FRFHF - yeah, you are right, it's not cheap.
If Buffett wasn't 86, I'd put everything into BRK. Unfortunately, he is and my guess is about 15-20% drop when he dies. I don't plan to keep BRK after he dies, so my BRK investment pretty much has to account for that drop within coming years.
Buffett implied around 10% return in coming years. He might be conservative as always. If I have to sell BRK after 15-20% drop, this could go down to 8% perhaps.
I think FRFHF can do organic return of about 10% too. Prem still promises 15%, but I don't think he can do that without another big macro bet (and the last one was not very good) or great equity investments (I don't expect that and the stock prices are not cheap enough for great equity returns). Assuming FRFHF drops to 1.2 book or so, you also get 7-8% return. Not great, but there's not much around that offers much better returns.
In short, I am sucking my thumb because with no hedges Fairfax could start generating OKish returns and I don't know better investments currently. But I could agree that switching to BRK is a way to go. At least if I held the cash, I'd buy BRK here and probably would not buy Fairfax at current prices. |
