Toronto Stock Exchange (TSX) · Financial Services
Fairfax Financial Holdings Limited FFH
Buy candidateScore band: 70–80
Scored as a financial: return on invested capital has no meaning for a bank or an insurer, so that criterion is removed from both the score and the maximum.
The thesis, in one sentence
A demonstrated compounder with underwriting discipline and float carried at negative cost for decades, but bought above its own five-year book multiple, leaving little or no margin of safety.
Written for this site in plain English, without figures. The arithmetic is in the full report.
The thesis is from the deep report of 2026-07-28; the verdict badge reflects the latest scoring of 2026-09-06.
Key risks
- Underwriting cycle reverting to a break-even combined ratio would erase technical profit
- Part of the premium is a behavioral moat tied to one ageing founder
- Value is concentrated in two illiquid associate stakes
What would change the verdict
- Return on equity falls as the underwriting cycle turns
- Price to book falls back toward its own five-year average
- The multiple rises further above the level the models support
- Net margin falls for two consecutive quarters on the associate positions
Read it yourself
Step five of the method is the reader's: open the latest annual or quarterly report and read it before acting on anything here. A score is a summary, and a summary is not understanding.
This exchange has no stable per-company address, so the link opens the disclosure portal — search there for the ticker.
Next report expected 2026-11-05. The deep report was written against the filings available on 2026-07-28; anything published since is not in it.
DCF valuation range
range of the DCF modelsbase casetoday's price
Valuation range, shape only. Figures in the full version.
Monte Carlo outcome shape
No Monte Carlo run available for this ticker yet.
Chapter one: Executive summary
FFH — Fairfax Financial Holdings Limited — deep-value analysis
Generated: 2026-07-28 · Primary listing: TSX (FFH, CAD) and TSX (FFH.U, USD); US OTC under FRFHF (pink sheet, illiquid). Financial reporting: USD, IFRS (IFRS 17 since 2023). SEC: foreign private issuer, CIK 915191, 40-F/6-K filer (NOT 10-K/20-F). Price used in the analysis: … USD (~CAD 2,390.56 at CADUSD rate 0.7069) — source: yfinance FFH.TO + FRFHF, 2026-07-28. Approx. market cap: ~… USD (~CAD 49.3bn).
Executive summary
Fairfax Financial Holdings is a P&C insurance and reinsurance holding company led by V. Prem Watsa (Chairman & CEO since 1985, 40 years of capital allocation), organized in a decentralized manner across dozens of underwriting subsidiaries (Allied World, Odyssey, Crum & Forster, Brit, Zenith, Northbridge, Gulf Insurance et al.) with investments managed centrally by Hamblin Watsa Investment Counsel. 2025 was "the best year in the company's history" (CEO quote): net earnings … (…/diluted share), consolidated undiscounted combined ratio ** …**, record underwriting profit …, float … (…), book value per share … (…, or … dividend-adjusted).
Thesis: Fairfax is a demonstrated compounder — negative-cost float sustained for >35 years (historical average benefit … vs. the Canadian bond yield 3.1%), improving credit ratings (S&P BBB+→A-, A.M. Best bbb+→a-), disciplined buybacks (cumulative average price 2019-2025: …/share, less than half the current price) and optionality from Berkshire-style associate stakes (Eurobank, Poseidon, Digit). It doesn't have a classic structural moat, however — it's a cyclical business (underwriting) + an investment portfolio, and the discipline depends heavily on a single person.
Estimated value: the triangulated models give a very wide range — from a bear scenario where the stock should trade at a discount to book value (…), to a bull scenario that justifies nearly doubling the current price (…), with the base-case residual DCF at … but the statistical median of the 5 models at … (see the valuation section — the 5-year historical multiples suggest the stock has re-rated above its own average).
Verdict: INTERESTING (69.5%, GBL score 20.5/30) — a quality business with an excellent track record, but bought at a price that already reflects most of the good news of the last 2 years (P/B 1.34x vs. 5-year own average 1.04x; P/E 8.4x vs. average 6.1x). Not a "firm buy" position at the current price — it would become much more attractive on a pullback toward P/B ~1.1-1.2x.
Figures were removed from this excerpt. The full report opens free for five tickers a week — see what's open now.
Full report contents
- Executive summary
- 🔒 The business and the moat (Available in the full report)
- 🔒 Management and capital allocation (Available in the full report)
- 🔒 What changed over the last 4 quarters (Q1 2025 → Q1 2026) (Available in the full report)
- 🔒 Accounting red flags (Available in the full report)
- 🔒 Triangulated valuation (Available in the full report)
- 🔒 Pre-mortem — why the thesis could be wrong (Available in the full report)
- 🔒 Verdict compared to the tracker's GBL score (Available in the full report)
Evaluation history
| Date | Verdict |
|---|---|
| 2026-07-22 | Buy candidate |
| 2026-07-28 | Buy candidate |
| 2026-09-06 | Buy candidate |
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