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Prem Watsa’s Fairfax Financial Holdings (TSX:FFH) has been on a remarkable upward trajectory in recent years, driven by improved underwriting performance, solid returns from fixed-income securities, and astute investments. Currently trading comfortably above $1,500 per share and nearing $1,600, FFH has caught the attention of investors seeking momentum. However, beyond its appeal to momentum investors, FFH offers substantial value for those with a longer-term horizon.
Prem Watsa, often dubbed the Canadian Warren Buffett, leads Fairfax with a deep-value investing philosophy that has yielded impressive results akin to Buffett’s approach. While Buffett has favored higher-quality companies over deeply undervalued “cigar butt” investments, Watsa’s strategy embraces these opportunities, aiming for significant returns from undervalued assets.
Comparing Fairfax to Berkshire Hathaway, while FFH’s $37.2 billion market cap pales in comparison to Berkshire’s massive size, it remains a potent player in value investing. Year-to-date, FFH has surged over 31%, outperforming broader market indices, and over the past two years, it has soared by 134.6%. Despite these gains, FFH trades at a modest valuation of approximately 7.5 times trailing price-to-earnings ratio, suggesting further upside potential.
Looking ahead, Fairfax’s robust balance sheet positions it well to capitalize on future opportunities. As Watsa continues to deploy capital judiciously, FFH remains poised to benefit from strategic investments in undervalued assets. For investors who appreciate deep value and long-term growth potential, Fairfax Financial Holdings represents a compelling investment opportunity, even at its current valuation levels.
