Kingsway Financial Services Inc. (KFS): A Bull Case Theory

We came across a bullish thesis on Kingsway Financial Services Inc. (KFS) on Andvsri’s Substack. In this article, we will summarize the bulls’ thesis on KFS. Kingsway Financial Services Inc. (KFS)’s share was trading at $12.86 as of 30^th May.

Kingsway Financial Services (KFS) has undergone a significant transformation from a troubled Canadian insurance company into a unique, publicly traded search fund platform. After years of poor management and failed investments, activist investor Joseph Stilwell took control and installed Larry Swets as CEO to utilize the company’s substantial net operating losses (NOLs).

However, Swets’ tenure saw limited success until the 2016 acquisition of Argo Management Group and its founder, J.T. Fitzgerald. In 2018, Fitzgerald became CEO and began a comprehensive cleanup, exiting legacy assets, selling the insurance business, reincorporating in the U.S., and dramatically reducing debt.

Under Fitzgerald, Kingsway launched the Kingsway Search Accelerator (KSX) to institutionalize the search fund model. Search funds—vehicles where entrepreneurs acquire and operate small businesses—have historically generated strong returns, and Kingsway’s platform improves on the model with superior capital access, operational infrastructure, and a selective pipeline.

Notably, the company’s PWSC exit yielded a 10x return, and current portfolio companies are demonstrating strong performance. Recent catalysts include the addition of respected investors David Patinkin and Josh Horowitz to the board, strategic leadership changes in the warranty segment, and the acquisition of Bud’s Plumbing, led by Rob Casper, a seasoned aggregator CEO. These moves suggest a path toward becoming a self-funded, pure-play search fund company, potentially unlocking greater valuation multiples.

With substantial NOLs expiring by 2029, the urgency to monetize or streamline operations further supports the bullish outlook. Recent share price appreciation reflects growing investor recognition of Kingsway’s evolving business model and strategic potential.

For a comprehensive analysis of another standout stock covered by the same author, we recommend reading our summary of this bullish thesis on Copart, Inc. (CPRT).

Kingsway Financial Services Inc. (KFS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 4 hedge fund portfolios held KFS at the end of the first quarter which was 5 in the previous quarter. While we acknowledge the potential of KFS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.