-
Fairfax Financial Holdings Limited Subordinate Voting Shares (FFH)
-
Intact Financial Corporation (IFC)
-
Berkshire Hathaway Inc. (BRK.B)
I own some FFH and have been concerned by the Muddy Waters report (it's description in the press as it was too specific and complex for me to read and assess) and am wondering if you think it will affect the performance of FFH in the long run and if it is intrinsic to the manner FFH usually does business, compared to, say to another insurance co such as IFC which is more transparent in it's reporting?
The short report mainly talks about the way FFH reports the value of its investment holdings. However, FFH has followed accounting guidelines over the years. FFH dropped when the short report was released but has recovered since as investors did not see the merits in those arguments. We don’t think this short report would in any way affect the long-term business of FFH.
FFH’s business model is similar to BRK.B of being an investment company that uses insurance float to invest in long-term holdings. This model would have a risk of losing key personnel who was the main architect. On the other hand, IFC is more of a typical insurance company that focuses on generating premium growth and invest those funds in conservative portfolios. We are okay to hold both, IFC is a more simpler business, FFH could do well but it depends more on its investment activity vs its insurance business, most years.