Fairfax 3.0

[Dazel]

Berkshire is at all time highs despite holding $320b cash and having their public investment portfolio being hit and having their leader turning 95 in August. Why? Because they are a company built to last and safe port in troubled waters and a high flying ship when the sea’s are calm.

 

Fairfax 3.0 will also move significantly higher from here because Shareholders feel different holding powerhouse companies shares.
 

Once again it is the point of this thread. The comfort that comes from owning the best.

[73 Reds]

10 hours ago, Dazel said:

Berkshire is at all time highs despite holding $320b cash and having their public investment portfolio being hit and having their leader turning 95 in August. Why? Because they are a company built to last and safe port in troubled waters and a high flying ship when the sea’s are calm.

 

Fairfax 3.0 will also move significantly higher from here because Shareholders feel different holding powerhouse companies shares.
 

Once again it is the point of this thread. The comfort that comes from owning the best.

+1.  All young folks needs to know about investing is to avoid anything with a risk of permanent impairment of capital.    

[ValueMaven]

why would anyone buy Kinsale Capital (NYSE: KNSL) at 7x p/b, when you can get FRFHF at 1.1x p/b, and 8x?  I get they are different types of insurance companies - but to me, the amount of optionality with FRFHF vs. these E&S compounders is material.  KNSL doesnt have anything close to the equity and fixed income portfolio that FRFHF has.  Plus FRFHF is aggressively buying back stock ... KNSL is not.  Mr. Market gone made.

[SafetyinNumbers]

15 minutes ago, ValueMaven said:

why would anyone buy Kinsale Capital (NYSE: KNSL) at 7x p/b, when you can get FRFHF at 1.1x p/b, and 8x?  I get they are different types of insurance companies - but to me, the amount of optionality with FRFHF vs. these E&S compounders is material.  KNSL doesnt have anything close to the equity and fixed income portfolio that FRFHF has.  Plus FRFHF is aggressively buying back stock ... KNSL is not.  Mr. Market gone made.

KNSL has a structural advantage on its combined ratio which is why it has such a high ROE. It’s quality because it has high returns and predictable growth so it gets a high multiple. 

[ValueMaven]

@SafetyinNumbers helpful!  But isn't all insurance just commoditized at somepoint?  Have you looked at KNSL in-depth?  

[SafetyinNumbers]

4 hours ago, ValueMaven said:

@SafetyinNumbers helpful!  But isn't all insurance just commoditized at somepoint?  Have you looked at KNSL in-depth?  

I went to see KNSL in Richmond back in October. They are very smart, disciplined and have a cost advantage over their peers using technology. They write smaller business and their underwriters are more productive. I don’t want to pay 7x BV either but I understand why it trades there.

[Dazel]

Fairfax 3.0=strength back to alltime highs we go.

[Dazel]

And here we are!

[Viking]

It is interesting how uncorrelated Fairfax has been to the overall stock market in recent years. Why?

• Valuation - it is cheap (both P/BV and PE)
• Fundamentals continue to improve ($4b in earnings)
• P/C insurance - uncorrelated (mostly) to economic activity
• Tariffs - not impacted
• Buybacks - company is aggressively buying back stock
• Management - continues exceptional execution (best in class)

That is a pretty good set-up.

Edited April 1, 2025 by Viking

[Santayana]

I think it's still unknown what impact tariffs will have on the equity portfolio, but otherwise everything is lined up nicely.

[SafetyinNumbers]

52 minutes ago, Santayana said:

I think it's still unknown what impact tariffs will have on the equity portfolio, but otherwise everything is lined up nicely.

Which positions have you concerned?

[Santayana]

Poseidon would be the one I'd be most concerned about, but am more just saying we don't know what kind of impact there could be on the equity portfolio in general.  Maybe things like CLF and GM end up benefiting even, but I 'd say it's way too soon to tell.  I'm stupidly overweight in Fairfax, so it's not something that affecting my decision.

Edited April 1, 2025 by Santayana
.

[Hoodlum]

Grant White commented on Bloomberg Canada today regarding Fairfax.  Nothing much new but probably helped bring in buyers today.  Starts at 2:25

 

https://www.bnnbloomberg.ca/video/shows/the-open/2025/04/01/pulse-check-on-fairfax-mercado-libre-cnq-more/

Edited April 1, 2025 by Hoodlum

[Castanza]

Good to be a FFH holder right now 

[Redskin212]

Yes, especially when you are overweight like many of us on this board!

[backtothebeach]

35 minutes ago, Redskin212 said:

Yes, especially when you are overweight like many of us on this board!

 

Are you calling people fat?

Oh wait you are talking about Fairfax.

[villainx]

It’s down in Canada markets though. 

[Dazel]

Remember in Fairfax 3.0 they are the predator….i know the stock price has come down in a semi market crash. Think about they opportunity they will hav to deploy capital if this continues. That’s why we are here for this opportunity it’s how they make a killing. Credit spreads widening, corporate  bond and equity  opportunities that just were not there a month ago.

[Dazel]

This market is the best thing that can happen to Fairfax. They are big fans of Jeremy Gratham and in other crash’s they would have been very short. They vowed not to short individual companies after great set backs several years ago. But their portfolio is very defensive because of the over valuation in the U.S market. Their bonds are cash equivalents and they dwarf Berkshire’s cash pile. The worst it gets the better Fairfax position is. They buy when there is blood in the streets and the profits from these buys will take us to $5000 a share in the coming years.

 

love Fairfax 3.0! 

[Dazel]

I tried to buy the bottom yesterday and my bid got screwed by the fake news rally! Expect a sharp rebound in the share price back to records at Fairfax 3.0!

[ValueNation]

6 hours ago, Dazel said:

I tried to buy the bottom yesterday and my bid got screwed by the fake news rally! Expect a sharp rebound in the share price back to records at Fairfax 3.0!

 

Same here! I was hoping for a bit deeper fall than occurred...

[gfp]

I got a tiny amount.  Better than nothing!

 

[Dazel]

These results are what we should expect during Fairfax 3.0. Solid as can be.

[adventurer]

On 3/12/2025 at 1:53 PM, Hamburg Investor said:

I am just all in (from my perspective) with 43% Fairfax Financial and nearly 2% extra in Fairfax India. Is it a pity, that I can't buy more just right now? Not really. 

For one: Prem buys back shares for me anyhow. So his buybacks are my profits anyway. 

For two:

With what I had, I was able to buy much cheaper. So it was good not to keep ANY ‘dry powder’, but to ALWAYS be all in with the investable budget in FFH within the last years imho.

What is 4 months when investing? I think that's (almost) nothing. But it's only been four months since Fairfax Financial was consistently cheaper to buy then today; and it's only been 4.5 months since Fairfax was 7% cheaper; and before that it was very much cheaper very quickly. So the little bit of growth in intrinsic value in those short 4.5 months (maybe 5% to over 8%?), that was already reflected in the price then, when we compare it to todays situation: Fairfax was as cheap then as it is now relative to IV; and before it was much (much?) cheaper. So anyone having dry powder for over 4,5 months until now and not having invested back then, hasn't done so good in my eyes, but only has had luck - of course only as long as it was clear to that person, that Fairfax was a great investment back then.

But you have to bear in mind the risk of not having been invested during this time. And that's a really high risk imho. If it is true that Fairfax Financial is (very) cheap at the moment (which I believe), then it makes no sense to wait for it to become even cheaper. I don't think a lot of people have been profiting within the last years by trying to time Fairfax. It just went up and always very rare came back and then it's been for a very short time. It's just gone up, up, up sind end of 2022.

A very good investment that you can buy cheaply is like a very stretched rubber band: it is very likely to shoot forwards and this can happen very quickly. It doesn't make much sense to speculate that such a strongly stretched rubber band will become much tighter or could be folded for a long time in that situation. The arm holding it (even if it's Mr. Markets arm) will eventually become limp and will no longer be able to hold the pressure. The comparison is probably moderate, but I hope you get my point. 

Not doing the right thing one is very quickly caught in the trap of constantly waiting for setbacks that never come and all the time the dry powder is lying around instead of compounding.

We all know the stories of Buffett and Munger about the biggest mistakes they ever made: When asked, they keep (kept) citing situations where they didn't buy even though they could see that an investment could be good. Gayner often talks about how he bought his first shares of BRK far too late, and many other value investors tell similar stories. I was able to buy Lotus Bakeries for 400 Euro 10 years ago (or so); now it's 12.000 Euro or so. Since that happened and I was "thumb sucking", I now, what Buffett meant. And each time I drink a coffee and they put this little caramel cake to the coffee, I get remembered.

What else is it then thumb sucking to have dry powder lying unused while having discovered an investment (in my case FFH) that one sees as a once in a lifetime opportunity and isn't going all in, but holding something back? What is one waiting for when looking at a very good or even once-in-a-lifetime investment? What is one waiting for? For an even better investment or an even better price? Really? If the dry powder is investable, then I invest; if it's not investable (but needed for my financial security), then of course it's not to touch (in fact it isn't dry powder then). 

Of course, it's a little bit different if you are constantly expecting new cash flows that you can reinvest (which is not the case for me at the moment). It's totally clear, that one is happy then, buying on the cheap. But Fairfax has been cheap today and all days before within the last years, so I don't see any point "actively waiting" for a cheaper entry - the risk of missing this opportunity is just far too big in my eyes.

 

I was thinking of this lately. Since you and I are both located in northern Germany we both face the issue called taxes (~26,375% on Dividends, capital gains etc.) which cannot be avoided. They cannot by bypassed. I have also been heavily invested in FFH for some time now. However not all of my funds are. Especially when operating with taxable accounts it is most desirable to be invested in companies or ETFs for the long-term. That is without the intention to sell anytime soon. So what you are looking for is a Berkshire Hathaway/good index fund for the coming decades because taxes disrupt the compounding machine massively. 

The urge to invest in undervalued securities, analyze them etc. is pretty strong in me because it`s just so much fun to keep learning about it and because the rewards can be significant. But it`s not the most rationale thing to do if you are dealing with the German tax system disrupting compounding every time you have to sell and if you have long-term alternatives (perhaps FFH for example). This is why I was thinking of shifting everything into FFH 100%. I am relatively young and I keep justifying this approach with Munger advising us to grab opportunities such as these fiercely. But I am yet undecided.... 

Edited May 8, 2025 by adventurer

[Dazel]

Boringly awesome!

Fairfax 3.0