Fairfax Financial Holdings

TSE: FFH
Fairfax Financial Holdings has appeared in one of my
previous articles as a way to hedge against inflation. Since then, Trump has been elected as the next president in the United States and inflation is expected under his touted heavy infrastructure spending. This is because if the United States government wants to build huge amounts of infrastructure, it will require more money, which increases the cost of borrowing. This, in turn, raises the "time value" of the US currency, causing the cost of everything to go up as there is a greater demand for cash within the country. Up until recently, Fairfax Financial held a large position in a deflationary bet, and with Trump elected, it becomes a position that is hard to justify. As a result, the losses incurred on that position have been mostly realized as Prem Watsa (Chairman and CEO) has decided to cut that position. What you have left is a fairly reasonably-valued insurance, reinsurance and infrastructure holding conglomerate with stable earnings. At a closing price of $637.60 per share, you get strong leadership in a company that isn't afraid to take large positions in macro bets for you, while keeping its cushion of increasingly valuable assets and stable insurance businesses. Although its yield and P/E ratio are not the lowest when compared to focused insurance companies such as Sun Life Financial and Manulife, book value remains at a very appealing 1.2. It also trades at a price within about 10% of its 52-week low while paying a dividend of 2.22%. Due to large writedowns on investment losses, expect an increase in share price at the next quarterly earnings, which will reflect the underlying business strength.
Disclosure: I personally own FFH.