We Study Billionaires - The Investor’s Podcast Network TIP317: Intrinsic Value Assessment of Fairfax w/ Jake Taylor (Business Podcast)
Oct 4, 2020
Jake Taylor, CEO of Farnham Street Investments, renowned for his insights on value investing and author of "The Rebel Allocator," takes listeners on a captivating journey through the intrinsic value of Fairfax Financial Holdings. He discusses the nuances of valuing insurance and investment holding companies while comparing Fairfax's strategies to those of Berkshire Hathaway. Taylor also highlights growth opportunities in Africa, the intricacies of currency risk, and offers advice on preferred stock investments. This discussion is a goldmine for aspiring investors!
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Prem Watsa's Journey
- Prem Watsa, the "Canadian Warren Buffett," immigrated to Canada from India with only eight rupees.
- He built Fairfax Financial Holdings into a billion-dollar company, owning 10% himself.
Fairfax's Performance Drivers
- Fairfax's success can be analyzed through combined ratio (insurance profitability) and investment returns.
- Their performance varies across periods, excelling during downturns due to hedging strategies.
Valuing Fairfax
- Use price-to-book (P/B) as a starting point for valuing Fairfax, currently at 0.69.
- Considering its historical average P/B of 1.16, the stock appears cheap.
