Fairfax 2026

[KFS]

On 6/14/2026 at 5:54 PM, SafetyinNumbers said:

They also used their more fairly valued stock to buy Allied World which reduced the impact of the hedging strategy by issuing equity and dramatically increased the float ahead of what they expected to be an increase in interest rates. That ultimately took a lot longer to happen. They were already in talks with AW in September of that year but they did bump in December to help get the AW BOD on board. Another example of how Fairfax often expresses the same bet in a multitude of ways.

 

 

Not to be nitpicky here but just to clarify, I'm not sure I would have called the stock fairly valued during this transaction.  Fairfax issued 5.1 million shares at a P/B of only 1.06 to acquire Allied World.  Of course it has worked out great over the years, but I don't remember it being an obviously good move at the time.  

 

From the 2017 annual report:

 

 

 

 

 

 

 

[Marco Van Basten]

6 hours ago, SafetyinNumbers said:

Probabilistic investing often looks like luck.

With all due respect, has the equity book outperformed the S&P over the last 15 years?  By the way, there have been plenty of incredible opportunities in both US and non-US.  Why buy Eurobank when you could have bought Aena, Halma, Diploma, Asml, Hermes, Sartorius Stadim Biotech, Safran?  Why buy Blackberry, et all when Alphabet, Microsoft, Meta, Nvidia, Micron, Moody's, S&P Global, Idexx, Heico, Transdigm, GE, RSG & WM, and the list goes on were available?  Why are we so proud of buying crappy businesses at 50 cents on the dollar when Nvidia was trading at 5 cents on the dollar 5 years ago?  

[Viking]

4 hours ago, Marco Van Basten said:

With all due respect, has the equity book outperformed the S&P over the last 15 years?  By the way, there have been plenty of incredible opportunities in both US and non-US.  Why buy Eurobank when you could have bought Aena, Halma, Diploma, Asml, Hermes, Sartorius Stadim Biotech, Safran?  Why buy Blackberry, et all when Alphabet, Microsoft, Meta, Nvidia, Micron, Moody's, S&P Global, Idexx, Heico, Transdigm, GE, RSG & WM, and the list goes on were available?  Why are we so proud of buying crappy businesses at 50 cents on the dollar when Nvidia was trading at 5 cents on the dollar 5 years ago?  

Is there a reason you use 15 years as the benchmark? Buffett has said that 5 years is a good timeframe to use to evaluate a management team. That is my preferred measure. 
 

Does year 6 to 10 performance matter? A little, but much less IMHO. 
What about year 11 to 15? Interesting… but too long ago to matter much IMHO. 

For instance… back in 2013, I did not use a 10 or 15 year timeframe to evaluate Fairfax’s management team at the time (their investment returns). That would have been pretty dumb, given the CDS and equity hedge positions (that worked fabulously well from 2007-2009) would have completely skewed results. The best way to evaluate Fairfax in 2013 was to look primarily at what they owned at the time, how the positions had performed recently (prior 5 years), and what their prospects were (next 5 years). (I did that and then sold all my shares in Fairfax.)

 

Imagine using a 15 year timeframe to evaluate management at BlackBerry back in 2013? It would have told an investor to back up the truck… Really?

 

One of the benefits of using 5 years is it makes calculating rate of return easier. Fairfax has a very concentrated portfolio:

• Eurobank
• FFH-TRS
• Poseidon
• Fairfax India - primarily BIAL
• Orla Mining

Do I care today that Eurobank was a terrible business in 2014? Nope. What I care deeply about is what kind of business Eurobank is today - and it is a very good business. Could that change? Of course… that is why I listen to every quarterly call). 

 

Holdings get much smaller after the big 5. But there are a bunch of stars in there as well. Fairfax’s hit rate the past 5 years is nuts. 

To this, add the returns on the holdings they sold in the last 5 years:

• Resolute Forest Products
• Stelco
• Sigma
• Orla (part)
• Poseidon (part)

All were massive home runs (5-year returns).

 

And then, of course, we should also add the gains on the insurance businesses they IPO’d/sold in the last 5 years… this needs to get counted somewhere…

• Digit
• Pet insurance
• Ambridge
• Euolife’s life insurance business

More massive gains…
 

After all, at the end of the day, we are trying to evaluate a management team on their capital allocation skills. It should be fair and balanced and look at all the important pieces.

 

How has Fairfax performed over the past 5 years?
 

They have smoked - absolute and relative to the S&P500. 
 

Especially if you use the correct cost basis:

• FFH-TRS cost basis is not the starting value of Fairfax’s share price. It is much less.

Interestingly, the last 5 years had two bear markets: 2022 and 2025 (I think just qualified). There was also a historic bear market in bonds. Yes, the starting point (Dec 31, 2020) was very favourable. But that is when you look at performance vs the S&P500. 
 

For the past 5 years, Fairfax’s capital allocation has been best-in-class and it is not close. The fact that people don’t get it is not surprising - this is Fairfax after all. 

Edited 7 hours ago by Viking

[Txvestor]

1 hour ago, Viking said:

Is there a reason you use 15 years as the benchmark? Buffett has said that 5 years is a good timeframe to use to evaluate a management team. That is my preferred measure. 
 

Does year 6 to 10 performance matter? A little, but much less IMHO. 
What about year 11 to 15? Interesting… but too long ago to matter much IMHO. 

For instance… back in 2013, I did not use a 10 or 15 year timeframe to evaluate Fairfax’s management team at the time (their investment returns). That would have been pretty dumb, given the CDS and equity hedge positions (that worked fabulously well from 2007-2009) would have completely skewed results. The best way to evaluate Fairfax in 2013 was to look primarily at what they owned at the time, how the positions had performed recently (prior 5 years), and what their prospects were (next 5 years). (I did that and then sold all my shares in Fairfax.)

 

Imagine using a 15 year timeframe to evaluate management at BlackBerry back in 2013? It would have told an investor to back up the truck… Really?

 

One of the benefits of using 5 years is it makes calculating rate of return easier. Fairfax has a very concentrated portfolio:

• Eurobank
• FFH-TRS
• Poseidon
• Fairfax India - primarily BIAL
• Orla Mining

Do I care today that Eurobank was a terrible business in 2014? Nope. What I care deeply about is what kind of business Eurobank is today - and it is a very good business. Could that change? Of course… that is why I listen to every quarterly call). 

 

Holdings get much smaller after the big 5. But there are a much of stars in there as well. Fairfax’s hit rate the past 5 years is nuts. 

To this, add the returns on the holdings they sold in the last 5 years:

• Resolute Forest Products
• Stelco
• Sigma
• Orla (part)
• Poseidon (part)

All were massive home runs (5-year returns).

 

And then, of course, we should also add the gains on the insurance businesses they IPO’d/sold in the last 5 years… this needs to get counted somewhere…

• Digit
• Pet insurance
• Ambridge
• Euolife’s life insurance business

More massive gains…
 

After all, at the end of the day, we are trying to evaluate a management team on their capital allocation skills. It should be fair and balanced and look at all the important pieces.

 

How has Fairfax performed over the past 5 years?
 

They have smoked - absolute and relative to the S&P500. 
 

Especially if you use the correct cost basis:

• FFH-TRS cost basis is not the starting value of Fairfax’s share price. It is much less.

Interestingly, the last 5 years had two bear markets: 2022 and 2025 (I think just qualified). There was also a historic bear market in bonds. Yes, the starting point (Dec 31, 2020) was very favourable. But that is when you look at performance vs the S&P500. 
 

For the past 5 years, Fairfax’s capital allocation has been best-in-class and it is not close. The fact that people don’t get it is not surprising - this is Fairfax after all. 

Well, it's also important to consider where they are currently allocating capital. 
-KW, is questionable for me based on said company's own shareholder returns last 5, 10 or 15yrs. But we will remain curious.
-UA a classic dumpster diving investment down 90% from its peak.

-Sleep county remains to be seen.
-Andrew Peller which also don't seem particularly cheap or particularly high moat businesses.

 

Whilst I acknowledge they have had a good 5yr run, that was after a long drought and it's by no means certain to me that they have had some sort of eureka moment and this will continue. For that reason, I'm generally a bigger fan of share repurchases than most of the above acquisitions. However only time will tell. 

Despite all that, I remain invested because of what I said previously, the better mouse trap that they have. And that helps enormously over the long term. 

I definitely do believe the insurance companies have turned a corner. They are much larger, more diversified across both lines of insurance, and geographically, and have better underwriting standards. Their float is now in excess of $40B and I think interest rates are going to be persistently higher for longer than people are currently expecting just as a function of global sovereign debt levels and inflation risks. Thats powerful with their total investment portfolio 3:1 leveraged. I do generally trust their prudent overall risk management as they have a lot of skin in the game. 

[Viking]

36 minutes ago, Txvestor said:

Well, it's also important to consider where they are currently allocating capital. 
-KW, is questionable for me based on said company's own shareholder returns last 5, 10 or 15yrs. But we will remain curious.
-UA a classic dumpster diving investment down 90% from its peak.

-Sleep county remains to be seen.
-Andrew Peller which also don't seem particularly cheap or particularly high moat businesses.

 

Whilst I acknowledge they have had a good 5yr run, that was after a long drought and it's by no means certain to me that they have had some sort of eureka moment and this will continue. For that reason, I'm generally a bigger fan of share repurchases than most of the above acquisitions. However only time will tell. 

Despite all that, I remain invested because of what I said previously, the better mouse trap that they have. And that helps enormously over the long term. 

I definitely do believe the insurance companies have turned a corner. They are much larger, more diversified across both lines of insurance, and geographically, and have better underwriting standards. Their float is now in excess of $40B and I think interest rates are going to be persistently higher for longer than people are currently expecting just as a function of global sovereign debt levels and inflation risks. Thats powerful with their total investment portfolio 3:1 leveraged. I do generally trust their prudent overall risk management as they have a lot of skin in the game. 

Can you explain to me what the financials look like for each investment? What was the money Fairfax put in? (That is not the reported deal price.) What is the (likely) return they are going to generate off it in the coming years? 
 

Bottom line, I am being open minded with their new purchases. One reason is I haven’t spent a lot of time trying to understand them. I will get around to it. Another reason is Fairfax has been hitting the ball out of the park - as a result, I am giving them the benefit of the doubt. 
 

i don’t expect them to be perfect. Some investments will look like clunkers. Lynch said if you are right 6 times out of 10 you will do well in this business. I am not worried when it comes to Fairfax’s equity portfolio these days.

Edited 6 hours ago by Viking

[Viking]

49 minutes ago, Txvestor said:

Well, it's also important to consider where they are currently allocating capital. 
-KW, is questionable for me based on said company's own shareholder returns last 5, 10 or 15yrs. But we will remain curious.
-UA a classic dumpster diving investment down 90% from its peak.

-Sleep county remains to be seen.
-Andrew Peller which also don't seem particularly cheap or particularly high moat businesses.

 

Whilst I acknowledge they have had a good 5yr run, that was after a long drought and it's by no means certain to me that they have had some sort of eureka moment and this will continue. For that reason, I'm generally a bigger fan of share repurchases than most of the above acquisitions. However only time will tell. 

Despite all that, I remain invested because of what I said previously, the better mouse trap that they have. And that helps enormously over the long term. 

I definitely do believe the insurance companies have turned a corner. They are much larger, more diversified across both lines of insurance, and geographically, and have better underwriting standards. Their float is now in excess of $40B and I think interest rates are going to be persistently higher for longer than people are currently expecting just as a function of global sovereign debt levels and inflation risks. Thats powerful with their total investment portfolio 3:1 leveraged. I do generally trust their prudent overall risk management as they have a lot of skin in the game. 

KW is an interesting company. I totally agree with you - retail shareholders in KW got taken out behind the woodshed owning the stock. But my read is Fairfax did ok. The stock they owned was table-stakes (as Jamie Dimon would say). It got Fairfax access to Kennedy Wilson’s deal flow. Real estate partnerships. Mortgage loans. ThePacWest deal was an absolute home run for Fairfax (still is). And in the end, it also allowed Fairfax to take KW out on the cheap (at least that is my initial uneducated read). Real estate is deeply out of favour - this is likely an ideal time to buy something like KW. 
 

Now having said all that… KW is a bit of a complex beast… so I could be completely off base in terms of how it works out for Fairfax. We will see.
 

It reminds me a little of when Fairfax took Recipe private when Covid was still a thing here in Canada - Fairfax got it cheap (in terms of buying when there was a lot of pessimism). 

Edited 6 hours ago by Viking

[SafetyinNumbers]

11 hours ago, KFS said:

 

 

Not to be nitpicky here but just to clarify, I'm not sure I would have called the stock fairly valued during this transaction.  Fairfax issued 5.1 million shares at a P/B of only 1.06 to acquire Allied World.  Of course it has worked out great over the years, but I don't remember it being an obviously good move at the time.  

 

From the 2017 annual report:

 

 

 

 

 

 

 

When they announced the deal in December 2016, the stock was trading closer to 1.3x BV. That’s when the Allied World BOD signed the definitive agreement. In March 2016, they also issued equity for closer to 1.4x BV. This was in a backdrop of low interest rates so ROE was structurally lower. 
 

 

[SafetyinNumbers]

9 hours ago, Marco Van Basten said:

With all due respect, has the equity book outperformed the S&P over the last 15 years?  By the way, there have been plenty of incredible opportunities in both US and non-US.  Why buy Eurobank when you could have bought Aena, Halma, Diploma, Asml, Hermes, Sartorius Stadim Biotech, Safran?  Why buy Blackberry, et all when Alphabet, Microsoft, Meta, Nvidia, Micron, Moody's, S&P Global, Idexx, Heico, Transdigm, GE, RSG & WM, and the list goes on were available?  Why are we so proud of buying crappy businesses at 50 cents on the dollar when Nvidia was trading at 5 cents on the dollar 5 years ago?  

The goal isn’t to outperform the S&P, it’s to generate absolute returns. Over time the process should outperform the S&P especially when the leverage is included. This most recent 15 year period the backdrop was particularly difficult for this investment style because of the change in market structure. Further, the decision by Fairfax to accumulate more significant influence and control positions ensures that the accounting returns lagged economic returns since 2012. While the lag continues, the gains are coming pretty regularly now as the strategy has matured.