Reviewing Octave Specialty Group (NYSE:OSG) and Fairfax Financial (OTCMKTS:FRFHF)

Fairfax Financial (OTCMKTS:FRFHF) and Octave Specialty Group (NYSE:OSG) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, dividends, risk, profitability and institutional ownership.

Profitability

This table compares Fairfax Financial and Octave Specialty Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fairfax Financial	13.83%	14.72%	4.16%
Octave Specialty Group	-51.10%	0.44%	0.17%

Valuation and Earnings

This table compares Fairfax Financial and Octave Specialty Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fairfax Financial	$31.59 billion	1.12	$4.77 billion	$204.10	8.37
Octave Specialty Group	$251.22 million	0.83	-$261.69 million	($3.65)	-1.28

Fairfax Financial has higher revenue and earnings than Octave Specialty Group. Octave Specialty Group is trading at a lower price-to-earnings ratio than Fairfax Financial, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

10.4% of Fairfax Financial shares are held by institutional investors. Comparatively, 80.9% of Octave Specialty Group shares are held by institutional investors. 7.2% of Octave Specialty Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Fairfax Financial and Octave Specialty Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fairfax Financial	1	2	2	0	2.20
Octave Specialty Group	2	1	2	0	2.00

Octave Specialty Group has a consensus target price of $11.50, indicating a potential upside of 147.05%. Given Octave Specialty Group’s higher possible upside, analysts clearly believe Octave Specialty Group is more favorable than Fairfax Financial.

Risk & Volatility

Fairfax Financial has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500. Comparatively, Octave Specialty Group has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Summary

Fairfax Financial beats Octave Specialty Group on 9 of the 13 factors compared between the two stocks.

About Fairfax Financial

Fairfax Financial Holdings Limited, through its subsidiaries, provides property and casualty insurance and reinsurance, and investment management services in the United States, Canada, Asia, and internationally. The company operates through Property and Casualty Insurance and Reinsurance, Life insurance and Run-off, and Non-Insurance Companies segments. It insures against losses to property from fire, explosion, earthquake, windstorm, flood, terrorism, boiler explosion, machinery breakdown, and construction defects, as well as underwrites automobile, commercial and personal property, and crop insurance. The company also offers workers' compensation, automobile, employer's liability, accident and health, medical malpractice, professional liability, and umbrella coverage insurance products; marine, aerospace, surety risk, and other risks and liabilities insurance products; and reinsurance products. In addition, it franchises, owns, and operates restaurants; retails sports lifestyle products; provides integrated travel and travel-related financial services, as well as advanced digital tools for agriculture; owns and operates holiday resorts; originates, processes, and distributes value-added pulses and staple foods; develops, manages, and invests in hospitality real estate. The company was formerly known as Markel Financial Holdings Limited and changed its name to Fairfax Financial Holdings Limited in 1987. Fairfax Financial Holdings Limited was incorporated in 1951 and is headquartered in Toronto, Canada.

About Octave Specialty Group

Ambac Financial Group, Inc. operates as a financial services holding company. It operates three businesses: Specialty Property and Casualty Insurance, Insurance Distribution, and Legacy Financial Guarantee (LFG) Insurance. The Specialty Property and Casualty Insurance business provides specialty property and casualty program insurance with a focus commercial and personal liability risks. The Insurance Distribution business includes the specialty property and casualty insurance distribution business, which includes managing general agents and underwriters, insurance wholesalers, brokers, and other distribution businesses. The LFG Insurance business offers financial guarantee insurance policies that provide an unconditional and irrevocable guarantee, which protects the holder of a debt obligation against non-payment when due of the principal and interest on the obligations guaranteed. Ambac Financial Group, Inc. was incorporated in 1991 and is headquartered in New York, New York.