Fairfax 2026

[Hektor]

1 hour ago, vinod1 said:

Are we in just such an outperforming period or like Viking says they have "fixed" their approach?

I guess we will know if/when they get into another "turn around". Will they cut loose quickly or will they stay patient?

[Crip1]

1 hour ago, vinod1 said:

 

Prem has mentioned in the past that they expect 3 out of 5 positions to work out. They were and continue to be probabilistic investors.

 

When you are playing 60% odds, there are going to be periods when you are going to suck followed by periods of outstanding performance. 

 

Are we in just such an outperforming period or like Viking says they have "fixed" their approach?

 

What exactly was "wrong" about their investment process before that got fixed? Throwing in the towel a decade after the investment (Blackberry), does not exactly look like they changed or "fixed" their approach. It is just a natural conclusion.

 

I am more of the belief that we are in a period where macro conditions helping Fairfax investments. I am sure they improved their investment process as any good investor would do, but do not see anything that is radically different in their common stock/bond/preferred investments.

 

One area they did change was when buying insurance companies, they did move to quality. I do not see a similar change in their common stock investments. 

 

Vinod

 

As we all know, investing is complicated. With things this complicated, rarely is there a single explanation. Rather, it’s a confluence of factors. I offer the following and am open to alternative or additional factors.

• Timing – Using the “3 out of 5” rationale, random distribution suggests that we will have streaks with disproportionately higher numbers of hits and other streaks with disproportionately higher numbers of misses. Overall, there will be more hits over time but there will be months/years where misses outnumber hits. And, of course, an investment can go from hit to miss and vice versa.
• Luck – Let’s not kid ourselves, as much research that goes into our investment decisions as well as Fairfax’, there are unforeseen or unforeseeable factors that positively and negatively impact results. How much luck factors into any of our personal investments or Fairfax’ investments is debatable, but to say that it does not exist is naïve.
• Learning – All things being equal, the longer we do things, the better we get. This applies to an infinite number of skills we acquire over our lives. The more a learning machine invests, the better results the learning machine will achieve. How effective Prem and company are at being learning machines is debatable, but my opinion is that they’ve clearly shown to be learning machines.

-Crip
 

[Gopinath]

2 hours ago, vinod1 said:

 

Prem has mentioned in the past that they expect 3 out of 5 positions to work out. They were and continue to be probabilistic investors.

 

When you are playing 60% odds, there are going to be periods when you are going to suck followed by periods of outstanding performance. 

 

Are we in just such an outperforming period or like Viking says they have "fixed" their approach?

 

What exactly was "wrong" about their investment process before that got fixed? Throwing in the towel a decade after the investment (Blackberry), does not exactly look like they changed or "fixed" their approach. It is just a natural conclusion.

 

I am more of the belief that we are in a period where macro conditions helping Fairfax investments. I am sure they improved their investment process as any good investor would do, but do not see anything that is radically different in their common stock/bond/preferred investments.

 

One area they did change was when buying insurance companies, they did move to quality. I do not see a similar change in their common stock investments. 

 

Vinod

 

Well said, I also personally think they are in a very favorable period in terms of their success rate (most of their recent investments and interest rate calls have worked much better than their 60% odds), one should be cautious of projecting the recent performance into perpetuity. Regardless of their recent great performance or lack thereof in the previous period, their performance going forward will be decent but volatile as they happened to be in insurance and commodity type businesses.  

[djokovic1]

I think the analysis that @Viking has done to showcase the 5 year CAGR of the top 10 holdings is 30.6% is very instructive. Even if you assume the worst case scenario that this was 50% of the portfolio and the remaining 50% went to 0 (which we know is not the case), you get a 5 year CAGR of 13.6% which is top tier. And we know they have done significantly better than that.

 

[anshulp]

2 hours ago, MMM20 said:

 

https://iansbnr.com/vote-for-the-insurance-ceo-of-the-quarter-century/

 

Maybe I'll wait until Prem is the favorite in these sorts of polls rather than getting left off the list. 

I love his blog, super interesting post usually. 

[treasurehunt]

1 hour ago, djokovic1 said:

I think the analysis that @Viking has done to showcase the 5 year CAGR of the top 10 holdings is 30.6% is very instructive. Even if you assume the worst case scenario that this was 50% of the portfolio and the remaining 50% went to 0 (which we know is not the case), you get a 5 year CAGR of 13.6% which is top tier. And we know they have done significantly better than that.

 

The remaining 50% obviously did not go to zero, but it is not conservative to assume that the top 10 holdings were 50% of the portfolio. From Viking's post, total market value of the 10 holdings was $4.157B at the end of 2020 or when the position was purchased, if later. Total carrying value of all common stock holdings at the end of 2020 was $9.775B. So the 10 holdings were less than 4.157/9.775 = 42.7% of the portfolio at the end of 2020 (probably much less since 3 of the positions were purchased after 2020).

[dartmonkey]

2 hours ago, djokovic1 said:

I think the analysis that @Viking has done to showcase the 5 year CAGR of the top 10 holdings is 30.6% is very instructive. Even if you assume the worst case scenario that this was 50% of the portfolio and the remaining 50% went to 0 (which we know is not the case), you get a 5 year CAGR of 13.6% which is top tier. And we know they have done significantly better than that.

 

I don’t think this is a good way of analyzing investment performance, divvying up the investments into top 10 present holdings, representing about half of current investments, and ‘the rest’  representing the other half, and averaging the two. The top performers will be a big percentage of current holdings just because they have done well, and the weightings are all wrong because the size of the winners will be much greater, at the end of the period, just because of their recent growth  

 

But if you want to paint a rosy picture of how Fairfax is doing, it’s perfect, so I am not too surprised that this is a popular way of doing it in a group of fans of the company. Of which I am one, for sure, with Fairfax representing just shy of 50% of my investments, after 5 years of growth. 

 

Come to think of it, my portfolio is a perfect example of how this ‘current top 10’ technique makes things look better than they really are. Fairfax has had an awesome return for the past 5 years (>500% gains), which is WHY it is now 50% of my holdings. But unfortunately, it was not 50% of my holdings 5 years ago, more like 20%. So my total portfolio is up less than 250% despite the 500% return of FFH. 

 

The proper way of analyzing my returns in the past 5 years is to look at what i owned 5 years ago, and how much that has increased in 5 years. Looking only at my biggest positions now is more pleasant, because it ignores the investments that have flamed out (we all have a Blackberry or two in our closets), but it makes things look better than they really are. 

[Munger_Disciple]

2 hours ago, dartmonkey said:

The proper way of analyzing my returns in the past 5 years is to look at what i owned 5 years ago, and how much that has increased in 5 years. Looking only at my biggest positions now is more pleasant, because it ignores the investments that have flamed out (we all have a Blackberry or two in our closets), but it makes things look better than they really are. 

 

Spot on! 

[djokovic1]

8 hours ago, dartmonkey said:

The proper way of analyzing my returns in the past 5 years is to look at what i owned 5 years ago, and how much that has increased in 5 years. Looking only at my biggest positions now is more pleasant, because it ignores the investments that have flamed out (we all have a Blackberry or two in our closets), but it makes things look better than they really are. 

Yes 100% agreed, no debate there.

 

I still find it a useful datapoint given that we are talking about the top 10 investments (not just the top 2 or 3). That Pareto principle, 80% of your returns will be driven by 20% of your stocks.....

 

But we can all simply agree the last 5 year track record (and 40 year) track record is great with hiccups in between as any investor has. 
 

Also @treasurehunt 40% * 30% =12% is a pretty nice 5 year CAGR as a worst case  (although that's not really the worst case as CAGR's can be negative of course for the remaining lot but we can give them some credit for their track record)

Edit: Personally I would like better disclosure on their equity returns, they used to have better more granular disclosure on it in the past

Edited January 7 by djokovic1

[73 Reds]

10 hours ago, dartmonkey said:

I don’t think this is a good way of analyzing investment performance, divvying up the investments into top 10 present holdings, representing about half of current investments, and ‘the rest’  representing the other half, and averaging the two. The top performers will be a big percentage of current holdings just because they have done well, and the weightings are all wrong because the size of the winners will be much greater, at the end of the period, just because of their recent growth  

 

But if you want to paint a rosy picture of how Fairfax is doing, it’s perfect, so I am not too surprised that this is a popular way of doing it in a group of fans of the company. Of which I am one, for sure, with Fairfax representing just shy of 50% of my investments, after 5 years of growth. 

 

Come to think of it, my portfolio is a perfect example of how this ‘current top 10’ technique makes things look better than they really are. Fairfax has had an awesome return for the past 5 years (>500% gains), which is WHY it is now 50% of my holdings. But unfortunately, it was not 50% of my holdings 5 years ago, more like 20%. So my total portfolio is up less than 250% despite the 500% return of FFH. 

 

The proper way of analyzing my returns in the past 5 years is to look at what i owned 5 years ago, and how much that has increased in 5 years. Looking only at my biggest positions now is more pleasant, because it ignores the investments that have flamed out (we all have a Blackberry or two in our closets), but it makes things look better than they really are. 

Agreed but only if each of your investments started out as equal weight.  Otherwise you may be over-thinking this b/c  your best performers are responsible for most of your investment success, which is Viking's primary point.  

[Hamburg Investor]

 

1 hour ago, 73 Reds said:

The proper way of analyzing my returns in the past 5 years is to look at what i owned 5 years ago, and how much that has increased in 5 years. Looking only at my biggest positions now is more pleasant, because it ignores the investments that have flamed out (we all have a Blackberry or two in our closets), but it makes things look better than they really are. 

Agree 100%.

The Top10 Equity portfolio should be around 4.1 bn dollar in 2020.
1. So Blackberry was representing 8%. 
2. FFH-TRS wasn't existing, but is - together with Eurobank - the biggest contributor of the Top10 holdings
3. Foran Mining wasn't part of FFHs portfolio 5 years ago (at least it were fewer shares, don't know)
4. Metlen wasn't part of FFHs portfolio in 2020
5. Thomas Cook India seems to have grown into the Top10 (your argument... winners are overrepresented)
6. Resolute First Products: Was sold in July 2022; It's only part of the list, as it seems to be one of the 10 "most impactful holdings" of the last 5 years.
7. Stelco: Was a Top10 in 2020; as it's been sold in Nov 2024 it's in this list only as it still is "one of the 10 most impactful holdings of the last 5 years.

It's the list of the "most impactful winners of the last 5 years". So it's not even the Top10 holdings of today. I think the informative value of the CAGR is therefore very limited.

Nonetheless the list is instructive in a way, somehow. To me it shows e. g., that they got the size right at its winners. But it shouldn't be overinterpreted!

Does it mean, that FFH has done bad overall investments over the last 5 years? Of course not, you and me know, that they were incredible good at it.

It's just, that the table clearly is not able to answer the questions, HOW GOOD they were on average (CAGR), as it ONLY highlights the best of the best. 

[SafetyinNumbers]

7 hours ago, djokovic1 said:

Edit: Personally I would like better disclosure on their equity returns, they used to have better more granular disclosure on it in the past

This shouldn’t be hard to do for the accounting equity returns. They give us the asset mix, the coupon on the fixed income portion and the gains/losses on bonds are separated from the equities. 
 

[djokovic1]

Thanks but ideally I want to seen something like the below (with and without hedging). I haven't seen such a breakdown since 2016. Because the accounting numbers are not clean (and are also not economic value) so you don't have a direct performance comparison to benchmarks on their public equity investments. And I would be pretty sure they have it internally! It would be nice for investors to have it too, to assess their performance. 
 

 

Edited January 7 by djokovic1

[vinod1]

20 hours ago, Viking said:

 

@vinod1, I think if you look at specific investments it becomes relatively easy to see the changes that Fairfax has made in their approach. I see three things they changed:

• The importance of management/CEO/partners when making a large investment
• The financial condition of the company - strength of the balance sheet.
• Profitability.

Prior to 2018, Fairfax was littered with company's that scored low on all three metrics. 

 

Today, most of Fairfax's large positions score well on all three metrics. I don't think that is happenstance (luck). I think it is by design - i.e. Fairfax changed their internal framework.

 

New purchases have been much better. And 'keeper' holdings have been forced to get with the new program - be run by strong management teams, have a solid balance sheet and be profitable. Fairfax is operating at a completely different level today. And this new framework is becoming embedded in their culture. 

 

I could be completely wrong. I don't think so - the evidence looks too compelling (to me anyways).  

 

@Viking Thanks for pointing out the changes. You are probably correct and I need to update my views - just like your detailed analysis made me change my mind regarding earnings power. My portfolio returns over the last 4 years owe a lot to you. Thank you! 

 

Vinod 

 

 

[vinod1]

11 years back I took a detailed look at the historical record of Fairfax investment returns from 1986 to 2014. I was trying to answer a few related questions:

 

(1) What if Fairfax has just invested its stocks and bonds in an index fund right from the beginning, what would its returns have been?

 

(2) What is the alpha Fairfax investment team is adding? How consistent is it?

 

(3) And what can we infer about future returns, especially since bond market returns are going to be terrible due to low yields? 

 

I wrote as a blog post at that time in early 2015 estimating Fairfax future returns. This is old and fairly boring, but there might be someone who may find it interesting. The blog (and all 3 blog posts  ) has been lost when I transitioned to a new hosting platform.

 

Vinod

 

 

 

At what rate can Fairfax compound.pdf

[Maverick47]

Thanks @djokovic1.   In a typical situation where stocks and bonds are the main investment options, this sort of disclosure is very helpful.  It would work for looking at my own personal investment performance for example.  But I think Fairfax has investment options that go beyond this framework nowadays that make it more of a challenge.  They have been making investments in standalone companies such as Sleep Country and Recipe for example, along with private equity type investments such as Poseidon and the TRS on their own shares, not to mention convertible bonds or warrants on Digit or Orla.  These can be very meaningful and sizeable investments for Fairfax, but market valuing them and trying to include them in a chart of common stocks and bonds performance relative to some sort of index probably isn’t easy to do.  So they’d probably be absent from any such comparison.  

[djokovic1]

@Maverick47 I agree with what you say, yet doing the math for their public equity portfolio only and reporting it (and leaving out the private companies) allows an investor to make a sound judgment on their investing skills (by comparing with benchmarks, ideally over 10-15 years). 

Separately, I am quite surprised on how little informational value most on the board are ascribing to Viking's return analysis of the top 10 holdings with a CAGR of 30.6%.

Yes it's not perfect, and it's 'only' 5 years, and of course if we had perfect data we would replicate all the investments from 5 years ago (and the investment decisions thereafter). But we don't!

It's fine to be conservative but take a look at your own top 10 holdings today and calculate the last 5 year CAGR. If it comes close to 30% give me a call. Mine definitely does not.

[TwoCitiesCapital]

19 minutes ago, djokovic1 said:

It's fine to be conservative but take a look at your own top 10 holdings today and calculate the last 5 year CAGR. If it comes close to 30% give me a call. Mine definitely does not.

 

My 5-year CAGR in Fairfax is close to 40% per annum and is by far my largest holding. Does that count?

[djokovic1]

Well done!! And I imagine there are a few others on this forum with a similar outcome.

 

But for me it doesn't qualify, it's much much harder to have a much larger number of stocks (10) compounding at very high rates for a significant period of time.

 

Congrats on your conviction and outcome!

[Maverick47]

32 minutes ago, djokovic1 said:

@Maverick47 I agree with what you say, yet doing the math for their public equity portfolio only and reporting it (and leaving out the private companies) allows an investor to make a sound judgment on their investing skills (by comparing with benchmarks, ideally over 10-15 years). 

Separately, I am quite surprised on how little informational value most on the board are ascribing to Viking's return analysis of the top 10 holdings with a CAGR of 30.6%.

Yes it's not perfect, and it's 'only' 5 years, and of course if we had perfect data we would replicate all the investments from 5 years ago (and the investment decisions thereafter). But we don't!

It's fine to be conservative but take a look at your own top 10 holdings today and calculate the last 5 year CAGR. If it comes close to 30% give me a call. Mine definitely does not.

@djokovic1 we are in complete agreement!  
 

I voluntarily oversee a number of portfolios for family members, and only one has a five year CAGR just barely in excess of 30.6%.  That happens to be a concentrated portfolio that started a little over five years ago with only five holdings, invested for the benefit of charities.   It’s being liquidated regularly and should be completely distributed to the charities within another year or so.  In selling positions each year to make distributions I have attempted to water the flowers and sell the weeds.  As a result, Fairfax is the only position left in the portfolio, though it was only about 30% of the starting portfolio.

There’s no conceivable way for me in my own mind to have been able to achieve anything close to such a CAGR if I had to be invested in ten or more equities and make regular decisions about where to invest new funds.  It was only the accident of running a portfolio that was started a little over 5 years ago, being wound down and sold off, with the survivorship bias of Fairfax being the last holding, that produced such a result.  I am truly grateful for what Fairfax has been able to do the last five years,  and it will be a pleasure when the final chapter of this portfolio is written, and the last share of Fairfax sold, with the proceeds distributed to the charitable beneficiaries.

 

[Viking]

1 hour ago, djokovic1 said:

@Maverick47 ...Separately, I am quite surprised on how little informational value most on the board are ascribing to Viking's return analysis of the top 10 holdings with a CAGR of 30.6%.

Yes it's not perfect, and it's 'only' 5 years, and of course if we had perfect data we would replicate all the investments from 5 years ago (and the investment decisions thereafter). But we don't!

It's fine to be conservative but take a look at your own top 10 holdings today and calculate the last 5 year CAGR. If it comes close to 30% give me a call. Mine definitely does not.

 

@djokovic1, thank you for the comment. To state the obvious, it is very difficult to calculate a total annuall return for Fairfax's equity portfolio - using a bottom up analysis (i.e. by each holding).

• With a value of $26.7B, it is of a significant size. 
• There are a large number of holdings.
• There are both public and private holdings (with limited disclosure).
• There are outright sales (100% of a position is sold). And there are also brand new purchases.
• Fairfax often adds to positions. And also does partial sales.
• Some holdings pay dividends. This can be determined/calculated for public holdings but not for private holdings. 
• Fairfax has material international holdings - currency movements also needs to be included in the analysis (currency changes in 2025 have been significant).
• And if all that wasn't enough, how should derivative type positions like FFH-TRS be included? What cost base should be used for this investment? And what level of expenses? 

Needless to say, calculating a one year total return is very difficult. What about a 5 year? That is much more difficult - the one year actually looks easy in comparison.  

 

Because it is difficult - does this mean we do nothing?

 

The key question is this - is this an important part of Fairfax's business model? The answer is an obvious yes. It is critically important. 

 

What can we do to better understand the performance of the equity portfolio? 

 

The answer is easy. You break it into smaller pieces. And that is what I have tried to do over the years. I have developed a number of tools that help us understand what is going on at Fairfax's equity portfolio. Each tool is incomplete on its own. But when they are used together they provide a pretty good picture of what is going on. 

 

Recently, I came up with a a couple of new tools. I think they are helpful. Like all new tools, I am learning how to use/explain them properly. I appreciate the feedback from other board members - and my learnings will find their way into future updates. 

-----------

The 'narrative' is Fairfax is not very good at equity investing. I don't agree. In fact, it looks to me like Fairfax is very good. My view is informed by what my tools tell me.  

Edited January 7 by Viking

[Viking]

2 hours ago, vinod1 said:

 

@Viking Thanks for pointing out the changes. You are probably correct and I need to update my views - just like your detailed analysis made me change my mind regarding earnings power. My portfolio returns over the last 4 years owe a lot to you. Thank you! 

 

Vinod 

 

@vinod1, I appreciate the comment. Thank you.

 

Fairfax is a complicated company. And it has been changing in important ways every year for 5 years. This combination makes it even more difficult for investors to understand/analyze/value. The company keeps morphing each year into a better version of itself. Now I don't expect that this will keep happening every year.

 

My guess is the investors who have been most successful with Fairfax (as an investment) over the past 5 years are the ones who have been the most inquisitive and open minded about what is happening and focussed on where the Fairfax puck is going. 

Edited January 7 by Viking

[CharlesMunger]

Fairfax appears to have continued repurchasing

 

[Hoodlum]

5 hours ago, CharlesMunger said:

Fairfax appears to have continued repurchasing

 

 

Thanks for posting @CharlesMunger   I noticed the larger trade on 12/16 for 50k through Scotia under the CBOE trading network, but initially thought it was for 100k.  There was a similar 109k buyback done on 11/11.  Scotia is who Fairfax uses for buybacks and it looks like they use the CBOE trading network for some of their larger buybacks. 

 

12/16

 

11/11

Edited January 8 by Hoodlum

[Hoodlum]

Brit is expanding Property D&F to Bermuda. 
 

https://www.britinsurance.com/news/brit-launches-property-df-in-bermuda

 

Brit Group Holdings Limited (“Brit”) is pleased to announce that it will begin writing Property D&F in Bermuda through Brit Re.

 

This will see Brit Re write US and Global Property D&F from January, with a focus on US-based complex risks. Core appetite will include industrial, manufacturing and realty risks, among other industry verticals.

 

The new offering will be led by Tom Ayton, Vice President, Property D&F, who has relocated from Brit’s London office. Tom has been with the Brit group since 2021 and has also held Property D&F underwriting roles at Agora and Markel.