Fairfax India: Well-Managed, Growing Holding Company at Discount

Jeffrey Stacey of Stacey Muirhead Capital Management presented his investment thesis on Fairfax India Holdings (Canada: FIH.U) at Best Ideas 2022.

Thesis summary:

Fairfax India Holdings is an investment holding company with an objective of achieving long-term capital appreciation by investing in public and private equity securities and debt instruments in India and in Indian businesses.

Fairfax Financial owns 29.9% while OMERS owns 14.3% of the equity. Management and investment advisory services are provided by Fairfax Financial, which has a successful long-term operating record in India. Some of the largest investments made by Fairfax India include the Bangalore International Airport Limited, the IIFL group of companies, Sanmar Chemicals Group, and CSB Bank.

Since its inception in 2015, Fairfax India has compounded book value per share at 11.3% while the underlying share price has compounded at only 4.0% over the same period (both figures are as of the end of Q3 2021).
Fairfax India recently traded at a ~42% discount to the net mark-to-market value of the underlying public and private equity investments. Fairfax India has been buying back stock to take advantage of the discount, having purchased at least 5.5% shares outstanding in 2021.

Given the above-average long-term growth potential of India, a portfolio of public and private investments with solid economic prospects, a market price at a significant discount, and an active share repurchase program, Jeff believes that Fairfax India represents a compelling investment opportunity.

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About the instructor:

Jeffrey Stacey is the founder of Stacey Muirhead Capital Management Ltd. and he has over 35 years of investment industry experience. Jeff has an Honours Bachelor of Business Administration degree from Wilfrid Laurier University and is a Chartered Financial Analyst.

Jeff has been involved in many charitable and board activities throughout his career. He has served on several investment committees including for two Canadian universities. In addition, he has served on the advisory boards for two university student managed investment funds.

Jeff is married and has two children. Personal interests include hiking, fitness, reading, travelling, and playing drums.

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