Prem Watsa

Prem Watsa

Last Update: 2014-08-13

Number of Stocks: 42
Number of New Stocks: 4

Total Value: $1,462 Mil
Q/Q Turnover: 0%

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

Prem Watsa Watch

  • 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 (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

    Of the investing gurus we follow at, 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

    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 (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 (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 (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 (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.


  • 6 New Stock Picks from Prem Watsa

    In spite of a “very cautious view of financial markets” and financially ballasting smartphone maker BlackBerry (BBRY), stock buying at Prem Watsa’s Fairfax Financial (FFH) was relatively normal in the third quarter, with six new holdings added to the portfolio, according to the latest report. Watsa also shifted some sector weightings from the previous quarter. The guru pulled back on communication services, healthcare and financial services, and increased his portfolio’s exposure to basic materials from 15.3% to 24.2%, energy from 9.5% to 16.6% and consumer cyclical from 3.6% to 6.1%.

    The total fair value of Watsa’s long portfolio of 42 stocks is $1.6 billion, with 0% quarter-over-quarter turnover.  

  • Quotes from Prem Watsa (Fairfax Financial)

  • Prem Watsa Still Optimistic About BlackBerry, Pessimistic About Economy

    As the market advances and BlackBerry (BBRY) tumbles, Fairfax Financial chairman and CEO Prem Watsa has taken the reverse position from the majority of investors: He has hedged his portfolio against a market meltdown even at the cost of tempered returns and committed sizable capital toward the tattered smartphone maker. This all continued in the third quarter, with some new developments.

    [b]Third Quarter Market Hedging  

  • Buffett of Canada, Prem Watsa’s Top Yields

    Canada’s “Warren Buffett” is Prem Watsa, founder of Fairfax Financial Holdings. His portfolio currently lists 41 stocks, three of them new, and a total value of $2.48 million with a quarter-over-quarter turnover of 2%. While Watsa typical buys massive holdings, some of his smaller stakes show top yields.

    Here are company updates on three stocks with the highest dividend yields held by Guru Prem Watsa.  

  • Prem Watsa Buying BlackBerry at Half of Book Value

    Famed investor and builder of Canada’s 47th largest company, Fairfax Financial Holdings (FFH), is branching out by purchasing a technology company. Smartphone maker BlackBerry Inc. (BBRY) announced today that Prem Watsa’s Fairfax has signed a letter of intent to pay shareholders $9 per share in cash, or about half of book value of $18 per share, to acquire the company at a total cost of $4.7 billion.

    BlackBerry has until Nov. 4 to negotiate the details of the transaction with Fairfax and shop for a better offer.  

  • Cautious 'Canadian Warren Buffett' Prem Watsa’s Portfolio Positioning for Second Half

    Prem Watsa’s foresight ahead of the financial crisis, strong long-term track record and thriving insurance conglomerate add weight to his market opinions. The founder of Fairfax Financial (TSX:FFH), a Toronto-based kindred of Warren Buffett’s Berkshire Hathaway (BRK.A)(BRK.B), has been doing and saying some interesting things heading in the second half of the year.


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User Comments

ReplyPensaman - 10 months ago
FF owns BBRY about 10.06% of outstanding shares
Communication Equipment BBRY
51,854,700 541,486 21.8%
ReplyCharles.wilton - 10 months ago

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