Introduction
Fairfax Financial Holdings Ltd. should outperform the S&P over the next decade as a result of aggressively investing a much larger portion of their investment portfolio, an improved rate of return on their investments, and a multiple expansion on the book value of their stock.
A major reason that Fairfax’s stock is undervalued today is because investors are anticipating that growth will underperform in the future as it has in the more recent past. The cause of this perception is Fairfax’s pessimistic view of the markets the past 10 years which resulted in them