Fairfax 2026

[TwoCitiesCapital]

5 hours ago, Maverick47 said:

I’ve really only invested on my own for the last decade or two, and the broker I use in the States really limits my ability to look outside to companies traded on other countries’ stock exchanges, unless their shares can be purchased over the counter such as with Fairfax.  
 

So for me, Buffett and Prem have been my back door into shares of companies traded on foreign exchanges.  Eurobank was one small exception for a while…I was able to pick up some shares over the counter until that avenue was closed for me….

 

So I can only imagine what it must have been like to see companies selling for low single digit PE ratios.  I had a few good buys on some good companies right after the 2008 Financial Crisis that I picked up a bit under 10 PE’s , some of which would have exceeded 10 baggers if I’d held onto them until today, but when a number of them doubled or tripled over a few years, I bailed out and redeployed elsewhere.  
 

Not sure if I’ll see a 25 bagger in the time I have left, but given Fairfax’s prospects, I should see it or more on at least a few of my Fairfax shares that I purchased years ago, which are 5 baggers currently.  Could conceivably get there in the next ten years or so with a little help from a multiple expansion!

 

It doesn't always turn out so rosy. Eurobank was a 90+% loss for me after following Fairfax into it. 

 

It was only the double down and adds during COVID that ultimately made it worthwhile and a decent investment afterwards. 

[Maverick47]

1 hour ago, TwoCitiesCapital said:

It doesn't always turn out so rosy. Eurobank was a 90+% loss for me after following Fairfax into it. 

 

It was only the double down and adds during COVID that ultimately made it worthwhile and a decent investment afterwards. 

Yikes…I’ve only been really aware of them the last few years, and forgot about how painful it must have been for Fairfax and other shareholders to see what they thought was a reasonably priced 30 euro stock just get hammered and see new shareholders join and dilute their ownership at a MUCH lower price.

 

Right around the time of the Great Financial Crisis, I was participating in a short term stock market game with a few other fellow employees as we tried to learn about investing.  Everyone started with $1 million of fictional money and could buy on margin, sell short, etc.  The game would end in something like six months.  I started out investing in a couple of large companies, including Berkshire, then comparing my results with competitors, realized I wouldn’t have a chance of winning.  The leader, by far, had borrowed another million on margin, and then used it to short some small bank stocks that looked to be exposed to losing in the Crisis.  I just rode his coat tails to a second place finish doing the same thing. However, the software was flawed, and never enforced either an interest cost on our borrowing, or issued any margin calls.  Both of us were allowed to run negative balances in the multi million dollar range without selling our positions out, and they recovered enough by the end of the game to allow us both to finish 1st and 2nd.

 

But it was a good lesson to learn about myself (with fictional money) that I could easily fall into the trap of being a short term speculator, and lose everything if I were to let myself take on leverage and then use it to make risky short bets.  
 

So when I finally began investing some of my own retirement funds, I specifically chose not to have the ability to borrow on margin or short stocks, as I didn’t think I’d be able to control my speculative urges if I were to allow myself either of these options….

 

 

[Txvestor]

2 hours ago, TwoCitiesCapital said:

 

It doesn't always turn out so rosy. Eurobank was a 90+% loss for me after following Fairfax into it. 

 

It was only the double down and adds during COVID that ultimately made it worthwhile and a decent investment afterwards. 

100%. All holders during that time learned that the hard way. I put in a small position about 2%, and lost most of it. The dilution and additional capital was just something I could not stomach, even as I saw Prem pour more hundreds of millions into it. Someone said balls of steel and that's for sure. 
Needless to say my Eurobank position ended up being a decent tax loss write off later on, and I realized none of these things are guaranteed. The real money was made on that next capital raise. 

There's a chance some of even Fairfax's current investments are zeros eventually. However over time if you have a good method, the winners more than make up if you can hold onto them long enough. That last part is also no easy task. Buying Fairfax at $500 and seeing it trade $260 was also not easy. The thing that gives me more confidence now is that their model is truly very well put together and more balanced, their equity portfolio is reasonably diversified so that no one thing(including god forbid eurobank) will sink them, and their insurance operations are solid and diversified, and they have a healthy respect for leverage and how they invest their float. I think they also have good management with sufficient bandwidth to serve as a sounding board for the associates and consolidated holdings. And their own approach in this area is sound. Even so, I won't put more than 25-30% in it. I've even thought about what I'd do if it grows to be 50% position, I currently think I'd likely let it run. 
Having said all that, even now, you need to be psychologically prepared for a 50% drawdown at any given point in time. as Charlie Munger reminded us, that's even happened a few times in the storied history of Berkshire Hathaway. Leverage is a killer and a stressor in those situations. I remind myself of that whenever I get bullish.
 

Edited Sunday at 06:47 PM by Txvestor

[backtothebeach]

WRB reported last night, combined ratio is 90%. Stock is flat today after some volatility.
https://seekingalpha.com/pr/20588598-w-r-berkley-corporation-reports-second-quarter-2026-results

[Intelligent_Investor]

With the stock continuing to drop, I have a feeling we are going to get a massive quarter in regards to buybacks

[Whensthepaintdry?]

It seems at this point Fairfax and this board are the only buyers. Sadly for the stock price, most people on this board may already have close to full positions. 
 

[adventurer]

I just try to add as best as I can. Even if it’s just pieces of a stock. 

[Viking]

1 hour ago, Whensthepaintdry? said:

It seems at this point Fairfax and this board are the only buyers. Sadly for the stock price, most people on this board may already have close to full positions. 

 

When Fairfax makes a really big investment, do you want them to buy high or buy low? I much prefer they buy low. And the lower the better. Fairfax's low share price of the past year has been a massive gift for long term shareholders. We should be celebrating our good fortune.

 

Volatility in the stock market is a wonderful thing. It provides opportunity. Fairfax's stock is crazy cheap. And Fairfax is feasting. 

Edited 1 hour ago by Viking

[Whensthepaintdry?]

I don’t mind. I’ve been adding every paycheck. I’m just surprised the opportunity still exists, but then when I listen to pitches like the recent TIP podcast I can understand why it does. 

[Txvestor]

59 minutes ago, Whensthepaintdry? said:

I don’t mind. I’ve been adding every paycheck. I’m just surprised the opportunity still exists, but then when I listen to pitches like the recent TIP podcast I can understand why it does. 

It's been that way for 20yrs. And for a period during that time(not recently) it was also deserved. What is a little surprising is that after the last 5yrs of results, insurance operations, investment performance and interest rates reset, that's still the case. Sometimes these imbalances do take a while to correct. 
I was just comparing Fairfax with WR Berkeley across a range of metrics last night and my conclusion was that it was about 1/2 to 60% as cheap. Thats insane as it was on average as good as or better on qualitative measures as well. I think the reasons have to do with what Viking and other board members keep saying. They're not splashy or promotional, they're listed in Canada, they're not on the radar of a lot of N.A. institutional investors, their books are more complex than the average insurer as are their investments. They under report their BV if anything. 
 

However, they also have a lot of consistent and long term investors perhaps as much as 60-65% by some estimates. And they keep chipping away at the balance of weak hands with their share buybacks. Yes we are surprised that the luxury of undervaluation is lasting this long, but the longer the merrier if you believe in their long term success. This gap will eventually close as remaining holders demand higher prices for their shares. They have stable and almost predictable streams of cash coming in over the next 3yrs at a minimum. I think most of us feel a major cat. year is about a break even. Outside of that, share buybacks will likely continue at these valuations. The only reason this might be a little frustrating is if someone is nearing a need for cash, a wedding, a house purchase etc and have to liquidate some holdings out of necessity. 
 

Finally if that day does come where shares are no longer selling materially below IV, a couple of things happen. They will have other excellent uses of cash, like buying minority shares in subs, New private equity deals via KW, non insurance acquisitions, debt paydowns, Indian infrastructure, and so on. Lastly if the shares were ever trading significantly above IV, I believe they would consider acquisitions using shares also. I also like how they make acquisitions with debt to reduce the overall cost and keep the holding company as a backbone to support them while reducing leverage. 
 

Overall it's a good set up and the business model is the engine that is driving this train. 
 

Edited 28 minutes ago by Txvestor

[SafetyinNumbers]

17 minutes ago, Txvestor said:

Finally if that day does come where shares are. I longer selling materially below IV, a couple of things happen. They will have other excellent uses of cash, like buying minority shares in subs, New private equity deals via KW, non insurance acquisitions, debt paydowns, Indian infrastructure, and so on. Lastly if the shares were ever trading significantly above IV, I believe they would consider acquisitions using shares also. I also like how they make acquisitions with debt to reduce the overall cost and keep the holding company as a backbone to support them while reducing leverage. 

I think it will take a hard market not to sell materially below intrinsic value. Under the current market structure I think the multiple range will oscillate lower during soft markets making higher lows vs the last cycle and higher highs under subsequent hard markets. I used to think they would issue shares again if the stock is near intrinsic value and they might if the right opportunity came along but I also think they want to reduce the share count enough that employees and the family have enough votes after Prem’s super voting shares are reduced to single voting to block any hostile bids.

[Viking]

28 minutes ago, Txvestor said:

It's been that way for 20yrs. And for a period during that time(not recently) it was also deserved. What is a little surprising is that after the last 5yrs of results, insurance operations, investment performance and interest rates reset, that's still the case. Sometimes these imbalances do take a while to correct. 
I was just comparing Fairfax with WR Berkeley across a range of metrics last night and my conclusion was that it was about 1/2 to 60% as cheap. Thats insane as it was on average as good as or better on qualitative measures as well. I think the reasons have to do with what Viking and other board members keep saying. They're not splashy or promotional, they're listed in Canada, they're not on the radar of a lot of N.A. institutional investors, their books are more complex than the average insurer as are their investments. They under report their BV if anything. 
 

However, they also have a lot of consistent and long term investors perhaps as much as 60-65% by some estimates. And they keep chipping away at the balance of weak hands with their share buybacks. Yes we are surprised that the luxury of undervaluation is lasting this long, but the longer the merrier if you believe in their long term success. This gap will eventually close as remaining holders demand higher prices for their shares. They have stable and almost predictable streams of cash coming in over the next 3yrs at a minimum. I think most of us feel a major cat. year is about a break even. Outside of that, share buybacks will likely continue at these valuations. The only reason this might be a little frustrating is if someone is nearing a need for cash, a wedding, a house purchase etc and have to liquidate some holdings out of necessity. 
 

Finally if that day does come where shares are no longer selling materially below IV, a couple of things happen. They will have other excellent uses of cash, like buying minority shares in subs, New private equity deals via KW, non insurance acquisitions, debt paydowns, Indian infrastructure, and so on. Lastly if the shares were ever trading significantly above IV, I believe they would consider acquisitions using shares also. I also like how they make acquisitions with debt to reduce the overall cost and keep the holding company as a backbone to support them while reducing leverage. 
 

Overall it's a good set up and the business model is the engine that is driving this train. 
 

+1