Investing in India - Fairfax Financial Holdings Corporation

The following article restates some of the arguments advanced in earlier posts about investing in India.  Some highlights:

• the high rate of economic growth
• a more business friendly climate under the Modi regime
• an attractive demographic
• the contention that India should be less affected by international trade disputes than other countries (debatable)
• the difficulties encountered by foreigners trying to invest in India (corruption, a myriad of bureaucratic barriers etc.)

'An elephant starting to run': With China's economy slowing, all eyes turn to India in search of growth

In reviewing possibilities for investing in India a few years ago, I settled on investing in Fairfax India Holdings Corporation (FIH-U-T).

In brief:

• The company takes equity positions in India-based companies and manages them in a manner comparable to the model used by Berkshire Hathaway.  The Corporation evolved out of Fairfax Financial Holdings Limited, an enterprise which has a very solid foundation and which is helmed by some very able individuals.  
• The Corporation is managed by individuals who are very familiar with the ways of doing business in India and who have successful records of investing.  
• I figure that its selective approach to investing in specific companies will yield a performance that is superior to the performance of stock market indices for Indian exchanges.  

The performance of FIH since the original purchase:

2016     7.9%

2017    25.7%

YTD   (18.1%)

The shareholder letters are informative and explain how Fairfax is adjusting its operations over time.  I like the adaptive approach and management's flexibility in navigating what can be a challenging and complex market place.  Read this sample:

Share Owner Letter March 2018

A few thoughts going forward:

• I anticipate and accept that there will be volatility in the price of FIH for a variety of reasons: investor skittishness about short-term (measured in 3 to 5 year increments) things such as the political climate in India, concerns over international trade etc.  My time frame for this investment is in the order of decades - not months and I figure that the long-term trends bode well for this investment. 
• I consider that India will be a better long term investment than China: a democracy governed by the rule of law; a far more attractive demographic, substantial unmet needs for infrastructure, a geopolitical entity that somehow is able to accommodate tremendous internal differences in culture, language and religion; a country where the direction of the economy is set by a myriad of actors and not dominated by a political kleptocracy; an awakening sense of the possibilities of home-grown enterprise. 
• I have faith in the ability of management to deliver superior performance.

Fairfax India is a core holding and I plan to add to the position on dips in the market.