Fairfax 2026

[Txvestor]

On 5/11/2026 at 1:21 AM, Hamburg Investor said:

+1

 

Optionality is a big driver for FFH.

 

BRK and MKL come to mind when comparing your argument about optionality to FFH.
 

What sets all three apart from other insurers is their willingness to invest in equity on a large scale - first, in individual stocks, and second, in entire companies. To my knowledge, there are no other insurance companies that have done this on a similarly large scale. So all three „win“ from that more in optionality.

 

 

But regarding optionality there’s more to FFH.

 

FFH gives itself even more optionality than BRK and MKL:
- Large-scale buybacks
- TRS
- Large-scale foreign investments in equity (BRK’s investments in Japan point in the same direction; but in my opinion, that isn’t on a large scale—Buffett operates primarily domestically)
- Foreign investments in the insurance market
- Macro bets (deflation, housing derivatives)
- Systematic large-scale acquisition of company stakes with co-investors on board (Buffett has done this as well - but again, not systematically or on a similarly significant scale, at least not relative to total investments). 

 

The difference between FFH and BRK/MKl is, that FFH does all this systematically at big scale. You‘ll find the others partly doing the same; but not at that scale and not that iterative. 

 

In my view, this all adds up to a major advantage for FFH over the other two. The weighted performance of all these additional options also points to an expanded Circle of Competence for Prem (though I remain cautious about derivatives overall; but they are just one segment). If one weighs the investments in global companies (Ireland, Greece, India), global insurance company acquisitions, derivatives, buybacks, etc., I generally view these as drivers of overall success. 

I would add to that, having minority stakes outstanding in Insurance subs as well as other non insurance yet majority owned subs. Eg AGT foods. If it gets cheap enough, I'm sure they retain the right to buy it out. 
And when they're buying these things back, they're buying very well known entities.
Another area they're not often given credit for is how they incubate companies, especially in the insurance space they know well. Think ICICI Lombard, Digit, Ki etc  every so often one of these seems to blow up into a Billion plus investment gain outcome. 

Edited May 12 by Txvestor

[Hamburg Investor]

10 minutes ago, Txvestor said:

I would add to that, having minority stakes outstanding in Insurance subs as well as other non insurance yet majority owned subs. Eg AGT foods. If it gets cheap enough, I'm sure they retain the right to buy it out. 
And when they're buying these things back, they're buying very well known entities.
Another area they're not often given credit for is how they intubate companies, especially in the insurance space they know well. Think ICICI Lombard, Digit, Ki etc  every so often one of these seems to blow up into a Billion plus investment gain outcome. 

All good points and I agree. They just use a bigger toolbox. 
 

However, I need to correct myself on one point, at least when comparing it to BRK: FFH has just far more opportunities for buybacks than BRK (and MKL). It’s less a matter of wanting to and more a matter of being able to. BRK rarely fell below its intrinsic value (nor did MKL).

 

One could add several credit and financing tools. Like the deals between FFH and Kennedy Wilson. Those were structured across several years, combining direct and indirect lending, portfolio acquisitions, and equity stakes.
 

Berkshire did something similar, for example during the financial crisis (BoA, Goldman.

 

All in all it’s obvious, that „optionality“ is a strategy at FFH and they found even more than BRK.

[Parsad]

4 hours ago, yesman182 said:

Should board members be allowed to write books? So Buffett can’t go on CNBC anymore? No more letters? Prem shouldn’t talk to the author of the Fairfax way? Seem a little nutty to me. 

 

Books won't have any influence on short-term prices.  Letters are written directly to shareholders...no different than any other company release...10-Q, 10-K, etc.  What's nutty is how much irregular activity is allowed to happen today and the SEC and most regulators don't have the manpower to chase after it or even enforce securities regulations.  Most regulators in Canadian provinces have a hard time even collecting tens of millions of outstanding fines.  Cheers!

[Viking]

I think using a younger Berkshire Hathaway as a comparable for Fairfax today is useful, but only if done at a very high level.

 

Key components of business model:

• Use P/C insurance as the core engine. For the float (leverage) it provides.
• Decentralized operations (insurance and investments)
• Centralized capital allocation, succession planning
• Invest in equities (public & private)
• Controlling shareholder
• Long term focus

How each company does each of the key components is very different.
 

Expected rates of return

 

And, of course, when it comes to picking equities, Buffett is the GOAT. No one is going to compound at the rates he did at Berkshire Hathaway over their first 40 years. 
 

However, the model (and the management team at Fairfax is good enough) that Fairfax should be able to compound shareholders’ capital at above average rates of return over the next 5 or 10 years (as far as my crystal ball looks out). 
 

Summary

 

Comparing Berkshire Hathaway and Fairfax is a very nuanced exercise. 

[SafetyinNumbers]

1 hour ago, Viking said:

I think using a younger Berkshire Hathaway as a comparable for Fairfax today is useful, but only if done at a very high level.

 

Key components of business model:

• Use P/C insurance as the core engine. For the float (leverage) it provides.
• Decentralized operations (insurance and investments)
• Centralized capital allocation, succession planning
• Invest in equities (public & private)
• Controlling shareholder
• Long term focus

How each company does each of the key components is very different.
 

Expected rates of return

 

And, of course, when it comes to picking equities, Buffett is the GOAT. No one is going to compound at the rates he did at Berkshire Hathaway over their first 40 years. 
 

However, the model (and the management team at Fairfax is good enough) that Fairfax should be able to compound shareholders’ capital at above average rates of return over the next 5 or 10 years (as far as my crystal ball looks out). 
 

Summary

 

Comparing Berkshire Hathaway and Fairfax is a very nuanced exercise. 

I know I’m in the minority but I think the leverage makes Fairfax better than Berkshire. I wrote an article in the Globe and Mail 2 years ago arguing that FFH next 30 years would look better than BRK’s last 30 years on that basis. A bet on Berkshire was a bet on masterful stock picking. With Fairfax, the bet is pricing in terrible stock picking but it might be great and in fact, we know that it has been great recently but hasn’t been reflected in book value yet. 

 

[gfp]

Yes I agree - the leverage from float, the willingness to opportunistically shrink equity through repurchases earlier in their evolution (which helps maintain that float leverage).  Quite a few capital allocation options tee-ed up and the ability to chose between them / when to do what, etc.. makes for a better investor.  Becoming massively overcapitalized in t-bills doesn't lead to optimal outcomes but certainly comes in handy on that 1 day out of 1000 you're the only one situated like that.

[73 Reds]

8 minutes ago, gfp said:

Yes I agree - the leverage from float, the willingness to opportunistically shrink equity through repurchases earlier in their evolution (which helps maintain that float leverage).  Quite a few capital allocation options tee-ed up and the ability to chose between them / when to do what, etc.. makes for a better investor.  Becoming massively overcapitalized in t-bills doesn't lead to optimal outcomes but certainly comes in handy on that 1 day out of 1000 you're the only one situated like that.

I view share repurchases at this stage of their evolution differently.  I suppose the argument "for" is that management knows the company better than anyone else.  Yet unlike most companies in specific industries, Fairfax can, and does invest in almost anything and unlike Berkshire today, their investment universe is wide open.  So the question is, are share repurchases better than any other investment opportunity out there?   And even so, if a large-scale superior investment opportunity comes along later and they've shrunk their balance sheet with repurchases, do they potentially lose the opportunity if money becomes more expensive? 

[gfp]

Warren Buffett is famous because of his performance during a period he had more ideas than money.  He was forced to make difficult decisions to cut good investments to fund insanely good investments routinely.  He would raise funds by selling undervalued securities to fellow value investors.  Having more capital than ideas is what slowed Brk to a crawl.

 

It's fine, it's a fortress and can play a great role in a portfolio.  But maintaining 3:1 leverage with negative cost float, despite being "riskier" is exactly what the special sauce is in this model and it is hard to maintain that leverage ratio if you are unwilling to use one of the capital allocation tools in your toolkit until you cross half a billion dollars in market cap.  Maybe Berkshire was never cheap enough for Warren.  But Fairfax was certainly cheap and they know what they own

[73 Reds]

1 minute ago, gfp said:

Warren Buffett is famous because of his performance during a period he had more ideas than money.  He was forced to make difficult decisions to cut good investments to fund insanely good investments routinely.  He would raise funds by selling undervalued securities to fellow value investors.  Having more capital than ideas is what slowed Brk to a crawl.

 

It's fine, it's a fortress and can play a great role in a portfolio.  But maintaining 3:1 leverage with negative cost float, despite being "riskier" is exactly what the special sauce is in this model and it is hard to maintain that leverage ratio if you are unwilling to use one of the capital allocation tools in your toolkit until you cross half a billion dollars in market cap.  Maybe Berkshire was never cheap enough for Warren.  But Fairfax was certainly cheap and they know what they own

No question, Fairfax was cheap because of some poor investment decisions.  The assumption is they have corrected their mistakes and won't repeat them.  Therefore, my wish is they slow or stop repurchasing stock if they are capable of finding better investments.

[SafetyinNumbers]

33 minutes ago, 73 Reds said:

No question, Fairfax was cheap because of some poor investment decisions.  The assumption is they have corrected their mistakes and won't repeat them.  Therefore, my wish is they slow or stop repurchasing stock if they are capable of finding better investments.

I think that is conflating the insurance subsidiary capital with the holdco capital. They are turning stuff over in the insurance subsidiaries portfolios (i.e. making new investments) but also paying up dividends to the holdco to maintain the 3:1 leverage. 
 

Also, I don’t think it’s cheap because of poor investment decisions although that’s a common narrative. I think it’s cheap because of the market structure. The only investors that will buy on an uptick are passive and quants. Right now, we don’t have the quants because revenue momentum slowed.

[Viking]

54 minutes ago, 73 Reds said:

No question, Fairfax was cheap because of some poor investment decisions.  The assumption is they have corrected their mistakes and won't repeat them.  Therefore, my wish is they slow or stop repurchasing stock if they are capable of finding better investments.

Poor past investment decisions (mostly pre-2018) is one reason Fairfax is cheap. But I think there are more reasons it is cheap. How Fairfax invests is frowned upon by most investors: 

• The industries and types of companies.
• Their creativity (FFH-TRS being a great recent example).
• Being opportunistic - exploiting market dislocations
• The fact they sell companies/positions (not buy and hold forever).
• The turnover of the portfolio (in general).

As a result, the key question an investor needs to come to grips with to invest in Fairfax is “do you trust management.” I think this is very important for Fairfax (more important than for most companies).
 

And of course, most investors don’t trust management - so it is rational they don’t invest in Fairfax. (Note: I am not saying it is rational to not trust management.)

Edited May 12 by Viking

[73 Reds]

18 minutes ago, SafetyinNumbers said:

I think that is conflating the insurance subsidiary capital with the holdco capital. They are turning stuff over in the insurance subsidiaries portfolios (i.e. making new investments) but also paying up dividends to the holdco to maintain the 3:1 leverage. 
 

Also, I don’t think it’s cheap because of poor investment decisions although that’s a common narrative. I think it’s cheap because of the market structure. The only investors that will buy on an uptick are passive and quants. Right now, we don’t have the quants because revenue momentum slowed.

Sorry, it WAS cheap a number of years ago due to some bad investments.  Not as cheap now.  One other benefit of share repurchases is to bolster the TRS and absorb excess selling.  But I'd still rather they look for better investments elsewhere.

Edited May 12 by 73 Reds
Missed line

[Marco Van Basten]

1 hour ago, gfp said:

Yes I agree - the leverage from float, the willingness to opportunistically shrink equity through repurchases earlier in their evolution (which helps maintain that float leverage).  Quite a few capital allocation options tee-ed up and the ability to chose between them / when to do what, etc.. makes for a better investor.  Becoming massively overcapitalized in t-bills doesn't lead to optimal outcomes but certainly comes in handy on that 1 day out of 1000 you're the only one situated like that.

It only comes in handy if you use it on that 1 day out of a 1000, and unless I am mistaken, Berkshire failed miserably on those 1 out 1000 days (Fall of 2008-spring 2009, March of 2020, and there are other examples.)

[SafetyinNumbers]

4 minutes ago, 73 Reds said:

Sorry, it WAS cheap a number of years ago due to some bad investments.  Not as cheap now.  One other benefit of share repurchases is to bolster the TRS and absorb excess selling.  But I'd still rather they look for better investments elsewhere.

If you prefer lower returns just buy BRK or MKL. I think FFH trades at 40-50% discount to intrinsic value so I still see it as cheap. 

[73 Reds]

Just now, SafetyinNumbers said:

If you prefer lower returns just buy BRK or MKL. I think FFH trades at 40-50% discount to intrinsic value so I still see it as cheap. 

LOL, I actually prefer higher growth so Fairfax still makes the cut.

[SafetyinNumbers]

2 minutes ago, 73 Reds said:

LOL, I actually prefer higher growth so Fairfax still makes the cut.

So you prefer higher growth but without the mechanism (leverage) that delivers it?

[73 Reds]

Just now, SafetyinNumbers said:

So you prefer higher growth but without the mechanism (leverage) that delivers it?

No, I like both.  But there are lots of ways to generate leverage.  Unfortunately, BRK and MKL are not growing too fast though I will probably never sell my BRK holdings, just won't add unless it gets way cheaper than now.  Never really saw a need or reason to own MKL though it is a fine company.

[Txvestor]

3 hours ago, 73 Reds said:

No question, Fairfax was cheap because of some poor investment decisions.  The assumption is they have corrected their mistakes and won't repeat them.  Therefore, my wish is they slow or stop repurchasing stock if they are capable of finding better investments.

And my wish as a long term shareholder is that they use excess cash to concentrate my position in what we(and more importantly they) know is at values where the LT inbuilt ROI makes it an easy hurdle. Honestly they should measure that option vs any other use of that investable cash. 

Double down on what's working and cheap. Why not, with the excess cash as long as the balance sheet is sound and there's a margin of safety. We don't need empire builders. With a balance sheet of around $108B, that's plenty adequate to just be objective and neutral with optionality and 360 about where best additional capital goes. 

Edited May 12 by Txvestor

[Txvestor]

1 hour ago, Marco Van Basten said:

It only comes in handy if you use it on that 1 day out of a 1000, and unless I am mistaken, Berkshire failed miserably on those 1 out 1000 days (Fall of 2008-spring 2009, March of 2020, and there are other examples.)

Not just then. There were times well after the GFC around the time Buffett announced he had undergone treatment for prostate cancer. Where it was cheap for a long time, around $75-85 a b-share. The appetite to buy back just wasn't as strong back then. 

[73 Reds]

20 minutes ago, Txvestor said:

Not just then. There were times well after the GFC around the time Buffett announced he had undergone treatment for prostate cancer. Where it was cheap for a long time, around $75-85 a b-share. The appetite to buy back just wasn't as strong back then. 

For most of his tenure at Berkshire, Buffett was entirely averse to share buybacks.  Yet there were times that a TRS would have been just the thing - thinking back to 1999-2000 when Berkshire was hated.

[djokovic1]

7 hours ago, Viking said:

Poor past investment decisions (mostly pre-2018) is one reason Fairfax is cheap. But I think there are more reasons it is cheap. How Fairfax invests is frowned upon by most investors: 

• The industries and types of companies.
• Their creativity (FFH-TRS being a great recent example).
• Being opportunistic - exploiting market dislocations
• The fact they sell companies/positions (not buy and hold forever).
• The turnover of the portfolio (in general).

As a result, the key question an investor needs to come to grips with to invest in Fairfax is “do you trust management.” I think this is very important for Fairfax (more important than for most companies).
 

And of course, most investors don’t trust management - so it is rational they don’t invest in Fairfax. (Note: I am not saying it is rational to not trust management.)

completely agree with this 100%. It’s based of my lived experience that most investors I know have studied or are invested in BRK/MKL but haven’t studied Fairfax or rejected it after a cursory look.

 

Which explains to me why it trades at a big discount to peers. 
 

Nothing that time and continued execution won’t solve as long as we are right on management and their capital allocation. Bonus points: we get meaningful buybacks while we wait.

[SafetyinNumbers]

2 hours ago, djokovic1 said:

completely agree with this 100%. It’s based of my lived experience that most investors I know have studied or are invested in BRK/MKL but haven’t studied Fairfax or rejected it after a cursory look.

 

Which explains to me why it trades at a big discount to peers. 
 

Nothing that time and continued execution won’t solve as long as we are right on management and their capital allocation. Bonus points: we get meaningful buybacks while we wait.

I think it’s mostly attributed to the market structure. The big run up we had was because momentum investors piled in on the premium growth and interest income growth. The company was also aggressively buying stock which helped. The multiple peaked out at 1.69x BV in late July, the stock peaked in January off of the TSX 60 add. The multiple had already started to drop. Without the momentum buyers I think it’s hard to get multiple expansion. The company buys on down ticks and so do the type of value investors that would buy Fairfax. I’m surprised that there are still sellers at this multiple but the reality is that Fairfax’s float doesn’t turn over as much as most companies so it doesn’t take much to have an impact on price. 
 

I have been adding at 1.3x BV because I liked how aggressive Fairfax was in March on the buyback. I think that helps put a floor in on the multiple but of course the multiple might go much lower. I assume Fairfax will be even more aggressive at lower multiples.

[Txvestor]

20 hours ago, 73 Reds said:

For most of his tenure at Berkshire, Buffett was entirely averse to share buybacks.  Yet there were times that a TRS would have been just the thing - thinking back to 1999-2000 when Berkshire was hated.

Absolutely and even when he finally started doing it; it was at prices well below IV, he started at 1.1XBV folly well knowing IV had exceeded by more than 10% over 50yrs of investing, and then upped it eventually to 1.3. I think generally he had this view that share buybacks were him exploiting an information edge and he probably looked at it like him buying back shares from his elder sister who didn't know details and just waited for annual updates. I expect Greg Abel who has the unenviable task of allocating cash flows of 10s of billions annually on top of the 380B watches to be a lot more aggressive in this regard. Realistically speaking, with Buffett fading out of the picture, consistent buybacks under 1.5BV or a dividend make a lot of sense. As I can't see them eating but unable to make almost any sized acquisition. 

[Txvestor]

13 hours ago, SafetyinNumbers said:

I think it’s mostly attributed to the market structure. The big run up we had was because momentum investors piled in on the premium growth and interest income growth. The company was also aggressively buying stock which helped. The multiple peaked out at 1.69x BV in late July, the stock peaked in January off of the TSX 60 add. The multiple had already started to drop. Without the momentum buyers I think it’s hard to get multiple expansion. The company buys on down ticks and so do the type of value investors that would buy Fairfax. I’m surprised that there are still sellers at this multiple but the reality is that Fairfax’s float doesn’t turn over as much as most companies so it doesn’t take much to have an impact on price. 
 

I have been adding at 1.3x BV because I liked how aggressive Fairfax was in March on the buyback. I think that helps put a floor in on the multiple but of course the multiple might go much lower. I assume Fairfax will be even more aggressive at lower multiples.

I think the fact that it's not listed on the NYSE is also a factor. I doubt that will ever change as a result of the fiasco with the shorts exceptionally well chronicled in the book  The Fairfax way. I thought the TSX60 add would have had a larger impact than it did but guess not. I think there's a fairly large pool of $ that will not invest outside of the US or in ADRs. 

Edited May 13 by Txvestor

[SafetyinNumbers]

4 minutes ago, Txvestor said:

I think the fact that it's not listed on the NYSE is also a factor. I doubt that will ever change as a result of the fiasco with the shorts exceptionally well chronicled in the book  The Fairfax way. I thought the TSX60 add would have had a larger impact than it did but guess not. I think there's a fairly large pool of $ that will not invest outside of the US or in ADRs. 

I consider that part of the market structure. Less demand, lower price.