Fairfax 2026

[dealraker]

1 hour ago, Madpawn said:

Curious what this board thinks of allocation weight to Fairfax. The dilemma is that I'm already overweight (by quite a bit) Fairfax and Fairfax India - so without going to deep into the details, is investing a huge chunk of your portfolio into Fairfax as "safe" as BRK (I'm tempted to say arguably safer given it's relatively cheaper, but we've also seen Fairfax's past mistakes which have been a bigger drag than what BRK has experienced in its history) 

I've owned Fairfax since 1994 and I did add small amounts about 25 times in the period where we here on the COBF forums were obsessing over the valuation.  I do not think about Fairfax very often but when I do I always have the same thoughts, much like those I have given I inherited Berkshire in 1975.  Here goes:

 

When the price of Fairfax is consistently rising investors obsessively think long term and increasingly get both satisfied and comfortable holding the stock and even consider or act to increasing their holdings.

 

When the stock isn't rising or declines, and this can come both justified and not justified, investors obsess with short time horizons and also they get extremely valuation focused.  This valuation focus is generally either PE or price-to-book, but it goes micro focused.

 

My view, one I've shared previously, is that insurance is very much a skill business and the best managements simply are destined/guaranteed to outperform those with less skill.  I rank Fairfax very high or even at the top of the skill parade both underwriting and on the investment side.

 

The safest thing in my view isn't to buy the one Berk vs Fairfax selling at the best perceived value, the best thing is to figure out, maybe even model, how much fear and need to escape you'll experience in a price falling atmosphere and judge your level of holdings based on that.  The price falling can be both Mr. Market's manic-depressive mood or an event - internal or external - or a cycle or whatever.  But if you can profile yourself as well as you can value the business then you can extend your time horizon.  Simply put, I would not own more stock than I can stomach for a downtrend.

 

If you can extend your time horizon and manage yourself, your stomach turmoil, then you have a huge probability of doing well owning Fairfax.  

[Txvestor]

20 minutes ago, Crip1 said:

With 2-Year Treasuries currently at 4.35%, I think that sacrificing 0.35% of yield for the optionality of being able to redeploy at maturity makes sense, but I’m not in Brian B’s stratosphere in terms of bond investing. 

 

-Crip

Whatever average mix they have they've been generating 5% without reaching too much for duration. Thats from a mix of maturities, the Pacwest portfolio impact and other corporates. 
Thats a perfectly good outcome without too much duration risk in this volatile environment, if you ask me. Whatever they do they will be fairly measured so as not to take on too much risk and keep optionality open in case of a market dislocation. 
I think as long as they keep generating cash, from their 3-4 engines. Deploying it in this environment will continue to be a nice problem to have. 

[dartmonkey]

13 hours ago, Parsad said:

The one thing that could get Charlie Munger's eyes rolling was every time Whitney stood up to pose a question at the Berkshire meeting!

I have trouble believing that this is true. Tilson’s questions were always sensible, in marked contradistinction to 90% of the audience questions which were puerile or which had already been answered so many times previously. Tilson actually wrote chapter 3 in the book about Munger, and it seems unlikely that he would have been asked to do so if anyone thought Munger harboured any personal animosity against Tilson. 

 

For some reason I have never been able to fathom, many people seem to harbour an intense dislike of Tilson, despite his pretty good track record, his sensible ideas, and his strong support of value investing and Berkshire in particular. Nor does he have any association with the attack on Fairfax.

 

I don’t expect you to be able to prove that Munger ever rolled his eyes at Tilson’s questions, just as I can’t prove that he didn’t, but I find it highly unlikely. I think you should prove it, or withdraw your accusation, which is beneath you, but I’m not holding my breath.

Edited 3 hours ago by dartmonkey

[TwoCitiesCapital]

3 hours ago, Junior R said:

its worked out pretty good with 10 year touch 4.7% today 

 

Which is the highest in ~18 months, but still below the highs set in 2023 and has topped out in this range multiple times since. 

 

Additionally, it's not the 10-year that matters to Fairfax, but more so the 3-5 which are also below 2023 highs and have consistently been setting "lower highs" on each subsequent spike - this current one included. 

 

Not to say they can't go higher, but they haven't been for three years and I think energy and war inflation, like we're seeing today, precedes economic contractions and not inflationary expansions. 

 

I tend to agree it's a good time for bonds - 3% real yields have historically been great buying opportunities for TIPS even if not immediately.

 

You can get 2.25-2.5% in shorter duration TIPS which is still pretty good historically. 5-6% on agency mortgages with limited prepayment risk at this time given home values falling/stagnating?

 

You're getting mid-single digit returns before even considering any sort of credit/duration/pre-payment/leverage pick-up and a 5-year TIP is going to have quite a bit less duration/inflation risk than equities @ 20x + earnings. We saw in 2022 that it takes YEARS for index earnings to recover in real terms - and much of that recovery was in AI infrastructure/chip spend which is still up in the air if it was real earnings or is just gonna come out in depreciation/write offs over the next 5-years. 

 

 

Edited 3 hours ago by TwoCitiesCapital

[dartmonkey]

2 hours ago, Hoodlum said:

 

And yet BMO has a target of $2500 cdn.  

Love it! So their target price is for the share price to go from 12.5 to 13.7 x Q2 earnings? Anyone know what their earnings forecast is for the whole year?

[Parsad]

17 hours ago, SafetyinNumbers said:

The 202 is surprising. The $130 estimate for Q2 an analyst is expecting seems crazy. Anyone know who it is? Definitely set up to miss. Not sure if the market will care.

 

 

 

 

 

 

3 hours ago, SafetyinNumbers said:

Hearing its BMO with the estimate but I haven’t seen the note.

 

3 hours ago, Hoodlum said:

 

And yet BMO has a target of $2500 cdn.  

 

It's probably due to the same reason I said expect an earnings surprise in Q2...higher than what Viking is estimating and he's usually damn close! 

 

I cannot see why they would buy so much stock back in Q2 unless there was some adjustment to book value...maybe we missed something in terms of realized gains or mark-to-market of the associates. 

 

I think a whopper quarter is coming and that's why BMO also hasn't changed their target significantly, since it is a one-off for now.  But it does affect book value and that's why Fairfax bought back a ton of stock. 

 

Either that or someone offered them a large block privately!  Cheers!

[SafetyinNumbers]

1 minute ago, Parsad said:

alue...maybe we missed something in terms of realized gains or mark-to-market of the associates. 

 

I think a whopper quarter is coming

How big is a whopper?

[SafetyinNumbers]

48 minutes ago, dartmonkey said:

Love it! So their target price is for the share price to go from 12.5 to 13.7 x Q2 earnings? Anyone know what their earnings forecast is for the whole year?

Highest estimate is $250. Lowest estimate is $160 so it essentially trades at 7-10x P/E which reflects the variability in earnings.

 

[Hoodlum]

34 minutes ago, Parsad said:

 

 

 

It's probably due to the same reason I said expect an earnings surprise in Q2...higher than what Viking is estimating and he's usually damn close! 

 

I cannot see why they would buy so much stock back in Q2 unless there was some adjustment to book value...maybe we missed something in terms of realized gains or mark-to-market of the associates. 

 

I think a whopper quarter is coming and that's why BMO also hasn't changed their target significantly, since it is a one-off for now.  But it does affect book value and that's why Fairfax bought back a ton of stock. 

 

Either that or someone offered them a large block privately!  Cheers!

 

Maybe an early very large reserve release this Qtr?  Fairfax should be releasing reserves from the early stages of the previous hard market now, although Fairfax has stated in the past that this is usually done in Q4.  That is the only thing that I can think of that would move the needle. 

 

A $1B reserve release.  

 

Edited 1 hour ago by Hoodlum

[Parsad]

2 hours ago, dartmonkey said:

I have trouble believing that this is true. Tilson’s questions were always sensible, in marked contradistinction to 90% of the audience questions which were puerile or which had already been answered so many times previously. Tilson actually wrote chapter 3 in the book about Munger, and it seems unlikely that he would have been asked to do so if anyone thought Munger harboured any personal animosity against Tilson. 

 

For some reason I have never been able to fathom, many people seem to harbour an intense dislike of Tilson, despite his pretty good track record, his sensible ideas, and his strong support of value investing and Berkshire in particular. Nor does he have any association with the attack on Fairfax.

 

I don’t expect you to be able to prove that Munger ever rolled his eyes at Tilson’s questions, just as I can’t prove that he didn’t, but I find it highly unlikely. I think you should prove it, or withdraw your accusation, which is beneath you, but I’m not holding my breath.

 

I don't have to prove it...I was there!  Tilson whenever he would ask questions, they were long winding questions.  Over time, everyone knew who he was and on one occasion, he got up to ask a question and it went on for like 30-40 seconds and Munger's eyes were rolling and glazed over...nothing to do with his blindness!  Many in the audience started groaning when we saw Munger's face screw up over the question.  

 

As for some people's animosity to Tilson...maybe you should talk to those people on why they feel that way.  Also, your attitude towards me about "not holding my breath"...first, what the fuck is that about, second, whatever reasons you may have, I'm not asking you to withdraw your accusation or comment...you are free to express yourself?  But ask yourself how is that any different than another person's opinion on Tilson?

 

 

[Parsad]

53 minutes ago, SafetyinNumbers said:

How big is a whopper?

 

$800M-$1B gain?  Did we miss something that may have increased tangible book value dramatically?  Cheers!

[Parsad]

24 minutes ago, Hoodlum said:

 

Maybe an early very large reserve release this Qtr?  Fairfax should be releasing reserves from the early stages of the previous hard market now, although Fairfax has stated in the past that this is usually done in Q4.  That is the only thing that I can think of that would move the needle. 

 

A $1B reserve release.  

 

 

Maybe, but we haven't heard or seen that with other reinsurance companies so far in Q2.  Cheers!

[dartmonkey]

3 minutes ago, Parsad said:

.  Also, your attitude towards me about "not holding my breath"...first, what the fuck is that about, second, whatever reasons you may have, I'm not asking you to withdraw your accusation or comment...you are free to express yourself?  But ask yourself how is that any different than another person's opinion on Tilson?

You are very sure of yourself and I have never seen you back down, that’s all, so I didn’t expect you would here, nor did you. But if you were there, and saw the eyes rolling, ok. Still doesn’t explain why you would be so negative about Tilson, but many others share your opinion, and of course you are entitled to it, even if in my opinion it seems totally unfair.

[Parsad]

16 minutes ago, dartmonkey said:

You are very sure of yourself and I have never seen you back down, that’s all, so I didn’t expect you would here, nor did you. But if you were there, and saw the eyes rolling, ok. Still doesn’t explain why you would be so negative about Tilson, but many others share your opinion, and of course you are entitled to it, even if in my opinion it seems totally unfair.

 

The first time I met Tilson in 2002 at the Berkshire AGM, I attended an open gathering he had where a bunch of young investors and fund managers attended.  I went up to speak to him just to thank him for everything he was doing for young investors and managers...and literally his eyes glazed over, he turned around, and started speaking to someone else.  Never said a word to me, never turned back as I stood there.  Perhaps it was an emergency...though he didn't move or go anywhere...perhaps he didn't hear me, but my cousin and other friends were right there and heard/watched everything.  I don't know...but I've never done that to anyone in my life...even in an emergency, I apologize to them first and excuse myself.  So something small, but it showed a flaw in his character...to me anyways!

 

When Fairfax stock was getting batted around by payroll journalists and hedge funds in 2003, Tilson was a defender of their behavior.  He was friends with some of them and vocally shorted stocks himself.  Go read up on his past history from back then.  So from a Fairfax shareholder perspective...strike two for me!

 

Lastly, ask Gregmal what he thinks of Tilson's research...or many others from the past who used to watch Tilson literally copy short positions and long positions from many of his friends...Einhorn, Ackman, etc.  For me...strike three...no originality as an investor!  Cheers!

[dealraker]

18 minutes ago, dartmonkey said:

You are very sure of yourself and I have never seen you back down, that’s all, so I didn’t expect you would here, nor did you. But if you were there, and saw the eyes rolling, ok. Still doesn’t explain why you would be so negative about Tilson, but many others share your opinion, and of course you are entitled to it, even if in my opinion it seems totally unfair.

Tilson's T2 Partners and his Kase Capital both had a dreadful performance records and shut down.  He also was noteworthy for his flip flops as to stock calls that he highly promoted to the public.  

 

I'd not read what Greg has to say if he reads this.  It will rock your world!

Edited 1 hour ago by dealraker

[yesman182]

16 minutes ago, dartmonkey said:

You are very sure of yourself and I have never seen you back down, that’s all, so I didn’t expect you would here, nor did you. But if you were there, and saw the eyes rolling, ok. Still doesn’t explain why you would be so negative about Tilson, but many others share your opinion, and of course you are entitled to it, even if in my opinion it seems totally unfair.

Is Tilson the guy who at one of the meetings said to Charlie in the Q&A "when we were having dinner together last month...." and Charlie cut him off and was like " were we both eating at a charity dinner with dozens of people" or something like that.  I don't have strong feeling about Tilson, but I do think he falls into the camp of people who use a very loose connection or closeness to Warren and Charlie for their personal profit.  

[dealraker]

3 minutes ago, yesman182 said:

Is Tilson the guy who at one of the meetings said to Charlie in the Q&A "when we were having dinner together last month...." and Charlie cut him off and was like " were we both eating at a charity dinner with dozens of people" or something like that.  I don't have strong feeling about Tilson, but I do think he falls into the camp of people who use a very loose connection or closeness to Warren and Charlie for their personal profit.  

I think it is safe to say that many tired of Tilson's prolific use of Buffett/Munger/Berkshire for self promotion.  That said he was wildly popular with many Berkshire forum posters for a long time.

[Parsad]

57 minutes ago, yesman182 said:

Is Tilson the guy who at one of the meetings said to Charlie in the Q&A "when we were having dinner together last month...." and Charlie cut him off and was like " were we both eating at a charity dinner with dozens of people" or something like that.  I don't have strong feeling about Tilson, but I do think he falls into the camp of people who use a very loose connection or closeness to Warren and Charlie for their personal profit.  

 

Yup!  I forgot about that one.  Cheers!