Fairfax 2026

[dartmonkey]

1 minute ago, SafetyinNumbers said:

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?

Yes, many of us here like to think that we are conservative, sober and experienced-FFH people, so if petec is our leader, take us to him.

[thowed]

Ha - think it may have come out wrong!  Obviously this board is going to have a lot of FFH fans (of which I am one), so it's good to have some pushback.  I feel like PeteC and Parsad have tended to require a lower price / higher bar for adding (I think the rest of us have been buying on dips over the past year) so I just find it interesting when they say they're adding.

 

I also like that there are people like you @SafetyinNumbers who have such a high weighting in it, as this makes me feel more confident in my high (if not so high) weighting.

 

Cheers!

[roundball100]

54 minutes ago, SafetyinNumbers said:

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

Do we have to sign up for all 3 as a lot?

[Marco Van Basten]

1 hour ago, SafetyinNumbers said:

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

I am, except for the progressive part... I had a bottle of wine with dinner last night!  

[TwoCitiesCapital]

2 hours ago, SafetyinNumbers said:

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

 

[petec]

2 hours ago, Marco Van Basten said:

I am, except for the progressive part... I had a bottle of wine with dinner last night!  

 

Just the one? 

 

Amateur 

[petec]

3 hours ago, thowed said:

I feel like PeteC and Parsad have tended to require a lower price / higher bar for adding

 

Exalted company indeed.

 

Please remember I spent most of the 2010's adding and getting nowhere. I am deeply fallible 

[Hamburg Investor]

On 5/13/2026 at 10:33 PM, 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. 

Re: On the correlation of FFH, MKL and BRK

Worth revisiting the framing here. Correlation measures co-movement of prices, but price volatility isn't really the risk that matters for long-term investors. Permanent loss of capital is. The more useful question isn't "will these three fall together in a downturn?" but rather "could any of them permanently destroy purchasing power?" That leads to a quite different conclusion.

 

BRK as industrial conglomerate
Berkshire today generates the majority of its earnings from BNSF, Berkshire Energy, Pilot Flying J and dozens of other operating businesses, completely independent of underwriting cycles or capital markets. Insurance contributes roughly a third of operating earnings and arguably reduces overall risk by attaching low-cost float to an already fortress-like industrial base. Classifying BRK alongside MKL and FFH as "primarily an insurer" understates how different the business actually is.

 

MKL post-2025
Markel exited its Global Reinsurance Division in August 2025. What remains is a specialty direct insurer with limited catastrophe exposure, plus Markel Ventures, a collection of quietly cash-generative industrial businesses. The largest single source of underwriting correlation with FFH has been removed.

 

 

FFH's differentiated portfolio
FFH does carry a large global reinsurance book and that is real exposure. But the investment side looks quite different from MKL and BRK: Eurobank, Fairfax India, Bangalore Airport, and meaningful hard asset exposure through Minera Alamos and the emerging Eldorado Gold position via Foran Mining. In a deflationary global crash, the one scenario that pressures all three simultaneously, those gold and copper production assets would likely hold value while conventional equity portfolios suffer. That is genuine differentiation.

 

The structural advantage all three share
Pure investment portfolios become forced sellers in crises. None of these three companies does. BRK has $330bn in Treasuries and industrial cash flows. MKL has Markel Ventures. FFH has operating companies across four continents. The ability to sit still, or even be a buyer, when others are forced to sell is arguably the most underappreciated feature of the holding company model.

 

 

Where your point stands
A simultaneous global collapse in equities, credit and economic activity would pressure all three. But that scenario hits nearly everything. The more targeted response would be a modest allocation to gold royalty companies alongside these three, and interestingly, FFH has already partially addressed that through its mining positions.

 

All three holdings are very diversified in their own internal structure and have a very low risk of permanent loss of capital. All three have so many different income streams and opportunities to invest their capital - that gives each of them a very low risk profile imho. 
 

Combining all three together in a portfolio spreads the risk even further, given their very different concrete stock investments, wholly owned businesses, geographical foot print etc.

 

Particularly given BRKs low insurance exposure, MKL's reinsurance exit and FFH's real asset exposure lowers the overall risk profile meaningfully - at least in my eyes. 

 

Thinking like an owner, not a trader.
 

[Munger_Disciple]

4 hours ago, Hamburg Investor said:

Re: On the correlation of FFH, MKL and BRK

Worth revisiting the framing here. Correlation measures co-movement of prices, but price volatility isn't really the risk that matters for long-term investors. Permanent loss of capital is. The more useful question isn't "will these three fall together in a downturn?" but rather "could any of them permanently destroy purchasing power?" That leads to a quite different conclusion.

 

I am not talking about stock price correlation, but business correlation. There are all subject to the softening insurance cycle. The effect of insurance cycle is obviously lower for Berkshire due to the many non-insurance operations it owns. 

 

4 hours ago, Hamburg Investor said:

 

Thinking like an owner, not a trader.
 

 

You are not the only one. I suspect a vast majority of this board thinks similarly.

[SafetyinNumbers]

6 hours ago, Munger_Disciple said:

There are all subject to the softening insurance cycle. The effect of insurance cycle is obviously lower for Berkshire due to the many non-insurance operations it owns. 

How do you think the softening insurance cycle impacts FFH results? 

[Viking]

Nine short months ago, many people were very concerned about lower interest rates and how much it would impact interest income at Fairfax in the coming years.

 

Fast forward to today... the 2 year treasury is back above 4% (4.06%) and the 10 year is back above 4.55%. 

 

What is the lesson? 

 

Trying to predict short term movements in interest rates is a tough game.

 

It makes me wonder what Mr. Market is worried about today... (and what we will think about it in another 12 months...)

 

[kab60]

On 5/5/2026 at 3:31 PM, kab60 said:

That is clearly not my return expectation going forward. I am looking at stuff that will do +15% between earnings+growth, and then I turn over the book regularly to harvest multiple re-ratings as/if they occur to juice ROE.

 

If I had to hold forever, I would go Fairfax over Lancashire. Shorter term, I prefer Lancashire. I think there is surprisingly little talk on here about the industry cycle. Broker commentary on lack of price discipline is pretty bad, but who knows if that is priced in. What I do know is that it increases likelihood of M&A.

Seems like Intact is coming for Hiscox now... The end of London-listed insurers might be near...

 

That makes Lancashire Holdings a bit of a sitting duck... + Conduit RE, which has a bit of hair though but also trading at a discount to TBV.

 

I don't own any, but I can't see Lancashire staying independent through this softening market, unless shares really rocket. It's not even unlikely that Fairfax comes at them. Lancashire seems to have a pretty unique culture and probably prefers being part of a holding company.

Edited May 15 by kab60

[Hoodlum]

On 5/14/2026 at 1:17 PM, Zemergefen said:

Exactly!

 

Hopefully this will be great for 2026 underwriting results.

 

That could then also suggest a further softening of the insurance market.  If long bond yields continue to rise, some insurance companies with long bond duration may need to pull back on their underwriting which would help offset the softening market somewhat. 

[Junior R]

2 year at 4.08% it does look good for them if they want to move some more cash into bonds

 

Duration is 2.2 years, average maturity is 3 years and our yield is approximately 5%. A lot of safety and flexibility is built into the fixed income portfolio, which is our response to the playing field as it sits. The economic and interest environment has many conflicting factors, so we're playing it safe, keeping lots of flexibility and making a good return as we wait.

 

Edited May 15 by Junior R

[Hoodlum]

15 minutes ago, Junior R said:

2 year at 4.08% it does look good for them if they want to move some more cash into bonds

 

Duration is 2.2 years, average maturity is 3 years and our yield is approximately 5%. A lot of safety and flexibility is built into the fixed income portfolio, which is our response to the playing field as it sits. The economic and interest environment has many conflicting factors, so we're playing it safe, keeping lots of flexibility and making a good return as we wait.

 

30 year yields today have also passed the Covid highs.  I wonder which insurance companies will be impacted due to holding long duration bonds. 

[Hamburg Investor]

15 hours ago, Munger_Disciple said:

You are not the only one. I suspect a vast majority of this board thinks similarly.

Yes, and your nick name here is a testament for that approach. 
 

15 hours ago, Munger_Disciple said:

I am not talking about stock price correlation, but business correlation. There are all subject to the softening insurance cycle. The effect of insurance cycle is obviously lower for Berkshire due to the many non-insurance operations it owns. 

I think business correlation is not the same as business risk at least in this case. At least I see all three insurers having a very, very low risk profile compared to all other sibgle stock investments.
 

First BRK in my eyes lowers the risk of permanent loss of capital in nearly every stock portfolio. So many different income streams, a lot of wholly owned businesses (so less risk of running out of cash as the independence from Mr. Market is really great), so much cash on hand. I have high respect for anybody reaching for higher yields in a conservative manner like you do I guess. But for me having nearly 50% of my portfolio in FFH, I want to have a safe haven to counter that „half of all eggs in one basket“ risk and I think BRK is the perfect match. I get stock market like returns, but as safe as it can get. So I have around 10% of my portfolio in BRK.
 

Second I hold Markel with nearly 10% of my portfolio as I still see some important differences in risk conpared to FFH. E. g. the float leverage of MKL is less big than FFH (but higher than BRKs). So there’s less risk than FFH, but higher performance potential than BRK. And now no Reinsurance risk any more (while it has been lower before, compared to FFH). No reinsurance risk gives MKL a different risk profile, so rosk diversification. Of course I don’t expect MKL to bring the same returns like FFH with a lower ratio of float/premiums to equity. And don’t forget: the insurance businesses of both have a really different profile too and that’s growing. I really like the worldwide diversification FFHs just grows into from a risk perspective; and I like the specialization MKL has in its niche.
 

MKL has a lower risk profile and it has a different risk profile, as it holds other stocks and owns other businesses and the management is different. The most important thing for me: Both Prem and Tom are clearly value guys (or, as Buffett would put it: „They are both from Graham and Doddsville“)

 

Toms and Prems toolboxes are clearly not the same from an investing perspective. I see a lot of mistakes Prem has done in the rearview mirror, that I don’t expect Tom to do ever - and vice versa. Do I like FFH more than MKL? Yes. But was Tom the better jockey to bet on between 2011 and 2016? Definitely! Do I think Prem will do such bad decisions again? Of course not. But is this a sure thing? No - so diversification helps.

 

In a nutshell for me I think investing into 1. value management driven 2. holding companies 3. with a lot of different income streams, 4. having a decentralized structure 5. levered by a solid, profitable insurance business, gives an investor the lowest risk any single investment can give.

 

The 5th point is imho especially interesting, as generally I think float leverage shouldn’t be too high from a risk perspective (ideally not more than 1:1 between float and equity but more than 1:3). Higher leverage like 2:1 gives a big chance of high outperformance with just a bit hogher risk. FFHs leverage seems really manageable and let’s me sleep well at night; still I see BRK and MKL being a bit safer in a black swan event.

 

I totally understand, that my approach doesn’t match your hurdle rate and that’s totally understandable and fine and I respect it. I guess (but I might be wrong), you’re having a different view on risk (more like different sectors lowering risk?) and I‘d appreciate reading about your perspective. 

[Munger_Disciple]

3 minutes ago, Hamburg Investor said:

Yes, and your nick name here is a testament for that approach. 

 

 LOL

[Munger_Disciple]

29 minutes ago, Hamburg Investor said:

I‘d appreciate reading about your perspective. 

 

I own BRK & FFH but not MKL though I think it's a decent company. I have been an extremely happy & content BRK shareholder for > 25 years now (sold a tiny bit last year for the first time in my life & it felt a little weird to be honest) and a Fairfax shareholder for about 4-5 years now and expect to hold its stock for the very long term. Agree with your perspective on BRK. Unlike others on the board, I think it will be very hard for Fairfax to compound at 15% for a very long time. I think they will run into the same problems as BRK eventually but I expect them to do better. I can see FFH compounding at close to 15% (unless there is a CAT event) in the next 5-7 years but after that who knows?

 

 

Edited May 15 by Munger_Disciple

[SafetyinNumbers]

7 hours ago, Munger_Disciple said:

 

I own BRK & FFH but not MKL though I think it's a decent company. I have been an extremely happy & content BRK shareholder for > 25 years now (sold a tiny bit last year for the first time in my life & it felt a little weird to be honest) and a Fairfax shareholder for about 4-5 years now and expect to hold its stock for the very long term. Agree with your perspective on BRK. Unlike others on the board, I think it will be very hard for Fairfax to compound at 15% for a very long time. I think they will run into the same problems as BRK eventually but I expect them to do better. I can see FFH compounding at close to 15% (unless there is a CAT event) in the next 5-7 years but after that who knows?

 

 

Are you assuming they won’t be able to maintain the investments to equity ratio? 

[CharlesMunger]

Keeping averaging down here. Already got way too much but hey its cheap? A double in 5 years from these levels?

 

• Market Cap $36 bn
• $1.5 bn  Underwriting profit
• $2.5 bn Interest and dividends
• $1.0 bn Income from associates and non-insurance consolidated income
• $150 per share after taxes, interest expense, corporate overhead, and other costs. Before fluctuations from realized and unrealized gains and losses in the stock and bond market

 

At whihch level would you think Prem privately would load up the truck again?

Edited May 16 by CharlesMunger

[SafetyinNumbers]

48 minutes ago, CharlesMunger said:

Keeping averaging down here. Already got way too much but hey its cheap? A double in 5 years from these levels?

 

• Market Cap $36 bn
• $1.5 bn  Underwriting profit
• $2.5 bn Interest and dividends
• $1.0 bn Income from associates and non-insurance consolidated income
• $150 per share after taxes, interest expense, corporate overhead, and other costs. Before fluctuations from realized and unrealized gains and losses in the stock and bond market

 

At whihch level would you think Prem privately would load up the truck again?

I keep averaging up! My guess is he’s going to let the company do the buying for him. 
 

For the most part, I find investors ignore the equity portfolio but every 1% in capital gains is $10 in earnings. 

[gfp]

1 hour ago, CharlesMunger said:

Market Cap $36 bn

 

US dollar close was $1578.9 per share and there are 20,624,032 shares outstanding right?  The rest of your figures were in US dollars.

 

Market cap is $32.56 million USD.  The proxy and a bunch of online services don't calculate the look-through treasury ownership of 800k shares through Sixty-two investment.  they do usually account for shares held in treasury for future executive compensation.

 

 

[CharlesMunger]

43 minutes ago, SafetyinNumbers said:

I keep averaging up! My guess is he’s going to let the company do the buying for him. 
 

For the most part, I find investors ignore the equity portfolio but every 1% in capital gains is $10 in earnings. 

 Haha yeah i was late to the party i guess. Was buying the last 8 months or so.  
 

10 minutes ago, gfp said:

 

US dollar close was $1578.9 per share and there are 20,624,032 shares outstanding right?  The rest of your figures were in US dollars.

 

Market cap is $32.56 million USD.  The proxy and a bunch of online services don't calculate the look-through treasury ownership of 800k shares through Sixty-two investment.  they do usually account for shares held in treasury for future executive compensation.

 

 

 Ha! You are right. Hope this share count number continues getting lower dramatically 

[SafetyinNumbers]

1 hour ago, CharlesMunger said:

Ha! You are right. Hope this share count number continues getting lower dramatically 

I think the notional value of the TRS can be added to debt and the share count reduced by the number of shares covered by the TRS. 

[gfp]

1 hour ago, SafetyinNumbers said:

I think the notional value of the TRS can be added to debt and the share count reduced by the number of shares covered by the TRS. 

 

I've thought about that also but despite them choosing to repurchase the block of counterparty shares hedging the TRS tranche they have closed in the past, there is no reason to assume they will repurchase the share blocks when they choose to close out all or part of the TRS position in the future.  I know you like to think of it as "they have already locked in the price" but that's not how I think about it at all.  The decision to buy the counterparty's shares at the same time you are choosing to exit the swap is a completely separate decision and the price will be very different.

 

The company has been consistent about framing it as an investment - for the gains - and not framing it as "locking in the price of a future share buyback."  I think they would be happy to exit the TRS at a price so high they were not interested in buying the underlying block...