John KimFairfax FinancialFFH.TODON'T BUYSep 25, 2019

All of his Top Picks today have no momentum or key catalysts. Just excellent, well-run businesses that will add long-term value. Doesn't know how they'll look 1 year from now, but will certainly look good 3-5 years hence.

Today's a pretty good entry point. Compounded 19% a year since the IPO. Its insurance business has really improved (you have to be good at underwriting and at investing the money). Not a trade, you buy it for the long term. Everybody who works there owns shares, so what better incentive can you have? Yield is 0.89%.

A more stable franchise than in the past. Well managed, business as usual. No reason to sell, but not the most obvious buying opportunity either. New $$ should go to blue chips sitting at bigger discounts today.

Solid insurance-type name. Cheap valuation. Management knows what it's doing. Will continue to grow book value per share over time.

Q4 results last week were very good -- earnings stronger than expected, underwriting was fantastic, combined ratio was very strong. Big hit of catastrophe losses. You need to look at the long-term improvements the company's made, which he expects to continue.

Unlike most P&C companies, makes acquisitions the way BRK does. Big footprint in India, and looking to make a banking acquisition there (good chance of success, and this would add another trophy asset).

Unlike other insurers, FFH operates in the commercial space and trade at an attractive valuation.

They reported last week and beat the street by a mile. Prem Watsa is viewed at the Warren Buffet of Canada and FFH trades at a discount because of him. FFH is a lot more investment-focused than peers. Intact trades at 2.4x price-to-book vs. FFH 1.3x, a very big discount.

Watching closely. Results for 2025 are definitely making her more interested. At 1.8x book not really deep value, but not unreasonable for such a quality compounder. Potential upside of 26%, but has not hit analysts' targets once in last 5 years. Expects decent return, but unlikely to be the best in the sector.

Reported best year in history. Firing on all cylinders. Taking more in than paying out, and can invest the rest. Lumpy earnings, harder to predict.

In the space, she owns SLF instead.

Has done so well because it's been on the right side of the interest rate trade, plus underwriting operations have improved. Not a screaming buy today -- easy money has been made over the last 2 years. You're now paying a fair price for a fair asset, still attractive.

He'd much rather buy IFC on the dips.

Dead money for several years, and now on fire. Increased book value per share and growth profile. Improved underwriting ability. Benefits from lower catastrophic losses, which happened last quarter. Robust operating income. Buybacks, dividend growth.

At 12x PE for 2027, not a buy right now. Doesn't see too much growth for 2026-27, other than rising book value per share. There are more "divendy" stocks out there for an RRSP. But a good-quality holding.

Because of the company's style, we can't do much about the earnings volatility. Value investments go in and out of favour, and monetization of assets can occur at anytime and skew results materially. 2018 to 2021 we think was an abberation. FFH barely made any money in 2018 and lost money in 2020. The past four years have been fabulous, yet the stock trades at 9X earnings. If we look at consensus numbers (with the same degree of uncertainty), analysts do expect very strong EPS for the next five years ($95 per share to $184). We might guess (not a prediction) for 15% earnings growth. We would be comfortable buying as long as an investors understands the company and has patience. The dividend is not great but there is at least 0.90% while one waits. But we think its long term record override the weak five year period.
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Great Canadian company. Values scores 8/10, fundamentals 9/10. P&C insurer plus invests in a wide range of businesses, and results can be mixed because of this investment style. Known for taking big bets, which can lead to big wins or big misses. Making strategic portfolio moves. Sees upside from here of potentially 20%. Outperformed most of its insurance peers. Reasonable PE of 8.4x, and that's an opportunity. Analysts see it as Undervalued by as much as 65%. On her watchlist.

Likes the insurance space and sees a lot of opportunity there. This is a solid pick for investors who want exposure to the sector in more of a contrarian way. A mini-Berkshire Hathaway.

He owns this for a long while and did well. He sold it in October when its relative strength weakened. The stock has since bounced off $2,200, but this looks like a sideways trading range with resistance at $2,400-2,500. Insurance struggled this year, but FFH did the least.

Stay with this long term. Their India business has potential. The stock is not followed well, because of its high stock price.

In the defensive part of Canadian financial services. Underwriting profitability consistently getting better, the core reason why stock's been doing better. Opportunity to term out its fixed income portfolio. Not a screaming bargain today, but makes sense as part of a diversified portfolio especially as we pivot away from banks and get a bit more defensive.

Continues to be encouraged by what company's doing. Low double-digit PE, undemanding. Modest dividend so they can keep capital and grow their portfolio.