Alphyn Capital Management, an investment management firm, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Master Account of the fund returned 12.4% net in the second quarter compared to 10.9% for the S&P 500 Index. As of the second quarter of 2025, the top ten holdings accounted for approximately 65% of the portfolio, and approximately 17% of the portfolio was held in cash. Market conditions remained volatile in Q2 due to ongoing tariff developments and evolving interest rate projections. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second quarter 2025 investor letter, Alphyn Capital Management highlighted stocks such as Fairfax Financial Holdings Limited (OTC:FRFHF). Fairfax Financial Holdings Limited (OTC:FRFHF) is an insurance company that offers property and casualty insurance and reinsurance, and investment management services. The one-month return of Fairfax Financial Holdings Limited (OTC:FRFHF) was 1.89%, and its shares gained 55.38% of their value over the last 52 weeks. On July 11, 2025, Fairfax Financial Holdings Limited (OTC:FRFHF) stock closed at $1,803.38 per share with a market capitalization of $40.424 billion.
Alphyn Capital Management stated the following regarding Fairfax Financial Holdings Limited (OTC:FRFHF) in its second quarter 2025 investor letter:
Fairfax Financial Holdings Limited’s (OTC:FRFHF) progress over the last three years has been a textbook exercise in compounding. Hard-market pricing from 2022 to 2024 enabled the group to expand net written premiums at a double-digit clip, increasing float to $33 billion, up roughly 12% per year since 2020. With that larger float invested in longer-duration bonds, interest and dividend income have climbed from $0.6 billion in 2021 to about $2.5 billion last year. Adding a steady $1bn+ of associate earnings and normalized underwriting profit, Fairfax is positioned to earn more than $165 per share in 2025, over triple the approximately $52 per-share run rate we underwrote in 2019. These four pillars, disciplined underwriting, growing float, higher fixed-income yields, and associate contributions, have driven the company’s outperformance since 2022.
The share price has adjusted accordingly: Fairfax now trades at around 1.7x stated book value, or 1.5x forward, rewarding us with both earnings growth and multiple expansion. The insurance hard market may be coming to an end, and even if premium growth slows to the 6% base-case forecast and the combined ratio drifts toward the high 90s, management still expects more than $1.5 billion in underwriting profit, in addition to the recurring income streams noted above. A substantial cash cushion and excess capital across the underwriting subsidiaries provide Fairfax with flexibility to continue repurchasing shares or reinvest opportunistically. While we should not expect the same pace of multiple expansion from here, the company’s scalable earnings engine and conservative balance sheet leave ample room for attractive, though more measured, long-term returns.
A close-up of a hand signing a property casualty insurance product contract.
Fairfax Financial Holdings Limited (OTC:FRFHF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 1 hedge fund portfolios held Fairfax Financial Holdings Limited (OTC:FRFHF) at the end of the first quarter, which was 1 in the previous quarter. While we acknowledge the risk and potential of FRFHF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FRFHF and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
