Value Stocks Episode 6 – Fairfax India Holdings Corporation
- Double-digit growth rates in all the company’s holdings.
- Large gap between assessed intrinsic value and the recorded book value of their holdings.
- Good opportunity for investors to dip their toe.
In this episode we discuss Fairfax India Holdings Corporation (OTCPK: FFXDF). If you have owned Fairfax Financial (OTCPK:FRFHF) in the past you are likely familiar with Fairfax India which was set up in 2014 as a way to benefit from the substantial growth that is occurring in India. Currently FFXDF is trading around $15 per share, down from a 52-week high of $18.90. This price decrease has closed the gap between the price and the book value of the company and hence one of the reasons we decided to discuss this stock on the podcast. We hope you enjoy the episode.
Podcast Summary Notes
0:00 – Company Introduction
- What do they do?
- What is their market cap?
- Do you own the stock?
5:00 – Why did you want to talk about this company?
- Current owners of Fairfax Financial (OTCPK: FRFHF)
- Recent drop in share price which closed gap between book value
- A way to invest in a fast-growing economy with the protection of experienced management
6:20 – What do you like about the company?
- Top two holdings IIFL Holdings Ltd. and Bangalore International Airport
- Economic growth rate in India
- Management experience
12:15 – What do you dislike about the company?
- Hedge fund style set-up with associated performance fees
- India growth trend could be upset by changing geopolitical factors
20:37 – Thoughts on management?
- Good stewards of capital
24:15 – What are your thoughts on moat?
- No moat for the entity of Fairfax India but there are moats in some of their individual investments
26:52 – What are your thoughts on growth, cash flow, and capital allocation?
- Some concern of past issuing of shares to raise capital
- Cash flow is being reinvested in the business rather than being returned to shareholders, which makes sense given the level of growth
31:20 – Valuation/Intrinsic Value of the business
- How did you calculate the intrinsic value?
- Is it an above average business?
47:00 – Final thoughts on the business