Fairfax 2026

[djokovic1]

3 hours ago, SafetyinNumbers said:

General question: Will the P/BV multiple touch 1.2x or 1.5x first? It’s at ~1.35x now.

Also what is the real P / BV as Prem would calculate it? <1.2x 

I am pretty sure that's the measure they would be using (if at all) rather than unadjusted P/B to determine buybacks.

Looking forward to see their repurchase activity in Mar. Should be out soon.

[petec]

On 4/4/2026 at 8:11 AM, nwoodman said:

@petec,

Great write up. Full disclosure: I am not an Ackman fan, so take the following with that bias noted. That said, I always appreciate your clarity of thought.

Pershing committed $900 million at $100 a share, so the capital at risk is real and I do not dismiss it. But the fee architecture tells a different story. Pershing's advisory fee starts participating above a reference price of roughly $66, with a quarterly base fee on top. So while Ackman's equity may be underwater below $100, the manager can still be paid well before minorities fully benefit from a re-rating toward HHH's own internal NAV estimate of $118.

 

The services agreement also includes a change-of-control make-whole provision approximating the present value of future fees, which speaks to how durable the arrangement is. For me, governance is not a line item in a SOTP. It is the discount rate applied to every other line item.

 

The Berkshire comparison is where the thesis breaks for me. Buffett built the insurance operation first, proved underwriting discipline over multiple hard and soft cycles, and only then did the float become a compounding engine.

HHH is attempting to invert that sequence. Vantage was founded in 2020 and the acquisition comes at the tail end of a hard market heading into a softer cycle. That is a young platform, acquired at a late point in the pricing environment, being positioned as the foundation of a compounding model.

Pershing managing the Vantage portfolio without an incremental fee at the portfolio level is fair to acknowledge. But they are already being compensated under the broader services agreement, so the term "fee-free" deserves some scrutiny.

 

Insurance compounding is not a structural outcome; it is a behavioural one. It requires patience in soft markets, a willingness to shrink, and the discipline to sit on cash. But you need the balance sheet to play that game. Everyone entering insurance believes they will underwrite with discipline, but the balance sheet is what allows you to actually maintain it through a full cycle. When the holdco above you is carrying close to $3 billion in debt and prefs, and the manager is compensated through a fee arrangement tied to market cap, the pressure to keep writing volume at inadequate prices can overwhelm intent.

 

At Fairfax, underwriting discipline was proven over time and across cycles, and only then did float become a durable compounding engine. The stock did not re-rate because it was positioned as a compounder; it re-rated because the discipline was earned.

 

HHH is explicitly modelling itself on what Berkshire and Fairfax built. That sets a high bar. The question is not whether the structure resembles a compounder, but whether the underlying behaviours,  underwriting discipline, capital allocation patience, and governance , are actually present. The MPC assets are genuinely good. But the vehicle around them leaves me uneasy.

The longer I watch this game, the wider the gap becomes between a well-designed balance sheet and what is actually defensible in insurance: underwriting culture, institutional memory, and discipline earned across cycles. That is something Ackman can aim to build over time, but it cannot be assumed or engineered upfront.

 

As always appreciate the opportunity to think this through, and no doubt have missed some sitters in this reply

 

Thanks! I'll respond on the HH thread to avoid polluting this one further!

[SafetyinNumbers]

3 minutes ago, djokovic1 said:

Also what is the real P / BV as Prem would calculate it? <1.2x 

I am pretty sure that's the measure they would be using (if at all) rather than unadjusted P/B to determine buybacks.

Looking forward to see their repurchase activity in Mar. Should be out soon.

Effectively we’re using a measure of intrinsic value once we start adjusting book value. I think buying up to a 40% discount to intrinsic value still provides a solid margin of safety. That’s just above 1.5x P/B based on my methodology. 

[Buffett_Groupie]

43 minutes ago, Duke In Shadows said:

first thing every new person looking at FFH should understand. Truly amazing allocation.

 

https://x.com/DukeInShadows/status/2041222481772515794?s=20

Congratulations! You folks are so smart and brilliant to time the purchase impeccably well in 2020  whereas I had to endure 23 years of pain and suffering before capturing the same gains in the most recent 5 years.

 

But then again, Charlie Munger said without suffering, any decent gain is grossly undeserving because the world isn't a crazy enough place, yet, to reward a bunch of undeserving people. LOL

 

Hence, one should deliberately bring on more pain to make it more deserving

[djokovic1]

48 minutes ago, SafetyinNumbers said:

Effectively we’re using a measure of intrinsic value once we start adjusting book value. I think buying up to a 40% discount to intrinsic value still provides a solid margin of safety. That’s just above 1.5x P/B based on my methodology. 

 

I think their upper bound on buybacks will also likely vary based on opportunity cost. In a hard market, less capital would go to buybacks and instead to higher return premium growth. In a soft market more capital will go to buybacks as there is more excess capital. 

I am curious to see if there is an upper limit (below lets say <2x unadjusted book), because you would rather have that excess capital generate a return for you through buybacks than sit on the balance sheet for too long generating 0. 
 

[gfp]

52 minutes ago, djokovic1 said:

than sit on the balance sheet for too long generating 0. 

 

Yikes!  The alternative is zero!??

[Hektor]

1 hour ago, Buffett_Groupie said:

Hence, one should deliberately bring on more pain to make it more deserving

[SafetyinNumbers]

59 minutes ago, djokovic1 said:

 

I think their upper bound on buybacks will also likely vary based on opportunity cost. In a hard market, less capital would go to buybacks and instead to higher return premium growth. In a soft market more capital will go to buybacks as there is more excess capital. 

I am curious to see if there is an upper limit (below lets say <2x unadjusted book), because you would rather have that excess capital generate a return for you through buybacks than sit on the balance sheet for too long generating 0. 
 

I think we need to make a distinction between buybacks in the open market vs retiring TRS. I think the latter can happen at any price as the buyback was done when they were put on. Retiring them is just reducing leverage. 

[djokovic1]

27 minutes ago, gfp said:

Yikes!  The alternative is zero!??

 Fair enough not 0, 3-4% but a meaningfully lower return than buying back your stock at <10x earnings

Edited April 6 by djokovic1

[djokovic1]

35 minutes ago, SafetyinNumbers said:

think we need to make a distinction between buybacks in the open market vs retiring TRS. I think the latter can happen at any price as the buyback was done when they were put on. Retiring them is just reducing leverage. 

If we are talking about excess capital then it’s the capital generated above needs for organic premium growth, m&a and public market investments above hurdle rates while still being within leverage limits (so that includes TRS) so my logic applies to open market buybacks. 
 

The TRS should be sold if there is no excess capital due to leverage constraints and there are additional reinvestment opportunities above the buyback IRR. 

[dartmonkey]

56 minutes ago, djokovic1 said:

1 hour ago, gfp said:

Yikes!  The alternative is zero!??

 Fair enough not 0, 3-4% but a meaningfully lower return than buying back your stock at <10x earnings

Edited 50 minutes ago by djokovic1

 

Say they get 3.7% (the 1-month, 3-month and one-year Treasury rate). Then pay 20% income tax, so it's 2.96%. Inflation in the USA is 2.4%. So investing in short-term treasuries is a good way of not LOSING money, but it's only a 0.6% real return, so thinking about it as zero is pretty close. 

[SafetyinNumbers]

3 hours ago, djokovic1 said:

The TRS should be sold if there is no excess capital due to leverage constraints and there are additional reinvestment opportunities above the buyback IRR. 

By “sold” do you mean unwound without buying the shares back?

[Crip1]

7 hours ago, Buffett_Groupie said:

Congratulations! You folks are so smart and brilliant to time the purchase impeccably well in 2020  whereas I had to endure 23 years of pain and suffering before capturing the same gains in the most recent 5 years.

 

But then again, Charlie Munger said without suffering, any decent gain is grossly undeserving because the world isn't a crazy enough place, yet, to reward a bunch of undeserving people. LOL

 

Hence, one should deliberately bring on more pain to make it more deserving

Could not help but think of a song lyric when reading this: "But I really think it's better this way. The more you suffer, the more it shows you really care, right?"

 

-Crip

Edited April 7 by Crip1

[djokovic1]

2 hours ago, SafetyinNumbers said:

By “sold” do you mean unwound without buying the shares back?

Yes

[SonOfKen_IV]

sort of deja vu.

 

 

 

 

 

[SafetyinNumbers]

7 hours ago, djokovic1 said:

Yes

I think they buyback the shares like they did with the first lot of 200k. It makes the most sense but we’ll see. 

[djokovic1]

8 hours ago, SafetyinNumbers said:

I think they buyback the shares like they did with the first lot of 200k. It makes the most sense but we’ll see. 

 

Yes I think so too, but in my mind the economic decision making process for buying back shares or buying back shares to replace the TRS is not too dissimilar. 

It's unlikely they will be in a position where they just close the TRS, without buying back the shares. Hypothetically it could happen if Fairfax stock doubled tomorrow and a lot of other stuff they like went down by 50%.

[SafetyinNumbers]

FFH got more aggressive on the buyback in March cancelling more than 1% of shares outstanding.

 

I haven’t calculated it carefully but I think they have spent over $600m on buybacks so far this year which is about a quarter of what I think they have available for buybacks this year. So right on pace I suppose!

Edited April 8 by SafetyinNumbers

[Hoodlum]

1 hour ago, SafetyinNumbers said:

FFH got more aggressive on the buyback in March cancelling more than 1% of shares outstanding.

 

I haven’t calculated it carefully but I think they have spent over $600m on buybacks so far this year which is about a quarter of what I think they have available for buybacks this year. So right on pace I suppose!

 

That is great news!  That brings it to 372k shares (54k,101k,217k) bought back for cancellation (~1.8% of outstanding) in Q1.  Fairfax certainly picked up the pace in March.  I wonder when the blackout period begins for Q1 results.

Edited April 8 by Hoodlum

[SafetyinNumbers]

3 hours ago, Hoodlum said:

 

That is great news!  That brings it to 372k shares (54k,101k,217k) bought back for cancellation (~1.8% of outstanding) in Q1.  Fairfax certainly picked up the pace in March.  I wonder when the blackout period begins for Q1 results.

They have an ASPP. They do seem to drop the limit when they are in blackout period though.

[thedanmancan]

4 hours ago, Hoodlum said:

 

That is great news!  That brings it to 372k shares (54k,101k,217k) bought back for cancellation (~1.8% of outstanding) in Q1.  Fairfax certainly picked up the pace in March.  I wonder when the blackout period begins for Q1 results.

Thank you, just sense checking this please, I see on CEO.ca:

- 89,588 shares cancelled dated 31 Dec 2025 (assume reported as part of FY2025

- 101,124 shares cancelled dated 27 Feb 2026

- 217,223 shares cancelled dated 31 Mar 2026

- Total for FY2026 YTD - 318,347 shares

 

Could I check where the 54k shares is from please?

[Hoodlum]

48 minutes ago, thedanmancan said:

Thank you, just sense checking this please, I see on CEO.ca:

- 89,588 shares cancelled dated 31 Dec 2025 (assume reported as part of FY2025

- 101,124 shares cancelled dated 27 Feb 2026

- 217,223 shares cancelled dated 31 Mar 2026

- Total for FY2026 YTD - 318,347 shares

 

Could I check where the 54k shares is from please?

That was from 1/31. 
 

[adventurer]

Really good. Thank you for the update. Hopefully we will go below 20 Mil. this year. High odds for that. 

Edited April 9 by adventurer

[djokovic1]

Great capital allocation. More capital going towards buybacks in a soft market especially as stock price has been relatively flat for 9months while intrinsic value has continued to compound.

[Hamburg Investor]

32 minutes ago, djokovic1 said:

Great capital allocation. More capital going towards buybacks in a soft market especially as stock price has been relatively flat for 9months while intrinsic value has continued to compound.

+1

 

The gift that keeps on giving.

And as a sidenote: It helps not growing so fast into Berkshire dimension. Which would ultimately reduce future return opportunities.

Every dollar reinvested into buybacks serves longterm shareholders all the more.