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What Drives Fairfax Financial Holdings Ltd (FRFHF) to Sustainable Success?

Alphyn Capital Management, an investment management firm, released its first-quarter 2024 investor letter. A copy of the letter can be downloaded here. The Master Account of the fund returned 7.1% net in the first quarter compared to 10.6% for the S&P500 Index. As of March 31, 2024, the top ten holdings accounted for approximately 66% of the portfolio, and approximately 8.2% of the portfolio was held in cash. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Alphyn Capital Management featured stocks like Fairfax Financial Holdings Limited (OTC:FRFHF) in the first quarter 2024 investor letter. Headquartered in Toronto, Canada, Fairfax Financial Holdings Limited (OTC:FRFHF) provides property and casualty insurance and reinsurance, and investment management services. On April 10, 2024, Fairfax Financial Holdings Limited (OTC:FRFHF) stock closed at $1,100.97 per share. One-month return of Fairfax Financial Holdings Limited (OTC:FRFHF) was -1.47%, and its shares gained 67.18% of their value over the last 52 weeks. Fairfax Financial Holdings Limited (OTC:FRFHF) has a market capitalization of $26.207 billion.

Alphyn Capital Management stated the following regarding Fairfax Financial Holdings Limited (OTC:FRFHF) in its first quarter 2024 investor letter:

“In February, a short seller took advantage of Fairfax Financial Holdings Limited's (OTC:FRFHF) complex accounting to launch a report during the company's "quiet period" before earnings - when firms are restricted in their ability to make public comments - to accuse the company of inflating "fair value marks" on its sprawling holdings. While I generally support the role of short selling in maintaining corporate transparency and accountability, this report was heavy on insinuation and light on solid evidence. Fairfax adeptly countered each point during the earnings call, and the share price recovered in a matter of days.

The market has started to appreciate Fairfax's streamlined story as a leading global insurer that generates "adjusted operating income (undiscounted underwriting profit, interest, and dividends plus income from associates) of $3.9 billion, which may continue at these levels for the next four years." While the hard insurance market that helped generate these profits will not last forever, I believe the company's ability to reinvest these substantial cash flows at high rates of return is not fully priced in, particularly given that with their $30 billion insurance float, they need only achieve about 7% return on investment to grow book value by 15%. The focus on its deep talent pool in the latest shareholder letter signals a strong and well-resourced team capable of driving sustained success.”

A financial adviser in a suit talking with a senior client about their life insurance policy.

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Fairfax Financial Holdings Limited (OTC:FRFHF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

 

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Disclosure: None. This article is originally published at Insider Monkey.