David Burrows Fairfax Financial FFH-T BUY Nov 06, 2024

BRK.B is a big ship, needs big decisions to steer it. He owns a bit. Dragging a lot of cash; he thinks it's set aside for a potential leadership transition, not because it's expecting some horrible haircut to the market.

FFH is the biggest holding at his firm; you're buying its investment capacity, and we're in a very good cycle. Dynamite investment team. Beyond the claims, investors get returns on the investments. More nimble than BRK, and younger leadership. 

Both great companies, but this one gets the nod.

Founder led/owned, but doesn't own shares. Company founder takes a lot of big/risky "swings". Difficult to determine earnings outlook. Interest rates also weigh heavily on insurance style business. Would recommend holding. 

Big fan. Valuation has reset higher, but capital discipline intact. His #1 choice over MFC and SLF, acknowledging that FFH is not like the other two.

In financials, his biggest weight is insurance. His #1 position is FFH in P&C, but MFC is a significant position as well. He also has IFC. This group is behaving well. 

Insurance doing exceptionally well. Recently bought ZZZ. Things are chugging along well. Dividend raised from $10 to $15, significant increase. Still at a discount on price to book. In client TFSAs. Very keen on it.

Just as with BRK, its insurance business takes in premiums, which get invested in other side businesses. So it's an insurance business with other assets on the side.

Amazing business, extremely well run. The case can be made that they can continue growing book value per share by 15% annualized for years to come. Combined ratio has been good. Sitting on excess capital to deploy. Trades at only 1.2x price to book.

Sits in client TFSAs, where you want Canadian names to get full value of the dividend. Whereas with US or international names, there's withholding tax.

Bottom line here has been pricing power due to all the global warming, which he doesn't see ebbing anytime soon. Combined ratio has declined from 100% to ~93%, a good thing. (CB, which he also owns, is at 88%.) The company keeps the difference from the combined ratio. Global acquisitions. Called in preferred shares, so can now fund business at a cheaper rate. Running on all cylinders, doing exactly as expected of it.

All the insurance names, both in Canada and the US, continue to work. If interest rates do, in fact, go higher, that will only be beneficial for lifecos and other insurers. The chart looks fantastic. Good run, so there is some weakening in the intermediate term.

If a long-term holding, best thing you can do is sit on your hands and do nothing except participate in the DRIP program. Especially if he's right on the broader call of rates being 8-10% in the secular bear market of 2030-40, should be a big tailwind for insurers.

Owns shares in company. Founder led with very strong management team. Recent share price weakness created a buying opportunity. Discounted relative to peers. Good alternative to Canadian bank stocks. Would recommend holding for the long term.