Opinions
Lorne Steinberg
Fairfax Financial
FFH-T
BUY
Apr 07, 2025
Stock price when the opinion was issued
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Everyone was shorting it in the 2000s, and now it's one of the most favoured stocks on the TSX. Up 13% YTD. He owns it in TFSAs. Helped by global acquisitions. Combined ratio ~94%. Underwriting has improved, costs kept in line. Almost every operation it has is showing profitability.
Estimated PE for this year is about 10x, normal for insurance industry. Has hit a high, but it's one you want to own for the long term. He continues to buy for clients.
Premium contentFFH will keep chugging along under fine management, improving combined ratios and pure momentum. Bay Street is flashing buy signals and an 11% price target to $2,600. The main drawback with Fairfax is its share price, currently above $2,300. Don't expect a stock split anytime soon. However, if your pockets are deep and your horizon is long, then FFH is right for you.
A bit of a black box. Stock price has done very well the last few years, after having gone nowhere before that. Insurance at the core, and Prem Watsa's done a great job allocating those premiums. Higher rates favours insurers, lower rates the opposite, and he has no control over what the future holds.
If you own it, hold. You may want to investigate succession plans.
FFH is in his Canadian dividend strategy. BRK.B is in his global strategy.
Both are insurance-driven companies that are partly holding companies. Diversified businesses. Breakup NAV (not that they'd ever be broken up) is significantly higher than current share price. And that makes both of these a buy. Both are in the lower-risk category of companies.