Fairfax 2025

[djokovic1]

5 hours ago, Txvestor said:

Agree fully with these points. However in honor of Munger, let's invert. just to consider the contrarian view. 
These events/actions were in the past how many are sustainable or relevant to the future? 

-The FFH-TRS are arguably less value

additive now than 3yrs ago as the stock has made a massive move. I think the unwinding has begun. 

-Selling some cyclical holdings at their peak was definitely wonderful, but I don't see too much more coming. Some like BB don't seem to be going anywhere. 

-Stock buybacks are now at considerably higher valuations and above BV(compared to well below previously) and for a given amount of capital outlay will shrink the shares outstanding much less. The gap between share price and IV has closed. 

-Interest rates do seem to have peaked, although the timing of any fall is unclear, certainly longer they stay up the better for Fairfax but it's quite possible and even likely we see a modest decline in rates over the duration beyond which they have extended their bond portfolio. Each 1% change maybe worth $650M in annual earnings to them(either direction).  
 

-Their Insurance businesses aren't growing nearly as much and outside of the acquisition of gulf total underwritten didn't very much last year. Its certainly not likely to be a growth engine go forth even as it will likely generate solid underwriting profit. 
 

-Upswing in the Greek economy is definitely helping them, but the overall EU economy prognosis doesn't seem particularly rosy. And that's what the Greek economy is tied to mostly.
 

-Modi barely hung on to power last year. Having had to resort to a minority gov t albeit with mostly stable partners. His power has somewhat been checked.
He's also 74 and this is likely his last term in gov't. If Congress(who dominated politics pre 2014) returns to power next they won't be anything near as pro business. 
 

So to my mind the factors lifting Fairfax from $2100 Can onwards aren't appearing as strong as those that lifted it from $500 Can. to current. 
 

They certainly aren't overvalued or anything and seem set to generate a good $200-250 Can. a year or so in annual EPS, and there maybe some rerating yet on the basis of earnings quality compared to the overall market; but I'm not seeing where the growth and additional value creation comes from. 

 

 

 

 

 

It's good to be a harsh critic of your investments but as a new (2025) investor in Fairfax this would be my riposte:

 

1) I see 15-20% close to locked in EPS / book value compounding for the next 4 years. You get that at 10x earnings. Hard to find something this attractive with very low risk currently (if someone has something better please let me know!, I am all ears).

2) Fairfax even after this huge run-up is hugely mispriced. Take a look at this table I created a few weeks ago, Note all numbers from CapitalIQ. And table was created before Fairfax earnings. They have the best 5 year track record (ROE) but are trading at a significant discount to peers. Gives a nice margin of safety and potential for multiple expansion.

 

 

 

For me the biggest longterm risk > 5 years out is if we go to a very low rate environment again

Edited Wednesday at 08:44 AM by djokovic1
Adding info

[giulio]

5 hours ago, Txvestor said:

The gap between share price and IV has closed. 

Definitely not, imo. I think you need to dig deeper than who's the PM of India, the "Greek economy" or gpw growth (not the metric to overly focus on for insurance).

Ffh will have a considerable amount of money to redeploy in the coming years and they can do it globally, across the entire capital structure, opportunistically.

You need to take this reinvestment opportunity in consideration to understand where the business will be in 3-5 years. The stock may or may not follow in the same time frame but who cares?

N.b. not all their investment will work out.

 

@This2ShallPass iirc both Buffett and Watsa said that the change in bvps should approximate the change in IV over time, not that bv = IV.

 

[This2ShallPass]

5 minutes ago, giulio said:

iirc both Buffett and Watsa said that the change in bvps should approximate the change in IV over time, not that bv = IV.

Yes, bv is the closest proxy to IV and in which case you just need a different P/B multiple depending on the quality of the insurance company. Fairfax underwriting is getting better but their combined ratios are still higher than the best (iirc Chubb 2024 CR was 85%! and WRB hits it out of the park pretty regularly). Fairfax investment is not predictable, they feast or famine which will reduce the multiple you get. Hopefully they're past all the 7 lean years 7 good years stuff and are going to be much more consistent but that remains to be seen. At the next big market dislocation, there's a good chance they might swing for the fences again (it's in their dna)..

 

All that said, I'm still a big believer. I love everything they have done in the last 5 years. FF is my #1 holding at 30% but I'm seriously thinking about reducing it to 25%.

[dartmonkey]

On 2/17/2025 at 12:22 PM, SafetyinNumbers said:

They said on the call it will be filed on March 7. 

Great, thanks. Seems like information that should be on their web page but the like to keep it bare bones. 

[dartmonkey]

5 hours ago, giulio said:

iirc both Buffett and Watsa said that the change in bvps should approximate the change in IV over time, not that bv = IV.

Exactly. BV itself is a very poor indication of intrinsic value, and the ratio of IV:BV will be quite different from one company to another. I would argue that FFH merits a higher ratio than Berkshire, just because it has such a large float available for investment (about twice equity) in relation to Berkshire where that float is a small fraction (about a quarter of equity.) But in both cases, the INCREASE in BV from year to year, over the long-term, is a good indication of how quickly IV is increasing.

 

The following is a bit dated, I'll update it when we get float numbers from Berkshire and Fairfax in a few weeks, but it hasn't changed much and illustrates the point that Fairfax can do a lot more investment with a given amount of book value:

 

Berkshire float, year end 2022: $164b; market cap $859b; float leverage 19%;

Fairfax float, year end 2022: $31.2b; market cap $23.8b; float leverage 131%.

[Viking]

9 hours ago, djokovic1 said:

It's good to be a harsh critic of your investments but as a new (2025) investor in Fairfax this would be my riposte:

 

1) I see 15-20% close to locked in EPS / book value compounding for the next 4 years. You get that at 10x earnings. Hard to find something this attractive with very low risk currently (if someone has something better please let me know!, I am all ears).

2) Fairfax even after this huge run-up is hugely mispriced. Take a look at this table I created a few weeks ago, Note all numbers from CapitalIQ. And table was created before Fairfax earnings. They have the best 5 year track record (ROE) but are trading at a significant discount to peers. Gives a nice margin of safety and potential for multiple expansion.

 

 

 

For me the biggest longterm risk > 5 years out is if we go to a very low rate environment again

 

@djokovic1, nice analysis. Another thing to keep in mind is book value at a traditional insurance company will capture the value of the investment portfolio pretty accurately. Because most insurance companies are 90% bonds/fixed income and these are pretty easy to value. 

 

Fairfax has a big equity portfolio. Over the past 5 years, excess of fair value over carrying value for associate and consolidated companies has increased in value by about $2 billion (from a negative number to a big positive number today). My guess is none of this significant value creation is captured in Fairfax's L5Y ROE of 17.3% that you posted above.

 

And there is even more. The 'fair value' for holdings like BIAL also look materially low. My guess is there are other examples (like what is phantom holding AGT Food Ingredients worth these days?).

 

Bottom line, Fairfax's performance over the past 5 years has been much better than people realize. 'Best in class' is not an exaggeration.  

[Viking]

15 hours ago, gfp said:

 

You missed my point or maybe you agreed with my point but misunderstood me

 

I think I am going to print this, frame it and put it on the wall in my den. It is simply brilliant. I couldn't stop smiling when I read it (and I mean that is a good way).

[Hoodlum]

8 minutes ago, Viking said:

 

@djokovic1, nice analysis. Another thing to keep in mind is book value at a traditional insurance company will capture the value of the investment portfolio pretty accurately. Because most insurance companies are 90% bonds/fixed income and these are pretty easy to value. 

 

Fairfax has a big equity portfolio. Over the past 5 years, excess of fair value over carrying value for associate and consolidated companies has increased in value by about $2 billion (from a negative number to a big positive number today). My guess is none of this significant value creation is captured in Fairfax's L5Y ROE of 17.3% that you posted above.

 

And there is even more. The 'fair value' for holdings like BIAL also look materially low. My guess is there are other examples (like what is phantom holding AGT Food Ingredients worth these days?).

 

Bottom line, Fairfax's performance over the past 5 years has been much better than people realize. 'Best in class' is not an exaggeration.  

I think one day we and the market will be talking about KI insurance as the big surprise, similar to how the sale of the Pet insurance business surprised us.  Except KI will be on a much larger scale. 

[Viking]

16 hours ago, Txvestor said:

Agree fully with these points. However in honor of Munger, let's invert. just to consider the contrarian view. 
These events/actions were in the past how many are sustainable or relevant to the future? 

-The FFH-TRS are arguably less value

additive now than 3yrs ago as the stock has made a massive move. I think the unwinding has begun. 

-Selling some cyclical holdings at their peak was definitely wonderful, but I don't see too much more coming. Some like BB don't seem to be going anywhere. 

-Stock buybacks are now at considerably higher valuations and above BV(compared to well below previously) and for a given amount of capital outlay will shrink the shares outstanding much less. The gap between share price and IV has closed. 

-Interest rates do seem to have peaked, although the timing of any fall is unclear, certainly longer they stay up the better for Fairfax but it's quite possible and even likely we see a modest decline in rates over the duration beyond which they have extended their bond portfolio. Each 1% change maybe worth $650M in annual earnings to them(either direction).  
 

-Their Insurance businesses aren't growing nearly as much and outside of the acquisition of gulf total underwritten didn't very much last year. Its certainly not likely to be a growth engine go forth even as it will likely generate solid underwriting profit. 
 

-Upswing in the Greek economy is definitely helping them, but the overall EU economy prognosis doesn't seem particularly rosy. And that's what the Greek economy is tied to mostly.
 

-Modi barely hung on to power last year. Having had to resort to a minority gov t albeit with mostly stable partners. His power has somewhat been checked.
He's also 74 and this is likely his last term in gov't. If Congress(who dominated politics pre 2014) returns to power next they won't be anything near as pro business. 
 

So to my mind the factors lifting Fairfax from $2100 Can onwards aren't appearing as strong as those that lifted it from $500 Can. to current. 
 

They certainly aren't overvalued or anything and seem set to generate a good $200-250 Can. a year or so in annual EPS, and there maybe some rerating yet on the basis of earnings quality compared to the overall market; but I'm not seeing where the growth and additional value creation comes from. 

 

@Txvestor, I love your post... so many juicy topics to discuss/debate. My comments are going to be pretty random... and I am going to go big picture - because I think that is the best place to start when looking at specific topics. Hopefully my comments make sense  

 

1.) FFH-TRS - Fairfax's best investments are make when we have wicked volatility. We haven't had wicked volatility for the past 2 years - so Fairfax has not been able to make 'home run' type investments lately. But that is ok (it is what it is). My guess is they will get their opportunity in another year or two or three. 

 

I think lots of Fairfax investors are fearful of volatility and what it will do to Fairfax's results in the short term (not you per se). My view is they have it backwards.  

 

2.) Selling. I am liking this part of Fairfax's capital allocation strategy more and more. There will always be a bubble forming somewhere. Fairfax will get more wonderful opportunities to sell high in the future. We just don't know what or when. 

 

For example, if we get a surge in nat gas prices later in 2025/2026 (as all these LNG export facilities come on-line in the US), EXCO looks like it might be an ideal take-out candidate. This is just one example. 

 

3.) Stock buybacks. The key here is what is the actual intrinsic value of Fairfax? My guess is Fairfax has a pretty good idea. They just told us they they still view the FFH-TRS position as being a good investment moving forward. As I have stated before, I hope they keep vacuuming up shares at current prices.

 

Back in late 2021 they paid around 1 x BV. Three years later we learned they got a steal of a deal. My guess is in three years time we will look at stock buybacks at today's prices as being a great deal for long term shareholders.

 

4.) Interest rates matter. So does the size of the fixed income portfolio and it is growing rapidly in size - due to earnings from a 5% yield and continued top-line growth in the insurance business. What it is invested in also matters - the recently announced Blizzard deal is very interesting in this regard. Bottom line, 'interest and dividend income' is likely to remain robust.

 

 5.) Yes, insurance is slowing. But it is still growing. Only about 20 to 25% of Fairfax income streams come from underwriting profit (a traditional P/C insurance company is closer to 45%). Bottom line, Fairfax is much less exposed to the P/C insurance cycle than a traditional P/C insurance company.

 

In the near term they will continue to take out minority partners. And continue to make more bolt on acquisitions (like Albingia in France).

 

Fairfax also has the ability to shift capital not needed in insurance to other opportunities that will yield a high return. A soft insurance market may also sow the seeds for the next spike in growth (via acquisition).

 

6.) Greek and Indian economies will ebb and flow. Like I stated above, volatility is good for Fairfax - and it is good for its equity investments. They are well managed and will look to be opportunistic in any downturn. It really is counter-intuitive.

 

Conclusion: It is not possible to know with certainty what Fairfax is going to do in the future. I think looking for certainty might be a mistake. It really comes down to do you trust management. In 2020 I would have probably answered no. But today? I do trust them. I think they have earned it with the execution they have delivered over the past 5 years. Of course my eyes are wide open.   

Edited Wednesday at 07:16 PM by Viking

[Txvestor]

11 hours ago, giulio said:

Definitely not, imo. I think you need to dig deeper than who's the PM of India, the "Greek economy" or gpw growth (not the metric to overly focus on for insurance).

Ffh will have a considerable amount of money to redeploy in the coming years and they can do it globally, across the entire capital structure, opportunistically.

You need to take this reinvestment opportunity in consideration to understand where the business will be in 3-5 years. The stock may or may not follow in the same time frame but who cares?

N.b. not all their investment will work out.

 

@This2ShallPass iirc both Buffett and Watsa said that the change in bvps should approximate the change in IV over time, not that bv = IV.

 

My point in raising those items was to argue that those tailwinds of the last 5yrs don't exist in the same way as they did for the coming 5yrs. Its clear that, compared to its peers it is priced lower. Much of that is a market response to the management 2009-2019 record. A good 70% of that has unwound but there maybe more to come. 
As to deployment of future cash flows, let's stay curious, Prem has done some phenomenal things ie Stelco, Irish bank, etc but also some bone headed things like equity hedges, BlackBerry etc. 
Stock buybacks, minority buyouts and internal holdco investments are wonderful, and they do have options there. That said Sleep Country was a real head scratcher for me. Is fairfax undervalued at the current price, yes, by a lot? No is my view. 
For the record I do like that they are less focussed on macro and more on their businesses and opportunities presenting during market dislocation and trading internal assets based on economic cycles. That's more of their niche area. 2008 CDSs was more of a one off. 

Edited Wednesday at 07:43 PM by Txvestor

[SafetyinNumbers]

3 minutes ago, Txvestor said:

My point in raising those items was to argue that those tailwinds of the last 5yrs don't exist in the same way as they did for the coming 5yrs. For the record, compared to its peers it is priced lower. Much of that is a market response to the management 2009-2019 record. A good 70% of that has unwound but there maybe more to come. 
as to deployment of future cash flows, let's stay curious, Prem has done some phenomenal things ie Stelco, Irish bank, etc but also some bone headed things like equity hedges, BlackBerry etc. 
Stock buybacks, minority buyouts and internal holdco investments are wonderful, and they do have options there. That said Sleep Country was a real head scratcher for me. Is it undervalued at the current price, yes, by a lot? No is my view. 

Most investors project their own investing style on Fairfax which is a problem when most investors are pure quality or pure value investors. It’s too hard to understand a probabilistic style of investing so they just pass. I expect them to make mistakes because I have the same investing style and also make mistakes. The net result is BVPS has CAGRed at 18%+ for 40 years and with the current set up there is no reason why that can’t continue. If someone thinks that’s expensive at ~1.4x BVPS, they should sell. They certainly have been for the past 8 years at lower multiples with the float down 7m+ shares (including TRS) since then. 

[Viking]

4 minutes ago, Txvestor said:

My point in raising those items was to argue that those tailwinds of the last 5yrs don't exist in the same way as they did for the coming 5yrs. For the record, compared to its peers it is priced lower. Much of that is a market response to the management 2009-2019 record. A good 70% of that has unwound but there maybe more to come. 
as to deployment of future cash flows, let's stay curious, Prem has done some phenomenal things ie Stelco, Irish bank, etc but also some bone headed things like equity hedges, BlackBerry etc. 
Stock buybacks, minority buyouts and internal holdco investments are wonderful, and they do have options there. That said Sleep Country was a real head scratcher for me. Is it undervalued at the current price, yes, by a lot? No is my view. 

 

The equity hedges were taken of at the end of 2016. That was more than 8 years ago. The Blackberry purchase was years before that. My view is Fairfax has learned important lessons from mistakes made in the past. I think it actually makes them a stronger company today. 

 

The analogue is when Fairfax messed up on the insurance side of its business in the early 2000's. The lesson's learned then have resulted in the strong insurance business model they have today. They learned from their mistake and it has made them a stronger company.

 

Yes, the view is not what the current narrative is today regarding Fairfax. But that is where my reading of the facts/analysis takes me. I could be wrong. We will see in the coming years.

[Txvestor]

55 minutes ago, Viking said:

 

The equity hedges were taken of at the end of 2016. That was more than 8 years ago. The Blackberry purchase was years before that. My view is Fairfax has learned important lessons from mistakes made in the past. I think it actually makes them a stronger company today. 

 

The analogue is when Fairfax messed up on the insurance side of its business in the early 2000's. The lesson's learned then have resulted in the strong insurance business model they have today. They learned from their mistake and it has made them a stronger company.

 

Yes, the view is not what the current narrative is today regarding Fairfax. But that is where my reading of the facts/analysis takes me. I could be wrong. We will see in the coming years.

I'm glad they aren't taking many positions in publicly listed companies, and that the positions they are taking are relatively small.
Their style of investing seem to hit on a lot of value traps. They do better with private equity style investments, insurance start ups, of course their bond king is exceptional, and internal investments/stock buybacks. Even over seas, they lost in Africa and did well in India, albeit without many exits yet. 

Edited Wednesday at 08:25 PM by Txvestor

[Viking]

25 minutes ago, Txvestor said:

I'm glad they aren't taking many positions in publicly listed companies, and that the positions they are taking are relatively small.
Their style of investing seem to hit on a lot of value traps. They do better with private equity style investments, insurance start ups, of course their bond king is exceptional, and internal investments/stock buybacks. Even over seas, they lost in Africa and did well in India, albeit without many exits yet. 

Since 2018, Fairfax’s track record with new equity purchases has been very good. The perception is they invest in value traps. That was true pre-2018. That has not been the case since then.

 

Further, they have dealt with almost of all of the former value traps that they owned from pre-2018 (what is remaining is very small it terms of the total equity portfolio).

 

A great example is Stelco. Bought in late 2018. People hated it at the time (including me). At the time it probably checked all the boxes of being a classic value trap. And then it then delivered a CAGR of 25% per year for the next 6 years. Simply outstanding.

Edited Wednesday at 08:49 PM by Viking

[Viking]

30 minutes ago, Txvestor said:

I'm glad they aren't taking many positions in publicly listed companies, and that the positions they are taking are relatively small.
Their style of investing seem to hit on a lot of value traps. They do better with private equity style investments, insurance start ups, of course their bond king is exceptional, and internal investments/stock buybacks. Even over seas, they lost in Africa and did well in India, albeit without many exits yet. 

We have just had 2 very strong years - equity markets are up +50%. Valuations are probably getting stretched. I like that Fairfax is being very disciplined. But this will change - we will get another bear market. And next time, Fairfax will be flush with cash….

Edited Wednesday at 08:55 PM by Viking

[Txvestor]

19 minutes ago, Viking said:

Since 2018, Fairfax’s track record with new equity purchases has been very good. The perception is they invest in value traps. That was true pre-2018. That has not been the case since then.

 

Further, they have dealt with almost of all of the former value traps that they owned from pre-2018 (what is remaining is very small it terms of the total equity portfolio).

 

A great example is Stelco. Bought in late 2018. People hated it at the time (including me). At the time it probably checked all the boxes of being a classic value trap. And then it then delivered a CAGR of 25% per year for the next 6 years. Simply outstanding.

Admittedly I haven't looked at the returns of their portfolio since 2018 vs the S&P. However looking at their 13F, we see holdings like OXY, BB, Kraft Heinz, Kennedy Wilson, and Molson Coors accounting for 1/2 of their $1.5B equity portfolio. I've followed these for a number of years and they've gone nowhere. If any of you have audited their equity performance I'd be interested to know. It sure didn't feel like they beat any index, but maybe I'm wrong.
I don't believe they reported on that in any of their annual reports either. 
 

Edited Wednesday at 09:05 PM by Txvestor

[Munger_Disciple]

@Viking You are most likely the most bullish (apart from @SafetyinNumbers) guy on Fairfax Just curious how do you position size FFH currently as a % of your portfolio?

[Santayana]

34 minutes ago, Txvestor said:

Admittedly I haven't looked at the returns of their portfolio since 2018 vs the S&P. However looking at their 13F, we see holdings like OXY, BB, Kraft Heinz, Kennedy Wilson, and Molson Coors accounting for 1/2 of their $1.5B equity portfolio. I've followed these for a number of years and they've gone nowhere. If any of you have audited their equity performance I'd be interested to know. It sure didn't feel like they beat any index, but maybe I'm wrong.

The 13F represents a pretty small portion (~15%) of their equity portfolio.

[TwoCitiesCapital]

2 hours ago, Txvestor said:

Admittedly I haven't looked at the returns of their portfolio since 2018 vs the S&P. However looking at their 13F, we see holdings like OXY, BB, Kraft Heinz, Kennedy Wilson, and Molson Coors accounting for 1/2 of their $1.5B equity portfolio. I've followed these for a number of years and they've gone nowhere. If any of you have audited their equity performance I'd be interested to know. It sure didn't feel like they beat any index, but maybe I'm wrong.
I don't believe they reported on that in any of their annual reports either. 
 

 

The bulk of their equity exposure if via minority stakes that aren't in the 13F because they're foreign (like Eurobank, Thomas Cook India, and Fairfax India) or private (like Exco). Also, the portfolio is fairly concentrated in a handful of these names at the moment and they're equity accounted so the mark-to-market doesn't flow through the income statement, but the lookthru earnings and dividends do. 

Edited Wednesday at 11:07 PM by TwoCitiesCapital

[Parsad]

17 hours ago, This2ShallPass said:

Good point on Fairfax leverage. But, then why did Prem and Buffett use BV growth as the primary measure of the company success all these years? Is it just that's the closest proxy and IV is debatable?

 

 

It's an easier proxy for shareholders to understand, rather than them getting into full intrinsic value calculations.  You notice how neither has ever stated the range of intrinsic value at any given time in their annual reports, but give investors all the tools to do the calculation.  Easier to just say that price follows book value or we're buying back shares at X times book.  Cheers!

[Viking]

2 hours ago, Munger_Disciple said:

@Viking You are most likely the most bullish (apart from @SafetyinNumbers) guy on Fairfax Just curious how do you position size FFH currently as a % of your portfolio?

 

@Munger_Disciple, as of today, I am comfortable having Fairfax as a core position of about 35% of my total portfolio. I will flex this position up (and then back down) to take advantage of short term price volatility (like I do with all the stocks I own). I think this is what I have been constantly saying for about a year now.

 

Disclaimer: I may change my mind tomorrow. So you are warned!

 

Position size is a complicated topic. It is very situational. And my views on the subject are not fixed - they are continually evolving. Factors for me:

- Age / life stage / health situation

- Size of total portfolio

- Percent of total net worth in financial assets

- Estate planning

- My spouse (quite risk averse)

- Opportunity set

- Account types (most of my financial assets are in registered accounts - so it is very easy for me to flex my position)

 

Note, none of the above includes a discussion of the company and its intrinsic value - which is also important 

Edited yesterday at 12:05 AM by Viking

[SafetyinNumbers]

1 hour ago, Parsad said:

 

It's an easier proxy for shareholders to understand, rather than them getting into full intrinsic value calculations.  You notice how neither has ever stated the range of intrinsic value at any given time in their annual reports, but give investors all the tools to do the calculation.  Easier to just say that price follows book value or we're buying back shares at X times book.  Cheers!

A P/B multiple in conjunction with ROE is one way of estimating intrinsic value. It makes intuitive sense that a high ROE indicates higher quality of assets all else being equal which is reflected in a higher multiple. To estimate IV for Fairfax, I use a normalized market multiple of 15x PE as it has an above average return profile and the Buffett method of book value + float. That gives me an intrinsic value range which it still trades well below. 
 

There are lots of other ways to estimate it. I sometimes think about being more precise but if that’s necessary then it’s probably not that cheap. The cheapness gives the margin of safety and Fairfax’ portfolio is full of right tail optionality which I believe means it’s more likely ROE exceeds expectations versus not. I’m surprised how cheaply people are selling their shares before the potential index addition. Even if one thinks the stock is expensive why sell before that gets announced unless one thinks it’s already priced in. 
 

[Munger_Disciple]

5 hours ago, Viking said:

 

@Munger_Disciple, as of today, I am comfortable having Fairfax as a core position of about 35% of my total portfolio. I will flex this position up (and then back down) to take advantage of short term price volatility (like I do with all the stocks I own). I think this is what I have been constantly saying for about a year now.

 

Disclaimer: I may change my mind tomorrow. So you are warned!

 

Position size is a complicated topic. It is very situational. And my views on the subject are not fixed - they are continually evolving. Factors for me:

- Age / life stage / health situation

- Size of total portfolio

- Percent of total net worth in financial assets

- Estate planning

- My spouse (quite risk averse)

- Opportunity set

- Account types (most of my financial assets are in registered accounts - so it is very easy for me to flex my position)

 

Note, none of the above includes a discussion of the company and its intrinsic value - which is also important 

 

Makes sense. I too find position sizing one of the most interesting and challenging topics in investing. Like you said, many factors come into play. 

Edited yesterday at 05:18 AM by Munger_Disciple

[hardcorevalue]

8 hours ago, Hoodlum said:

I think one day we and the market will be talking about KI insurance as the big surprise, similar to how the sale of the Pet insurance business surprised us.  Except KI will be on a much larger scale. 

 

Unfortunately Fairfax doesn't even own the majority of Ki

[This2ShallPass]

6 hours ago, SafetyinNumbers said:

To estimate IV for Fairfax, I use a normalized market multiple of 15x PE as it has an above average return profile and the Buffett method of book value + float.

Both these methods give the same IV ($56-58B). Much higher than the $33B market cap. Do you believe Fairfax is still that undervalued?