Fairfax 2026

[TwoCitiesCapital]

It's pretty well documented phenomenon that index adds tend to underperform and index removals out perform - probably as everyone who front runs the moves unwind. 

 

TSX add will likely make a large difference longer term, but short term impact is muddied. 

[djokovic1]

market structure could have short term impacts on price (but not on value) and I don’t spend much time thinking about it. In the long term price will converge to intrinsic value. I avoid worrying about market structure etc because if you have alignment and good capital allocation (ie buybacks if stock is cheap), intrinsic value keeps compounding regardless. Which we have with Fairfax! Lot of companies in the UK are cheap arguably due to lack of flows into the UK and they continue to remain cheap in part due to lack of buybacks (until the good ones get taken out)

[SafetyinNumbers]

2 hours ago, djokovic1 said:

market structure could have short term impacts on price (but not on value) and I don’t spend much time thinking about it. In the long term price will converge to intrinsic value. I avoid worrying about market structure etc because if you have alignment and good capital allocation (ie buybacks if stock is cheap), intrinsic value keeps compounding regardless. Which we have with Fairfax! Lot of companies in the UK are cheap arguably due to lack of flows into the UK and they continue to remain cheap in part due to lack of buybacks (until the good ones get taken out)

The key is a management team that takes advantage of the opportunity. Fortunately for us, unlike a lot of management teams, Prem, won’t take the company private and keep the opportunity for themselves which is a big risk in this market structure. Please see KW. 

[mananainvesting]

54 minutes ago, SafetyinNumbers said:

The key is a management team that takes advantage of the opportunity. Fortunately for us, unlike a lot of management teams, Prem, won’t take the company private and keep the opportunity for themselves which is a big risk in this market structure. Please see KW. 

Agreed! Key is even when the company is severely undervalued management won't sell or take private! 

$KW management is probably everything I do not want to see in a company. Extremely high compensation (imo) and for what? taking it private when the market mispriced (likely) it!!

Hoping Fairfax is careful with that team! 

[Hamburg Investor]

21 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.

What I don’t get is, why most investors think investing in one of them would be the best idea. I think a lot of investors invest into different AI stocks or more than one of the Mag7. But only a few seem to think about investing in all three BRK, MKL and/or FFH.

 

The power of float plus value investing plus investing a bigger portion of their investments into equity plus a decentralized structure (…) helped all three to be get to the Top1% of all American stocks, as far as I know. That combination is a secret sauce imho. They all brought between 15% and 20% CAGR over 40 to 60 years. 
 

If FFH is in your circle of competence, MKL, BRK are maybe too. I don’t like putting 100% of my investments into just one stock. So Fairfax is double the size than BRK and MKL combined in my portfolio.

 

To me that feels safe and offensive too. BRK has just less float leverage, but Buffett wents away. MKL was the top performer in the 2010s of the three and for a reason. And FFH has the best times ahead; but still they all have different insurance leverage and insurance business. They are invested in different regions and stocks. 
 

E. g. I like BRK as I think it’s the safest business in the world. If the blackest swan event ever happens to the world, I think BRK would be the last man standing,  in a lot of scenarios longer than FFH or MKL. I think it’s good to have such a thing in my portfolio. Even if BRK just mirrors index performance over most of the years, I think I will be happy having it in really, really bad years. Chances are very high, that BRK will give a lesser good performance; but that’s okay, I don’t own BRK stocks to outperform, I own it as an insurance against a severe once in a century market storm, still giving me market like returns. 

 

And MKLs management has grown intrinsic value by 15% CAGR over the same timespan than FFH (which has made around 18% or 19%), with much less lumpy performances, with less derivative investments. What’s wrong with a compounder 15%, that is in my circle of competence?
 

In any case, MKL seems to have a different risk profile compared to FFH. It’s smaller than BRK and I think will give better returns than BRK, and smaller returns than FFH. But still amrket beating.
 

But you know what? 15 years ago I would not have thought of FFH having a lost decade in front of them. I wasn’t aware MKL leaving FFH in the dust over the next 7 to 9 years. Even BRK outperformed FFH over multiple years. And I might be wrong again, now predicting FFH being the clear winner. Having all three in my portfolio let’s me sleep better, as I know I am wrong from time to time. I have three insurance compounders from Graham and Doddsville in my portfolio - and even if one fails, which I don’t expect, but if, the others should do really good and overcompensate.

[Munger_Disciple]

16 minutes ago, Hamburg Investor said:

What I don’t get is, why most investors think investing in one of them would be the best idea. I think a lot of investors invest into different AI stocks or more than one of the Mag7. But only a few seem to think about investing in all three BRK, MKL and/or FFH.

 

The power of float plus value investing plus investing a bigger portion of their investments into equity plus a decentralized structure (…) helped all three to be get to the Top1% of all American stocks, as far as I know. That combination is a secret sauce imho. They all brought between 15% and 20% CAGR over 40 to 60 years. 
 

If FFH is in your circle of competence, MKL, BRK are maybe too. I don’t like putting 100% of my investments into just one stock. So Fairfax is double the size than BRK and MKL combined in my portfolio.

 

To me that feels safe and offensive too. BRK has just less float leverage, but Buffett wents away. MKL was the top performer in the 2010s of the three and for a reason. And FFH has the best times ahead; but still they all have different insurance leverage and insurance business. They are invested in different regions and stocks. 
 

E. g. I like BRK as I think it’s the safest business in the world. If the blackest swan event ever happens to the world, I think BRK would be the last man standing,  in a lot of scenarios longer than FFH or MKL. I think it’s good to have such a thing in my portfolio. Even if BRK just mirrors index performance over most of the years, I think I will be happy having it in really, really bad years. Chances are very high, that BRK will give a lesser good performance; but that’s okay, I don’t own BRK stocks to outperform, I own it as an insurance against a severe once in a century market storm, still giving me market like returns. 

 

And MKLs management has grown intrinsic value by 15% CAGR over the same timespan than FFH (which has made around 18% or 19%), with much less lumpy performances, with less derivative investments. What’s wrong with a compounder 15%, that is in my circle of competence?
 

In any case, MKL seems to have a different risk profile compared to FFH. It’s smaller than BRK and I think will give better returns than BRK, and smaller returns than FFH. But still amrket beating.
 

But you know what? 15 years ago I would not have thought of FFH having a lost decade in front of them. I wasn’t aware MKL leaving FFH in the dust over the next 7 to 9 years. Even BRK outperformed FFH over multiple years. And I might be wrong again, now predicting FFH being the clear winner. Having all three in my portfolio let’s me sleep better, as I know I am wrong from time to time. I have three insurance compounders from Graham and Doddsville in my portfolio - and even if one fails, which I don’t expect, but if, the others should do really good and overcompensate.

 

One problem with investing in all three (without other diversifying investments) is that all three businesses are highly correlated with each other as they are primarily insurers (less in the case of BRK). Correlation is especially high for FFH & MKL. It thus makes very little sense to invest in both of them. 

Edited May 13 by Munger_Disciple

[djokovic1]

9 minutes ago, Hamburg Investor said:

What I don’t get is, why most investors think investing in one of them would be the best idea. I think a lot of investors invest into different AI stocks or more than one of the Mag7. But only a few seem to think about investing in all three BRK, MKL and/or FFH.

Personally it’s because my return hurdle is 15-20%. For me, Berkshire and Markel don’t meet it. Fairfax and a few other non insurance businesses I own do. 

[Junior R]

5 minutes ago, Munger_Disciple said:

 

One problem with investing in all three (without other diversifying investments) is that all three businesses are highly correlated with each other as they are primarily insurers (less so with BRK). Correlation is especially high for FFH & MKL. 

right now people are just jumping to high fliers ...I thinks CSCO just hit all time high after hours lol

 

if you have patience and not in a big rush FFH could be easy double in 5 years

[Munger_Disciple]

Just now, Junior R said:

right now people are just jumping to high fliers ...I thinks CSCO just hit all time high after hours lol

 

if you have patience and not in a big rush FFH could be easy double in 5 years

 

No doubt, I don't mean diversify into AI related stocks. Perhaps into other bombed out sectors like SaaS companies. Ex-US has become interesting again. 

[dealraker]

57 minutes ago, Junior R said:

right now people are just jumping to high fliers ...I thinks CSCO just hit all time high after hours lol

 

if you have patience and not in a big rush FFH could be easy double in 5 years

I own some Cisco and just hope the business continues to progress along as the stock is in a tax account.  Now we get AI valuations LOL; but then at some point we also get the next stage AI valuations...the low ones that inevitably come after the parabolic moves.

[Parsad]

2 hours ago, Munger_Disciple said:

 

One problem with investing in all three (without other diversifying investments) is that all three businesses are highly correlated with each other as they are primarily insurers (less in the case of BRK). Correlation is especially high for FFH & MKL. It thus makes very little sense to invest in both of them. 

 

MKL and BRK are somewhat correlated, but overall, the three stocks are not particularly correlated even though they are insurance companies, and differ widely with the S&P500 TR.  I own all four and just don't care about the market anymore...just enjoy life and have fun in my trading accounts!  The bulk of my money is in non-trading accounts and is in these four.  Cheers!

 

[Munger_Disciple]

1 minute ago, Parsad said:

 

MKL and BRK are somewhat correlated, but overall, the three stocks are not particularly correlated even though they are insurance companies, and differ widely with the S&P500 TR.  I own all four and just don't care about the market anymore...just enjoy life and have fun in my trading accounts!  The bulk of my money is in non-trading accounts and is in these four.  Cheers!

 

 

Actually SPX is a good diversifier for all the insurers given it's quite tech heavy though not right now due to its high valuation.

What is your portflio allocation among the four?

[Parsad]

7 minutes ago, Munger_Disciple said:

 

Actually SPX is a good diversifier for all the insurers given it's quite tech heavy though not right now due to its high valuation.

What is your portflio allocation among the four?

 

35% Fairfax, 25% MKL, 15% BRK, 15% VOO, 10% Cash...if there is a significant market correction, any cash gets added to the cheapest one or largest correction.  Cheers!

[Munger_Disciple]

10 minutes ago, Parsad said:

 

35% Fairfax, 25% MKL, 15% BRK, 15% VOO, 10% Cash...if there is a significant market correction, any cash gets added to the cheapest one or largest correction.  Cheers!

 

Interesting to see MKL > BRK in your portfolio. I think the reason FFH was not that correlated in the past was due to a confluence of factors: bad u/w results and macro bets (CDS followed by equity hedges). I expect FFH to be quite correlated to the other two going forward. 

[Parsad]

35 minutes ago, Munger_Disciple said:

 

Interesting to see MKL > BRK in your portfolio. I think the reason FFH was not that correlated in the past was due to a confluence of factors: bad u/w results and macro bets (CDS followed by equity hedges). I expect FFH to be quite correlated to the other two going forward. 

 

Happened just in the last couple of months.  BRK will continue to do well, but it is just too big now for outsized gains and opportunities.  It will probably excel in acquiring those large private businesses that are too big for FFH, MKL and most private equity funds.  But the universe is just too far small for BRK to substantially move the needle.  I would not be surprised to see large buybacks and an eventual dividend with all the cash that pours out.  

 

FFH and MKL have a great opportunity in front of them, and they are still small enough and flexible enough to do amazing things for my portfolio and eventually my niece and nephew and any non-profits I support.  They already own both, so going forward, they just know along with my brother...keep adding and adding...let it all compound!  Cheers!

[Castanza]

1 hour ago, Parsad said:

 

35% Fairfax, 25% MKL, 15% BRK, 15% VOO, 10% Cash...if there is a significant market correction, any cash gets added to the cheapest one or largest correction.  Cheers!

This is the way...own good companies and buy what's on sale. I never understood the extreme self limitation on position sizing for companies you have conviction in (taking the liberty in assuming your percentages could change IF any one of those goes on a big discount).

 

This is the exact portfolio I have in my non-trading accounts. Although I count my 401k and I only recently added MKL on this current draw down. Closer to 40% FFH, 20% BRK, 10% MKL, 25% SPY and 5% Cash. 

[Parsad]

2 hours ago, Castanza said:

This is the way...own good companies and buy what's on sale. I never understood the extreme self limitation on position sizing for companies you have conviction in (taking the liberty in assuming your percentages could change IF any one of those goes on a big discount).

 

This is the exact portfolio I have in my non-trading accounts. Although I count my 401k and I only recently added MKL on this current draw down. Closer to 40% FFH, 20% BRK, 10% MKL, 25% SPY and 5% Cash. 

 

Yup...pretty damn close!  And I sleep well at night. 

 

About 65% of my money is invested like this...personal holding company, over half of my RRSP, over half of my TFSA.  The other 35% is what I trade...remaining of RRSP, TFSA and a couple of cash accounts (not too much trading in these...more opportunistic over time to boost their size).  Cheers!

[Junior R]

9 hours ago, Parsad said:

 

Yup...pretty damn close!  And I sleep well at night. 

 

About 65% of my money is invested like this...personal holding company, over half of my RRSP, over half of my TFSA.  The other 35% is what I trade...remaining of RRSP, TFSA and a couple of cash accounts (not too much trading in these...more opportunistic over time to boost their size).  Cheers!

lol what happens when your RRSP doubles ...you need to plan  for drawdown lol or just let estate pay the taxes lol

Edited May 14 by Junior R

[Parsad]

1 hour ago, Junior R said:

lol what happens when your RRSP doubles ...you need to plan  for drawdown lol or just let estate pay the taxes lol

 

Most of it is going to charity.  If I die before it is converted to a RRIF...it's fine.  If I'm still alive, I will be donating a large portion each year and offsetting any taxes. 

 

Of all the problems I could have, it's a good problem to have.  Rather than one where I don't have enough money for healthcare, nursing home, homecare, etc.  My Mom would be in that position if I wasn't here to help her, so I'm ok with it. 

 

I have enough money to take care of her, take care of myself, leave my property and a great nestegg for my niece and nephew, plus leave a very nice lump sum to non-profits of my choice.  If it only gets bigger, then the non-profits will benefit even more.  Cheers!

[petec]

Just added a bit here for the first time since June 2020.

 

Probably jinxed it.

 

Sorry 

[thowed]

Ha ha - great stuff.  I think of you as one of the more conservative, sober, experienced FFH people here, so I like this!

[Zemergefen]

https://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso/roni/strengths/

 

Summary from Gemini.

 

"The latest outlook as of May 14, 2026, shows that we are officially under an El Niño Watch. Climate models are now strongly aligned, signaling a rapid transition from the neutral conditions seen earlier this year to a potentially significant El Niño event.  

Here is the current breakdown of the estimates for the 2026 season:

1. Probability and Timing

Near-Term Onset: There is an 82% chance that El Niño will emerge between May and July 2026.  

Long-Term Persistence: Confidence is very high (96% chance) that it will continue through the Northern Hemisphere winter of 2026–2027.  

Current Status: Sea-surface temperatures in the central and eastern Pacific have been rising rapidly over the last two months, with some regions already showing anomalies of +0.5°C to +1.0°C.

2. Potential Strength

While it is still early, there is significant discussion regarding a "Super El Niño":

Strong Potential: Some models suggest ocean temperatures could reach 2.0°C or higher above average by November 2026.  

Uncertainty: Experts warn of the "spring predictability barrier," noting that forecasts become much more reliable after May. Currently, there is roughly a 25% chance of a "very strong" event and a 50% chance of a "strong" one.  "

 

 

[gfp]

4 minutes ago, Zemergefen said:

https://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso/roni/strengths/

 

Summary from Gemini.

 

"The latest outlook as of May 14, 2026, shows that we are officially under an El Niño Watch. Climate models are now strongly aligned, signaling a rapid transition from the neutral conditions seen earlier this year to a potentially significant El Niño event.  

Here is the current breakdown of the estimates for the 2026 season:

1. Probability and Timing

Near-Term Onset: There is an 82% chance that El Niño will emerge between May and July 2026.  

Long-Term Persistence: Confidence is very high (96% chance) that it will continue through the Northern Hemisphere winter of 2026–2027.  

Current Status: Sea-surface temperatures in the central and eastern Pacific have been rising rapidly over the last two months, with some regions already showing anomalies of +0.5°C to +1.0°C.

2. Potential Strength

While it is still early, there is significant discussion regarding a "Super El Niño":

Strong Potential: Some models suggest ocean temperatures could reach 2.0°C or higher above average by November 2026.  

Uncertainty: Experts warn of the "spring predictability barrier," noting that forecasts become much more reliable after May. Currently, there is roughly a 25% chance of a "very strong" event and a 50% chance of a "strong" one.  "

 

 

 

So are you posting this to suggest that we are more likely to see a relatively benign Atlantic Hurricane season or something else?

[Zemergefen]

Exactly!

 

Hopefully this will be great for 2026 underwriting results.

 

[SafetyinNumbers]

2 hours ago, thowed said:

Ha ha - great stuff.  I think of you as one of the more conservative, sober, experienced FFH people here, so I like this!

Who are the progressive, drunk, inexperienced FFH people here?