Fairfax Financial

Relaying the best writing on the company

I do not want this to come across as a victory lap, or bragging. It absolutely isn’t. To prove my point, I’d like to point out the stock chart of Dream Unlimited:

Dream is my largest position (by probably too much), and the stock has gone from $50 in April 2022 to less than $20 today. I’ve lost a tonne of money there. Like “why do I even do this” money.

Moving on though, I also have been buying a lot of Fairfax Financial over the last two years, to the point that it is now my second largest position. This chart makes me look a bit smarter.

I write very little anyway, so I don’t really need to offer a reason for not writing about Fairfax (the biggest reason is because I almost never write anything!), but there was another contributing factor to my silence. When it became obvious to me that Fairfax was going to be a big investment for me, at which point I may have otherwise written a post about Fairfax, there were two very good pieces of writing about Fairfax already out there.

In lieu of writing something myself, I have been made aware that not everyone has read these write-ups, and I would like to share them with you if you haven’t.

Edgepoint - New Growth

The first one, both in terms of their effect on my thinking and chronologically, is the Edgepoint commentary New Growth.

I wish I could write something as good as this. It’s fantastic and I think anyone who wants to do investing writeups would be well served to read it. It lays out why the stock is/was mispriced, what had changed and why the stock should be higher without getting bogged down in numbers.

For a high level introduction to Fairfax stock, one should start here.

Junto Investments - No Clues From the Past

This piece goes deeper into the insurance business, as well as adds some numbers to the Fairfax story. It’s very in depth, and someone who wants to know more about Fairfax, but also about insurance investing in general, would be well served by reading it.

Viking - Corner of Berkshire and Fairfax posts

The definitive Fairfax tome. It’s more granular, but if you were looking for a one stop shop for learning about Fairfax, soup to nuts, this is it. Viking does an excellent job breaking down almost everything about Fairfax - each line of business is looked at individually, capital allocation is examined over a long period of time, the history of acquisitions is laid plain, relevant annual letter passages are quoted appropriately, the whole history of the company is shown, etc.

This is a tremendous resource. Viking has performed investors a wonderful service by publishing his thoughts on the company and then compiling all (or most) of those thoughts into one document.

Fairfax stock is up a lot, and I think many may look at the stock chart and think they’ve missed the boat. I don’t think that’s the case. If you read these three pieces, I think you’ll see what I and an increasing number of people see. Fairfax is trading at roughly book value, and for the earnings the company can/will produce, the growth it can show, the quality of the company, the valuation of its peers, I could see that looking like a very attractive valuation in 5 years, 10 years, etc.