) is a cautious investor, whose vigilance has been heighted in recent years by what he perceives as a mix of factors indicating an economic storm up ahead. He has had extraordinary performance at his insurance conglomerate Fairfax Financial (TSX:FFH
), compounding book value per share at 21.3% since inception. His return on his stock portfolio has lagged, however, as he hedges against potential future market instability. According to his 2013 annual letter, threats he sees to the market include: high U.S. total debt/GDP ratio with significant deleveraging remaining, weak economic growth in the Western world, inflation, QE’s lack of impact on the real economy, real estate bubble in China and low U.S. and junk bond yields.
In the first quarter, Watsa started three new positions, in Steel Partner Holdings LP (NYSE:SPLP
), Morgan Stanley Asia Pacific Fund Inc. (NYSE:APF
) and Harvest Natural Resources Inc. (NYSE:HNR
). Continue Reading »