Fairfax stock positions

[petec]

On 3/9/2026 at 4:32 PM, Viking said:

AGT is important. Is it an example of 'old Fairfax'? Where minority shareholders lose a bundle? Or does it become an example of 'new Fairfax'?

 

The irony is that Fairfax invested in AGT and Seaspan about 6 months apart. The reality is that one of these investments worked beautifully and the other did not. It has nothing to do with old vs. new Fairfax - these are both "old Fairfax" investments.

 

Not every investment works. Simple as that. And we must be wary of survivorship bias: we cannot look at the good investments as evidence of a "new Fairfax" and dismiss the bad ones as symbolic of "old Fairfax". 

 

I seem to recall Prem aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds. I am not convinced we should change our future expectations in that regard. 

 

 

 

 

Edited March 19 by petec

[SafetyinNumbers]

20 minutes ago, petec said:

I seem to recall Prem aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds. I am not convinced we should change our future expectations in that regard. 

Expected Value investing in a nutshell. I do think they are moving up the quality curve though. 

[dartmonkey]

38 minutes ago, petec said:

Not every investment works. Simple as that. And we must be wary of survivorship bias: we cannot look at the good investments as evidence of a "new Fairfax" and dismiss the old ones as symbolic of "old Fairfax". 

 

I seem to recall Prem aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds. I am not convinced we should change our future expectations in that regard. 

 

I think this is a good point, and it illustrates how we will go astray if we look at, say, the 10 biggest Fairfax investments today and how they have done (survivorship bias), vs looking at the 10 biggest Fairfax investment 10 years ago and seeing how they have done going forward. 

[petec]

9 minutes ago, SafetyinNumbers said:

Expected Value investing in a nutshell. I do think they are moving up the quality curve though. 

 

It does feel like that. And partly that's simply a factor of scale: they can now buy bigger things, and as a very general rule for a business to have got big it has to have some quality about it.

 

However, going through some big recent capital deployments with a quality lens and a devil's advocate mindset: 

• Kennedy Wilson. I love this investment but most people don't seem to understand why Fairfax bought it, and it is levered to the nines.
• Blizzard Vacatia: again I love this one, but it's essentially some asset-backed debt and an equity option on management.
• Sleep Country. Sells mattresses. Yay. 
• Recipe: COBF consensus seems to be this is a collection of fairly substandard restaurants.
• Foran and Orla: speculative mining investments.
• Under Armour: I've lost count of the number of apparel retailers I've seen fly for a couple of decades and then die. Very hard to carve out an enduring moat in this industry.

Are these really all that different from the Stelco and Seaspan era investments that the board disliked for lack of quality? 

[dartmonkey]

On 3/10/2026 at 4:55 PM, Viking said:

Shareholders got out of bed this morning to discover that they had been given a $1.1B gift. Fairfax sold ~50% of their position in Poseidon/Seaspan.

• In Q2 $FFH.TO will book ~$866M gain.
• Excess of FV over CV will increase to ~$824M (from ~$600M at Dec 31).

Outstanding! Who says: "you can't have your cake and eat it (too)"?

 

I never understood this expression, "you can't have your cake and eat it too", because of course you can have your cake and then eat it. What you can't do is eat it, and then still have it. So the original English expression,  "you can't eat your cake and have it too*" makes more sense than the inverted North American one that I and probably most of us grew up with.

 

In Fairfax's case, of course, you can eat half your cake and keep the other half, with no contradiction, and that seems like a great compromise. They accomodate their investing partners that wanted more that wanted more shares, while taking some money off the table which will be useful for buybacks (Safety will probably correct me and say that most of it willl stay in the subsidiaries; Gemini tells me that "The holding is primarily managed through Fairfax's investment affiliates"; but I guess some of this could be dividended up to the holding company...) But at the same time, they keep some cake for later by keeping a big share in a company that is performing well...

 

=======

 

Interersting fact: The Unabomber was in part caught because his brother David, who read his manifesto, recognized what he thought was "a weird version of the common idiom 'you can’t have your cake and eat it too!'—both Ted Kaczynski and the Unabomber inverted it into 'you can’t eat your cake and have it too.' In fact, the Unabomber was just using the more logical, original version of the expression, but this was unusual enough for an American for David to suspect that the Unabomber was his brother Ted.

[TwoCitiesCapital]

1 hour ago, petec said:

 

The irony is that Fairfax invested in AGT and Seaspan about 6 months apart. The reality is that one of these investments worked beautifully and the other did not. It has nothing to do with old vs. new Fairfax - these are both "old Fairfax" investments.

 

Not every investment works. Simple as that. And we must be wary of survivorship bias: we cannot look at the good investments as evidence of a "new Fairfax" and dismiss the bad ones as symbolic of "old Fairfax". 

 

I seem to recall Prem aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds. I am not convinced we should change our future expectations in that regard. 

 

 

+1

 

People hated StelCo when it was made. Turned out wonderfully. And then they held onto the CLF shares which have not. 

 

Eurobank? A goddamn disaster before it became a home run with the massive 'doubling down' done at a recap that resulted in a 90+% loss on the origin basis. 

 

And don't get me wrong. I was personally in Eurobank - both before and after - and was in StelCo and held CLF. This isn't a critique of Prem. 

 

Is just to say I'm not going around telling everyone about a new investment approach. There is no old/new framework IMO. 

 

The only difference today are rates/inflation (has favored value investments) and no shorting (which has been huge). Not that their fundamental style changed or that they have a new approach. 

Edited March 19 by TwoCitiesCapital

[Viking]

7 hours ago, petec said:

 

The irony is that Fairfax invested in AGT and Seaspan about 6 months apart. The reality is that one of these investments worked beautifully and the other did not. It has nothing to do with old vs. new Fairfax - these are both "old Fairfax" investments.

 

Not every investment works. Simple as that. And we must be wary of survivorship bias: we cannot look at the good investments as evidence of a "new Fairfax" and dismiss the bad ones as symbolic of "old Fairfax". 

 

I seem to recall Prem aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds. I am not convinced we should change our future expectations in that regard. 

The original investment in AGT ($150M) was made in July 2017. The driver of this investment was a guy named Paul Rivette. 
 

Three things stand out with this investment:

• Very dynamic founder (magnetic personality)
• Terrible balance sheet
• Terrible business (commodity business - no moat and highly volatile). 

After Fairfax’s initial purchase in 2017 the business results got worse. To the point it had to be taken private (requiring Fairfax to invest another $220M in April 2019 to stop the bleeding).  
 

How has the business performed over the past 7 years? 

 

It still looks like a pretty tough business - just look at how the IPO went and where the stock is trading today. 
 

What we do know about Fairfax is they do not walk away from investments… even when they probably should (no idea why this is). Farmers Edge and Boat Rocker (also from the 2014 to 2017 vintage) are still costing Fairfax $. 
 

My view is Seaspan was the first ‘new Fairfax’ investment.

• Sokol was a proven operator (not just a good talker)
• Fairfax’s investment was focussed on fixing the balance sheet of the company
• Sokol’s vision was to transition Seaspan from a container shipper to a finance company (largely eliminate the volatility of the business).

AGT and Seaspan are great examples of old Fairfax and new Fairfax. Now 2017 to 2019 was a transition. I think Fairfax probably knew in 2016 or 2017 they needed to make some changes to their investment framework. So the shift was gradual over a couple of years. 
 

Fast forward to today… when was the last time they made a terrible investment? Their hit rate went from less than 30% (pre 2018) to over 90% (post 2018 and later). 
 

That might be a fluke. Or because the macro gods smiled on them. I don’t think it is primarily either of those - I think it is because they implemented a better framework:

• Premium on strong management (not just good talkers)
• Strong balance sheet
• Profitable operations (minimizing mom/dads need to bail kid out when they mess up financially)

And now that they see how well the new investment framework works - they are likely institutionalizing it. 

Edited March 19 by Viking

[bearprowler6]

Viking,

 

We all admire your analysis and your unwavering belief in the so-called "new' Fairfax however respectively nothing has changed. Fairfax was fortunate to benefit from the hard market of the last few years as well as a more normal interest rate environment. The TRS on their own shares was very creative however not without considerable risk which has been discussed previously. Their inability to walk away from a position despite all the evidence indicating they should remains troublesome  (e.g., Farmers Edge, Boat Rocker and Blackberry). It is often cited on this board that these investments are no longer material and therefore should no longer be factored into an analysis of Fairfax today. I disagree with this way of thinking since these investments even though they are worth a fraction of what was invested still require the same management oversight and represent lost opportunity costs versus selling these positions redeploying the capital into more promising opportunities. Furthermore, the core of the investment management team are all mid-70s+. Sure they have a reasonable bench of investment professional developing behind the core team however it is not simply a case of an old guy retires and a young buck takes over. Does anyone really believe that another Brian Bradstreet is waiting in the wings? Long time investors have benefited greatly from the upward movement in the share price over last several years and we are grateful however to suggest that Fairfax is a leopard that has truly changed its spots is a stretch at best. I caution any new investor to Fairfax to avoid following your analysis blindly and instead to do their own analysis of Fairfax when determining whether to buy, hold or sell their shares.

 

BP6

[SafetyinNumbers]

2 minutes ago, bearprowler6 said:

Viking,

 

We all admire your analysis and your unwavering belief in the so-called "new' Fairfax however respectively nothing has changed. Fairfax was fortunate to benefit from the hard market of the last few years as well as a more normal interest rate environment. The TRS on their own shares was very creative however not without considerable risk which has been discussed previously. Their inability to walk away from a position despite all the evidence indicating they should remains troublesome  (e.g., Farmers Edge, Boat Rocker and Blackberry). It is often cited on this board that these investments are no longer material and therefore should no longer be factored into an analysis of Fairfax today. I disagree with this way of thinking since these investments even though they are worth a fraction of what was invested still require the same management oversight and represent lost opportunity costs versus selling these positions redeploying the capital into more promising opportunities. Furthermore, the core of the investment management team are all mid-70s+. Sure they have a reasonable bench of investment professional developing behind the core team however it is not simply a case of an old guy retires and a young buck takes over. Does anyone really believe that another Brian Bradstreet is waiting in the wings? Long time investors have benefited greatly from the upward movement in the share price over last several years and we are grateful however to suggest that Fairfax is a leopard that has truly changed its spots is a stretch at best. I caution any new investor to Fairfax to avoid following your analysis blindly and instead to do their own analysis of Fairfax when determining whether to buy, hold or sell their shares.

 

BP6

This perspective is really helpful for buybacks. Much appreciated!

[Hamburg Investor]

39 minutes ago, bearprowler6 said:

Viking,

 

We all admire your analysis and your unwavering belief in the so-called "new' Fairfax however respectively nothing has changed. Fairfax was fortunate to benefit from the hard market of the last few years as well as a more normal interest rate environment. The TRS on their own shares was very creative however not without considerable risk which has been discussed previously. Their inability to walk away from a position despite all the evidence indicating they should remains troublesome  (e.g., Farmers Edge, Boat Rocker and Blackberry). It is often cited on this board that these investments are no longer material and therefore should no longer be factored into an analysis of Fairfax today. I disagree with this way of thinking since these investments even though they are worth a fraction of what was invested still require the same management oversight and represent lost opportunity costs versus selling these positions redeploying the capital into more promising opportunities. Furthermore, the core of the investment management team are all mid-70s+. Sure they have a reasonable bench of investment professional developing behind the core team however it is not simply a case of an old guy retires and a young buck takes over. Does anyone really believe that another Brian Bradstreet is waiting in the wings? Long time investors have benefited greatly from the upward movement in the share price over last several years and we are grateful however to suggest that Fairfax is a leopard that has truly changed its spots is a stretch at best. I caution any new investor to Fairfax to avoid following your analysis blindly and instead to do their own analysis of Fairfax when determining whether to buy, hold or sell their shares.

 

BP6

 

 

 

1 hour ago, SafetyinNumbers said:

This perspective is really helpful for buybacks. Much appreciated!

 

That reminds me of another stock. A textile business in the 1960ies. I haven’t bought for similar reasons (apart from I wasn’t born yet).
 

The whole story of the guy buying the busibess was fun in itself:

 

First the guy bought it becoming emotional (it was a dispute with the than owner about 1/4 dollar per share or so; I don’t tell the story to you, you won’t believe it!)
 

Second, it got even better: The guy sticked to textile over 20 years, even though it was clear that business went to asia and wouldn’t come back! He not only held it - he even threw more money after the textile mills. The Opportunity costs over the years were as high as $200bn (no joke!). How happy I am - never buying it. What a disaster!
 

Third, one could think he might have learned from that, right? But - no! One of the next things he bought was - a shoe business! That was 1993. And where has the shoe making moved to? Yes. Asia. Again. Can you believe it? Sticked 20 years to textile, shich moved to asia, and 8 years later buys a shoe business. So now we are at nearly 30 years of disaster and value destruction with a pause of 8 years. 
 

Fourth, he was an „airoholic“ (he claimed that word for himself as he got so many bad investments into airlines). 

I could go on and on…

 

It’s always the same: People don’t change. They don’t learn. Never. They just stay like they have always been.
 

I mean, he might have once come up with the idea of focusing on quality instead of just buying “as long as it’s cheap.” I bet he never learned that!

 

Or buying entire companies instead of always just parts. Why not? 

 

I can’t imagine that he ever learned all that things. It's always the same with these guys. And than they get old and are as dumb as they‘ve always been. 

 

Well, okay, while he still owned the textile mills, he invested quite a bit in insurance companies. And that was rather successful. But he just sticked to all those textile, shoe business, airlines, IBM and had all that in his books.
 

Anyway, how lucky I am I never bought that company!

 

The guy and his shareholders certainly never struck it rich—and rightly so.

 

[petec]

3 hours ago, Viking said:

The original investment in AGT ($150M) was made in July 2017. The driver of this investment was a guy named Paul Rivette. 
 

Three things stand out with this investment:

• Very dynamic founder (magnetic personality)
• Terrible balance sheet
• Terrible business (commodity business - no moat and highly volatile). 

After Fairfax’s initial purchase in 2017 the business results got worse. To the point it had to be taken private (requiring Fairfax to invest another $220M in April 2019 to stop the bleeding).  
 

How has the business performed over the past 7 years? 

 

It still looks like a pretty tough business - just look at how the IPO went and where the stock is trading today. 
 

What we do know about Fairfax is they do not walk away from investments… even when they probably should (no idea why this is). Farmers Edge and Boat Rocker (also from the 2014 to 2017 vintage) are still costing Fairfax $. 
 

My view is Seaspan was the first ‘new Fairfax’ investment.

• Sokol was a proven operator (not just a good talker)
• Fairfax’s investment was focussed on fixing the balance sheet of the company
• Sokol’s vision was to transition Seaspan from a container shipper to a finance company (largely eliminate the volatility of the business).

AGT and Seaspan are great examples of old Fairfax and new Fairfax. Now 2017 to 2019 was a transition. I think Fairfax probably knew in 2016 or 2017 they needed to make some changes to their investment framework. So the shift was gradual over a couple of years. 
 

Fast forward to today… when was the last time they made a terrible investment? Their hit rate went from less than 30% (pre 2018) to over 90% (post 2018 and later). 
 

That might be a fluke. Or because the macro gods smiled on them. I don’t think it is primarily either of those - I think it is because they implemented a better framework:

• Premium on strong management (not just good talkers)
• Strong balance sheet
• Profitable operations (minimizing mom/dads need to bail kid out when they mess up financially)

And now that they see how well the new investment framework works - they are likely institutionalizing it. 

 

I mean this with sincere respect, because your contribution on this board is second to none, but this is hopeful nonsense.

 

Shipping is the epitome of a terrible business: highly cyclical with no barriers to entry. And Seaspan's balance sheet was terrible when Fairfax bought in. 

 

Fairfax are value investors. Some of their investments work; some don't. 

 

Much of Fairfax's incredible turnaround can be put down to two things: higher rates, which transformed earnings on float, boosted NIM at Eurobank, and helped harden the insurance market; and covid, which impacted supply chains in such a way that the recovery saw huge spikes in timber, steel, and shipping costs to the great benefit of Resolute, Stelco, and Seaspan (but not AGT). The fact that all this happened while FFH shares were at silly levels and they could buy back shares hand over fist was a nice bonus.

 

Have they deepened their bench and tweaked their investment process? Sure. But have they transformed it? No. A quick glance at their recent investments shows you that. And if they had, they'd have told us so.

 

I am delighted that Fairfax is my largest position because I liked the leopard's old spots, not because I think it has changed them.

 

[roundball100]

1 hour ago, petec said:

 

I mean this with sincere respect, because your contribution on this board is second to none, but this is hopeful nonsense.

 

Shipping is the epitome of a terrible business: highly cyclical with no barriers to entry. And Seaspan's balance sheet was terrible when Fairfax bought in. 

 

Fairfax are value investors. Some of their investments work; some don't. 

 

Much of Fairfax's incredible turnaround can be put down to two things: higher rates, which transformed earnings on float, boosted NIM at Eurobank, and helped harden the insurance market; and covid, which impacted supply chains in such a way that the recovery saw huge spikes in timber, steel, and shipping costs to the great benefit of Resolute, Stelco, and Seaspan (but not AGT). The fact that all this happened while FFH shares were at silly levels and they could buy back shares hand over fist was a nice bonus.

 

Have they deepened their bench and tweaked their investment process? Sure. But have they transformed it? No. A quick glance at their recent investments shows you that. And if they had, they'd have told us so.

 

I am delighted that Fairfax is my largest position because I liked the leopard's old spots, not because I think it has changed them.

 

Surely you have to give Fairfax credit for having learned a tremendous amount about running (and buying) insurance companies.  This is independent of what has happened on the investment side.

[TwoCitiesCapital]

3 hours ago, Hamburg Investor said:

 

 

 

 

That reminds me of another stock. A textile business in the 1960ies. I haven’t bought for similar reasons (apart from I wasn’t born yet).
 

The whole story of the guy buying the busibess was fun in itself:

 

First the guy bought it becoming emotional (it was a dispute with the than owner about 1/4 dollar per share or so; I don’t tell the story to you, you won’t believe it!)
 

Second, it got even better: The guy sticked to textile over 20 years, even though it was clear that business went to asia and wouldn’t come back! He not only held it - he even threw more money after the textile mills. The Opportunity costs over the years were as high as $200bn (no joke!). How happy I am - never buying it. What a disaster!
 

Third, one could think he might have learned from that, right? But - no! One of the next things he bought was - a shoe business! That was 1993. And where has the shoe making moved to? Yes. Asia. Again. Can you believe it? Sticked 20 years to textile, shich moved to asia, and 8 years later buys a shoe business. So now we are at nearly 30 years of disaster and value destruction with a pause of 8 years. 
 

Fourth, he was an „airoholic“ (he claimed that word for himself as he got so many bad investments into airlines). 

I could go on and on…

 

It’s always the same: People don’t change. They don’t learn. Never. They just stay like they have always been.
 

I mean, he might have once come up with the idea of focusing on quality instead of just buying “as long as it’s cheap.” I bet he never learned that!

 

Or buying entire companies instead of always just parts. Why not? 

 

I can’t imagine that he ever learned all that things. It's always the same with these guys. And than they get old and are as dumb as they‘ve always been. 

 

Well, okay, while he still owned the textile mills, he invested quite a bit in insurance companies. And that was rather successful. But he just sticked to all those textile, shoe business, airlines, IBM and had all that in his books.
 

Anyway, how lucky I am I never bought that company!

 

The guy and his shareholders certainly never struck it rich—and rightly so.

 

 

The point isn't that these critiques are meant to keep people from buying Fairfax. 

 

It's my top position. Petec has mentioned owning it as well. 

 

It's to keep your eyes open and not be blinded wearing hindsight biased rose-tinted glasses as you make the narrative fit the share price. 

 

Fairfax was a miserable investment in the 2010s. It's been fantastic in the 2020s. What changed was the inflation regime, interest rates, and their investment style coming back into vogue, and COVID providing the opportunity to buy plenty more thing cheap. Not that they changed their investment style. 

 

Just like it was obvious Fairfax had nowhere to go but down in 2018 when the rate cycle changed, insurance was still soft, and they hadn't locked in duration, and Blackberry wasn't doing anything. Similarly, it was obvious they had nowhere to go but up in 2021 when inflation/rates were accelerating, the market were recovering, and it languished while the broader market raged.

 

Seeing reality allows you to catch the flip

[Viking]

5 hours ago, bearprowler6 said:

…I caution any new investor to Fairfax to avoid following your analysis blindly and instead to do their own analysis of Fairfax when determining whether to buy, hold or sell their shares.

 

BP6

@bearprowler6, you make a great point. And I whole heartedly agree.

[Viking]

2 hours ago, petec said:

 

I mean this with sincere respect, because your contribution on this board is second to none, but this is hopeful nonsense.

 

Shipping is the epitome of a terrible business: highly cyclical with no barriers to entry. And Seaspan's balance sheet was terrible when Fairfax bought in. 

 

Fairfax are value investors. Some of their investments work; some don't. 

 

Much of Fairfax's incredible turnaround can be put down to two things: higher rates, which transformed earnings on float, boosted NIM at Eurobank, and helped harden the insurance market; and covid, which impacted supply chains in such a way that the recovery saw huge spikes in timber, steel, and shipping costs to the great benefit of Resolute, Stelco, and Seaspan (but not AGT). The fact that all this happened while FFH shares were at silly levels and they could buy back shares hand over fist was a nice bonus.

 

Have they deepened their bench and tweaked their investment process? Sure. But have they transformed it? No. A quick glance at their recent investments shows you that. And if they had, they'd have told us so.

 

I am delighted that Fairfax is my largest position because I liked the leopard's old spots, not because I think it has changed them.

@petec, your comment above is one of the reasons why I love this board so much. Your critique (as per usual) was focussed on ideas and logic. Not personal. Please keep them coming (you and others). Healthy debate is one way we all learn and improve as investors (and hopefully generate better results over time). 

Edited March 20 by Viking

[Maverick47]

2 hours ago, roundball100 said:

Surely you have to give Fairfax credit for having learned a tremendous amount about running (and buying) insurance companies.  This is independent of what has happened on the investment side.

@roundball100 I think this is a great observation.  I’m trying to think of other investors who tried to merge insurance and investing, and failed to produce decent results.  Saul Steinberg with the Reliance companies, David Einhorn with GL Re, Hallmark Insurance, and we now have Bill Ackman trying to do the same thing.  
 

The insurance side of things is tough to do well.  
 

 

[SafetyinNumbers]

4 hours ago, petec said:

Much of Fairfax's incredible turnaround can be put down to two things: higher rates, which transformed earnings on float, boosted NIM at Eurobank, and helped harden the insurance market;

When I read this, it seems dismissive of the common sense probabilistic bets they made and continue to make, which may not be how you intended it. Most capital can’t make the same bet because the institutions are investing other people’s money. There aren’t many expected value / probabilistic investors around and most investors don’t respect us because we don’t invest like they do but it is a valid strategy. Worked for Buffett especially in the partnership days and Templeton etc…
 

I have great respect for quality investors. I cosplay as one with small parts of my portfolio with mixed success (KNSL going badly right now but it’s a great business). The multiple expansion in quality compounders forced me to think long term and I think that’s really helped my returns since then. I never would have predicted would have such a concentrated position in anything ever even 5 years ago when I started buying FFH but the risk/reward seems that good. As an expected value investor I know I could be wrong but the odds that I’m wrong in a way where I don’t meet my 10% hurdle seem very low over the next 5 years. If I’m even remotely right though, I should handily beat my hurdle. I might beat it spectacularly. That’s a possibility when buying Fairfax but probably not when buying Costco. 
 

Quality investors follow Buffett’s rule #1, never lose money. Expected value investors expect to be wrong a third of the time. They also expect to underperform the market for long periods of time but if it’s a successful strategy they will also beat the market for long periods of time.
 

Expected value investing is an absolute returns game. Quality investing has been hijacked by the relative returns crowd. Most self-described value investors are quality investors with a value filter on the buy decision. The ones that are out of business are the ones who used the value factor to inform, the sell decision. Never sell has all of the assets. It’s worked because growth and predictability factors have high correlation with stock prices. The value factor hasn’t had high correlation with stock prices for a long time.

 

Most institutional capital is trying to beat the market in the short term. That’s how they keep the capital. That means keeping up with the quants. That’s why they are selling Fairfax despite the incredibly low valuation. They don’t even bother predicting expected return. Gross premiums are slowing. In every other sector this means the stock price is going down, so they sell. What’s surprising to me is how much they own. To keep the stock flat despite earnings beats every quarter means they owned a lot and might still. 
 

The big multiple expansion we saw from 2020-July 29, 2025 was due much more to institutions chasing the revenue growth than anything else. I think value investors were selling on the way up because the multiple was expanding from 0.6x to almost 1.7x BV. A lot of investors on this board contributed! Since June 2024, between index demand and buybacks over 2.1m shares have been spoken for. I was also buying on pullbacks. My position is up 68% since then and I used leverage to fund it. Channeling Buffett Partnership days. I think it’s a similar kind of market from what I have read. 
 

Now we are getting the big multiple contraction as momentum investors continue to unwind their positions. The beauty is the multiple can contract 20% and the stock might be flat. The share count will also be much smaller.
 

We might have $2.4b to spend on buybacks between proceeds for Poseidon ($400m held at holdco) and dividends from the insurance subsidiaries. We are allowed to pay out $4b and the last few years they have been doing half and using it for buybacks. 

Edited March 20 by SafetyinNumbers

[Buffett_Groupie]

16 hours ago, petec said:

 

The irony is that Fairfax invested in AGT and Seaspan about 6 months apart. The reality is that one of these investments worked beautifully and the other did not. It has nothing to do with old vs. new Fairfax - these are both "old Fairfax" investments.

 

Not every investment works. Simple as that. And we must be wary of survivorship bias: we cannot look at the good investments as evidence of a "new Fairfax" and dismiss the bad ones as symbolic of "old Fairfax". 

 

I seem to recall Prem aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds. I am not convinced we should change our future expectations in that regard. 

 

 

 

 

"aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds." only works if each investment is equally weighted, but in practice, it never happens, right? 

[SafetyinNumbers]

6 hours ago, Buffett_Groupie said:

"aiming for something like 6 out of 10 investments being ok and 2-3 being superb, with 1-2 duds." only works if each investment is equally weighted, but in practice, it never happens, right? 

In my experience that’s not the case. The better ones tend to get bigger weights and help the performance that much more. When those are mistakes, it hurts more. I have had my share. 

[petec]

9 hours ago, roundball100 said:

Surely you have to give Fairfax credit for having learned a tremendous amount about running (and buying) insurance companies.  This is independent of what has happened on the investment side.

 

Absolutely. I have no problem with this argument at all, although it predates what Viking refers to as "new Fairfax". I think the improvement on the insurance side arguably dates back to the 2000's, and certainly to when Andy Bernard was appointed head of insurance which I think was around 2011. 

[petec]

8 hours ago, TwoCitiesCapital said:

It's to keep your eyes open and not be blinded wearing hindsight biased rose-tinted glasses as you make the narrative fit the share price. 

 

Exactly this. And FWIW it is my top position too at 16%.

[petec]

7 hours ago, SafetyinNumbers said:

When I read this, it seems dismissive of the common sense probabilistic bets they made and continue to make, which may not be how you intended it.

 

You are right, it is not. I think they took advantage of an anomalous period (low and falling rates, long insurance downcycle, long commodity downcycle) to acquire a lot of cheap assets. 

 

Then the returns materialised when those conditions changed. What makes it spectacular is that it all happened within the same 5 year span.

[petec]

8 hours ago, Viking said:

@petec, your comment above is one of the reasons why I love this board so much. Your critique (as per usual) was focussed on ideas and logic. Not personal. Please keep them coming (you and others). Healthy debate is one way we all learn and improve as investors (and hopefully generate better results over time). 

 

Thank you. I was nervous writing it because I really do not want to offend. But I agree - this place would be useless without robust debate. 

 

One other thing I should say: I don't particularly want Fairfax to have changed. They have a phenomenal long term record. I own them because I like what they do. Yes they had a bad patch; most investors do. I think this was mostly random: a number of investments didn't work out at the same time (and they made it worse by hedging). Now they have had a great patch. But over time, the record is strong.

[Hamburg Investor]

11 hours ago, TwoCitiesCapital said:

The point isn't that these critiques are meant to keep people from buying Fairfax. 

 

It's my top position. Petec has mentioned owning it as well. 

 

It's to keep your eyes open and not be blinded wearing hindsight biased rose-tinted glasses as you make the narrative fit the share price. 

 

Fairfax was a miserable investment in the 2010s. It's been fantastic in the 2020s. What changed was the inflation regime, interest rates, and their investment style coming back into vogue, and COVID providing the opportunity to buy plenty more thing cheap. Not that they changed their investment style. 

 

Just like it was obvious Fairfax had nowhere to go but down in 2018 when the rate cycle changed, insurance was still soft, and they hadn't locked in duration, and Blackberry wasn't doing anything. Similarly, it was obvious they had nowhere to go but up in 2021 when inflation/rates were accelerating, the market were recovering, and it languished while the broader market raged.

 

 

 I Agree - somehow, somehow not.

My points would be:

• Even the best investors of all time sometimes did/do bad. => Does this mean, we shouldn't criticize? Of course not - just the opposite! It just means, that not all critics should hold one back from buying, just as not one brilliant move should be the reason for buying. Apple has done bad decisions in the 80ies and 90ies and Coca Cola has done bad decisions. Blackberry was a bad investment, that Prem made (and still holds). The whole concept of holding bad insurance companies by Prem and very high leverage in the 2000s in general is to be criticized as are the bad investment decisions (a lot) of the 2010s. Buffett bought crap too, Berkshire itself being the testament for that. I myself underlined, that those were bad investments. The discussion is not about criticizing. We all are having a sharp eye on everything ( @Viking would be the first to assist you, that Prem has done bad in the 2010s) . That's why we are here. To be critical. To learn, To think. 
• The real discussion in this forum is about distinguishing the important from the unimportant. And that is where different perspectives sometimes clash here in the forum. That’s what a discussion is all about, isn’t it? 

Specifically regarding FFH: What happened at FFH in the 2010s? My view in a nutshell: 

• (Essentially, the concept consists of an insurance company using free float (and deferred taxes) as leverage, a fairly large proportion of investments in equities, a long-term investment focus (as opposed to a quarterly focus), a focus on value investing (as opposed to growth), a decentralised structure, a culture in which everyone is incentivised towards long-term success, etc. A concept that clearly works. BRK, MKL, FFH prove this. All three rank among the top 1% (and some among the top 10 overall) of all shares in their respective countries.)

• zero rates (=> not Prems fault, an outlier. Clearly not ‘normal’ times, if we look at the last 100 years)

• growth beating value by miles (not Prem’s fault. An outlier. If we look at the last 100 years, growth hasn’t beaten value on average – the opposite is true)

• A long soft market (not Prem’s fault. Hard markets are rarer; but clearly it didn’t help and was under average)

• Since 2011, the insurance business has been managed better than ever before. 

• Bad investment decisions, derivatives (Clearly Prem’s fault. That was not good!)

=> FFH faced fierce macro headwinds from various sides in the 2010s, the likes of which had never before converged on such a massive scale.

=> At the same time, he made very poor decisions. 

And since 2016/2020, the picture has shifted dramatically: 

• A long hard market (big tailwind!)

• interest rates at – historically – normal levels (4% is historical just around average... 1970ies was high, 2000s was low...)

• growth still beating value, but perhaps a little less (that's still a headwind, as long as you are a value investor; it's hard to beat the market, if Mag7 goes through the roof and you don't own them)

• Great investment decisions (plus maybe even a bit of luck)

=> FFH got a nice macro tailwind from various sides in the 2020s.

=> In my eyes today's macro is more normal, maybe even a bit better than average, but clearly nothing completely out of the norm. Others might consider the long hard market as only criterium, but I don't, as its returns are not only driven by insurance profits. Others might think of 4% interest as "higher than average", but I don't. Others might ignore or value less the fact that ‘growth beats value’ still holds true. But that's fine (and still a nice point for discussions!) 

=> At the same time, Prem made very good decisions. 
 

=> Overall/underlying (in my eyes really important): Prem building a new, better structure over the whole timeframe (2010 until today):

• Better insurance business:
  • Compared to MKL and to P&C in general, the CRs today are better on average over the years; Prem lagged behind other P&C insurers’ CRs by miles until 2011 (3%, 4%, 5%); now he’s better than average (like 3% better or more) => That’s what you see when structures change, regardless of hard and soft markets that come and go.
  • Worldwide diversification
• less volatility in earnings through a new portfolio structure (wholly owned businesses) ...
• (hopefully, not sure: Stronger focus on quality investments in general (as opposed to a focus on "cheap" - at least that's what Buffett learned and my impression is Prem is going into the same direction - but not sure!)
• (hopefully, not sure: Less derivatives and less bets; e. g. I understand the rational behind the TRS - but it's a bet on Mr. Market) 

My impression is, that we are having two opposing ways of thinking and everyone of us tends to be in between those lines (I’m deliberately exaggerating):

1. There's one way of thinking here in this forum, that Fairfax management hasn't changed at all over the years and that the difference in outcome between 2010s and the 2020s is just driven by change of macro. So, in future, Fairfax’s returns will be determined solely by macro, as the company is structurally the same it has ever been.
2. Another way of thinking in this forum sees learnings at Management level and a better structure than in the 2000s in the foreground.

I don't think one has to decide for one way of thinking or for the other. Both can be true at the same time. At least, that's what I see.

Everyone has to do his own due diligence.

 

Edited March 20 by Hamburg Investor

[SafetyinNumbers]

3 hours ago, petec said:

 

You are right, it is not. I think they took advantage of an anomalous period (low and falling rates, long insurance downcycle, long commodity downcycle) to acquire a lot of cheap assets. 

 

Then the returns materialised when those conditions changed. What makes it spectacular is that it all happened within the same 5 year span.

That’s good. 
 

I just see a lot of they got lucky on interest rates and steel and oil and gold and Digit etc… The consensus is they are bad investors which is pretty clear as analysts tend to ignore the equity portfolio to the point they don’t include any value until gains are realized. BMO wrote on FFH last week post the Poseidon sale and cut the earnings given it is equity accounted for but didn’t include anything for the gain to be realized in Q2.