When looking for a long-term investment that combines insurance, value investing, and global exposure, Fairfax Financial Holdings (TSX:FFH) stands out. Over the last few decades, it carved out a reputation as a well-run holding company with a unique approach to managing risk and capital. So, where could Fairfax be in six years? If the last few years are any indication, the answer may be higher than many expect.
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The stock
Fairfax is best known for its conservative underwriting in the property and casualty insurance business and its Warren Buffett-like investing approach. It was founded in 1985 by Prem Watsa, often called the “Canadian Warren Buffett,” for his deep value investment style. Since then, the company has grown into a multinational insurance and investment firm with assets all over the world.
Fairfax stock is trading at approximately $2,282 as of writing. It has a market cap of over $51 billion, making it one of the largest non-bank financial companies on the TSX. The company’s performance in the last year has been particularly strong. In its most recent quarterly earnings, Fairfax reported net earnings of $945.7 million, or $42.70 per diluted share, compared to $764 million, or $33.26 per share, in the same quarter last year. These numbers are not only impressive but show the company is managing both its insurance operations and its investment portfolio with precision.
What really stood out in this report was the $1.06 billion gain on investments. That’s where Fairfax shines. Its portfolio includes a range of assets: stocks, bonds, private equity, and even real estate. It doesn’t chase trends. It looks for value. And it has done well with this strategy over the long term.
More cash incoming
Fairfax’s insurance business also continues to perform. While the company did report catastrophe losses of over $692 million, particularly from California wildfires, it still produced strong underwriting income. Adjusted operating income from insurance and reinsurance hit $685.5 million. That shows how well-diversified Fairfax is. Even with massive catastrophe claims, it stayed profitable.
Fairfax also has a growing presence in international markets. Its stake in ICICI Lombard in India, along with other international operations, has opened the door to growth outside North America. This expansion strategy gives Fairfax a potential edge over more Canada-focused insurers. As global markets develop, this exposure could be a major growth engine over the next six years.
Future outlook
Looking ahead, what can investors expect by 2030? If Fairfax continues to grow earnings and book value at a steady pace, there’s room for considerable upside. The company trades at a modest valuation relative to its peers, especially when compared to U.S. insurers. Its price-to-book ratio remains relatively low, which is often a sign of undervaluation, especially given the strength of its balance sheet and earnings.
Fairfax doesn’t pay a large dividend, which may turn off income-focused investors. But what it lacks in yield, it makes up for in capital appreciation. That has been the story for years. It also tends to buy back shares when it believes the stock is undervalued. This shareholder-friendly move could help support the stock price in the years ahead.
Bottom line
So, how would an investor approach Fairfax today? With a six-year horizon in mind, it could be an ideal pick for those looking to hold a quality financial stock that offers both exposure to global markets and a proven investment track record. If you’re comfortable with some volatility and willing to think long term, Fairfax could reward your patience. If it keeps doing what it’s been doing, there’s every reason to believe it will be significantly more valuable. It may not double overnight, but it could quietly compound into something much bigger. For investors who like to buy and hold, that’s exactly the kind of stock to keep an eye on.
