Landmarks & Legacies
There’s something timeless about the Toronto skyline — a reminder that while markets rise and fall, true landmarks endure. And just as the skyline stands as a symbol of resilience and permanence, so too does Fairfax. In a city filled with financial institutions, none reflect the values of integrity, prudence, and true shareholder alignment quite like Fairfax.
By Nick Fisher, Portfolio Manager
One of our best performing holdings over the last 5 years has been Fairfax Financial. It isn’t just an insurance holding company—it’s a capital allocation machine built on discipline, patience, and integrity. The most underappreciated aspect of Fairfax is its culture. An admirable culture is so rare in today's world. A strong culture is paramount in managing risk.
Fairfax Financial is built around a deeply rooted culture of conservative underwriting, disciplined investing, and long-term value creation. Under the leadership of founder and CEO Prem Watsa—often referred to as the "Canadian Warren Buffett" —the company has cultivated a reputation for integrity, patience, and a contrarian mindset.
Here are some defining aspects of its culture:
Long-Term Orientation
Fairfax doesn’t chase quarterly earnings targets or market trends. Instead, it focuses on building long-term intrinsic value, even if that means short-term volatility or underperformance. This patient philosophy aligns the company closely with like-minded, long-term investors.
Decentralized Autonomy
Fairfax operates a decentralized model, allowing the leaders of its various insurance subsidiaries and portfolio companies to run their operations independently. This fosters accountability, agility, and an entrepreneurial spirit across the organization.
Conservative Financial Management
Risk management is at the core of Fairfax’s DNA. The company emphasizes capital preservation, prudent leverage, and strong reserves. It’s known for a cautious stance, particularly in volatile markets.
Value Investing Philosophy
Prem Watsa is a firm believer in Benjamin Graham-style value investing. Fairfax’s investment decisions are often contrarian, opportunistic, and based on deep fundamental analysis. The company has made bold bets in distressed assets and emerging markets, often reaping significant rewards.
Alignment with Shareholders
The company’s culture emphasizes alignment between management, employees and shareholders. Executives often have significant personal capital invested alongside shareholders, and Fairfax's annual letters are transparent and shareholder-focused.
Integrity and Social Responsibility
Fairfax emphasizes integrity, fairness, and a strong moral compass in its dealings. It also engages in meaningful philanthropic work through the Fairfax Foundation, supporting education and communities where it operates. Community is front and center in all of Prem Watsa’s communications with shareholders. A true Win-Win-Win culture for all.
None of this is to say that Fairfax like any business doesn’t have challenges from time to time. In fact, this is where the rubber meets the road. Where accountability, transparency and action are evident in each instance. Many leaders talk about culture, very few live it like Fairfax. It is no coincidence that Fairfax is a top 20 performing stock in terms of returns since 1985.
Similarly, we will continue to remain prudent in our investment principles and focus relentlessly on the long-term performance of great businesses. That has always been — and will remain — the core of our work at Pilot Wealth Management.