Parsad Posted February 24 Posted February 24 3 hours ago, 73 Reds said: Sanjeev, one would think that it is hard enough to successfully invest globally; writing diversified global insurance goes much further with regard to properly reading the tea leaves. Any worries that overconfidence in the global insurance arena shows up sooner or later? Not really. Insurance is a very old business...probably one of the oldest businesses. Success has always come from long-term quality underwriting with a diversified business...whether it was the Rothschilds, Medicis, Lloyds, etc. Mistakes come from not being disciplined. But I agree with you that no business is a sure thing. You cannot fall in love with a stock. Those people who simply held on to Berkshire forever are outliers themselves. It's a behavior itself that rarely happens...holding a stock forever. The difference with companies like Berkshire, Fairfax, Markel, etc is that their streams of income do become diversified. They aren't wholly dependent on insurance profits...that's just a component...the main component, but not the only component. It's also why balance sheet strength to me is so important for an insurer. I think Prem gets that as he is getting older and the business will be run by the next generation. It's time that the balance sheet is more fortified...the income streams robust and diversified...the team is deep and talented...the insurance business all encompassing. It's a much better Fairfax Financial and will probably keep getting better! Cheers!
Parsad Posted February 24 Posted February 24 8 hours ago, civic248 said: New here and just joined today but have been reading this forum for awhile now after investing in fairfax after attending the Berk meeting in 2022 where i had learned about the Canadian WB. I did a few research and found the company to be amazing and just what I was looking for. Then I discover this community and it was even better. I have been in the commercial insurance industry for 20+ years and just quit last year as I didn't find it very challenging. I am looking forward to contributing and also corresponding with you all. I love all of the members analysis and have read vikings pieces and found incredible details and analysis that goes beyond the typical analyst coverage. What a time to be alive! Welcome to the forum! Cheers!
Hamburg Investor Posted February 24 Posted February 24 6 hours ago, Parsad said: Not really. Insurance is a very old business...probably one of the oldest businesses. Success has always come from long-term quality underwriting with a diversified business...whether it was the Rothschilds, Medicis, Lloyds, etc. Mistakes come from not being disciplined. The difference with companies like Berkshire, Fairfax, Markel, etc is that their streams of income do become diversified. They aren't wholly dependent on insurance profits...that's just a component...the main component, but not the only component. It's also why balance sheet strength to me is so important for an insurer. I think Prem gets that as he is getting older and the business will be run by the next generation. It's time that the balance sheet is more fortified...the income streams robust and diversified...the team is deep and talented...the insurance business all encompassing. It's a much better Fairfax Financial and will probably keep getting better! Cheers! +1 And isn't it like that: All things being equal any company with multiple cash streams is less risky than one with one income stream. So two companies each with ROE 15% (same balance sheet strength, same culture, same ...), one having one business, one with multiple (and each business having the exact same strength of moat), than the one with multiple income streams is less risky. Why? Because the risk of failure at the company having only one cash stream is higher. If it looses its one cash stream, it hardly can invest into other businesses. Berkshire Hathaway itself being a very rare exception from the rule, as it transferred from a textile business to an insurance business with relatively high equity investments; but e. g. Kodak, Polaroid, IBM, BlackBerry, Nokia, Sears, newspapers in general etc. weren't succeeding. To a lesser degree even a company with multiple cash streams, each having a slightly lower moat, is much more able to survive disruptions over time than one cash stream business; the return of the more diversified cash stream in many cases will be higher on average over long periods of time (as the one income stream business fails more often on average). So from a mathematical standpoint, you are more happy having 10 cash streams with a moat of 80% perfection (all else, e. g. ROE, being equal), than one stream with 90% perfection. And that's true, even if you were not able to shift cash from one business to another. But it applies the more if you are having a decentralized structure and are able to invest the proceeds of the dying (or not-so-good-delivering) business into other income streams, that are easily accessible to management. In reality moats are volatile over decades and returns in any business go up and down. So having the possibility to invest proceeds of a business returning only ROE 10% at a time into another, which at a time brings 18%, is a structural advantage, and it's good for survival chances. Per definition tech is a sector, which is driven more than any other sector by progress and disruption. Nokia had a big moat, just as Blackberry had or Kodak. It is no coincidence that Coca Cola, Wells Fargo, Anheuser-Busch, Hershey and Altria are among the most successful long-term stocks, if you're going back over 100 years. There are virtually no technology stocks within that century category. Technology as a sector stays, but the businesses within that sector change more often. Even though technology changed the world more than any other sector, tech companies haven't given the best returns. they disrupt each other more often. A lot of people think, that Buffett and Munger were 100% making the case for concentrated bets and were against diversification. But that is wrong or at least greatly shortened and only half the story. The best proof of this is Berkshire Hathaway itself: It is built on dozens of independent cash streams. This kind of structural setup – many cash streams, decentralised reinvestment of proceeds – has a lot to do with safety (and with returns). It's not the perfect setup, but it's very very good and has a bigger chance of lasting very, very long. Failure just doesn't kill you so quickly. Munger: "You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time."
dartmonkey Posted February 24 Posted February 24 2 hours ago, Hamburg Investor said: So from a mathematical standpoint, you are more happy having 10 cash streams with a moat of 80% perfection (all else, e. g. ROE, being equal), than one stream with 90% perfection. And that's true, even if you were not able to shift cash from one business to another. But it applies the more if you are having a decentralized structure and are able to invest the proceeds of the dying (or not-so-good-delivering) business into other income streams, that are easily accessible to management. In reality moats are volatile over decades and returns in any business go up and down. So having the possibility to invest proceeds of a business returning only ROE 10% at a time into another, which at a time brings 18%, is a structural advantage, and it's good for survival chances I agree with all this but not only is there a survival advantage, there’s also a return advantage. Which is better, investing in 2 companies that each have one business, uncorrelated to the business of the other company, with each of those businesses having a 15% ROE, or investing in one company which houses those 2 uncorrelated businesses under the same roof? I would say the second, because not only can they survive a hit to one of the businesses, but they can shift capital between the two, as threats/opportunities arise. This is the benefit that investors like Buffett or Watsa have over managers of companies that are mostly in one business, even a wonderful business like Costco or Starbucks or Cisco, that they always have to invest in, in good times or bad.
73 Reds Posted February 24 Posted February 24 10 hours ago, Parsad said: Not really. Insurance is a very old business...probably one of the oldest businesses. Success has always come from long-term quality underwriting with a diversified business...whether it was the Rothschilds, Medicis, Lloyds, etc. Mistakes come from not being disciplined. But I agree with you that no business is a sure thing. You cannot fall in love with a stock. Those people who simply held on to Berkshire forever are outliers themselves. It's a behavior itself that rarely happens...holding a stock forever. The difference with companies like Berkshire, Fairfax, Markel, etc is that their streams of income do become diversified. They aren't wholly dependent on insurance profits...that's just a component...the main component, but not the only component. It's also why balance sheet strength to me is so important for an insurer. I think Prem gets that as he is getting older and the business will be run by the next generation. It's time that the balance sheet is more fortified...the income streams robust and diversified...the team is deep and talented...the insurance business all encompassing. It's a much better Fairfax Financial and will probably keep getting better! Cheers! Re: holding a stock forever, such behavior is far more common than you think. People like me who have owned Berkshire for decades treat the stock the same way we business owners treat our own businesses. Business owners don't trade or sell successful businesses unless they are ready to retire or move on. it's a mindset that tends to work if you let it. Buffett has talked about this often.
Parsad Posted February 24 Posted February 24 1 hour ago, 73 Reds said: Re: holding a stock forever, such behavior is far more common than you think. People like me who have owned Berkshire for decades treat the stock the same way we business owners treat our own businesses. Business owners don't trade or sell successful businesses unless they are ready to retire or move on. it's a mindset that tends to work if you let it. Buffett has talked about this often. Actually, you are an outlier...whether you believe it or not. 75% of investors do not hold a stock longer than 5 years. ETF's have changed that slightly, but for those that own individual stocks, the holding period is not one of a business owner, but more of a speculator. Active fund managers are no different...their turnover is just as high. Berkshire shareholders, and even Fairfax shareholders, are more unique. Many have held for a long-time...a mindset encouraged by their CEO's. Again...outliers! Cheers!
MarioP Posted February 24 Posted February 24 4 hours ago, Hamburg Investor said: +1 And isn't it like that: All things being equal any company with multiple cash streams is less risky than one with one income stream. So two companies each with ROE 15% (same balance sheet strength, same culture, same ...), one having one business, one with multiple (and each business having the exact same strength of moat), than the one with multiple income streams is less risky. Why? Because the risk of failure at the company having only one cash stream is higher. If it looses its one cash stream, it hardly can invest into other businesses. Berkshire Hathaway itself being a very rare exception from the rule, as it transferred from a textile business to an insurance business with relatively high equity investments; but e. g. Kodak, Polaroid, IBM, BlackBerry, Nokia, Sears, newspapers in general etc. weren't succeeding. To a lesser degree even a company with multiple cash streams, each having a slightly lower moat, is much more able to survive disruptions over time than one cash stream business; the return of the more diversified cash stream in many cases will be higher on average over long periods of time (as the one income stream business fails more often on average). So from a mathematical standpoint, you are more happy having 10 cash streams with a moat of 80% perfection (all else, e. g. ROE, being equal), than one stream with 90% perfection. And that's true, even if you were not able to shift cash from one business to another. But it applies the more if you are having a decentralized structure and are able to invest the proceeds of the dying (or not-so-good-delivering) business into other income streams, that are easily accessible to management. In reality moats are volatile over decades and returns in any business go up and down. So having the possibility to invest proceeds of a business returning only ROE 10% at a time into another, which at a time brings 18%, is a structural advantage, and it's good for survival chances. Per definition tech is a sector, which is driven more than any other sector by progress and disruption. Nokia had a big moat, just as Blackberry had or Kodak. It is no coincidence that Coca Cola, Wells Fargo, Anheuser-Busch, Hershey and Altria are among the most successful long-term stocks, if you're going back over 100 years. There are virtually no technology stocks within that century category. Technology as a sector stays, but the businesses within that sector change more often. Even though technology changed the world more than any other sector, tech companies haven't given the best returns. they disrupt each other more often. A lot of people think, that Buffett and Munger were 100% making the case for concentrated bets and were against diversification. But that is wrong or at least greatly shortened and only half the story. The best proof of this is Berkshire Hathaway itself: It is built on dozens of independent cash streams. This kind of structural setup – many cash streams, decentralised reinvestment of proceeds – has a lot to do with safety (and with returns). It's not the perfect setup, but it's very very good and has a bigger chance of lasting very, very long. Failure just doesn't kill you so quickly. Munger: "You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long, long time." Excellent post Hamburg. And what is so good about it is that you can use it to other companies. You have very little things to change to post it for Constellation software. It is technologie but low tech and has thousand of cash stream. I just bought my first CSU share last week as it was finally at a price low enough for me.
73 Reds Posted February 24 Posted February 24 1 hour ago, Parsad said: Actually, you are an outlier...whether you believe it or not. 75% of investors do not hold a stock longer than 5 years. ETF's have changed that slightly, but for those that own individual stocks, the holding period is not one of a business owner, but more of a speculator. Active fund managers are no different...their turnover is just as high. Berkshire shareholders, and even Fairfax shareholders, are more unique. Many have held for a long-time...a mindset encouraged by their CEO's. Again...outliers! Cheers! Nah, just a business owner - we all think alike. Why sell something that continues working just fine?
backtothebeach Posted February 24 Posted February 24 Another good day for buybacks... This reminds me so much of Berkshire when it was trading around 1.3x BV for an eternity in the early 2010s. Difference is Buffett was not buying back shares because they had put the threshold at 1.2x.
yesman182 Posted February 24 Posted February 24 35 minutes ago, backtothebeach said: Another good day for buybacks... This reminds me so much of Berkshire when it was trading around 1.3x BV for an eternity in the early 2010s. Difference is Buffett was not buying back shares because they had put the threshold at 1.2x. Reminds me more of Berkshire in 2022 when he was buying back shares and everyone was running around complaining he wasn't buying an elephant and busy chasing meme stocks.
Junior R Posted February 24 Posted February 24 2 hours ago, Parsad said: Actually, you are an outlier...whether you believe it or not. 75% of investors do not hold a stock longer than 5 years. ETF's have changed that slightly, but for those that own individual stocks, the holding period is not one of a business owner, but more of a speculator. Active fund managers are no different...their turnover is just as high. Berkshire shareholders, and even Fairfax shareholders, are more unique. Many have held for a long-time...a mindset encouraged by their CEO's. Again...outliers! Cheers! Fairfax and BRK.B is different as its kinda like an active ETF but with less trading and a longer track record ...as long as Management adapts and P/B doesn't jump to like 3x combined with PE of 15+ (for next couple years) than you can hold but with other stocks as you can see now days a lot of changes so its hard to hold stuff when stories can change quickly vs before ...
Junior R Posted February 24 Posted February 24 49 minutes ago, backtothebeach said: Another good day for buybacks... This reminds me so much of Berkshire when it was trading around 1.3x BV for an eternity in the early 2010s. Difference is Buffett was not buying back shares because they had put the threshold at 1.2x. One thing I did notice is last couple Q when we hit quite period stock drops than after earnings it starts recovering again...this is a low volume stock
Viking Posted February 24 Posted February 24 (edited) With annual results out we can begin to evaluate how management at Fairfax performed in 2025. When it comes to investment management part of the business, the company had an exceptional year: Total return: $8.5B, or ~11.8% 4-year average return (2022 to 2025): 8.1% Total portfolio: ~$75B, growth of + 8.7% Investments per share: ~$3,304, growth of 13.3%. Fairfax delivered an outstanding total return in 2025 of 11.8%. This is a conservative estimate. It includes excess of FV over CV for non-insurance associate and consolidated holdings. But it does not include other forms of hidden value. The 4-year average of 8.1% is very strong. It should be noted that this includes 2022, which saw a bear market in stocks and a historic bear market in bonds. The total investment portfolio is ~$75 billion, an increase of 8.7%. Total investments per share is ~$3,304, an increase of 13.3% (up 142% over the past 7 years). Importantly, net premiums written increased 3.9% in 2025. Fairfax saw very strong growth in its investment portfolio despite slowing top-line growth in its P/C insurance business. The growth was especially strong per share. Looking forward, 8% looks like a good rate of return to use for investments when building 2026 and 2027 forecasts. Edited February 24 by Viking
Parsad Posted February 24 Posted February 24 3 hours ago, Viking said: With annual results out we can begin to evaluate how management at Fairfax performed in 2025. When it comes to investment management part of the business, the company had an exceptional year: Total return: $8.5B, or ~11.8% 4-year average return (2022 to 2025): 8.1% Total portfolio: ~$75B, growth of + 8.7% Investments per share: ~$3,304, growth of 13.3%. Fairfax delivered an outstanding total return in 2025 of 11.8%. This is a conservative estimate. It includes excess of FV over CV for non-insurance associate and consolidated holdings. But it does not include other forms of hidden value. The 4-year average of 8.1% is very strong. It should be noted that this includes 2022, which saw a bear market in stocks and a historic bear market in bonds. The total investment portfolio is ~$75 billion, an increase of 8.7%. Total investments per share is ~$3,304, an increase of 13.3% (up 142% over the past 7 years). Importantly, net premiums written increased 3.9% in 2025. Fairfax saw very strong growth in its investment portfolio despite slowing top-line growth in its P/C insurance business. The growth was especially strong per share. Looking forward, 8% looks like a good rate of return to use for investments when building 2026 and 2027 forecasts. Terrific post Viking! Look at those last three years...effing amazing consistency! Cheers!
Hamburg Investor Posted February 24 Posted February 24 (edited) 10 hours ago, dartmonkey said: agree with all this but not only is there a survival advantage, there’s also a return advantage. Which is better, investing in 2 companies that each have one business, uncorrelated to the business of the other company, with each of those businesses having a 15% ROE, or investing in one company which houses those 2 uncorrelated businesses under the same roof? I would say the second, because not only can they survive a hit to one of the businesses, but they can shift capital between the two, as threats/opportunities arise. This is the benefit that investors like Buffett or Watsa have over managers of companies that are mostly in one business, even a wonderful business like Costco or Starbucks or Cisco, that they always have to invest in, in good times or bad. +1 When starting to write my focus was more on margin of safety than on returns; but you‘re right; it’s about both. Just another add: I think the more layers a company has, the more value investors are biased to put a margin of safety on each layer they find within a conpany („this wholly owned business could earn between x and y; let’s be conservative and… If we now sum up the earnings streams of all wholly owned business it‘s a bit above xyz, let’s be conservative and… Which multiple should we now apply to all income streams of the wholly owned businesses, having a wide range of ROEs? Let’s be conservative and… ). But that‘s wrong! For someone with a hammer everything looks like a nail. For some value investors every layer they find is given a Margin of safety. If you‘re applying margin of safety like that, you are not focussing margin of safety on risk, but you are biased away from holdings and to investments with less (say: one) income stream; while it should be just the other way around (all other things equal). It’s all about risk. If there’s more risk, the margin of safety should be bigger, and if there’s less, it should be smaller - that’s the point which should define the magnitude of the margin of safety. Edited February 24 by Hamburg Investor
Hoodlum Posted February 25 Posted February 25 (edited) Fairfax has announced a new debt offering of $650M. My guess is this is will be used to purchase the remaining minority interest in Allied World or possibly the remaining preferred K series. https://www.fairfax.ca/press-releases/fairfax-launches-c650-million-senior-notes-offering-2026-02-24/ Edited February 25 by Hoodlum
SafetyinNumbers Posted February 25 Posted February 25 1 hour ago, Hoodlum said: Fairfax has announced a new debt offering of $650M. My guess is this is will be used to purchase the remaining minority interest in Allied World or possibly the remaining preferred K series. https://www.fairfax.ca/press-releases/fairfax-launches-c650-million-senior-notes-offering-2026-02-24/ Amazing they can borrow below what the fixed income portfolio yields.
Hoodlum Posted February 25 Posted February 25 (edited) 26 minutes ago, SafetyinNumbers said: Amazing they can borrow below what the fixed income portfolio yields. It certainly helps that the 5 year Canada bond is almost 1% less than the 5 year treasury. Edited February 25 by Hoodlum
Viking Posted February 25 Posted February 25 Let’s hope George is right… he likes gold, materials, oil.
Viking Posted February 25 Posted February 25 (edited) 18 minutes ago, Hoodlum said: It certainly helps that the 5 year Canada bond is almost 1% less than the 5 year treasury. This is a good reminder for me: as Fairfax grows shareholders’ equity, they also grow debt. This needs to be kept in mind when modelling the size of the investment portfolio, total return and how much the various income streams will grow each year. Higher interest expense. But much higher average return (currently +8%). And with operating income at about $5.6B they have very good interest coverage. Edited February 25 by Viking
Txvestor Posted February 25 Posted February 25 7 hours ago, Parsad said: Terrific post Viking! Look at those last three years...effing amazing consistency! Cheers! Whats more, when I look under the hood, I don't see how they go under $5B a year barring a mega cat event. However soft the insurance market, or even if interest rates drop another 1-2% points or there's a major economic slowdown. As such I think a multiple based on those earnings is reasonable.
dartmonkey Posted February 25 Posted February 25 21 hours ago, Viking said: When it comes to investment management part of the business, the company had an exceptional year: Total return: $8.5B, or ~11.8% 4-year average return (2022 to 2025): 8.1% Total portfolio: ~$75B, growth of + 8.7% Investments per share: ~$3,304, growth of 13.3%. Fairfax delivered an outstanding total return in 2025 of 11.8%. This is a conservative estimate. It includes excess of FV over CV for non-insurance associate and consolidated holdings. It is also conservative because it is not the standard way of doing the return calculation, which would be 8.5b/65b = 12.3%, not 11.8%, since the increase in value of the portfolio was not because new money was injected into the portfolio but just because of the accumulation from returns on the initial amount. Quote This is a good reminder for me: as Fairfax grows shareholders’ equity, they also grow debt. This needs to be kept in mind when modelling the size of the investment portfolio, total return and how much the various income streams will grow each year. Yes, it would be interesting to see the same table but with an amount for debt and float, to see if they are using more or less leverage. As for how the debt should be treated, the RBC analysis that SafetyinNumbers has mentioned a few times (for instance, Nov. 13) seems like a good way of accounting for the interest. Fairfax's debt allows them to increase investment returns (as a percentage of equity), but there is an interest cost that has to be deducted somewhere, along with overall operating costs and taxes (it was 0.3x equity at that point, with a 6.8% annual cost, so it added a -1.8% drag on the +19.9% equity returns in 2024.
gfp Posted February 25 Posted February 25 1 minute ago, Hoodlum said: Is anyone else having issues accessing fairfax.ca ? It seem to be done now. It was down but is working again
Hoodlum Posted February 25 Posted February 25 Just now, gfp said: It was down but is working again Thanks. Looks good now
Redskin212 Posted February 25 Posted February 25 Fairfax announced the issuance of $650 million of debt yesterday at what looks like fairly attractive rates. I find it interesting that issuing this amount of debt attracts no attention and really not a big deal. I remember a time when this would have been discussed ad nauseum. FAIRFAX LAUNCHES C$650 MILLION SENIOR NOTES OFFERING The base shelf prospectus is accessible, and the shelf prospectus supplement for this offering will be accessible within two business days, through SEDAR+ Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U) announces that it intends to offer (i) C$400 million in aggregate principal amount of Senior Notes due 2036 (the “2036 Notes”) to be priced at C$99.968 per C$100 principal amount, and (ii) an additional C$250 million in aggregate principal amount of its 5.10% Senior Notes due 2055 (the “2055 Notes” and, together with the 2036 Notes, the “Senior Notes”) to be priced at C$99.485 per C$100 principal amount, plus accrued interest (the “Offering”). The Senior Notes will be offered through a syndicate of dealers to be led by BMO Nesbitt Burns Inc., CIBC World Markets Inc., RBC Dominion Securities Inc. and Scotia Capital Inc., as joint bookrunners, and including Merrill Lynch Canada Inc., National Bank Financial Inc., TD Securities Inc., Citigroup Global Markets Canada Inc., Desjardins Securities Inc., J.P. Morgan Securities Canada Inc., Mizuho Securities Canada Inc. and Morgan Stanley Canada Limited, as agents. The 2036 Notes will pay a fixed rate of interest of 4.40% per annum. The Senior Notes will be unsecured obligations of Fairfax. Fairfax currently has outstanding C$300,000,000 aggregate principal amount of its 5.10% senior notes due 2055 (the “Original 2055 Notes”). The Additional 2055 Notes will have the same terms as the Original 2055 Notes, except for the issue date, offering price and the first interest payment date, and will form part of the same series as the Original 2055 Notes. Fairfax intends to use the net proceeds of the Offering to refinance, repay or redeem outstanding debt, equity or other corporate obligations of Fairfax and its subsidiaries, to pursue potential acquisition or investment opportunities (which may include acquisitions of minority interests in its subsidiaries), and for general corporate purposes. This may include the redemption or repurchase of certain of Fairfax’s previously issued debt or equity securities. As of the date of this press release, Fairfax has not made any determination as to the specific debt, equity or other corporate obligations to be repaid or redeemed, nor the amount, timing or method of such repurchase or redemption. Similarly, as of the date of this press release, Fairfax has not made any determination as to the specific acquisitions or investment opportunities to be pursued, nor the cost, timing or method of such acquisitions or investments. Any such repurchase, redemption, acquisition or investment will be subject to market conditions. Any proceeds not used to refinance, repay or redeem outstanding debt, equity or other corporate obligations or to pursue potential acquisition or investment opportunities will be used for general corporate purposes, which may include to augment Fairfax’s cash position or to increase short-term investments and marketable securities held at the holding company level. The Offering is expected to close on or about February 27, 2026, subject to the satisfaction of customary conditions.
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