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Investing Specialists

Fairfax Financial Got Bullish on U.S. Equities in 4Q

This Canadian property and casualty insurer was buying when others were fearful.

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By Chris Blumas | Stock Analyst

 Fairfax Financial (FFH) had another stellar year in 2008. Prem Watsa and the management team at Fairfax helped guide the firm to its second consecutive year of record profitability. This is no small feat given the carnage that has unfolded around the globe over the last two years.

Since a pair of Bear Stearns hedge funds collapsed in the second half of 2007, financial institutions around the globe have been rocked to their core. The main reason behind Fairfax's remarkable results during one of the most chaotic periods in modern history was the performance of its investment portfolio. Over the last two years, the firm has generated almost $4.4 billion in net investment gains and increased book value by 85% while many of its competitors realized massive losses, had their credit ratings downgraded, and retrenched their operations. Fairfax continues to sit on ample cash reserves, has excess underwriting capacity, and has never been in better shape financially.

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.