Fairfax issues further rebuttal to Muddy Waters short seller report

The management team of Fairfax Financial Holdings Limited has rebuffed allegations from Muddy Waters, a short selling firm, in a new statement released on its website.

The Toronto-based firm said it had reviewed the “allegations and insinuations” made in a 72-page Muddy Waters report.

“We categorically deny and refute all of them, without exception, as false and misleading,” Fairfax said.

The insurance firm said it believed Muddy Waters had never attended its conference calls, nor asked questions, called or written to the firm.

Instead, it said the short seller had appeared on media network CNBC “during our quiet period with these one-sided, ill-informed allegations and insinuations in a transparent attempt to profit by short selling our stock”.

The management statement said of the shortseller, “they have woefully misjudged the strength of Fairfax’s financials and prospects and we are confident the marketplace will reflect our strong fundamentals”.

Prem Watsa, chairman and CEO of Fairfax, commented: “We are neither Berkshire Hathaway, nor GE, as Muddy Waters suggests. We are Fairfax, a strong and enduring company built over 38 years, committed to integrity, customer service, employee welfare and the communities we operate in.

“We have a unique Fair and Friendly culture throughout our organization. We strive to provide excellent returns to shareholders, and are committed to providing full disclosure in our annual report, highlighting both our pluses and minuses.

“We have always been focused on building for the long term and have never given any quarterly guidance. Over 38 years, our book value per share has compounded by 18.9% per year and our stock price at 18.0% per year. Out of 6,000 companies listed in the US in 1985, when we began, less than 20 companies have a similar record.

“We have discussed repeatedly in our annual reports that we have not achieved our 15% objective in the last 5 to 10 years. However, we have more than achieved our 15% return over the last several years.

“Moreover, as those following Fairfax more closely are aware, the foundation of our operating income (underwriting profit, interest and dividend income, and profit from associates) is stronger than ever, and bodes well for the future. 

“Our company is very strong and the best is yet to come. We look forward to answering any questions in our conference call on Friday, February 16, 2024 at 8:30 a.m. ET.”