Longleaf Partners Fund, an investment management firm under Southeastern Asset Management, published its “Longleaf Partners International Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 6.73% was delivered by the fund for the Q1 of 2021, outperforming its MSCI EAFE benchmark that had a 3.48% gain in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Longleaf Partners International Fund, in their Q1 2021 investor letter, mentioned Fairfax Financial Holdings Limited (NYSE: FRFHF) and shared their insights on the company. Fairfax Financial Holdings Limited is a Toronto, Canada-based financial holding company that currently has an $11.9 billion market capitalization. Since the beginning of the year, FRFHF delivered a 32.75% return, extending its 12-month gains to 64.21%. As of April 22, 2021, the stock closed at $452.59 per share.
Here is what Longleaf Partners International Fund has to say about Fairfax Financial Holdings Limited in their Q1 2021 investor letter:
“Fairfax Financial (31%, 1.51%), the insurance and investment conglomerate, was the 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. Along with Fairfax, about 40% of our investment in EXOR is its wholly controlled reinsurance company, PartnerRe. We believe EXOR is also well placed to benefit from these trends, while also evaluating other opportunities in the insurance space.”
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Our calculations show that Fairfax Financial Holdings Limited (NYSE: FRFHF) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. FRFHF delivered a 27.29% return in the past 3 months.
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Disclosure: None. This article is originally published at Insider Monkey.
