He's still got almost 20% of his portfolio in Blackberry. I used to follow him for a bit as this was always touted as the mini Berkshire. Probably not?


Blackberry was clearly a mistake, but it's not 20% of his portfolio. This is a common misconception due to the fact that listings like Dataroma only count consider SEC filings, required for holdings in American publicly traded companies. They say that 16% of Fairfax's holdings are in Blackberry (2nd holding after Occidental), but in fact, as Dataroma indicates, Fairfax has 47m shares of Blackberry, now worth about $165m. This is small in relation to Fairfax's total of $59b in investments. Most of Fairfax is invested in bonds ($34.2b), common stocks ($6.6b), associated companies like Poseidon and Eurobank ($6.3b), preferred stocks ($2.4b) and derivative instruments ($1.1b).

So even as a percentage of the relatively small common stock portfolio, BB only accounts for 2.5% of holdings. It is true that BB accoounted for 17% of what they call Fairfax's 'Portfolio value' ($1.5b), when it was trading at $5.53, but is now at $3.50, and so it is more accurate to say that that disappointing investment is now worth $165m and accounts for 11% of the portfolio of publicly traded US companies whose value at the end of Q3 was $1.531b, but only 2.5% of the $6.6b equity portfolio, and only 0.3% of Fairfax's whole $59.1b portfolio of investments.

It is true that Fairfax is not a mini Berkshire - it is much more of an insurance company than Berkshire, and while Berkshire has $348b of its $762b of investments in US equity securities (46%), Fairfax has $1.5b of its $59b portfolio in US stocks (2.6%).

If the question is, who is a better stock picker, I don't think there's any question that it is Buffett, and Blackberry is the poster child for a terrible investment decision. But mediocre stock picking is only a small part of the Fairfax story - the big story, going forward, is Fairfax's huge float leverage, its great fixed income returns, good underwriting by its insurance companies, and the successful investments like Poseidon, Eurobank, Digit Insurance, the Bangalore Airport, etc. It has a history of strong growth comparable to Berkshire's, and it is trading at about 6 times expected earnings in the next few years, at about 1.1x book value. I think it's worth looking beyond Blackerry!

dtb