Topic: Growth Stocks

Stock Pickers Digest Hotline – Friday, October 5, 2012

Article Excerpt

FAIRFAX FINANCIAL HOLDINGS, $376.90, symbol FFH on Toronto, owns 43.2% of Cunningham Lindsey, one of the world’s largest insurance claims management companies. Private-equity firm Stone Point Capital LLC holds a 51% interest. Cunningham Lindsey’s services include claims adjusting, appraisal and claims and risk management. Its customers include insurance and reinsurance companies, insurance brokers and multinational corporations. In March 2012, Fairfax and Stone Point announced that they planned to sell Cunningham Lindsey. The partners have now found a buyer in CVC Capital Partners. Fairfax is selling its stake to CVC for about $260 million. At the end of June 2012, Fairfax valued this interest at $108.3 million, so its profit on the sale will be $151.7 million—a gain of nearly 141%. After the deal closes, Fairfax will invest $35 million in Cunningham Lindsey to remain a small minority shareholder. Fairfax mainly sells insurance and reinsurance, but it also manages investments. This includes a $3.8 billion stock portfolio. To protect these stock investments against a market drop,…