Title: Buying more of this stock Subtitle: Keep compounding Publication: Compounding Quality (Substack, paid post) Author: Pieter Slegers / Team Compounding Quality Date: 2026-09-20 URL: https://www.compoundingquality.net/p/buying-more-of-this-stock Audience: only_paid Note: text captured verbatim from the paid post via a logged-in browser session (custom-domain SSO warm-up via /account first; tab URL, title and "SEP 20, 2026" byline verified before capture). Written post - no timestamps. Charts and tables are published as images; the ones carrying figures are transcribed inline below as [Table image - ...] blocks (the portfolio expected-return sheet, the portfolio FCF-yield history, the top-1% US compounders since 1985, the current-weights bar chart, Fairfax's capital-flywheel graphic and shares-outstanding chart, and the highlighted Fairfax row of the expected-return sheet). The post writes numbers in European convention (15,28 = 15.28; 2.300 CAD = CAD 2,300). Bar-chart weights are read off the chart by eye (approximate, +/-0.1pp); the post states Fairfax at 2.7% explicitly.
Buying more of this stock
Hi Partner
I hope you are doing well.
Today, we are adding more to an existing stock in Our Portfolio.
As a reminder, you can find the entire portfolio, including all transactions here.
[Image - header graphic.]
Performance
In the Community, some Partners ask questions about the performance of the Portfolio.
You can see all positions + all transactions in Our Portfolio Spreadsheet.
The current results are below our expectations.
Quality has had a rough time recently.
Every active strategy will out- and underperform the market from time to time.
That's exactly why this statement is so important:
"You can borrow someone's stock idea, but you can never borrow their. conviction."
If you blindly follow someone else's stock tip but you're not convinced in the stock idea yourself, you'll never be able to stay the course when things get though.
And that's exactly what's needed to outperform the market in the long term.
While I'm not happy with the recent result of the Portfolio, I am sticking the course.
I hope you do too.
The expected return for Our Portfolio now looks as follows:
[Table image - Our Portfolio expected-return sheet (Earnings Growth Model). Columns: Company | EPS 2025 | EPS 2028 | Dividend Yield | Total EPS Growth | Yearly EPS Growth | Expected yearly return next 3 years Medpace | 15.28 | 20.81 | 0.00% | 36.19% | 10.84% | 10.84% Evolution AB | 5.24 | 6.71 | 0.00% | 28.05% | 8.59% | 8.59% Kelly Partners Group* | 9 | 20 | 0.00% | 122.22% | 30.50% | 30.50% Brown & Brown | 4.26 | 5.23 | 0.96% | 22.77% | 7.08% | 8.04% LVMH | 21.85 | 27.67 | 2.90% | 26.64% | 8.19% | 11.09% Games Workshop | 594.9 | 666.93 | 2.80% | 12.11% | 3.88% | 6.68% Dino Polska | 1.59 | 2.31 | 0.00% | 45.28% | 13.26% | 13.26% Kinsale Capital | 19.51 | 28 | 0.20% | 43.52% | 12.80% | 13.00% Interparfums | 5.24 | 6.49 | 2.60% | 23.85% | 7.39% | 9.99% Ameriprise Financial | 39.29 | 55.39 | 1.20% | 40.98% | 12.13% | 13.33% Visa | 11.47 | 16.85 | 0.70% | 46.90% | 13.68% | 14.38% Topicus | 3.43 | 5.49 | 0.00% | 60.16% | 17.00% | 17.00% HgCapital Trust | 0.28 | 0.39 | 1.30% | 40.49% | 12.00% | 13.30% Constellation Software | 79.8 | 121.37 | 0.20% | 52.09% | 15.00% | 15.20% Brookfield | 2.6 | 3.95 | 0.80% | 52.09% | 15.00% | 15.80% Zoetis | 6.41 | 7.91 | 2.70% | 23.40% | 7.26% | 9.96% 3i Group plc | 1.63 | 2.48 | 3.10% | 52.09% | 15.00% | 18.10% KKR | 6.11 | 9.29 | 0.80% | 52.09% | 15.00% | 15.80% S&P Global | 17.83 | 23.03 | 0.90% | 29.16% | 8.90% | 9.80% Fairfax** | 26825 | 43708.00 | 0.90% | 62.94% | 17.67% | 18.57% Portfolio average (highlighted): 13.90% * FOR KPG we use NPATA ** For Fairfax Revenue was used]
The average company in Our Portfolio is expected to grow by 13.9% per year.
Here's what the valuation (FCF Yield) looks like:
[Table image - bar chart "FCF Yield" (Our Portfolio), read off the chart: 2015 ~4.2% | 2016 ~4.4% | 2017 ~4.5% | 2018 ~5.1% | 2019 ~4.2% | 2020 ~3.4% | 2021 ~3.3% | 2022 ~4.4% | 2023 ~4.1% | 2024 ~4.7% | 2025 ~5.6% | Right now ~5.9%.]
As long as our companies keep generating more and more value for us, I am less concerned about what the stock market is doing in the meantime.
I would highly encourage you to use a similar mindset.
Jochen also wrote an excellent piece about this recently.
It's called What if you fired Warren Buffett in 1999.
You can read it here:
[Image - report cover, linked to a Google Drive file.]
Read the report
Buying more of this stock
Today it's time to buy more of a stock we already own.
This company:
Wants to double every 5 years
Is led by one of the best capital allocators in the world
Management thinks the company is too cheap
On top of this, it's one of the best performing stocks in the US since 1985 (!):
[Table image - slide "Annual Stock Return of U.S. Listed Companies since 1985 - Top 1%", Compound Return (%): 1 Apple 22.7 | 2 Home Depot 21.3 | 3 Applied Materials 21.2 | 4 Amgen 20.4 | 5 Danaher Corporation 20.1 | 6 UnitedHealth Group 19.7 | 7 [name scribbled out in red] 19.5.]
I don't think this strong compounding will stop anytime soon.
Why? Because they are having a tremendous amount of growth potential in India.
The company I'm talking about?
Fairfax Financial ($FFH)
[Table image - Fairfax slide "Success of Our Formula": "Our combination of disciplined underwriting and total-return value investing has produced superior returns over a long period." Disciplined Underwriting + Value Investing = Superior Long-Term Returns. "15% long-term book value per share CAGR target (achieved 18.7% since inception)". Source: Fairfax 2026 AGM Presentation.]
How does this company make money?
Fairfax makes money by selling insurance and reinsurance policies, collecting premiums from clients while carefully managing risks. It then invests the money it holds before paying claims (the "float") to earn additional returns.
You can see Fairfax Financial as a mini Berkshire.
Fairfax stands for Fair & Friendly acquisitions:
Fair: Fairfax generally offers reasonable prices and deals with sellers and shareholders in good faith.
Friendly: They like to work with management teams, not against them. You won't typically see Fairfax launching hostile takeovers.
Sounds good, right?
You can read the full investment case here:
Full investment case Fairfax Financial
Why are we buying more?
Currently, Fairfax has a low weight in Our Portfolio:
[Table image - bar chart "Current weight (%) versus Company" (Fairfax highlighted in green), read off the chart: Brookfield ~8.45% | Medpace ~8.3% | Evolution AB ~7.95% | Ameriprise Financial ~6.1% | Visa ~6.05% | Kelly Partners Group ~5.95% | Topicus ~5.95% | Constellation Software ~5.9% | Kinsale Capital ~5.8% | Games Workshop ~5.5% | LVMH ~4.65% | Brown & Brown ~4.3% | Dino Polska ~3.8% | Interparfums ~3.7% | HgCapital Trust ~3.6% | 3i Group plc ~3.4% | KKR ~3.0% | S&P Global ~2.85% | Fairfax Financial ~2.7% | Zoetis ~1.8%.]
I definitely believe Fairfax deserves a higher weight.
A few months ago, I spend a lot of time studying the company.
First I read the book "The Fairfax Way".
An amazing book about the complete history of Fairfax.
Afterwards, I read all shareholder letters of Prem Watsa (from 1985 until today). It's an amazing document of 671 pages.
But why is Fairfax so interesting?
Legendary investor Peter Lynch says that if you can't explain in two minutes to a 13-year-old why you own a stock, you probably shouldn't own it.
Let's do this exercise for Fairfax.
Fairfax has one of the strongest track records of all U.S.-listed companies.
The company has generated a 19.5% annual return to shareholders since 1985.
To put this into perspective:
$1,000 invested in Fairfax when Prem Watsa started in 1985 would be worth well over $1.2 million today.
Out of roughly 6,000 companies, only 6 companies did better since 1985 (Berkshire stands at place 49):
[Table image - the same "Annual Stock Return of U.S. Listed Companies since 1985 - Top 1%" slide, unredacted: 1 Apple 22.7 | 2 Home Depot 21.3 | 3 Applied Materials 21.2 | 4 Amgen 20.4 | 5 Danaher Corporation 20.1 | 6 UnitedHealth Group 19.7 | 7 Fairfax 19.5 (boxed in red).]
When a company has been compounding at rates like this for over four decades, it's easy to believe that we are late to the party, maybe even too late.
We are strongly convinced this isn't the case. Perhaps even the contrary.
The best years might still be ahead for Fairfax shareholders.
[Table image - graphic "Fairfax Financial Holdings Limited - One Capital Flywheel. Disciplined. Global. Compounding." 1 Insurance: global P/C insurance operations, among the top 20 largest P/C insurers worldwide; presence across North America, Latin America, Europe, Middle East, Africa, India. -> insurance operations generate float (premiums > claims) -> 2 Invest float: ~$75 billion investment portfolio - ~$55B in fixed income (mainly government bonds), ~$20B in equities; generates interest & dividend income and net gains on investments; FY last year results: $2.2B interest & dividends, $3.1B net gains. -> returns provide capital for disciplined allocation -> 3 Reinvest returns: strong balance sheet, prudent leverage, minor dividend. -> more acquisitions increase float -> 4 Acquire & grow: acquire insurance and non-insurance businesses; expands earnings, diversifies business, and creates additional insurance float.]
There are three main reasons why we think the future for Fairfax shareholders looks bright.
1. High quality of the insurance business
The first one? The quality of the insurance business has been improving significantly over the past few years.
Fairfax has transformed from a mediocre insurer to a quality business.
As Jim Collins would say, Fairfax went 'From Good to Great'.
2. It's a cannibal
The second reason?
As a true cannibal, Prem Watsa continues to aggressively eat his own shares at cheap valuation levels.
In June 2026, he bought back 2.4% (!) of Total Shares Outstanding in a single month:
[Table image - Fiscal.ai chart "FFH Total Shares Outstanding" (annual, millions): Dec '17 28.6 | Dec '18 28 | Dec '19 27.6 | Dec '20 27 | Dec '21 24.7 | Dec '22 24.1 | Dec '23 23.8 | Dec '24 22.5 | Dec '25 21.7 | LTM 21.4. Total change -24.96% (CAGR -3.4%).]
Source: Fiscal.ai
3. India
Last but not least, Fairfax gives exposure to one of the strongest secular trends: India.
5.7% of their investment portfolio is invested in India.
They own 42.9% of the publicly traded Fairfax India, a holding company that invests in India.
Their biggest stake is the Bangalore Airport.
Fairfax also receives management and performance fees from Fairfax India.
Combine these factors (improvements in insurance operations, aggressive share buybacks at low valuation levels, and exposure to a big tailwind), and you have a great cocktail for attractive shareholder returns in the coming years.
What to expect
Fairfax itself expects to double its intrinsic value every 5 years.
If this would be true, you'd achieve a yearly return of 15% per year.
But on top of that, Fairfax is currently cheap (management believes this too as they are heavily buying back shares).
As a result, you could expect an even higher return as an investor.
In our Earnings Growth Model, the expected return for Fairfax now equals 18.6% per year:
[Table image - the portfolio expected-return sheet again, with the Fairfax row highlighted: Fairfax | 26825 | 43708.00 | 0.90% | 62.94% | 17.67% | 18.57%; portfolio average 13.90%; footnote "** For Fairfax Revenue was used".]
That's exactly why we are adding more to this amazing company.
You want to learn more about Fairfax? You can read the full investment case here.
Our transaction
We are buying Q 30 at a limit price of 2.300 CAD.
As a result, the weight of Fairfax in Our Portfolio will approximately increase from 2.7% to 5.3%.
As a reminder, you have access to the Portfolio here.
Everything In Life Compounds Team Compounding Quality
Book
Order your copy of The Art of Quality Investing here
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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