Fairfax Financial Holdings Ltd is on the other side of an inflection point in its earnings and valuation that position it for an extraordinary run over the next decade. It’s following in the footsteps of Warren Buffett’s Berkshire Hathaway, which shot up 27 times after it reached the size Fairfax is now in 1995.

Fairfax’s float grew to $33-billion by the end of 2023, while the company’s market capitalization recently reached nearly $26-billion. By comparison, Berkshire had an insurance float of US$3-billion versus a US$26-billion market capitalization in early 1995, before Mr. Buffett used Berkshire’s shares to acquire Geico and Gen Re to materially increase Berkshire’s float. Today, Berkshire has a float of US$169-billion and a market capitalization of US$856-billion.

On the valuation front, Fairfax trades at 7.5 times consensus 2024 earnings-per-share estimates and near one times consensus 2024 year-end book value estimates. In comparison, Berkshire ended 1995 at 2.2 times book value.

theglobeandmail.com - Article why fairfax financial should see an extraordinary run over the next