Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, recently released its Q1 2021 Investor Letter, a copy of which you can download here. The fund posted a return of 18.22% for the quarter, outperforming its benchmark, the S&P 500 Index which returned 6.18% in the same quarter. You should check out Longleaf Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q1 2021 Investor Letter, the fund highlighted a few stocks and Fairfax Financial Holdings Ltd (NYSE:FRFHF) is one of them. Fairfax Financial Holdings Ltd (NYSE:FRFHF) is an insurance company. In the last three months, Fairfax Financial Holdings Ltd (NYSE:FRFHF) stock gained 23.6% and on April 21st it had a closing price of $450.36. Here is what the fund said:
“Fairfax Financial (FFH) (31%, 1.44%), the insurance and investment conglomerate, was a top contributor in the quarter. The COVID pandemic has had a dramatic impact on the insurance industry. Pricing trends had already turned positive in 2019, yet the losses and uncertainty from a global pandemic pushed the positive pricing trend, a “hard market” in insurance industry speak, to another level. As a result, sentiment toward Fairfax continued to improve as fourth quarter results demonstrated profitable underwriting with a 95.5% combined ratio, and premiums written increased 16% with significant contributions from increased pricing, as the insurance market continues to harden. Fairfax also invests a significant portion of its investments in equity securities with a value orientation. As the overall stock market and value stocks appreciated strongly over the last five to six months, Fairfax’s equity portfolio was a beneficiary. The company increased its book value per share 8% in 4Q, and we expect to see continued growth next quarter. With interest rates beginning to increase, Fairfax is also primed to reinvest in higher yielding debt. The company currently holds a significant portion of its fixed income portfolio in short-term instruments, putting the company in an opportunistic position to capitalize on higher rates. The stock still trades low on book value and normalized earnings multiples. CEO Prem Watsa repurchased over 5% of Fairfax shares through swaps to preserve capital for additional underwriting and also ended the costly market hedges that had stunted Fairfax’s value growth over the last several years. The attractive price environment looks likely to continue, making this one of the best times in years for allocating capital into underwriting.”
Our calculations showed that Fairfax Financial Holdings Ltd (NYSE:FRFHF) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
