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Fairfax book value increase poll


shalab
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What is the expected increase in book value in Fairfax from 2010-2020?  

62 members have voted

  1. 1. What is the expected increase in book value in Fairfax from 2010-2020?

    • Less than the 7.2% annual rate achieved from 2000-2011
    • About 7% in the same league as before
    • Between 7-10%
    • Between 10-15%
    • >15%


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Here is what I got for compounded returns from 2000-2011 inclusive for FRFHF:

 

7.2% ( annual book value increase from 2011 report )

 

Although Fairfax is smaller in market cap compared to AIG - there are many headwinds it faces:

 

1. It mostly operates in the property casualty space - it has some pretty large amount of float it is working with. I am thinking it is somewhere around $14 billion at the end of 2012. It is hard to grow from these levels at a significant pace.

 

2. It faces competition in the property/casualty space from others - now that many U.S companies are recapitalized, there will be more people chasing the returns.

 

3. Prem is not spending time on ideas compared to fifteen years ago as he is busy with meetings and other commitments. He is relying on Hamblin Watsa analysts which seems to be run as a committee. Hamblin-Watsa are very good with hedging - their returns without hedging is no match to their return with hedging.

 

4. Smaller players such as GLRE ( and BH though it is not yet officially in insurance ) can move faster and have the same or better investment acumen as Hamblin Watsa.

 

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