Fairfax 2026

[djokovic1]

3 hours ago, yesman182 said:

Is the valuation framework you laid out on page 14 the framework Markel laid out in last years annual report? 
 

i hope your investors do well! 

thanks! Yes it is. It also uses 2025 YE numbers for all companies so the discount for Fairfax and Markel today will be larger than what’s shown there and Berkshire is likely also at a small discount. Because income statement and balance sheet for all is larger than at YE 25.

Edited 13 hours ago by djokovic1

[TG]

3 hours ago, djokovic1 said:

thanks! Yes it is. It also uses 2025 YE numbers for all companies so the discount for Fairfax and Markel today will be larger than what’s shown there and Berkshire is likely also at a small discount. Because income statement and balance sheet for all is larger than at YE 25.

Insightful report, thank you! Recently read a quite exenstive report doing a deep dive and breakdown of Markel - coming out at more or less the same discount. Next to BRK and FFH, MKL is quite the weight in my portfolio so I genuinely hope management ups the ante with the buybacks at these valuations. I don't expect them to be as opportunistic as FFH, but still. I like the general set up of these three names over time, with FFH probably being the powerhouse whereas MKL and BRK I'd say still about 10+%-ish returns (hopefully MKL a bit more though).

[nwoodman]

2 hours ago, TG said:

Insightful report, thank you! Recently read a quite exenstive report doing a deep dive and breakdown of Markel - coming out at more or less the same discount. Next to BRK and FFH, MKL is quite the weight in my portfolio so I genuinely hope management ups the ante with the buybacks at these valuations. I don't expect them to be as opportunistic as FFH, but still. I like the general set-up of these three names over time, with FFH probably being the powerhouse, whereas MKL and BRK I'd say still about 10+%-ish returns (hopefully MKL a bit more though).

No question about Fairfax; however, the current Berkshire price has me placing some small orders for the first time in years.  While the graph below is more of a market anchoring mechanism.  I think, after the interview the other night, the timing is pretty clear on what this has all been building towards in terms of buybacks.  No offence to Tom, but he still leaves me cold in terms of the babble speak. I am sure they will do OK, but the other two are laser-focused.  Fairfax is a no-wholes-barred capital allocation/recycling machine.  Berkshire is an inertia machine with the patience of Jobe and a right tail that builds as long as this market does its whacky thing.  I do think that Berkshire shareholders will gain somewhere between 0.25-0.5% because of Greg giving some rigour and accountability to the existing assets.  That is probably what has piqued my interest more than anything.  My capital is on Fairfax winning the compounding race over the next 10-15 years, but I am sure second- and third-place do well too. I still wouldn't rule out Berkshire surprising, simply because they are playing a game in terms of FI and dry powder that the other two simply aren't.

 

[Eldad]

17 hours ago, djokovic1 said:

 

Thank you everyone for the feedback and in general I have to shout out to CoBF. For no company have I learned so much by just being engaged on a forum with so many informed posters who in my opinion are in the top 1% of investors (maybe even better) w.r.t understanding the nuances of Fairfax in a deep way. And the best part its free...When I presented, I mentioned a big part of my conviction building was reading Viking's book cover to cover (and 25 of Prem's annual reports in a row). 

RRR, I have thought about this question and it's a good one. There are two angles I would answer it with:

 

i) The investment leverage an insurer operates with is linked to the mix of equity proportion in the investments. Equity requires more regulatory capital against it, fixed income less. So all else, if you have more equity in the book, you investment leverage has to run lower.

Take a look at the leverage Berkshire and especially Markel had in earlier days. When they had a lower proportion of equity in the book, their investment leverage was much higher.

 

These charts are evidence and should give you confidence that Fairfax is operating at a higher leverage partly because they can because their equity book is smaller than Berkshire and Markel. What is great about that set up today is that, have a meaningful part of the book in Fixed income is great because you earn 5% on it! Which is why today, Fairfax has the best set up with the highest ROE (as shown in my presentation). (In a zero rate environment it won't work as well i.e you would rather have lower leverage with as much in equities as possible).

 

 

 

ii) The second lens I would use is to say, the amount of leverage Fairfax can take is highly regulated and scrutinised. So they are maximising the amount of leverage they can take based on regulatory constraints. The reason that's not risky as typical leverage because majority of the leverage comes from float which can be though of long term negative cost of capital debt. As opposed to debt which has positive cost of capital (ie interest payments) and covenants against it which can hinder you in the short term even if 1 year is bad eg. Covid but float doesn't have the same downside.

Fairfax leverage is still fairly risky even if it’s float though right? If there is a really bad worldwide catastrophe event Fairfax could easily have its entire book equity taken to zero. BRK with 0.5 float leverage would likely be hurt badly but would immediately be maybe one of the few underwriters writing new business on earth. Am I wrong in thinking this? 

[Duke In Shadows]

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