Fairfax 2026

[Buffett_Groupie]

55 minutes ago, Viking said:

@Buffett_Groupie, good point. Earlier in January I did updates for all the public equity holdings (using Dec 31, 2025 stock prices). When Fairfax releases their annual report I plan on doing the same for the private holdings (like Poseidon/Atlas/Seaspan). When I post i tend to over-emphasize the other things I have been working on at the time (and other important things tend to get under-emphasized). Needless to say, this is the first ‘version’ of this post - so it is a little clunky and missing things. This is where comments/input/critique from other board members becomes quite valuable/helpful - so please keep it coming. 

would Seaspan be part of Engine 2 or Engine 3?

[wondering]

@Viking maybe I will push back on point (great post as usual btw). Can you give an example where Fairfax has successfully invested in a turnaround situation 

[Parsad]

5 minutes ago, wondering said:

@Viking maybe I will push back on point (great post as usual btw). Can you give an example where Fairfax has successfully invested in a turnaround situation 

 

Many of their earlier insurance businesses and many of their non-insurance investments are turnarounds...Eurobank, Bank of Ireland, Atlas Corp, Crum & Forster, Odyssey Re, etc.

 

The question is how much work does it take for them to turnaround businesses and is it worth the risk/reward?  I would say it's a ton of work, but more often than not, it has paid off.  

 

But the old core are pure Ben Graham/distressed investors.  Nothing gets them wetter faster than the words "distressed" and "turnaround".  So, they are a bit addicted.

 

This is all changing slowly though as the younger leadership group, whose style is more of a blend of "cheap, quality" is seeping into the investment team.

 

Cheers!

[TwoCitiesCapital]

35 minutes ago, Parsad said:

But the old core are pure Ben Graham/distressed investors.  Nothing gets them wetter faster than the words "distressed" and "turnaround".  So, they are a bit addicted.

 

 

Lol. Guilty. 

[Viking]

2 hours ago, Buffett_Groupie said:

would Seaspan be part of Engine 2 or Engine 3?

@Buffett_Groupie, great question. Today, I include all associate holdings in engine 2. I think you could make a good case that they should be included in the third engine and make it: share of profit of associates + non-insurance consolidated holdings. What do you think? Is that how you think about Fairfax?

 

I am working on a post where I layer in Fairfax’s 6 income streams. I think that is another helpful way to think about Fairfax’s business model. 

Edited January 30 by Viking

[Viking]

2 hours ago, wondering said:

@Viking maybe I will push back on point (great post as usual btw). Can you give an example where Fairfax has successfully invested in a turnaround situation 

In addition to @Parsad examples:

• Dexterra: purchased out of bankruptcy (the UK parent went bankrupt; the Canadian operations were good). 
• Peak Achievements: purchased out of bankruptcy.

Both of these have done well. 
 

I might also include the Recipe take private in the turnaround bucket. Fairfax bought it at a distressed price at the end of Covid. Better examples of this might be EXCO take private and/or the AGT Food and Ingredients take private. All three of these holdings went from dogs to solid investments today.

[Viking]

2 hours ago, Parsad said:

 

Many of their earlier insurance businesses and many of their non-insurance investments are turnarounds...Eurobank, Bank of Ireland, Atlas Corp, Crum & Forster, Odyssey Re, etc.

 

The question is how much work does it take for them to turnaround businesses and is it worth the risk/reward?  I would say it's a ton of work, but more often than not, it has paid off.  

 

But the old core are pure Ben Graham/distressed investors.  Nothing gets them wetter faster than the words "distressed" and "turnaround".  So, they are a bit addicted.

 

This is all changing slowly though as the younger leadership group, whose style is more of a blend of "cheap, quality" is seeping into the investment team.

 

Cheers!

@Parsad, I am on the record as saying Fairfax has changed their investment framework:

• Partner with strong management teams
• Companies with strong balance sheets
• Companies that are profitable (able to grow via retained earnings)

Of course there are exceptions. 
 

I think Fairfax learned the hard way that they are not resourced at H/O to be a turnaround shop. Especially today as the company grows quickly in size. The few true turnaround holdings left are slowly getting wound down:

• Boat Rocker (folded into stronger Blue Ant)
• Blackberry: exited debentures… now exiting common stock)

[Parsad]

1 hour ago, Viking said:

@Parsad, I am on the record as saying Fairfax has changed their investment framework:

• Partner with strong management teams
• Companies with strong balance sheets
• Companies that are profitable (able to grow via retained earnings)

 

Yeah, I would agree with that.  I think it's been a slow change as Wade slowly had more influence.  It's hard to teach an old dog new tricks...especially if those old tricks worked for the most part and got you lots of treats! 

 

I personally have a hard time paying up as well.  I'm not sure if I'll ever truly be comfortable paying up.  Cheers!

[Milu]

8 hours ago, Parsad said:

This is all changing slowly though as the younger leadership group, whose style is more of a blend of "cheap, quality" is seeping into the investment team.

I hear this but then I see them taking a big position in Under Armour, which makes no sense to me. Maybe there is some logic but this is a beat up distressed apparel company. I also remember when they went big into Blackberry/RIM after it was clear that apple and the smartphone had destroyed the business, it seemed like a very confusing investment decision to me at the time (not hindsight bias) and it played out in expected fashion. And then deciding to be perpetually hedged or short during one of the biggest bull runs in history. Perhaps the sign of how good this business is is how it has still managed to generate such good stock and book value returns despite plenty of large capital allocation errors, not necessarily because of great decisions.

 

I have started to read some of @Viking posts though and he does make a very good case for the company if they have indeed rectified these prior capital allocation approaches although seeing this Under Armour talk has made me question things.

[Buffett_Groupie]

9 hours ago, wondering said:

@Viking maybe I will push back on point (great post as usual btw). Can you give an example where Fairfax has successfully invested in a turnaround situation 

Eurobank and Stelco come to my mind

[Buffett_Groupie]

19 minutes ago, Milu said:

I hear this but then I see them taking a big position in Under Armour, which makes no sense to me. Maybe there is some logic but this is a beat up distressed apparel company. I also remember when they went big into Blackberry/RIM after it was clear that apple and the smartphone had destroyed the business, it seemed like a very confusing investment decision to me at the time (not hindsight bias) and it played out in expected fashion. And then deciding to be perpetually hedged or short during one of the biggest bull runs in history. Perhaps the sign of how good this business is is how it has still managed to generate such good stock and book value returns despite plenty of large capital allocation errors, not necessarily because of great decisions.

 

I have started to read some of @Viking posts though and he does make a very good case for the company if they have indeed rectified these prior capital allocation approaches although seeing this Under Armour talk has made me question things.

Hope Under Armour isn’t another Reitmans (Reitmans、RW&CO、PENNINGTON)

[SafetyinNumbers]

1 hour ago, Milu said:

I hear this but then I see them taking a big position in Under Armour, which makes no sense to me. Maybe there is some logic but this is a beat up distressed apparel company. I also remember when they went big into Blackberry/RIM after it was clear that apple and the smartphone had destroyed the business, it seemed like a very confusing investment decision to me at the time (not hindsight bias) and it played out in expected fashion. And then deciding to be perpetually hedged or short during one of the biggest bull runs in history. Perhaps the sign of how good this business is is how it has still managed to generate such good stock and book value returns despite plenty of large capital allocation errors, not necessarily because of great decisions.

 

I have started to read some of @Viking posts though and he does make a very good case for the company if they have indeed rectified these prior capital allocation approaches although seeing this Under Armour talk has made me question things.

Investors that project their own investment style onto Fairfax will have trouble owning the stock. It’s a big part of why the discount exists. Expected value investing is probabilistic and most people are deterministic. One isn’t better than the other, it’s just different. 
 

[Txvestor]

As things stand I think eurobank represents one of their largest investments and it's a big turnaround. There was a long period where they were under water and it looked destined to go under, they even had to recapitalize.

I think all in they invested in the region of $1.6B over 10yrs ago. It's now nearly a 4x investment. Glamorous no, effective yes. 

[Milu]

1 hour ago, SafetyinNumbers said:

Investors that project their own investment style onto Fairfax will have trouble owning the stock. It’s a big part of why the discount exists. Expected value investing is probabilistic and most people are deterministic. One isn’t better than the other, it’s just different. 
 

Yes that's a good point. With Buffett I could understand the logic of the companies he was buying, lots of big consumer brands with large moats, and demonstrated track record of success. Fairfax (to my surface level knowledge) have tended to focus more on deep value or turnaround plays, perhaps they have changed this now. Again I don't know enough about the company yet to have a fully educated opinion, just an interested observer and trying to learn more about it.

[Junior R]

under $2200 cad good day to add

[73 Reds]

1 minute ago, Junior R said:

under $2200 cad good day to add

I have a "mortgage the house, load the boat" price in mind but will keep it to myself as to not encourage any front-runners.

[gfp]

Just now, 73 Reds said:

I have a "mortgage the house, load the boat" price in mind but will keep it to myself as to not encourage any front-runners.

 

I know a hard money lender who is virtuously opposed to high interest rates if you want a connect

[73 Reds]

1 minute ago, gfp said:

 

I know a hard money lender who is virtuously opposed to high interest rates if you want a connect

LOL, he borrows from himself.

[Junior R]

10 minutes ago, 73 Reds said:

I have a "mortgage the house, load the boat" price in mind but will keep it to myself as to not encourage any front-runners.

from todays price could be a double in 5 to 7 years lol as long as long as they follow the new fairfax model lol

Edited January 30 by Junior R

[Whensthepaintdry?]

I would be a little disappointed if it took 7 years to double. 

[Junior R]

22 minutes ago, Whensthepaintdry? said:

I would be a little disappointed if it took 7 years to double. 

I was being conservative didn't want to say something short and than giving someone else disappointment lol 

 

I want to see share count under 15m by then

Edited January 30 by Junior R

[Viking]

4 hours ago, Milu said:

I hear this but then I see them taking a big position in Under Armour, which makes no sense to me. Maybe there is some logic but this is a beat up distressed apparel company. I also remember when they went big into Blackberry/RIM after it was clear that apple and the smartphone had destroyed the business, it seemed like a very confusing investment decision to me at the time (not hindsight bias) and it played out in expected fashion. And then deciding to be perpetually hedged or short during one of the biggest bull runs in history. Perhaps the sign of how good this business is is how it has still managed to generate such good stock and book value returns despite plenty of large capital allocation errors, not necessarily because of great decisions.

 

I have started to read some of @Viking posts though and he does make a very good case for the company if they have indeed rectified these prior capital allocation approaches although seeing this Under Armour talk has made me question things.

@Milu, UA is (still) a small investment. What I focus on is results. Here is how Fairfax’s 10 largest public holdings performed in 2025. Results for the past 5 years have been very good. At high level, they are watering their flowers and pulling their weeds. As a result, i give management some leeway - they have earned it in my books. 
 

Importantly, they are going to make some mistakes (this is not to say I think UA is a mistake - I have no idea as I don’t follow the company/industry). 
 

 

 

Edited January 30 by Viking

[roundball100]

1 hour ago, Milu said:

Yes that's a good point. With Buffett I could understand the logic of the companies he was buying, lots of big consumer brands with large moats, and demonstrated track record of success. Fairfax (to my surface level knowledge) have tended to focus more on deep value or turnaround plays, perhaps they have changed this now. Again I don't know enough about the company yet to have a fully educated opinion, just an interested observer and trying to learn more about it.

My take on this (and from the long-view provided in The Fairfax Way, which I found quite instructive, even though I thought that had followed much of the story on my own over the past 25 years): Fairfax has learned their lesson w.r.t. buying insurance companies, from experience - better to buy quality businesses, as turning around an insurance company takes a LONG time, and can be painfully costly due to the hidden costs of past policies sold - but on the other (non-insurance) side of the corporation, opportunistically investing in turn-arounds remains one of the ways they aim to deliver value to shareholders.  Am I wrong?

[dartmonkey]

10 hours ago, Viking said:

@Buffett_Groupie, great question. Today, I include all associate holdings in engine 2. I think you could make a good case that they should be included in the third engine and make it: share of profit of associates + non-insurance consolidated holdings. What do you think? Is that how you think about Fairfax?

 

I am working on a post where I layer in Fairfax’s 6 income streams. I think that is another helpful way to think about Fairfax’s business model. 

 I look forward to that post. Here's how I think about Fairfax:

 

As you said a couple of days ago, they are more than a conventional P/C insurance company, they are a capital-allocation system investing float and equity in fixed income, equities (minority stakes, associate stakes, or consolidated stakes, depending on the percentage) and wholly owned companies.

 

You talked about three complementary business engines:

1. Insurance operations that generate large, durable, growing amounts of low-cost (often negative-cost) float
2. A flexible investment portfolio, spanning fixed income and public and private equities
3. A growing collection of wholly owned operating companies across industries and geographies

I think this could reasonably be expanded to a few more, maybe 6 as you say. I like the RBC ROE insurance model that SafetyinNumbers has posted on multiple occasions, which is a way of estimating what their total returns on equity will be, which for the sake of convenience I will reproduce here, although I don't have an updated table (maybe Safety does):

 

 

 

 

Using this, I think you can think about Fairfax as getting its returns from underwriting (first blue line), investment return (second blue line), a little other income which I presume is the administrative cost of head office (3rd blue line; is this right?), and little financing drag from their borrowing (4th blue line). The second blue line, investment return, is a mix of a bunch of things which I think are worth teasing out, primarily fixed interest (largely representing insurance premiums which regulators require them to invest essentially in fixed income securities, largely treasuries but also some corporate debt and mortgages), public equity investments (including minority interests like Orla, associates like Eurobank, Poseidon and Exco Resources, and consolidated or fully owned equity investments like Recipe, Sleep Country, Fairfax India, AGT, Meadow Foods and Peak.

 

I like to think of the insurance companies as providing value in 2 ways (i.e. 2 'groves'): underwriting and investment income from the float. So Grove 1 would be underwriting, with an estimate of their return being something like 4% of thier $27b in net premiums written (($20.5b in 2025 first 3 quarters). This represents a combined ratio of 96, which may be slightly on the conservative side based on their 95 average over the lasst 10 years, but one bad catastrophe year could easily put them back to a 5-year average of 96.

 

The second grove would be their ~$50b fixed income portfolio, which is mostly but not entirely comprised of their $38.5b in float, with low returns typical of fixed income, say 4%.

 

The third grove would be their equity portfolio, excluding of course their insurance subsidiaries (already counted). I suppose this could be broken down into minority stakes and associated and consolidated stakes.

 

The drag from financing (interest expenses from their own debt) and from taxes has to be considered somewhere, although it is not really a grove.

 

And then the final grove is head office, which involves some expense (RBC estimates this as -0.7% of equity), but also a major profit source. After all, it is head office that pulls rabbits out of hats by selling companies opportunistically, not just equities but also the bond portfolio and even, occasionally, an insurance business (like PetCo) when the price is really good. I don't think it's double counting to give them some credit for creating value above and beyond the intrinsic value of their holdings, by selling them at an above-market price when the opportunity arises.

[Milu]

18 minutes ago, Viking said:

@Milu, UA is (still) a small investment. What I focus on is results. Here is how Fairfax’s 10 largest public holdings performed in 2025. Results for the past 5 years have been very good. At high level, they are watering their flowers and pulling their weeds. As a result, i give management some leeway - they have earned it in my books. 
 

Importantly, they are going to make some mistakes (this is not to say I think UA is a mistake - I have no idea as I don’t follow the company/industry). 
 

 

 

Thanks, yes UA may work out and agreed that as long as the big investments are showing good returns I don't mind a few small ones doing badly. My other question for you seeing as you have obvioulsy done a lot of research on the company. Is there any good metric to use to assess the valuation of FFH relative it it's peers and it's history. And how do things look now based on that. I know price to book is often used for these types of firms, Berkshire typically being known to be good value at 1.2 or lower, although Buffett gradually put less emphasis on this. Is Price to Book a similarly useful though not perfect way to assess Fairfax?