Most stocks don’t earn a permanent place in a long-term Foolish investor’s portfolio. They look promising for a few years, then something changes. A competitor catches up, growth slows, management loses its way, or the business simply stops creating the kind of value investors expected. Long-term holdings should not only survive changing markets but also adapt to them, often coming out stronger on the other side.
Fairfax Financial Holdings (TSX:FFH) has spent decades doing exactly that. Through insurance cycles, financial crises, inflation, and shifting interest rates, the company has continued finding ways to grow book value and allocate capital intelligently. It might not be a very popular business, and it certainly isn’t perfect, but very few Canadian stocks have built such a consistent record of creating wealth over long periods.
In this article, I’ll explain why Fairfax is one of the best Canadian stocks that come remarkably close to being the perfect long-term hold.
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Why Fairfax comes close to perfect
In short, Fairfax Financial is a Toronto-based holding company that operates mainly in property and casualty insurance, reinsurance, and investment management, while also owning stakes in several non-insurance businesses.
At the time of writing, Fairfax stock traded at $2,390.56 per share with a market cap of $54.8 billion. While FFH stock was down 2% over the last year, it has still climbed 126% over three years and an impressive 364% over five years. It also pays an annual dividend with a 0.9% yield.
The recent pullback in the stock doesn’t change its long-term growth prospects. In fact, it gives investors a chance to buy an attractive business at a better price, in my opinion.
A stronger business beneath the surface
The reasons Fairfax earns its place as a long-term stock become much clearer when you look beyond its headline earnings. In the first quarter, the company’s gross premiums written rose 4.1% year-over-year (YoY) to US$8.8 billion, while net premiums written climbed 4.2% to US$7.1 billion. This growth was driven mainly by its international insurance and reinsurance operations.
Even better, its underwriting profit surged to US$381.6 million from US$96.9 million a year earlier. The company’s undiscounted combined ratio improved to 94.1% from 98.5%. Since a combined ratio below 100% means the insurance business is generating an underwriting profit, this marked a big improvement in its operating performance.
Fairfax’s stronger results were also helped by much lower catastrophe losses, which dropped to US$119.3 million from US$781.3 million a year ago when the California wildfires weighed heavily on results.
Built to create value over time
Beyond its financials, there is another reason Fairfax looks like an attractive stock for long-term investors. In the latest quarter, the company continued allocating capital with a long-term mindset. It repurchased nearly 375,000 subordinate voting shares for about US$631.3 million during the first quarter, increasing the ownership stake of remaining shareholders.
Fairfax also completed the Kennedy Wilson take-private transaction in June 2026, giving it a majority economic interest while leaving the existing management team in operational control. Combined with the expected gains from its Poseidon and Eurolife transactions announced earlier this year, these moves show it remains focused on creating long-term shareholder value.
While no company is perfect, and Fairfax is still exposed to insurance losses and investment market volatility, its disciplined underwriting, diversified earnings, thoughtful capital allocation, and proven ability to compound value make it one Canadian stock that comes very close to being a perfect long-term hold.
