Is Fairfax Financial a buy?

National Bank of Canada Capital Markets analyst Jaeme Gloyn reiterated an “Outperform” rating and $3,200 price target on Fairfax Financial (Fairfax Financial Stock Quote, Chart, News, Analysts, Financials TSX:FFH) in a Feb. 4 note, calling the company his top idea in property and casualty insurance.

As reported by the Globe and Mail,  Gloyn said Fairfax is among the least exposed to a softening insurance cycle, supported by what he described as a “huge excess cash and capital position” that provides flexibility for share buybacks and minority interest acquisitions. He said those capital deployment options should continue to drive return on equity higher, adding that Fairfax’s underlying value remains underappreciated by the market.

Separately, Fairfax announced on Jan. 5 that it declared a dividend of US$15.00 per share on its multiple voting and subordinate voting shares, payable Jan. 22 to shareholders of record on Jan. 15. The company said the dividend level reflects current operating results across its insurance and reinsurance operations, as well as the holding company’s cash position, and should not be viewed as indicative of future dividends.

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