# Fairfax (FFH:TSE)



## Flash (Nov 25, 2014)

I'm reading a lot of reports that this Watsa is the next Warren Buffet and all, and apparently it made some significant amount of money by investing in troublesome equities (BB, Ireland). All that is good, and I'm tempted to buy a whooping 5 shares or so to get some exposure, but I can't stop thinking that this stock is very high risk since all the investments are made into low cap equities and risky markets (latest is Greece). 

What is your take out of this? I was surprised this equity didn't have it's own topic in this thread.


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## Moneytoo (Mar 26, 2014)

I was surprised that it's the top holding in*BMO Low Volatility Canadian Equity ETF (ZLB): http://www.etfs.bmo.com/bmo-etfs/allHoldings?fundId=86812

Don't own either, but was considering both (ZLB for my TFSA and FFH for my husband's).


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## PharmD (Dec 21, 2011)

They do have what always seems like a lot of high risk investments, but they have been investing in these kinds of businesses for a long time with a lot of success and they are heavily hedged and have been for a while. Fairfax has large deflation hedges in place and have had equity market hedges in place for years now (I haven't checked their recent filings, but at times 100% hedged). They are well positioned for a lot of negative scenarios which is probably why they are in the low volatility category. Just buy and hold this one.


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## godblsmnymkr (Jul 15, 2015)

Moneytoo said:


> I was surprised that it's the top holding in*BMO Low Volatility Canadian Equity ETF (ZLB): http://www.etfs.bmo.com/bmo-etfs/allHoldings?fundId=86812
> 
> Don't own either, but was considering both (ZLB for my TFSA and FFH for my husband's).


hey MT
the probable reason it is the top holding is that generally speaking, FFH does well when the market tanks so it acts as a hedge. FFH was hedged from 2004 or so leading up to the financial crisis where they made billions on derivatives and CDS. Prem has been net short the market since 2012 i believe and is betting on deflation heavily. he follows buffet's business model of taking his insurance premium $ (of which FFH is a multi national conglomerate of insurance companies) and making his bets in the market. to be clear insurance is his #1 business. 
the company has compounded at 20%/ annum since 1986!!! pretty amazing. 
basically during periods of high growth like 2013 FFH is under performing the market. during periods like 2008 they are out performing at an astronomical level. stock is a bit highly priced right now but I'll be stalking for an entry as I think i just found my next investment. 
the main negative i see with FFH is that being an insurance company its heavily exposed to all kinds of natural disaster risk and black swans. when Katrina happened they lost a lot of $.


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## AltaRed (Jun 8, 2009)

If you believe climate change is making weather more volatile and unpredictable, this may not bode well for property insurance companies. I have mixed feelings on where the insurance industry is going and whether there will be sufficient interest rate growth and GDP growth for insurance to continue its historical performance. I've been dithering on a position in FFH for quite some time.

Disclosure: I own PWF, IAG and MFC with IAG most exposed to the property casualty insurance market.


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## Moneytoo (Mar 26, 2014)

godblsmnymkr said:


> hey MT
> the probable reason it is the top holding is that generally speaking, FFH does well when the market tanks so it acts as a hedge.


Well I watched it for a few months, but its price swings were making me dizzy  I still liked the company, so ended up buying two strip bonds yielding 3%+ for my husband (and almost bought one for myself, but remembered the importance of diversification )

But yep, it's green today, on yet another red day - so my loss...


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## dubmac (Jan 9, 2011)

FFH is back to 2012 levels. not surprising given their insurance in natural disasters etc.
CEO Prem Watsa predicted the 2009-09 drop - but what drop since then. 
Book value was $421.13 (As of Mar. 2020).
I'm wondering whether this one acts like a barometer for the wider market - when it bottoms, we are indeed at the low!


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