Shares of Fairfax Financial Holdings (TSX: FFH) go aside for a large part of the summer and apparently the in -depth rally that preceded the consolidation. It is indeed much better for shareholders to experience a “lateral correction” than one that entails a steep drawing. And although Fairfax shares have gone out quite a bit, with a dip of about 6-7% in late summer, there is not yet a traditional correction.
Although Fairfax shares are too late for another dip, investors may want to place half a position to work today, especially considering how cheap shares are and the potential boost of lower interest rates. Indeed, the Bank of Canada has supplied a new rate reduction, and it is one that could cause another leg higher for those impressive shares of Fairfax Financial.
Time to bet on the Great Fairfax CEO Prem Watsa, a man who is known as the Warren Buffett of Canada?
I am not sure how Prem Watsa was nicknamed “Buffett of Canada”, but after leading FFH shares to 540% return in five years, I think it is clear that Fairfax might be the next big thing after Buffett retires as CEO from the legendary Berkshire Hathaway (NYSE: BRK.B) at the end of this year. Indeed, it will certainly be a historic moment, but a moment that investors can cause to pursue other conglomerates.
When it comes to fairfax, I think it is a great option, especially given that Watsa is probably one of the best Big-admitted investors, except Buffett. And, as I have noticed in my earlier documents about Fairfax Financial, the company has a very modest market capitalization (currently only $ 55 billion). This means that investments and acquisitions of Watsa and the company have more impact than when it was the size of Berkshire (a market capitalization in the $ 1 trillion ballpark).
Perhaps it is only the (small) size and power of Fairfax that make FFH shares one of the best insurance and investment companies, not only in Canada, but also in the world. Of course the incredible management team (Good Underwriting and Smart Investments) makes FFH shares that are worth paying a big premium, one that the shares currently miss.
PREM WATSA has closed a whole series of sweet Canadian deals over the years
Watsa has picked up a number of fantastic Canadian brands in recent years, from the barrel to the areas of sleep. As the rates fall, Watsa can have more financial firepower to make even greater movements. Of course he will not close a deal only because his company has enough money to spend.
He is a value investor, an investor with deep value that will only jump if there is a chance to crochet a substantial discount. As a classic value investor with a huge momentum behind his company, I would claim that it is time to be patient, because new investors think about the next big move in a name with several bags that still has room.
Anyway, the Canadian acquisitions of Fairfax don’t get that much attention, even if they should. In any case, with a 8.95 times backward price-to-win (p/e), with sufficient in the horizon, I expect that the next major movement in FFH shares will probably be higher. In any case, FFH shares is a striking performer and one that is finally worthwhile to put away in a TFSA for the long term.
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