Fairfax Financial Holdings Ltd T.FFH

Good Summary

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With a 65% total return over the past 12 months,  can you explain what FFH have done differently than the rest of the companies in their sector? 

FFH has experienced a tailwind from high interest rates in recent quarters, leading to a better yield in the investment portfolio, and is now trading at 1.0x times' Price/Book. Results have been good, and largely superior to peers: In the 2Q, FFH’s adjusted operating income grew 41%, driven by better-increased interest and dividend income, as well as strong underwriting profit. Better underwriting discipline, growth in premium written and especially the ROEs – one of the key metrics to evaluate financial companies which also shows improvement recently, averaging around 12%-15% range. Overall, the recent results showed a solid quarter with improvement across operating metrics. The stock was also cheap vs peers, trading at only 1.0x book value is a cheap valuation for such a quality insurance name. The other factor was that in 2022, investor sentinment shifted very strongly from 'growth' to 'value'. At only  5X earnings, investors saw in FFH a very cheap stock when other sectors were trading at 30X, or more. Essentially, FFH has gone from a 'hated' stock to a solid performer in an uncertain market, and the love has returned to it. The results have seen multiple broker upgrades over the past year which also contributed. (5iResearch)