- Fairfax Financial (TSX:FFH), owner of one of Canada’s most prominent value stock portfolios, will undertake a buyback program on the TSX between Sept. 30, 2023, and Sept. 29, 2024
- The potential undervaluation of the company’s 60 diversified holdings indicates the presence of discounts in the broad Canadian and U.S. markets
- Fairfax is a holding company active in property and casualty insurance, reinsurance and investment management
- Fairfax Financial stock (TSX:FFH) is up by more than 74 per cent YoY
Fairfax Financial (TSX:FFH), owner of one of Canada’s most prominent value stock portfolios, will undertake a buyback program on the TSX between Sept. 30, 2023, and Sept. 29, 2024.
Shares covered under the buyback include subordinate voting shares and numerous series of preferred shares as listed below:
| Limit on Purchases | |||||
| Securities Outstanding | Public Float | Average Daily Trading Volume | Total Limit | Daily Limit | |
| Subordinate Voting Shares | 24,353,736 | 23,415,646 | 33,166 | 2,341,564 | 8,291 |
| Series C Shares | 7,515,642 | 7,510,342 | 5,589 | 751,034 | 1,397 |
| Series D Shares | 2,484,358 | 1,784,158 | 2,954 | 178,415 | 1,000 |
| Series E Shares | 5,440,132 | 5,436,132 | 2,464 | 543,613 | 1,000 |
| Series F Shares | 2,099,046 | 1,753,096 | 2,511 | 175,309 | 1,000 |
| Series G Shares | 7,719,843 | 7,719,843 | 8,044 | 771,984 | 2,011 |
| Series H Shares | 2,280,157 | 2,280,157 | 1,852 | 228,015 | 1,000 |
| Series I Shares | 10,420,101 | 10,420,101 | 6,105 | 1,042,010 | 1,526 |
| Series J Shares | 1,579,899 | 1,579,899 | 888 | 157,989 | 1,000 |
| Series K Shares | 9,500,000 | 9,500,000 | 3,916 | 950,000 | 1,000 |
| Series M Shares | 9,200,000 | 9,196,000 | 3,391 | 919,600 | 1,000 |
Subordinate voting shares will be either cancelled or reserved for share-based payment awards, while preferred shares will be cancelled.
Heralding the potential return of value investing
Fairfax is instituting the buyback “because it believes that in appropriate circumstances its subordinate voting shares and preferred shares represent an attractive investment opportunity,” according to a statement released Thursday.
The company goes on to state that, “with respect to the subordinate voting shares, purchases under the bid will enhance the value of the subordinate voting shares held by the remaining shareholders.”
In layperson’s terms, this means Fairfax believes the current economic environment will offer opportunities to buy its shares at a discount compared to its assets’ future cash flows.
Its thesis has already proven out in the market, with 436,414 subordinate voting shares purchased under the ongoing buyback program at an average of C$891.97 up by more than 20 per cent compared with the current price of C$1,125 per share.
Fairfax’s portfolio, guided by legendary value investor Prem Watsa, is propelled by standout holdings such as Orla Mining (up by 300 per cent YoY), Occidental Petroleum (up by more than 500% since 2020) and Micron Technology (up by 30% YoY), and offers investors a diversified selection of 60 names for further due diligence.
Watsa and Fairfax’s bullish view on FFH stock follows a more than 150 per cent rise since 2020, indicating the large-scale returns that are potentially on the table for a diversified value portfolio following numerous years of underperformance versus growth stocks.
Fairfax is a holding company active in property and casualty insurance, reinsurance and investment management.
Fairfax Financial stock (TSX:FFH) is up by 0.76 per cent, trading at C$1,125 per share as of 11:07 am ET. The stock is up by more than 74 per cent YoY.
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