This fund manager loves Fairfax Financial

Lightwater Partners portfolio manager Jerome Hass says Fairfax Financial Holdings (Fairfax Financial Holdings Stock Quote, Chart, News, Analysts, Financials TSX:FFH) delivered a decisive earnings beat in its fourth quarter, while continuing to trade at a meaningful valuation discount to peers.

Speaking on BNN Bloomberg’s Market Call on Feb. 23, Hass said Fairfax reported earnings per share of about $57, well ahead of the roughly $37 expected by the Street.

“So Fairfax beat the street by a mile last week,” he said. “It was quite a large beat”.

Fairfax, chaired and led by Prem Watsa — often compared to Warren Buffett — reported record 2025 results on Feb. 19, with net earnings of US$4.8-billion, up from US$3.9-billion in 2024. The company posted a consolidated combined ratio of 93.0%, record underwriting profit of US$1.8-billion and gross premiums written of about US$33.3-billion.

“2025 was the best year in our history,” Watsa said, citing the record underwriting profit, strong interest and dividend income and significant investment gains.

Hass said Fairfax’s business model is closest to Berkshire Hathaway in that both are insurance-based conglomerates with significant investment operations. However, he argued that Fairfax trades at a discount in part because it is viewed as more investment-oriented than peers.

When compared with Intact Financial Corporation, which Hass noted is similar in size and return on equity, Fairfax trades at roughly 1.3x book value versus about 2.4x for Intact. He also pointed to Definity Financial Corporation, which trades near 2.2x book value despite being smaller.

“So it’s almost half the valuation of its closest peer,” Hass said. “We think that’s a pretty big discount.”

He noted that when Lightwater first purchased the shares, Fairfax traded at approximately 0.7x book value.

“We’re at 1.3x right now, which is reasonable,” he said, adding that the valuation has gradually improved but still does not fully reflect the company’s earnings power.

Fairfax shares have gained 16.39% over the past 12 months and 350.5% over five years. Of analysts covering the stock, five rate it “Buy,” one “Hold” and one “Sell,” with a consensus price target of $1,974.15.

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