Fairfax Financial Holdings Ltd T.FFH

Scotiabank Top Pick

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Scotiabank analyst Phil Hardie provided top picks in the outperforming diversified financials sector,

“We continue to see solid opportunities across the non-bank financial space with an average one-year expected return of ~25%. The sector has outperformed the S&P/TSX Composite and S&P/TSX Financial indices by a wide margin over the past 12 months and year-to-date in 2024. Stocks in our coverage universe have generated an average year-to-date return of 20.4% since the start of the year, however stock performance has been uneven ... Heading into the back half of the year, we see further upside potential but given strong year-to-date outperformance, we expect more modest average returns … Fairfax Financial and Trisura Group remain our top picks for 2024. Fairfax has demonstrated resilience through the business cycle and turbulent financial markets, but we view it as a less defensive play than more traditional publicly listed insurers … Trisura remains our top small-cap idea. The stock has a strong track record of delivering outsized shareholder returns but came under pressure through most of 2023 as the stock went through a transitional re-rate as investors rebalanced risks related to managing a high-growth company with upside potential. Our investment thesis is playing out well, with the company delivering solid operating results and avoiding negative surprises for investors. The stock has rebounded almost ~50% from its recent lows”