Shares of Fairfax Monetary Holdings (TSX:FFH) have been going sideways for a lot of the summer time, seemingly digesting the profound rally that preceded the consolidation. Certainly, it’s much better for shareholders to expertise a “sideways correction” than one which entails a steep drawdown. And whereas Fairfax shares have been slipping fairly a bit, experiencing a dip of round 6-7% again in late summer time, there’s no conventional correction simply but.

Although Fairfax inventory is overdue for an additional dip, buyers may want to put a half place to work in the present day, particularly contemplating how low-cost shares are and the potential enhance of decrease rates of interest. Certainly, the Financial institution of Canada delivered one other charge reduce, and it’s one that would spark one other leg larger for these spectacular shares of Fairfax Monetary.

Time to guess on the nice Fairfax CEO Prem Watsa, a person generally known as the Warren Buffett of Canada?

I’m unsure how Prem Watsa obtained the “Buffett of Canada” nickname, however after main FFH inventory to 540% returns in 5 years, I believe it’s clear that Fairfax is perhaps the following huge factor after Buffett retires as CEO from the legendary Berkshire Hathaway (NYSE:BRK.B) on the finish of this yr. Certainly, will probably be a historic second for positive, however one that would trigger buyers to pursue different conglomerates.

In the case of Fairfax, I believe it’s an ideal possibility, particularly contemplating Watsa might be the most effective big-name buyers apart from Buffett. And, as I’ve remarked in my prior items protecting Fairfax Monetary, the corporate has a really modest market cap (at present simply shy of $55 billion). Which means investments and acquisitions made by Watsa and firm may have extra of an influence than if it had been Berkshire’s dimension (a market cap within the ballpark of $1 trillion).

Maybe it’s Fairfax’s (small) dimension and power alone that make FFH inventory the most effective insurance coverage and funding holding corporations, not solely in Canada, however on this planet. In fact, the unbelievable administration workforce (good underwriting and sensible investments) makes FFH inventory value paying a fats premium for, one which the inventory at present lacks.

Prem Watsa has made a slew of candy Canadian offers through the years

Watsa has been scooping up some improbable Canadian manufacturers on a budget in recent times, from The Keg to Sleep Nation. As charges fall, Watsa might need extra monetary firepower to make even greater strikes. In fact, he received’t make a deal simply because his agency has ample cash to spend.

He’s a price investor, a deep-value investor who will solely pounce if there’s a possibility to snag a hefty low cost. As a basic worth investor with large momentum behind his agency, I’d argue that it’s time to be affected person as new buyers ponder the following huge transfer in a multi-bagger title that also has room to the upside.

Both means, Fairfax’s Canadian acquisitions don’t get as a lot consideration, regardless that they need to. In any case, with an 8.95 occasions trailing price-to-earnings (P/E) a number of, with ample tailwinds on the horizon, I count on the following main transfer in FFH inventory will seemingly be larger. In any case, FFH inventory is a standout performer and one which’s lastly value stashing away in a TFSA for the lengthy haul.