Fairfax 2026

[Viking]

5 hours ago, djokovic1 said:

@Viking I think about 2026 and 2027 similar to you. But I am higher for diluted EPS, $200 for 2026 and $230 for 2027.

Similar to you I think operating profit will be flattish and investment gains will be more moderate (relative to 2025), however, if you have no premium growth you can assume all the profits will be funnelled into buybacks. You will get shares outstanding go down by much more than 3-4%, closer to 8-10%. Conversely they could use that capital to do M&A (or buy out minorities), in that case top-pline will not be flat and grow more than we have assumed. Which explains my delta to your numbers.

@MMM20 I will let Eigen come to his own conclusions. Personally, we have discussed on the board here, I think Fairfax should trade at ~2x book+ if you expect 15% ROE+. Right now it's closer to 1x book. Of course if it triples tomorrow and gets close to 3x book, most of us will be silly to not think of selling! But if it doubles tomorrow to 2x book I am comfortable holding on and gain from the EPS compounding.

We have discussed before, it trades at much lower multiples than peers who have lower ROE's and most of them shorter track records. Bullish or not, I care about being accurate, rather than conservative or optimistic. To me it's pretty clear Fairfax is significantly mispriced relative to peers and on an absolute basis and shareholders will do very well from today with a 5 year + horizon.

@djokovic1 , thanks for sharing your thoughts. 

Edited February 27 by Viking

[dartmonkey]

On 2/25/2026 at 4:51 PM, Viking said:

9. Net Gains on Investments

 

Estimate: $1.5B

 

Drivers:

• Mark-to-market gains (FFH-TRS, Orla Mining, others). 
• Realized gains from asset sales

A major revaluation event is not built into the base case. As hidden value continues to grow, these become more likely – we just don’t know the timing.

 

This is the big question. Clearly, we won't be getting $3.15b in investment gains every year, like in 2025, and that is surely why Mr Market is not particularly impressed with overall earnings that put Fairfax at about 8x 2025 earnings. But maybe $1.5b is too pessimistic? The big investment gains were from Orla and the return swaps. Fairfax shares are down about $200 from their end of year price of $1908, so that could be a headwind, but Orla is up massively already in just 2 months, with the share price up almost as much in January and February (from $18.46 to $28.74) as it was in all of 2025 (from $7.96 to $18.46.) Yes, they sold a quarter of the position at $17.64, but the other 3/4 is looking at huge gains, roughly C$700m so far. Good gains already from UA, and their KW position may be counted as an investment gain when they take it private at a premium. Throw in one good asset sale (there aren't many years when they don't pull some kind of rabbit out of the hat), and with a little help from the return swaps, we could easily be closer to $3b than $1.5b.

Edited February 27 by dartmonkey

[Viking]

1 hour ago, dartmonkey said:

 

This is the big question. Clearly, we won't be getting $3.5b in investment gains every year, like in 2025, and that is surely why Mr Market is not particularly impressed with overall earnings that put Fairfax at about 8x earnings. But maybe $1.5b is too pessimistic? The big investment gains were from Orla and the return swaps. Fairfax shares are down about $200 from their end of year price of $1908, so that could be a tailwind, but Orla is up massively already in just 2 months, with the share price up almost as much in January and February (from $18.46 to $28.74) as it was in all of 2025 (from $7.96 to $18.46.) Yes, they sold a quarter of the position at $17.64, but the other 3/4 is looking at huge gains, roughly C$700m so far. Good gains already from UA, and their KW position may be counted as an investment gain when they take it private at a premium. Throw in one good asset sale (there aren't many years when they don't pull some kind of rabbit out of the hat), and with a little help from the return swaps, we could easily be closer to $3.5b than $1.5b.

@dartmonkey, I agree investment gains are a wild card. And, yes, Fairfax’s investments have gotten off to a very good start to the year. I don’t worry about the FFH-TRS position because it is pretty likely Fairfax will prioritize share buybacks at the current price level ($1,700). 

 

Using a bottom up approach, my forecast builds to an 8.5% total return on investments for the year, which would be quite good. I think that is a good number to start with. And with Fairfax’s strong start to the year, yes, it does look a little conservative. 

 

As of today (intraday), Fairfax's equity holdings are up ~$1.3 billion, with the two biggest drivers:

- Eurobank: +$700M

- Orla: +575M

 

 

 

Edited February 27 by Viking

[SafetyinNumbers]

1 hour ago, dartmonkey said:

Throw in one good asset sale (there aren't many years when they don't pull some kind of rabbit out of the hat)

I think characterizing these gains as “rabbits out of a hat” doesn’t give enough credit to funnel they have developed over the years. They have moved most of the portfolio over to significant influence and control positions since 2012. The accounting by its nature defers any gains so FFH only gets credit for its share of earnings until they sell. That means these gains are compounding over time. Any mistakes get written off immediately even if they ultimately recover which increases the accounting ROE on holdings and makes the potential gains even bigger. The size of deals has also been going up with the float, so the ultimate gains should grow assuming execution. The annual report is super helpful in figuring out what fair value over carrying value might be for the private investments. Looking forward to reading it next week. 

[Viking]

 

A question we should probably start to think about is if Fairfax is successful with a purchase of IDBI bank, where do they get the money from? The total purchase price is estimated to be ~$8B. Of course, they will likely have partners so they will not need to come up with the total amount.

 

The Eurlife sale looks like it might close in April (Eurobank is baking in 8 months from Eurolife in its 2026 guidance). That will deliver $950M in proceeds (less the investment in P/C business in Cypress).

 

Fairfax just issued C$650M in debt. 

 

One angle I am thinking about: Do they sell down any of their large equity holdings to raise some cash? (Not all, but part.)

 

A follow up question is: Do we get a large realized gain with a sale?

 

Eurobank is an obvious choice. Selling 20% of their stake in Eurobank would raise $1B in proceeds. and it would also result in a pretty large realized gain of ~$500 million. But why sell a crown jewel?

 

What about Poseidon? Perhaps they could sell 1/3 of their position in Poseidon for $1B. This would also trigger a sizeable realized gain ($350M)?

 

Another top candidate would be to sell another chunk of Orla. This position has a MV of about $1.6B today. And now that Foran Mining is being taken out by Eldorado Gold, Fairfax might want to reduce their exposure to gold.  

 

The key take-away is Fairfax has a lot of really good options at their disposal. And if they decide to do something there is a pretty good chance it will trigger a big realized gain. And they might do a couple of things like this. (Yes, this would drive some analysts crazy.) 

 

Bottom line, 2026 is shaping up to be a pretty interesting year for Fairfax. And its shareholders. 

Edited February 27 by Viking

[Viking]

1 hour ago, SafetyinNumbers said:

I think characterizing these gains as “rabbits out of a hat” doesn’t give enough credit to funnel they have developed over the years. They have moved most of the portfolio over to significant influence and control positions since 2012. The accounting by its nature defers any gains so FFH only gets credit for its share of earnings until they sell. That means these gains are compounding over time. Any mistakes get written off immediately even if they ultimately recover which increases the accounting ROE on holdings and makes the potential gains even bigger. The size of deals has also been going up with the float, so the ultimate gains should grow assuming execution. The annual report is super helpful in figuring out what fair value over carrying value might be for the private investments. Looking forward to reading it next week. 

 

I look at this topic in two general ways:

 

There is the stuff (hidden value) we (generally) know about, like excess of FV over CV. Or BIAL. This will get monetized over time, but when it happens I wouldn't characterize it as "pulling a rabbit out of their hat"

 

And then there is the stuff they do that is a surprise:

• Pet insurance
• Resolute: selling at top of lumber market
• Stelco: selling to Cleveland-Cliffs at a nosebleed high valuation (right before Trump imposed tariffs)

These are usually example of Fairfax being very opportunistic - and the size of the gain surprises all of us. That is what I usually characterize as "pulling a rabbit out of their hat."

 

Sometimes there is a combination of the two: we know hidden value is there... but what Fairfax actually gets is much more than we expected.

 

Anyways, it is an important topic - because it is an important part of Fairfax's business model and results.

Edited February 27 by Viking

[SafetyinNumbers]

11 minutes ago, Viking said:

 

A question we should probably start to think about is if Fairfax is successful with a purchase of IDBI bank, where do they get the money from? The total purchase price is estimated to be ~$8B. Of course, they will likely have partners so they will not need to come up with the total amount.

 

The Eurlife sale looks like it might close in April (Eurobank is baking in 8 months from Eurolife in its 2026 guidance). That will deliver $950M in proceeds (less the investment in P/C business in Cypress).

 

Fairfax just issued C$650M in debt. 

 

One angle I am thinking about: Do they sell down any of their large equity holdings to raise some cash? (Not all, but part.)

 

A follow up question is: Do we get a large realized gain with a sale?

 

Eurobank is an obvious choice. Selling 20% of their stake in Eurobank would raise $1B in proceeds. and it would also result in a pretty large realized gain of ~$500 million. But why sell a crown jewel?

 

What about Poseidon? Perhaps they could sell 1/3 of their position in Poseidon for $1B. This would also trigger a sizeable realized gain ($350M)?

 

Another top candidate would be to sell another chunk of Orla. This position has a MV of about $1.6B today. And now that Foran Mining is being taken out by Eldorado Gold, Fairfax might want to reduce their exposure to gold.  

 

The key take-away is Fairfax has a lot of really good options at their disposal. And if they decide to do something there is a pretty good chance it will trigger a big realized gain. And they might do a couple of things like this. (Yes, this would drive some analysts crazy.) 

 

Bottom line, 2026 is shaping up to be a pretty interesting year for Fairfax. And its shareholders. 

I think IDBI co-investment will happen at the insurance subsidiary level not at the holdco which is where the Eurolife proceeds show up. Maybe they use that for Allied World since that’s also a holdco investment. I don’t know if they need to sell anything in the equity book to do this deal. They have a lot of extra cash/fixed income they could use to do the deal. They have communicated previously that the biggest new equity position they will take is 10% of shareholders equity so they will definitely need partners. This might include what they own through Fairfax India but it remains to be seen. 

[dartmonkey]

3 hours ago, SafetyinNumbers said:

I think characterizing these gains as “rabbits out of a hat” doesn’t give enough credit to funnel they have developed over the years. They have moved most of the portfolio over to significant influence and control positions since 2012. The accounting by its nature defers any gains so FFH only gets credit for its share of earnings until they sell. That means these gains are compounding over time. Any mistakes get written off immediately even if they ultimately recover which increases the accounting ROE on holdings and makes the potential gains even bigger. The size of deals has also been going up with the float, so the ultimate gains should grow assuming execution.

I don't think we really disagree here at all. Fairfax has a bunch of hats, and every few years, we find out that there was a rabbit in one of them, or, more exactly, that the rabbit that we knew was in there was a lot bigger than we thought. First Capital Insurance, Pet Insurance, Stelco and more recently Eurolife come to mind, where the value they obtained was substantially better than what most of us expected. All I am saying is that if you're trying to model future earnings, I think there are enough of these sporadic gains that you have to at least pencil in that there are going to be more of them.

 

The operating earnings from underwriting, fixed income and non-insurance subsidiaries are the more predictable parts of Fairfax's business, but buying cheap and selling dear, mostly for companies but also sometimes bonds, is also a part of their modus operandi, and just because we don't get a rabbit every year doesn't mean that they are not growing inside those opaque hats.

 

By the way, do we know when the annual report gets released? I don't see any press releases in previous years for when it comes out, but the date on last year's report was (Friday) March 7 so I presume it's in a week or two?

[SafetyinNumbers]

8 hours ago, dartmonkey said:

I don't think we really disagree here at all. Fairfax has a bunch of hats, and every few years, we find out that there was a rabbit in one of them, or, more exactly, that the rabbit that we knew was in there was a lot bigger than we thought. First Capital Insurance, Pet Insurance, Stelco and more recently Eurolife come to mind, where the value they obtained was substantially better than what most of us expected. All I am saying is that if you're trying to model future earnings, I think there are enough of these sporadic gains that you have to at least pencil in that there are going to be more of them.

 

The operating earnings from underwriting, fixed income and non-insurance subsidiaries are the more predictable parts of Fairfax's business, but buying cheap and selling dear, mostly for companies but also sometimes bonds, is also a part of their modus operandi, and just because we don't get a rabbit every year doesn't mean that they are not growing inside those opaque hats.

 

By the way, do we know when the annual report gets released? I don't see any press releases in previous years for when it comes out, but the date on last year's report was (Friday) March 7 so I presume it's in a week or two?

I assume the AMC on 6th given its the date of record for the AGM.

[Hamburg Investor]

 

 

On 2/26/2026 at 7:41 PM, TwoCitiesCapital said:

I think the problem with pricing a company "correctly" is the margin you have to be right by. 

 

Two companies are identical. They both deliver a 20% RoE and both have a 7% cost of capital/discount rate. 

 

If company #2 misses in year 20 and has 0 earnings for that one year, the impact to the DCF to today's valuation is ~13%. If that miss occurs in year 1 instead of 20, the difference in valuation today is ~16%. And that's if the company compounds at 20% per year in 95% of observations.

 

What if it only happens 90% of the time? Or 80%? Both still result in phenomenal track records of compounding revenue/profit/book, but dramatically change your returns as an investor if you paid up for the 95% and only got 80%. 

 

If Fairfax was valued at 3x book, I'd be a seller all day. Maybe it looks stupid up front, particularly if they keep compounding at 20% for 1, 3, or 5 years. But all it takes is 1-2 bad years in 20 of not hitting your 20% goal to screw your returns if it was priced at perfection (and this is BEFORE considering multiple contraction that would also likely occur). 

 

Just look no further than CSU - was a market darling the last 5-years and has a phenomenal track record. Is now down more than 50% from its highs despite still hitting its return goals. People just got scared that it may not and now there is an active debate back and forth in that thread if it's STILL too expensive or not after the 50% drawdown. If you bought 1-year ago, you paid for 100% execution and you may only get 80%. 

Thank you for the post. Just some questions, that come to my mind and maybe you could help improve my learning curve:

1. ROE 20% for 20 years for FFH - how do you get there?

If a company is priced for a 20% ROE over 20 years, than just a small deviation brings big problems to the outcome. Couldn't agree more. You need to have a big moat for getting such a high ROE over such a long timeframe.

But is 20% ROE over the next 20 years really your (or anybody's?) base assumption for FFH as of today? I don't think so; would be interesting to learn how/why you get to that.

2. If ROE20% over 20 years: Why expensive with PB Ratio 3 / PE Ratio 15?

Anyway, let's stay with your assumption to come to my second question: ROE20% over 20 years - that's around a 40 bagger of equity over 20 years, isn't it? I'll leave out dividends and taxes on them, etc. for now; let's assume that dividends are reinvested in FFH without taxes (I'm only interested in the rough dimensions anyway, so I prefer to do rough calculations in my head and may be off a bit; but I think it doesn't change my following argument a lot).

Okay, so staying within the framework of your assumptions, a pb ratio of 3 and a ROE of 20%, that's a pe ratio of 15, right? So my second question would be: If you're making the case for any ROE20 company, why not buy that at a PE of 15? I mean, that'll be really cheap in my eyes. Even assuming ROE20 for most years and not all, the valuation would still be really okay. I mean, Munger made the case, that over long periods of time your returns will bei close to ROE, and if ROE is high, it's hard to overpay; and I'd add, that pb ratio of 3 wouldn't be high in my eyes. Maybe you could add some color to that?!

3. My base case for FFH for comparison: Way lower than yours - but with a loooonger view

 

Now here's my assumption; would be keen to learn what you think about it. In a nutshell:

• ROE of 18%+ over the next 5 years 
• ROE of 15%+ over the next 20 years (that includes the first 5 years, doesn't it? So even ROE13% or ROE 14% for year 6 to 20 would bring us to ROE15% for the 20 years, if 18%+ happens in the first 5 years, right?
• after that ROE of 12% to 15% for another 10 to 25 years and after that "some outperformance in comparison to the average S&P500 stock" (yes, I know, FFH isn't part of that). Maybe ROE 12% or 13% against 10% or 11% longterm ROE for the average US business? Doesn't seem very ambitious in my eyes.
• (it would be helpful if the average price of FFH would stay below intrinsic value, as buybacks could be done as a. that would push ROE immediately and b. that would help to bring an ever growing cash flow to work (look what happens to BRK since one and a half decades...) at low risk and c. that would help FFH to stay smaller for longer, which would help ROE to stay higher (again BRK: the investment universe just shrank so much... It just became so big)

4. Why should FFH outperform forever (at least a bit)? Where‘s FFHs enduring moat?

My general assumption is, that BRK, MKL, FFH share similarities that should help them to outperform the market over many, many decades. Not in each decade, but on average (low yields, growth outperforming value, soft insurance markets, bad capital allocation haven't helped FFH in the 2010 years; but my base assumption clearly isn't that with a forever view).

What are the similarities, where do I see the enduring moat?

 

- The decentralised structure,

- (better than) cost free float leverage,

- leaders clearly being "value investors from Graham and Doddsville", how Buffett would call them 

- the will to invest a bigger portion of equity into businesses (in contrast to Bond investing) than average insurers,

- culture,

- many different cash flows and the possibility of reinvesting proceeds from weaker-growing businesses in better-growing ones

 

Those are some important basic similarities. Putting all that together, that’s an enduring moat. At least it has helped the 3 companies to reach a balanced average yield of somewhere between 17% and 19% I guess over 140 years (BRK: 60 years and the other two each 40 years).

With that view I don't see why to sell FFH even at pb ratio of 3 tomorrow (so that would be a pe ratio of 22 or so for a business with ROE 15%; that's an okay valuation in my eyes, as I am pretty sure FFH being an outperformer over the long run AND I'd have to pay a lot of taxes (around 30% on profits and I have a lot of those...), when selling (and than hoping the price to erode and buy back cheaper; and than that doesn't happen; that's a typical error, happening all too often). The S&P500 is valued at a pe ratio of 30 AND that average S&P500 company will clearly underperform 15% ROE; I think 20 years compounding with 15% CAGR defines the best 5% or so of all S&P500 companies).
 

So in a nutshell I don't see ROE20% over 20 years for FFH as may base case assumption - but outperformance against the market over the very looooong run.

My view: You can buy a business at a high valuation either on the assumption of a very high ROE over a short timeframe and after that assummng falling back to average (okay your case with 20 years isn't short; but a 50+ years view is longer... ) or if you have a high conviction in a lower outperformance over a longer timeframe ("forever" being the north star). 

I am clearly not aiming for 20%+ returns over decades after tax with that; but I want very high conviction for an outperformance and a rock solid investment over time (so don’t translate „rock solid“ with „unlumpy returns“).
 

Even bought at 3 pb ratio I think CAGR 15% (OR an outperformance of 5% to the market) being possible over 2+ decades, but not for sure. Depends on the 15% „+“ above, which I see over 2 decades and on the question, if after that a CAGR of 12% or 15% kicks in. And with that CAGR thinking I am clearly not reflecting to Mr. Market but to development of intrinsic value over time. 
 

And don’t get me wrong: After all I am much more happy with a pb ratio of 1 or below over the next decade or so than pb rstio of 3 or above; the lower the shareprice, the more buybacks, the higher the ROE, the smaller FFH stays for longer, which helps FFH management moving the needle with smaller investments… All that’s better for longterm growth of intrinsic value and we only get that push, if price stays below intrinsic value.

 

You yourself made the case for Constellation Software; I haven’t analyzed it, as the software only focus of the business is just too narrow for me. 

Would be happy to learn, what you think about my assumptions and approach and reasoning about why pb ratio of 3 tomorrow would be okay.  

 

 

Edited March 1 by Hamburg Investor

[djokovic1]

@Hamburg Investor You have to be right in your assessment for 10+ years with a high multiple. It's hard enough to be right for 5 years. Software companies that were thought to be the best businesses in the world have arguably been disrupted overnight (or at least have much more uncertainty over terminal value so lower multiple). 

Unarguably forward returns are lower the higher the multiple of the stock is. If Fairfax hits any road bumps at 3x book, very likely the multiple takes a big hit and you may get a lost decade in terms of returns.

In general 3x book doesn't sound egregious for Fairfax's compounding engine, but the risk reward is not in an investor's favour at those multiples. Everything has to go right for it to be a great long term investment from that multiple. 

I used to like the romanticised view of coffee can investing, buy and hold forever. But for me it doesn't work. Valuation matters. Buffett's best years and highest returns were characterised by high turnover and optimising for price vs value. I am not advocating for actively trading, but one can't ignore valuation in investing.

 

[SafetyinNumbers]

42 minutes ago, djokovic1 said:

@Hamburg Investor You have to be right in your assessment for 10+ years with a high multiple. It's hard enough to be right for 5 years. Software companies that were thought to be the best businesses in the world have arguably been disrupted overnight (or at least have much more uncertainty over terminal value so lower multiple). 

Unarguably forward returns are lower the higher the multiple of the stock is. If Fairfax hits any road bumps at 3x book, very likely the multiple takes a big hit and you may get a lost decade in terms of returns.

In general 3x book doesn't sound egregious for Fairfax's compounding engine, but the risk reward is not in an investor's favour at those multiples. Everything has to go right for it to be a great long term investment from that multiple. 

I used to like the romanticised view of coffee can investing, buy and hold forever. But for me it doesn't work. Valuation matters. Buffett's best years and highest returns were characterised by high turnover and optimising for price vs value. I am not advocating for actively trading, but one can't ignore valuation in investing.

 

At what multiple do you start selling?

[djokovic1]

Fully accounting for economic book value, at 3x book I would definitely be reducing. At 2x I’m comfortably holding.

 

Also depends on opportunity set wrt other investment options and conviction in them.

Edited March 1 by djokovic1

[Hamburg Investor]

43 minutes ago, djokovic1 said:

@Hamburg Investor You have to be right in your assessment for 10+ years with a high multiple. It's hard enough to be right for 5 years. Software companies that were thought to be the best businesses in the world have arguably been disrupted overnight (or at least have much more uncertainty over terminal value so lower multiple). 

Unarguably forward returns are lower the higher the multiple of the stock is. If Fairfax hits any road bumps at 3x book, very likely the multiple takes a big hit and you may get a lost decade in terms of returns.

In general 3x book doesn't sound egregious for Fairfax's compounding engine, but the risk reward is not in an investor's favour at those multiples. Everything has to go right for it to be a great long term investment from that multiple. 

I used to like the romanticised view of coffee can investing, buy and hold forever. But for me it doesn't work. Valuation matters. Buffett's best years and highest returns were characterised by high turnover and optimising for price vs value. I am not advocating for actively trading, but one can't ignore valuation in investing.

 

Sorry, but although I agree with some of general Ausführungen, ich sehe eben Deine Ausführungen nicht angewendet:
 

• High multiple?: I am not assuming a ROE of 20% over 20 years – that was @TwoCitiesCapital. I am assuming much lower ROEs.
• Longterm? Regarding your view on "longterm": You seem to imply that long-term predictions about returns are generally not possible. At least, that's how I understand your statement: "You have to be right in your assessment for 10+ years with a high multiple. It's hard enough to be right for 5 years." My view would be: If I couldn't find longterm winners, I would invest into an etf. That's how I e. g. see software companies, etc. In my view, that's exactly why Buffett didn't invest in tech. His comment that tech was outside his circle of competence was, in my view, always an attempt not to offend anyone who thought tech was within his/her circle of competence. There may be very, very few people who really have a tech circle of competence; in my view, many of today's winners who bet on tech were simply in the right place at the right time on the stock market. There are few tech investors who have consistently found the right tech investments over 30, 40 or 50 years. But there are examples of successful investors in other industries. 
• High multiple again: Where can you find quality companies with a PE ratio of 22 and a high long-term (20+ years) ROE of 15% (i.e. a PB ratio of 3; and I am, of course, always talking about the proceeds compounding at 15% as well)?
  • If "tech stocks" is your answer, then sorry, I don't follow you. Tech is disruptive per se; a fact that Buffett and Munger both saw very clearly. Tech disrupts tech. Nobody knows with any degree of certainty what AI, quantum computers and all the other things we are not even aware of coming down the road between 2021 and 2030 will do to the moats of the Mag 7. IBM, Konica, Fuji, Kodak, Nokia, Blackberry – people were so sure about the big long-term moats of all of them. They were wrong.
  • This risk of moat disruption is way higher for most other stocks when compared to FFH, BRK and MKL. BRK obviously has the lowest risk of the three, but also has the lowest return expectations going forward.
  • Anyway: An example of a high conviction 15% compounder at a PE ratio of 22 would be great. I don't see it.
• The math: If you do the math, you will notice: A very long period of outperformance with just a few percentage points above the average of 10% per annum is a very good way to beat the market. At least it worked for a lot of investors buying BRK in the 1980ies or 1990ies or 2000s and I read a lot of people complaining they haven't bought back than. Which makes me think, that a lot of us are happy with a CAGR above the market of 5% or even a bit less ov er the longterm. And with that I am not saying, FFH being the next Berkshire. Obviously, BRK, MKL and FFH have been good opportunities to achieve precisely that in the past. The question is whether this is considered a coincidence or a result of their internal structure and similarities. If you add the three together, you get an average CAGR of 17% to 19% over 140 years on average. The three will probably achieve less than that looking forward, as they are all larger than they were in the 1990s and that's a drag to returns. If that outperformance in general is coincidence for you (which is of course totally fine; everybody should follower his/her paths)), I totally understand, that you think, outperformance of the three isn't predictable and than PB Ratio 3 is way too expensive. But than we just have different assumptions. Others thought, that ROEs above 30% for software companies would hold forever; that's where I differ. I first bought FFH in 2013 or so and gradually expanded that. Of course, you had to hold on to the company for a long time before it paid off. Of course, the management mistakes were a big burden. But still, I always assumed that they would fix it at some point. And there were other things (soft market, low bond yields, growth beating value), that were another drag to returns.

We don't have to agree, but I consider FFH to be an outperformer over a very long period of time and a (lumpy) compounder. For that, a PE ratio of 22 is not perfect, but okay.

[djokovic1]

I think we agree much more than disagree. But at 3x book, I think I will be able to find better risk reward opportunities elsewhere.

[Crip1]

On 2/27/2026 at 12:53 PM, Viking said:

 

A question we should probably start to think about is if Fairfax is successful with a purchase of IDBI bank, where do they get the money from? The total purchase price is estimated to be ~$8B. Of course, they will likely have partners so they will not need to come up with the total amount.

 

The Eurlife sale looks like it might close in April (Eurobank is baking in 8 months from Eurolife in its 2026 guidance). That will deliver $950M in proceeds (less the investment in P/C business in Cypress).

 

Fairfax just issued C$650M in debt. 

 

One angle I am thinking about: Do they sell down any of their large equity holdings to raise some cash? (Not all, but part.)

 

A follow up question is: Do we get a large realized gain with a sale?

 

Eurobank is an obvious choice. Selling 20% of their stake in Eurobank would raise $1B in proceeds. and it would also result in a pretty large realized gain of ~$500 million. But why sell a crown jewel?

 

What about Poseidon? Perhaps they could sell 1/3 of their position in Poseidon for $1B. This would also trigger a sizeable realized gain ($350M)?

 

Another top candidate would be to sell another chunk of Orla. This position has a MV of about $1.6B today. And now that Foran Mining is being taken out by Eldorado Gold, Fairfax might want to reduce their exposure to gold.  

 

The key take-away is Fairfax has a lot of really good options at their disposal. And if they decide to do something there is a pretty good chance it will trigger a big realized gain. And they might do a couple of things like this. (Yes, this would drive some analysts crazy.) 

 

Bottom line, 2026 is shaping up to be a pretty interesting year for Fairfax. And its shareholders.

This really is interesting to think about. The team at Fairfax has far more visibility into their holdings than any of us do, but I for one hate the idea of selling Eurobank any more than they already have to in order to retain their 33% ownership. Poseidon seems like a more obvious choice from my perspective but that depends largely on how much they can get versus how much they feel it's intrinsically worth. 

 

If this does come together, the one thing I would bet on in terms of financing is virtually all of us will say "Hmmm, I didn't even think of that" regarding one or more aspects of it. That's a big aspect of why I have such an outsized position in Fairfax, I'm effectively paying them make capital allocation decisions way smarter than I could ever do myself.

 

-Crip

[Hamburg Investor]

1 hour ago, djokovic1 said:

I think we agree much more than disagree. But at 3x book, I think I will be able to find better risk reward opportunities elsewhere.

 

Fingers crossed, that FFH will not go to 3.0 pb - and if so, that you (and me) find better opportunities.

 

At present valuations I’d have to go to less high conviction opportunities. Maybe I’d go there, maybe not.
 

I imagine taxes being a much bigger threat for me in Germany than for you, so I am just more focussed on longterm and less trading.

[Hamburg Investor]

1 hour ago, djokovic1 said:

 

I think we agree much more than disagree. But at 3x book, I think I will be able to find better risk reward opportunities elsewhere.

 

Where would you look for opportunities, if FFH would get to expensive? Me personally I’d look at MKL, BRK, META, BN, DHR, Protektor Forsikring. JOE. Meta is the only tech stock I have; for me it’s less of a tech idea and more like a network or infrastructure perspective. I look at it and recognise similarities to the newspaper (Washington Post) investment(s) of Buffett.

[djokovic1]

18 minutes ago, Hamburg Investor said:

Where would you look for opportunities, if FFH would get to expensive? Me personally I’d look at MKL, BRK, META, BN, DHR, Protektor Forsikring. JOE. Meta is the only tech stock I have; for me it’s less of a tech idea and more like a network or infrastructure perspective. I look at it and recognise similarities to the newspaper (Washington Post) investment(s) of Buffett.

that’s a good list! I am a big fan of serial acquirers that are early in their journey. Companies that can reinvest their capital at 20-30% ROIE for a long period of time. So a CSU or Danaher but 100x or 1000x smaller.

 

Terravest, NGTG (Japan), Judges Scientific for example. Lot of great ones in Sweden. 

 

i am very skeptical of Danaher though. Last 10 years they have started paying high multiples on M&A and their fundamental returns are very poor.

[SafetyinNumbers]

3 hours ago, djokovic1 said:

Fully accounting for economic book value, at 3x book I would definitely be reducing. At 2x I’m comfortably holding.

 

Also depends on opportunity set wrt other investment options and conviction in them.

We aren’t going to wake up at 3x so I assume once it starts trading above 2x, you start selling, out by 3x?

 

My plan was to base my sell decision when forward ROE can be forecast below 10% because I didn’t want to cut off the potential multiple expansion. The recent selling pressure associated with slowing revenue momentum makes me think that the next hard market we’ll see big multiple expansion. The longer it takes to get to the next hard market, the more shares we’ll be able buy back in the interim. The more shares we buy back, the bigger the multiple expansion. 

[djokovic1]

39 minutes ago, SafetyinNumbers said:

We aren’t going to wake up at 3x so I assume once it starts trading above 2x, you start selling, out by 3x?

Really hard to be that precise because it depends on alternatives at the time and confidence in forward ROE at that time (and for how long). But roughly yes selling between 2.5x and 3x+.

[UK]

BRK FFH float 2025.xlsx

[Hamburg Investor]

3 hours ago, djokovic1 said:

that’s a good list! I am a big fan of serial acquirers that are early in their journey. Companies that can reinvest their capital at 20-30% ROIE for a long period of time. So a CSU or Danaher but 100x or 1000x smaller.

 

Terravest, NGTG (Japan), Judges Scientific for example. Lot of great ones in Sweden. 

 

i am very skeptical of Danaher though. Last 10 years they have started paying high multiples on M&A and their fundamental returns are very poor.

Thank you, I will have a look at them! 
 

Danaher brought a CAGR of nearly 12% over the last 10 years, if I include the spin offs (Fortive and Veralto) and dividends. 
 

i still think the DBS being worth something, so I just stick to them.

 

Regarding Sweden: Are you referring to Investor AB, LaTour, or others?

 

Again thank you; I’ll have a look on them. My north star are serial acquirers with insurance companies (and those having better than cost free float), not paying dividends (as I have to pay too much taxes), small (but I like a prove. Track record, so that‘s not so easy to find), management with a value focus, that is able and having skin in the game. Seems we are having a similar focus.

[djokovic1]

3 hours ago, Hamburg Investor said:

Regarding Sweden: Are you referring to Investor AB, LaTour, or others?

Lagercrantz (pricey but super high quality and amazing track record), Bergman and Beving (B&B), Lifco (too large for my liking), Teqnion bit of a turnaround at the moment but I love this the most at present in Sweden as I really like the guys running it and their capital allocation and its a bit like Fairfax after 2010-2020 period with negative sentiment. Sweden is actually the origin of serial acquisition with B&B and it's quite common there. There are at least 20 more such serial acquirers in Sweden and most more successful than not but I am listing the most interesting ones from my perspective. (Just FYI only have Teqnion in Sweden although the others are worth looking at to get a flavour of how successful this business model has been in shareholder value creation). Separately also KPG does a similar thing, tax accounting buy and build out of Australia.

Edited March 1 by djokovic1

[Txvestor]

On 2/27/2026 at 12:53 PM, Viking said:

 

A question we should probably start to think about is if Fairfax is successful with a purchase of IDBI bank, where do they get the money from? The total purchase price is estimated to be ~$8B. Of course, they will likely have partners so they will not need to come up with the total amount.

 

The Eurlife sale looks like it might close in April (Eurobank is baking in 8 months from Eurolife in its 2026 guidance). That will deliver $950M in proceeds (less the investment in P/C business in Cypress).

 

Fairfax just issued C$650M in debt. 

 

One angle I am thinking about: Do they sell down any of their large equity holdings to raise some cash? (Not all, but part.)

 

A follow up question is: Do we get a large realized gain with a sale?

 

Eurobank is an obvious choice. Selling 20% of their stake in Eurobank would raise $1B in proceeds. and it would also result in a pretty large realized gain of ~$500 million. But why sell a crown jewel?

 

What about Poseidon? Perhaps they could sell 1/3 of their position in Poseidon for $1B. This would also trigger a sizeable realized gain ($350M)?

 

Another top candidate would be to sell another chunk of Orla. This position has a MV of about $1.6B today. And now that Foran Mining is being taken out by Eldorado Gold, Fairfax might want to reduce their exposure to gold.  

 

The key take-away is Fairfax has a lot of really good options at their disposal. And if they decide to do something there is a pretty good chance it will trigger a big realized gain. And they might do a couple of things like this. (Yes, this would drive some analysts crazy.) 

 

Bottom line, 2026 is shaping up to be a pretty interesting year for Fairfax. And its shareholders. 

Exiting EXCO is another option. With oil prices looming like they'll be up for a little while, it might present them a chance to do that as well. 
I'm sure they are exploring many options.