Prem Watsa

Prem Watsa

Last Update: 2014-11-14

Number of Stocks: 43
Number of New Stocks: 4

Total Value: $1,479 Mil
Q/Q Turnover: 14%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Prem Watsa Watch

  • Prem Watsa Buys IBM, Bally Technologies, Rayonier Advanced Materials, Sells Idenix Pharmaceuticals, Questcor Pharmaceuticals, Susser Holdings

    Prem Watsa - Prem Watsa Buys IBM, Bally Technologies, Rayonier Advanced Materials, Sells Idenix Pharmaceuticals, Questcor Pharmaceuticals, Susser Holdings Prem Watsa (Trades, Portfolio) Buys IBM, Bally Technologies, Rayonier Advanced Materials, Sells Idenix Pharmaceuticals, Questcor Pharmaceuticals, Susser Holdings

    Prem Watsa (Trades, Portfolio) of Fairfax Financial (TSX:FFH) just reported his third quarter portfolio. Prem Watsa (Trades, Portfolio) bought Fairfax for less than $10 million and has built it into a insurance giant with annual revenue of more than $10 billion. His investment idols are Ben Graham and Sir John Templeton.  


  • Fairfax Financial Earning Call Opening Statements

    Prem Watsa - Fairfax Financial Earning Call Opening Statements

    Fairfax Financial (FRFHF) Had its third quarter earnings call on Oct. 31, 2014.


    Transcript of earnings call opening statements

      


  • Fairfax Financial's Third Quarter Earnings

    Fairfax Financial Holdings (FFH) (FRFHF) released its third quarter earnings on Oct. 30. The firm had earnings of $461.2 million of $20.68 per share after payment of preferred dividends. This reflects an increase in investment gains and improvements in underwriting. Compared to the net loss of $571.7 million in the third quarter of 2013, or $29.02 net loss after payment of preferred dividends. Fairfax's book value increased in the third quarter to $403.76 per share compared to Dec. 2013 of $339.00, a 22.1% adjusted increase for the $10 dividend paid in the first quarter of 2014.


      


  • An Interview With Fairfax Financial's Prem Watsa

    Please briefly describe your family background.


    My father was an orphan from Mangalore. He lost his mother when he was 3 , and then his grandfather when he was 12 . He was one of four children, so his other siblings were sent to live with various relatives. However, he went to school and was an active sportsman, did his Bachelor’s degree and became a teacher at Madras Christian College. He later, went on to become the Principal of Hyderabad Public School.

      


  • Fairfax Financial: Assurance in Insurance

    Prem Watsa - Fairfax Financial: Assurance In Insurance

    Fairfax Financial (TSX:FFH) is a world-class insurance holding company that is a long-term compounding machine and worth significantly more than its current trading price. The security also provides significant protection against any downturn in the market, given the company’s positioning of its investment portfolio. The company’s quarter-end book value was $387 USD per share at June 30, 2014. There are approximately $45 per share in mark-to-market adjustments that can be added to this, resulting in an adjusted book value of $432 US per share. At its current quote ($445), one can purchase the company for 1.05x book value. The company is easily worth 1.3-1.4x book value, and that value will continue to increase. A more reasonable valuation is $600 per share.


      


  • Prem Watsa's Top Five Holdings

    Prem Watsa - Prem Watsa's Top Five Holdings

    Prem Watsa (Trades, Portfolio) founded the Toronto-based Fairfax Financial Holdings Limited (TSX:FFH) in 1985, which is engaged in property and casualty insurance, as well as reinsurance and investment management. Watsa was born in India, originally trained as a chemical engineer but took a chance to move to London, Ontario, where his brother lived. There, Watsa earned an MBA at Western University and then worked for a decade in the investment department at a now defunct Canadian insurance company before forming Fairfax. Today, Fairfax manages about $1.46 billion in assets.


    In GuruFocus’ 2011 interview with Watsa, the investor cited John Templeton, the renowned value-oriented contrarian investor, as his mentor. While Watsa tends to be neutral rather than investing long or short, he said the most valuable lesson he learned from Templeton was to be flexible. Since then, he has often been referred to as the “Canadian Warren Buffett (Trades, Portfolio).” While there are certainly similarities between the two — both made their fortunes in insurance and draw relatively modest salaries — Buffett tends to avoid risk and companies in trouble, unlike Watsa. The investor is known for a contrarian style and often invests in distressed stocks, most recently exemplified by his decision to take a large stake in Blackberry Ltd. (BBRY), formerly known as Research in Motion.

      


  • Prem Watsa Buys 4 New Stocks

    Prem Watsa - Prem Watsa Buys 4 New Stocks Prem Watsa (Trades, Portfolio), founder of Canadian insurance conglomerate Fairfax Financial Holdings (TSX:FFH), has been fully hedged on his equity positions since about 2010, reducing his returns as the market increased. In Fairfax’s second quarter financial results, however, Watsa told investors the hedges had decreased, though they were prone to fluctuate:  


  • Prem Watsa Takes 3 New Small Holdings

    Prem Watsa - Prem Watsa Takes 3 New Small Holdings Prem Watsa (Trades, Portfolio) 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 (SPLP), Morgan Stanley Asia Pacific Fund Inc. (APF) and Harvest Natural Resources Inc. (HNR).  


  • Prem Watsa 2014 Fairfax Annual Meeting Slides



  • Analysis of Guru Companies - Prem Watsa, Fairfax Financial

    Prem Watsa - Analysis Of Guru Companies - Prem Watsa, Fairfax Financial

    Of the investing gurus we follow at GuruFocus.com, six have publicly traded companies that are directly affected by their investments. So far I discussed Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A)(BRK.B), Carl Icahn (Trades, Portfolio)’s Icahn Enterprises (IEP), and Ian Cumming (Trades, Portfolio)’s Leucadia National (LUK). The next stock I am discussing is Prem Watsa (Trades, Portfolio)’s Fairfax Financial (FFH:TSX, FRFHF).


    The Guru

      


  • Why BlackBerry Is Sweeter Than Apple

    Prem Watsa - Why BlackBerry Is Sweeter Than Apple

    With software bugs, system breakdowns and tardy upgrades, BlackBerry (BBRY) had been rotten to the core for five long years due to managerial arrogance, incompetence and plain laziness. Once the sweet juice turned sour, it had burned too many stomachs and broken too many souls on Wall Street. The lingering bad taste is so widespread that people failed to see a new BlackBerry, sprouting out from their solid security roots, led by strong and proven leadership, charging into new growth areas with moats and recurring revenue, poised for long-term growth, while still in the first-inning of a historic turnaround.


      


  • Prem Watsa Is Fully Hedged

    Prem Watsa - Prem Watsa Is Fully Hedged

    Prem Watsa (Trades, Portfolio) is often described as “Canada’s Warren Buffett (Trades, Portfolio).” He said in his letter to Fairfax Financial (TSX:FFH) shareholders released on March 7 that his common stock portfolio is fully hedged. He then highlighted some of his reasons for being bearish:


    1. The U.S. total debt/GDP ratio is at a very high level and significant deleveraging is yet to come. This applies to Europe and the UK also.

      


  • Prem Watsa Cuts One of His ‘Most Successful Investments’

    Prem Watsa - Prem Watsa Cuts One Of His ‘Most Successful Investments’ Prem Watsa (Trades, Portfolio), the Canadian investor who owns Fairfax Financial Holdings (TSX:FFH), back in 2011 formed a consortium with Wilbur Ross (Trades, Portfolio) and several other financiers to infuse cash into the struggling Bank of Ireland (IRE) – an investment which turned out to be one of his “most successful,” as he said in his recently released 2013 annual letter to shareholders. Like Warren Buffett (Trades, Portfolio) at Berkshire Hathaway (BRK.A)(BRK.B), Watsa invests the float of his insurance conglomerate. Also like Buffett, he has rapidly increased the book value of Fairfax, registering a 21.3% compound annual growth rate in intrinsic value since 1985, according to his 2013 letter.

    For the past several years, Watsa’s returns on his common stock portfolio have been more muted than his historical numbers, due to a 100% hedge he has placed out of concern for the economic consequences of fiscal and monetary stimulus in the U.S., which he believes has yet to play out. Individual investments, however, have exceeded previous success in some cases, such as the strategy he devised with Bank of Ireland (LSE:BKIR).  


  • Prem Watsa Comments on Selling MEGA Brands

    It is with some sadness that we say farewell to MEGA Brands (TSX:MB), a leading global toy company run by the Bertrand family in Montreal, Canada. It is a made-in-Quebec success story that we assisted through the tough recessionary years. The Bertrands approached us with the request to sell to Mattel and as we have said in the past, we support management and the founders. Our cost for our MEGA shares is Cdn$9.88 per share and the Mattel offer is at Cdn$17.75 per share. All in, including our loss on our original convertible debentures, our profit will be Cdn$17 million.

    From Prem Watsa (Trades, Portfolio)'s annual 2013 letter to shareholders.  


  • Prem Watsa Comments on Bank of Ireland

    It is amazing to witness the transformation that has taken place in Ireland. In 2011, when we made our investment in the Bank of Ireland (IRE) at 10 euro cents per share, 10-year Government of Ireland rates were 12%, housing prices had come down 40% and sentiment was bleak. Since then, 10-year Government of Ireland rates have dropped to 3.1%, house prices have bottomed out and have begun to rise, Ireland has access to the bond markets again and capital is flooding into Ireland! Under Richie Boucher's strong leadership, the Bank of Ireland continues to do well as it recently refinanced its government-owned A1.8 billion preferred by doing a A580 million equity issue at 26 euro cents per share and selling the rest into the marketplace. Also, it adid a A750 million unsecured five-year bond financing at 3.34%! The Irish Government has now had all its loans to the Bank of Ireland paid back and its 13.95% ownership of the common stock is in a sizeable profit position. We thank the Irish Government for its exceptional support of the Bank of Ireland and look forward to the Bank's continued progress under Richie's leadership.


    As this letter went to print, because of the significant appreciation in our position in the Bank of Ireland, we rebalanced that position by selling a third of it at approximately 33 euro cents per share. The Bank of Ireland has been one of our most successful investments because of the outstanding performance of Richie and his management team. We continue to be strong supporters of Richie and the Bank of Ireland.

      


  • Prem Watsa Comments on Twitter

    Interestingly, Twitter (TWTR) went public, just after BlackBerry announced its convertible debt issue, at $26 per share, giving it a market value of $18 billion. It had revenues of $665 million and losses of $645 million, and most investors could not get a single share unless they were very good clients of the major houses underwriting the issue. On that day, BlackBerry traded in excess of 100 million shares at $6 per share, giving it a market value of $3 billion. BlackBerry had revenues of approximately $8 billion with cash of $2.6 billion and no debt other than the new convertible debt to be issued. If you thought that Twitter was grossly overvalued at $26 per share, it promptly doubled and currently is selling at $55 per share, with a market value of $39 billion.


    Twitter is no exception – please see the recently compiled table below to see the extraordinary speculation in high tech companies. This sort of speculation will end just like the previous tech boom in 1999 – 2000 – very badly!

      


  • Prem Watsa Comments on BlackBerry

    No sooner had the ink dried (almost!) after I wrote to you in last year's Annual Report about BlackBerry (BBRY), than BlackBerry became a daily headline. The Board of Directors of BlackBerry decided to form a Special Committee to look at all options for the company. As we were the biggest shareholder in the company (almost 10%) and were potentially conflicted by my being on the Board, I decided to resign as a director so we could review all our options. On September 23, 2013, Fairfax made an offer to take BlackBerry private at $9 per share, subject to a six-week due diligence period. To do our due diligence, we hired a very experienced team led by Sanjay Jha, who ran Motorola, Sandeep Chennakeshu, who was President of Ericsson Mobile Platforms, and John Bucher, who was Chief Strategy Officer at Motorola Mobility. Briefly stated, their conclusions were simply: 1) the company had excellent assets, 2) the management teams had made many mistakes along the way, and 3) the company could not afford high cost LBO debt. For the first time in our history, our due diligence resulted in our not being able to complete an announced deal. After discussions with the Special Committee, led by its Chair Tim Dattels, instead of continuing with a go-private transaction, we proposed to raise $1.25 billion for BlackBerry in the form of 6% seven-year convertible debentures (convertible at $10 per share into BlackBerry stock) and proposed that John Chen be concurrently appointed as Executive Chairman of BlackBerry.


    John Chen has an extraordinary background. After immigrating to the U.S. from Hong Kong at the age of 16, John gained a Bachelor's degree in electrical engineering from Brown and a Master's from Caltech. He then trained at Burroughs (Unisys), turned around Pyramid Technology Corp., and then very successfully resurrected Sybase and ran it profitably for about 15 years. When John took over Sybase in 1998, it had lost money for four years, its stock price

      


  • Seth Klarman Comments on Twitter

    Twitter (TWTR), for example, surged from $26 to almost $45 on day one, and closed the year around $64. It was priced, after all, at only twenty times its projected 2015 revenue. One analyst suggests the profitless company might achieve $50 million of “adjusted” cash earnings this year, giving it a P/E of over 500. Some hedge and mutual funds are again investing in late-stage, pre-IPO financing rounds for hot Internet companies at valuations that only seem reasonable if the companies go public, soon, and at astronomical prices.

      


  • Bearish Canadian Investor Prem Watsa's 7 New Positions

    Prem Watsa - Bearish Canadian Investor Prem Watsa's 7 New Positions Prem Watsa (Trades, Portfolio) runs FairFax Financial Holdings Ltd. (TSX:FFH), a financial conglomerate that also has a strong investing side, reminiscent of Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A)(BRK.B). The investing branch “emphasizes a conservative value investment philosophy, seeking to invest assets on a total return basis, which includes realized and unrealized gains over the long-term,” per the website.

    Watsa for the past several years has predicted and invested against a serious market downturn. Since 1985, he has compounded Fairfax’s book value at 19% annually. But recently the growth rate has slowed to 10% because of his portfolio positing. As he explains in his 2012 investor letter:  


  • Prem Watsa's Fairfax Buys $250 Million in Additional BlackBerry Debentures

    Prem Watsa - Prem Watsa's Fairfax Buys $250 Million In Additional BlackBerry Debentures

    Prem Watsa (Trades, Portfolio)’s Fairfax Financial Holdings (TSE:FFH) on Wednesday agreed to purchase $250 million in 6% unsecured subordinated convertible debentures of troubled smartphone maker BlackBerry (BBRY). The debentures have a maturity date of Nov. 13, 2020 and are convertible to common shares at a price of $10 per common share. The transaction will take place sometime on or before Jan. 16, 2014.


    Fairfax is purchasing the debentures as the exercise of an option in connection with its $1 billion debt investment in BlackBerry in November 2013. If converted, the original $1 billion in debentures would give Fairfax 76,854,700 shares of BlackBerry, or 12.2% of its shares outstanding. Converting the new debentures to be held by Fairfax would give him a total of 101,854,700 shares, or 17.6% of the company.

      


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User Comments

Mocheng
ReplyMocheng - 2 months ago
From his performance table, I see that he doesn't even outperform S&P 500. How can we call him the Warren Buffett (Trades, Portfolio) of Canada?
Pensaman
ReplyPensaman - 1 year ago
FF owns BBRY about 10.06% of outstanding shares
Communication Equipment BBRY
51,854,700 541,486 21.8%
Charles.wilton
ReplyCharles.wilton - 1 year ago
WHEN I CLICK BLACKBERRY IT DOESNT SHOW PREM WATSA AND WHEN I CLICK ON WATSA PORTFOLIO BLACBERRY IS ON THE SECOND PAGE AND THE HISTORY CLICK DOESNT WORK. ALSO THE FORMAT IS DIFFERENT AFTER FIRST PAGE?S



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