TIP832: FAIRFAX FINANCIAL (FFO.TO): THE BERKSHIRE OF THE NORTH

W/ KYLE GRIEVE & SHAWN O’MALLEY

TIP832: FAIRFAX FINANCIAL (FFO.TO): THE BERKSHIRE OF THE NORTH W/ KYLE GRIEVE & SHAWN O’MALLEY

18 July 2026

In today’s episode, Kyle Grieve and Shawn O’Malley analyze Fairfax Financial, the insurance conglomerate that Prem Watsa built from a near-bankrupt trucking insurer into a compounding machine often compared to Berkshire Hathaway. They break down Fairfax’s insurance and non-insurance segments, its use of float, and the capital allocation moves, from acquisitions to buybacks, that have driven decades of growth. The conversation also covers Fairfax’s competitive advantages, key risks such as catastrophe exposure and succession, and whether the business remains an attractive opportunity today.

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IN THIS EPISODE, YOU’LL LEARN:

  • Why Fairfax’s history shorting backfired for years
  • How Fairfax structures its insurance and non-insurance businesses
  • How Fairfax treats its winning investments
  • What the combined ratio reveals about Fairfax’s underwriting abilities
  • Why Fairfax’s culture keeps talented operators for decades
  • How Fairfax uses debt to fund acquisitions
  • Why Fairfax’s buyback timing shows disciplined capital allocation
  • How Prem Watsa’s pay stays modest despite success
  • What risks Fairfax has as it continues to scale
  • Valuation discussion of Fairfax
  • Intrinsic value of Fairfax
  • Whether Kyle and Shawn will add Fairfax to the Intrinsic Value Portfolio
  • And so much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Shawn O’Malley: The fact that they have compounded at 18% a year for over 40 years now, that’s just unbelievable. I mean, it has to be one of the most under-the-radar long-term success stories that we’ve ever come across.

[00:00:15] Kyle Grieve: Right? And to think it all started with the acquisition of a nearly bankrupt Canadian trucking insurance business with just, you know, $13 million in float, and that float has now grown to nearly $41 billion. Pfft.

[00:00:25] Shawn O’Malley: And the bet they put on the housing bubble during the GFC was, like, an absolutely incredible trade, right? And I think they netted over four and a half billion dollars. And so really The Big Short should have been about them, not Michael Burry.

[00:00:41] Intro: Since 2014, with more than 200 million downloads, we have interviewed the world’s best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you.

[00:01:01] Intro: This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now, for your hosts, Shawn O’Malley and Kyle Grieve.

[00:01:27] Shawn O’Malley: Daniel and I researched the gold standard of value investments when we looked at Berkshire Hathaway last year. And fittingly, we added it as a position to the Intrinsic Value Portfolio that we run. And so we have some experience looking at insurance-based holding companies, and Berkshire Hathaway is one of the best simply because they have the world’s best capital allocator leading the business in Warren Buffett, and he led it for many, many decades.

[00:01:55] Shawn O’Malley: But I’m excited to look at another insurance business that tends to run much more under the radar than Berkshire simply because its CEO, Prem Watsa, doesn’t quite have the same cult-like following as Buffett and lives in Canada too, not the U.S., so maybe that’s a factor. And, you know, for a lot of diehard investors, though, going to this company’s annual shareholder meeting is just as important as going to Berkshire’s.

[00:02:21] Kyle Grieve: That’s right. And this business is Fairfax Financial, and it’s compounded its book value at over 18% per year since 1985. Now, interestingly, one of the biggest tenets in value investing is that price follows intrinsic value over the long term, and Fairfax has done just that, compounding its share price at 18% as well.

[00:02:38] Kyle Grieve: And since 1986, when Fairfax had positive earnings per share, it has compounded its earnings per share at about 15%, an insanely high rate for any business over a 40-year time period.

[00:02:49] Shawn O’Malley: And speaking of Berkshire Hathaway, they’ve compounded book value at just a touch under 20% a year since inception.

[00:02:56] Shawn O’Malley: So Fairfax is really not too far behind. And Fairfax is interesting because it really has so many parallels to Berkshire, from having an incredibly well-aligned CEO who prioritizes shareholders, to running a decentralized organization, to taking advantage of float from insurance. There are just a lot of parallels that stand out between the two businesses.

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