

Edited January 4 by Hamburg Investor

[gfp]

1 hour ago, Hamburg Investor said:

To put it simply, a 4% bond yield and a combined ratio of 94% (i.e. a 6% yield) result in a total return of 10%

just a quick comment on this line of thinking - the combined ratio is calculated on earned premium. It does not invert to a return on float. Earned premium can be close to the amount of float but they aren’t the same. Offhand I think they are at least $10B apart at FFH

[Munger_Disciple]

52 minutes ago, gfp said:

just a quick comment on this line of thinking - the combined ratio is calculated on earned premium. It does not invert to a return on float. Earned premium can be close to the amount of float but they aren’t the same. Offhand I think they are at least $10B apart at FFH

 

And there are pesky taxes to worry about as well. 

[SafetyinNumbers]

21 minutes ago, Munger_Disciple said:

 

And there are pesky taxes to worry about as well. 

I don’t think there is much benefit to get very granular on the subject. Float provides leverage that grows and provides a return if the combined ratio is below 100. I think if one can buy Fairfax at a big discount to book value + float that provides margin of safety. I’m not looking to sell if the discount closes unless my forecast for forward ROE goes below 10%. 

[Viking]

Here is how Buffett frames float for Berkshire Hathaway shareholders in the 1998AR:

 

“With the acquisition of General Re — and with GEICO’s business mushrooming — it becomes more important than ever that you understand how to evaluate an insurance company. The key determinants are:

1. the amount of float that the business generates; 
2. its cost; and
3. most important of all, the long-term outlook for both of these factors.”

Warren Buffett – Berkshire Hathaway 1998AR

—————

 

This is very important for Fairfax shareholders today. Why? Fairfax has been aggressively growing its insurance business over the past 10 years. First with acquisitions. And more recently by capitalizing on the hard market. 
 

As a result, the amount of float has spiked higher. Companywide underwriting has structurally improved (lower cost). And the long-term outlook for both is positive. 
 

The core engine for Fairfax has never been stronger or better positioned than it is today. 

Edited January 4 by Viking

[Hamburg Investor]

11 hours ago, gfp said:

just a quick comment on this line of thinking - the combined ratio is calculated on earned premium. It does not invert to a return on float. Earned premium can be close to the amount of float but they aren’t the same. Offhand I think they are at least $10B apart at FFH

You are right and I am wrong. Can we assume that premiums account for around 70% of the float on average over many years? If the ratio is reasonably stable, then a factor could be incorporated. Thank you for your comment!

[Hamburg Investor]

10 hours ago, Munger_Disciple said:

 

And there are pesky taxes to worry about as well. 

You are right and I am wrong. 10% pretax ROE is not really helpful. I am not accountant... Thank you!

[Hamburg Investor]

8 hours ago, Viking said:

The core engine for Fairfax has never been stronger or better positioned than it is today. 

Absolutely! Which can be seen in the (unorthodox) graphic attached. The red dotted line wents down when Fairfax was less profitable than US P&C Insurance Companies in aggregate. And up when Fairfax was better. It paints a pretty clear picture. It goes up by one, if Fairfax CR is better 1% in a given year.

In aggregate, Fairfax went up since 2011 until 2024 from minus 30 to plus 20, so 50 points in 13 years or nearly 4 points per year. Better than that, in the 7 years before 2011, FFH lost 28 points in aggregate or 4 points per year.

That's an improvement of Fairfax combined ratio of 8 percent points pre 2011 versus after 2011 (if you include 2001 to 2004, than it's more like 6 1/2 points; that would include 911, which might be seen as a little random).

All this only, if you are willing to define the P&C US as "the market". Which one could discuss of course, but to me it felt like the best available comparison.

[UK]

1 hour ago, Hamburg Investor said:

Absolutely! Which can be seen in the (unorthodox) graphic attached. The red dotted line wents down when Fairfax was less profitable than US P&C Insurance Companies in aggregate. And up when Fairfax was better. It paints a pretty clear picture. It goes up by one, if Fairfax CR is better 1% in a given year.

In aggregate, Fairfax went up since 2011 until 2024 from minus 30 to plus 20, so 50 points in 13 years or nearly 4 points per year. Better than that, in the 7 years before 2011, FFH lost 28 points in aggregate or 4 points per year.

That's an improvement of Fairfax combined ratio of 8 percent points pre 2011 versus after 2011 (if you include 2001 to 2004, than it's more like 6 1/2 points; that would include 911, which might be seen as a little random).

All this only, if you are willing to define the P&C US as "the market". Which one could discuss of course, but to me it felt like the best available comparison.

Nice chart! Where is it from?

[bluedevil]

9 hours ago, Viking said:

Here is how Buffett frames float for Berkshire Hathaway shareholders in the 1998AR:

 

“With the acquisition of General Re — and with GEICO’s business mushrooming — it becomes more important than ever that you understand how to evaluate an insurance company. The key determinants are:

1. the amount of float that the business generates; 
2. its cost; and
3. most important of all, the long-term outlook for both of these factors.”

Warren Buffett – Berkshire Hathaway 1998AR

—————

 

 

Yeah, to me the best part of Fairfax as an investment right now is the long-term outlook for Fairfax's insurance operations.

 

The current machine -- which is really more like 250 different, independent businesses operating across the entire world -- has not been together for THAT long.  The most indicative results are likely what we have seen over the last five years, for 2 reasons.  First, many of the businesses -- such as a Crum & Forster and Brit -- were in long, long periods of being brought up to the Fairfax standard.  I think all of the big businesses are there now.  Second, the full impact of Andy Barnard's work probably has been felt after 2021 or so, when he'd been in the seat for a decade.

 

When you look at the results over the last five years on the underwriting side, the results have been astonishing.  Consistently profitable underwriting (even accounting for catastrophes), rock-solid reserving, AND huge organic growth.

 

Looking forward, they have 250 pretty independent businesses ("profit centers") spread across the world, empowered to independently pounce on opportunities.  It is a terrific setup for the future.  Obviously, much will depend on the softness or hardness of the market, but over time I think the odds are good that these companies will continue to create extraordinary growth in the amount of Fairfax's float, while maintaining something like 95% CRs. 

 

[Hamburg Investor]

51 minutes ago, UK said:

Nice chart! Where is it from?

Thanks; Perplexity helped me with this. I was researching the numbers myself and took some time to find the aggregate P&C US numbers.

I was looking for an easy graph about the evolution of quality of FFH insurance business.

 

BTW: The small drop in the years following 2016 represents the time when Prem bought a lot of insurance companies. I think those are the reason for falling back to a more „normal“ (instead of a superior) combined ratio.

 

 

[SafetyinNumbers]

2 hours ago, Hamburg Investor said:

Thanks; Perplexity helped me with this. I was researching the numbers myself and took some time to find the aggregate P&C US numbers.

I was looking for an easy graph about the evolution of quality of FFH insurance business.

 

BTW: The small drop in the years following 2016 represents the time when Prem bought a lot of insurance companies. I think those are the reason for falling back to a more „normal“ (instead of a superior) combined ratio.

 

 

I think they tend to stack reserves as much as possible period but especially after they do an acquisition. It’s interesting how the response from market participants is that they made another bad acquisition because the combined ratios jump after buying something as opposed to them choosing to increase reserves to defer income (and taxes).

[Txvestor]

https://www.bloomberg.com/news/articles/2026-01-05/under-armour-surges-after-fairfax-financial-discloses-22-stake
 

So we are at 22% now? I'm not clear on the rationale here. It has a horrible chart, and seems more like dumpster diving than quality. What turns it around? 

Other than maybe trying to combine with Sporting life/Golf town, I don't see any synergies here either. 

Edited January 6 by Txvestor

[Hoodlum]

31 minutes ago, Txvestor said:

https://www.bloomberg.com/news/articles/2026-01-05/under-armour-surges-after-fairfax-financial-discloses-22-stake
 

So we are at 22% now? I'm not clear on the rationale here. It has a horrible chart, and seems more like dumpster diving than quality. What turns it around? 

Other than maybe trying to combine with Sporting life/Golf town, I don't see any synergies here either. 

That 22% is for the A shares.  They are just reporting on what Fairfax reported over the weekend. I am sure that Fairfax sees value here.  We may find out more on the next conference call. 

[treasurehunt]

14 minutes ago, Txvestor said:

https://www.bloomberg.com/news/articles/2026-01-05/under-armour-surges-after-fairfax-financial-discloses-22-stake
 

So we are at 22% now? I'm not clear on the rationale here. It has a horrible chart, and seems more like dumpster diving than quality. What turns it around? 

Other than maybe trying to combine with Sporting life/Golf town, I don't see any synergies here either. 

 

I think it's 22% of the Class A shares, which works out to 42 million shares or so. We already know that Fairfax owns more than that (51.5 million, according to post by @Hoodlum on Saturday).