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Fairfax Financial Holdings Ltd. (FFH) is a financial services holding company that, through its subsidiaries, is primarily engaged in property and casualty insurance conducted on a direct and reinsurance basis.

Put simply, FFH trades at a substantial discount from it's book value of $185. It closed Monday at $132.50 on the NYSE.

The price/sales ratio is 0.30 and the market cap is nearly $2.2 billion. It's goal is to increase shareholder value by growing book value by 15% annually.

FFH stock has dropped recently. One reason is probably because Merrill Lynch issued a negative report at the end of March. This is nothing new -- FFH is either misunderstood or hated (or both) on Wall Street and this is not the first time the stock price has been knocked down thanks in part to a negative brokerage house report. Another reason is the worry that FFH, like any insurance company, might somehow turnout to be another AIG and wind up in the crosshairs of Elliot Spitzer. And the last reason that the stock price has fallen is because of weakness in some of the company's European operations.

I believe the Merrill Lynch report is wrongheaded and that FFH will not be another AIG. And even if the problem European business is worth zero (not likely), FFH is still worth more than the current stock price.

V. Prem Watsa, Fairfax's Chairman and CEO is one of the best chief executives on the planet. He has the vast majority of his personal net worth in the company, so his interests are clearly aligned with shareholders.

As long as the share price stays at these levels or goes down, and the book value holds up or increases, I'll continue accumulating shares of FFH.