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 14 hours ago by Txvestor