Fairfax removes hedge from its equity portfolio investments

Fairfax Financial Holdings Ltd (TSX and NYSE: FFH) has removed the hedge on its equity portfolio investments.
As of Oct. 31, 2008, Fairfax continued to hold approximately 73% of its investment portfolio in treasury bills and government bonds as well as approximately $9.7 billion notional amount of credit default swaps.
“The credit default swaps are extremely volatile, with the result that their market value and their liquidity may vary dramatically either up or down in short periods, and their ultimate value will only be known upon their disposition,” a Fairfax release says.
“While we believe the recession may be long and deep, we also believe that stock prices may have already discounted the worst of the economic decline,” said Prem Watsa, chairman and CEO of Fairfax. “As value investors, we are finding an incredible number of investment opportunities across the world.”
Fairfax Financial is the holding company of Northbridge Financial and Odyssey Re.