Prem Watsa

Prem Watsa

Last Update: 02-13-2017

Number of Stocks: 29
Number of New Stocks: 4

Total Value: $1,168 Mil
Q/Q Turnover: 9%

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

Prem Watsa Watch

  • Prem Watsa’s Place in the Benjamin Graham Universe

    “Since we began paying dividends in 2001, we have paid cumulative dividends per share of $93. Hope you have used them wisely!” – Prem Watsa (Trades, Portfolio), in the 2016 Fairfax Financial Letter to Shareholders


  • Prem Watsa Ends Period of Shorting Market With $1.2 Billion Loss

    One of the premier employers of Buffett-style investing, Canada’s Prem Watsa (Trades, Portfolio), posted $1.20 billion in investing losses Thursday after closing short positions against market indexes when the election of Donald Trump pivoted his outlook from cautious to bullish.

    Watsa’s Fairfax Financial realized $2.681 billion in losses on its equity hedges and short equity exposures in the fourth quarter, with $2.67 billion in unrealized gains, leading to a net loss of $347.3 million in the positions. Combined with net bond losses totaling $781 million, $153 million in net gains on long equity positions and other investments, he netted a loss of $1.07 billion.


  • Francis Chou Adds to Valeant, Trims Sears in 4th Quarter

    Francis Chou (Trades, Portfolio), founder of Chou Associates Management, started an investment club in 1981 with six of his fellow telephone repairman. Throughout the next five years, Chou worked as a retail analyst at GW Asset Management where he met “Canadian Warren Buffett (Trades, Portfolio)” Prem Watsa (Trades, Portfolio). The successful guru established his flagship fund, the Chou Associate Fund, in 1986. On an annual basis, Chou’s fund outperformed the Standard & Poor’s 500 index benchmark by approximately 7% on average from 1986 to 2010.

    Chou invests in companies with a value-oriented approach involving a detailed analysis of the strengths of companies, especially in regard to the balance sheet, cash flow characteristics, profitability, industry position, special strengths, future growth potential and management ability. During fourth-quarter 2016, the Chou Associates Fund manager expanded his position in Valeant Pharmaceuticals International Inc. (NYSE:VRX) and trimmed his position in Sears Holdings Inc. (NASDAQ:SHLD).


  • Prem Watsa Significantly Increases US Bancorp, Buys 4 Stocks

    Prem Watsa (Trades, Portfolio) devoted most of his fourth-quarter portfolio activity to building onto holdings he already owned, starting only four small new stock positions, the Fairfax Financial CEO reported Monday.

    Watsa’s meager stock buying seemed to be at odds with the upbeat outlook for the economy under a Donald Trump presidency he gave in December. Policies that reduce taxes, bureaucracy and regulation while boosting infrastructure spending would spur significant growth, Watsa, said.  

  • IBM Continues Strong Earnings Growth for Full-Year 2016

    On Jan. 19, International Business Machines Corp. (NYSE:IBM) reported net income of $4.5 billion and diluted earnings per share of $4.73 based on U.S. generally accepted accounting principles for fourth-quarter 2016. These values outperformed fourth-quarter 2015 values, with net income and EPS increasing 1% year over year and 3% year over year respectively. The higher net incomes resulted from higher IBM Cloud revenues.

    Brief summary of earnings report


  • Recent Declines Are Opportunity to Buy Fairfax Financial Holdings

    Shares in Warren Buffett (Trades, Portfolio)’s insurance and manufacturing conglomerate Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) have been on a staggering run over the past six months.

    Since the beginning of July 2016, the shares have added nearly 11%, outperforming the Standard & Poor's 500 by around 5.5%. Unfortunately, as the shares now trade at $161 and change, they look relatively expensive compared to the conglomerates' estimated book value of around $130, which may put some investors off.


  • 'Canada's Warren Buffett' Prem Watsa Praises Trump, Forecasts Stock Pickers' Market

    Prem Watsa (Trades, Portfolio) embarked on his “largest and best” acquisition in his company’s 31-year history this week, encouraged by what he views as a pro-business environment ushered in by the election of President-elect Donald Trump.

    Watsa is known as the "Warren Buffett (Trades, Portfolio) of Canada" because he operates a giant insurance conglomerate, invests the float according to value principles and allows his acquired companies to run on a decentralized basis. After years of being cautious of financial markets, Watsa poured $54 per share, or $4.9 billion, into his company, Fairfax Financials (TSX:FFH)’s “transformative” acquisition of global property and casualty reinsurer Allied World Assurance Co. (NYSE:AWH).


  • 4 Corporate Bonds That Yield Over 3%

    The bond market has completely changed in the last few weeks. A bond buyer can now find hundreds of blue-chip fixed income products with years. With Donald Trump's election, the bond market took a dive (bond prices dropped and yields rose).

    First though, how does a bond work? Bonds are sold in $1,000 increments and pay a coupon twice a year. Depending on the size of the coupon, the bond will rise or fall in price so the total return matches prevailing interest rates. If you hold a bond until maturity, you will receive your principal and income and will know the payments to the penny.


  • Prem Watsa Reduces Defensive Equity Hedges on Trump Election

    Prem Watsa (Trades, Portfolio) announced today that the results of the U.S. election had mitigated his concerns about the economy that prompted his decision to fully hedge his equity portfolio for years. In a press release, the Fairfax Financial Holdings founder said he reduced the hedges and that "there is the potential for a longer term rally in U.S equity markets that reduces the need for the capital preservation protection of equity hedging."

    Just last week, Watsa had remarked in his third-quarter financial results that he remained hedged and cautious.


  • Canadian Warren Buffett Prem Watsa Bought 2 Stocks

    Frequently dubbed the “Warren Buffett (Trades, Portfolio) of Canada,” Prem Watsa (Trades, Portfolio) executed two trades in the third quarter, his exclusive portfolio changes.

    The new positions, Virgina America (NASDAQ:VA) and NetEase Inc. (NASDAQ:NTES) are among the smallest ten of his 29 long equity positions. His top three positions, BlackBerry Ltd. (NASDAQ:BBRY), IBM Corp. (NYSE:IBM) and Kennedy Wilson Holdings Inc. (NYSE:RFP), dominate more than 70% of his portfolio. The portfolio, valued at $1.1 billion, is part of his investment vehicle, insurance conglomerate Fairfax Financial Holdings (TSX:FFH), whose structure and historical book value growth loosely parallel Warren Buffett (Trades, Portfolio)’s $396 billion behemoth Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B).


  • Watsa's Fairfax Sees Profits Wilt on Investment Losses

    Prem Watsa (Trades, Portfolio)’s Fairfax Financial Holdings (TSX:FFH)(FRFHF) hosted a conference call to discuss its third-quarter results Friday morning. The results were released at market close Thursday.

    The Toronto-based company said in its report that in response to the appreciation in equity market valuations and uncertainty in the economy, it has hedged its equity investment exposure. As of Sept. 30, equity hedges represented 112.7% of the company’s equity and equity-related holdings.


  • 17 Questions With Scott Philips

    How did you get started investing?

    When I was around eight years old, I played little league baseball and learned that certain baseball cards could become more valuable over time. That idea had instant appeal. So I would spend my allowance on baseball cards, and hunting through all of them for a quality player was part of the fun. Soon after, I added early edition comic books, and I accumulated boxes of them over time. This made the occasions I got dragged as a child to an antique shop or market more tolerable. I rifled through boxes of discarded baseball cards and comic books looking for a hidden gem. The idea of buying something discarded for a few cents that could be worth more in the future was an exciting discovery. Stock investing came later, right after college. I was set on law school, but my future father-in-law advised me that “you cannot opt out of the money game in life” and so he reasoned that spending at least a year or two in the financial world would create a lifelong skill. I agreed, and was very fortunate to get hired in the research department of Robinson-Humphrey in Atlanta. It was an amazing time and learning experience. This was in 1999, at the height of the tech bubble, and I was reading "Security Analysis, The Madness of Crowds," and had just met Sir John Templeton (who was shorting tech stocks at the time). In the dotcom bust, I was a junior analyst writing an earnings note on a carpet tile manufacturer called Interface, and realized that one division in the company was depressing the share price, and that on a sum of the parts basis, the business was potentially worth multiples of its share price at the time. It was a simple insight, but powerful. The stock eventually rose sevenfold during the next several years. However, long before that I knew that I was forever hooked on investing.


  • Interview With George Athanassakos

    I had the pleasure of having a brief conversation with George Athanassakos, value investor and director of the Ben Graham Center for Value Investing, as he was overseas on business. We talked about his favorite companies, what he looks for in a company and his favorite books, as well as his disciplined appropach.


  • Prem Watsa Increases Stake in Canadian Media Company to 27%

    Investor Prem Watsa (Trades, Portfolio) bought a large chunk of Canada-based media company and owner of Canada’s largest daily newspaper Torstar Corp. (TSX:TS.B) that increased his ownership to 27.4% of the company, he reported Thursday.

    Watsa, whose investment vehicle Fairfax Financial (TSX:FFH) often draws comparisons to Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), acquired 3,539,400 of Torstar’s Class B shares, equivalent to 4.9% of those outstanding. Watsa acquired the shares in the midst of their 40% slide this year from a price of $2.78. He purchased 939,400 of the shares on June 3 at a price of $1.77, and 2.6 million Thursday when the price dropped to $1.40.


  • Prem Watsa Picks 4 Tiny New Positions in 2nd Quarter

    Prem Watsa (Trades, Portfolio) who runs the insurance conglomerate Fairfax Financial added four very small positions to his portfolio in the second quarter, he disclosed Friday.

    Watsa has a portfolio valued at $1.03 billion with 27 positions, though BlackBerry (NASDAQ:BBRY) makes up a full third of it.


  • Prem Watsa Boosts Money-Losing Hedges on Continued Worry About Market Crash

    Canada’s best Warren Buffett (Trades, Portfolio) analog, Prem Watsa (Trades, Portfolio), spoke this week on his “concern about the financial markets” that caused him to increase his hedges on his common stocks even as he posted millions in losses in the portfolio for the first half of 2016.

    Watsa, founder of insurance conglomerate Fairfax Financial (TSX:FFH), increased his equity hedge ratio to 115% as of June 30, from 88.1% on Dec. 31. A financial statement attributed the increase to added short positions in stocks and stock index total return swaps, along with unrealized depreciation of equity and equity-related holdings.


  • Prem Watsa Buys ICICI Bank, Leucadia National

    Prem Watsa (Trades, Portfolio) manages a portfolio of 29 stocks with total value of $1.126 billion. The following are his most heavily weighted trades of the first quarter:

    The guru bought 1,500,000 shares in ICICI Bank Ltd ADR (IBN) with an impact of 0.95% on the portfolio.


  • This Company Was Prepared for the Brexit

    As the Dow Jones Industrial Average fell 610 points (3.39%) after the Brexit announcement, Fairfax Financial (FFH) was up 1.64% in the U.S. market and 3.55% in the Canadian market. If the market continues its turbulence, I would expect more of the same from the company led by value investing guru Prem Watsa.

    Although Watsa comes from the Benjamin Graham school of thought on value investing, he also prides himself on having his company excel through times of crisis such as the financial crisis of 2007-2009. Fairfax Financial is an $11.9 billion market cap insurance company headquartered in Toronto with operations throughout the world. Following the methods of Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.A, BRK.B), Watsa invests the company’s float in equities using value investing principles. For insurance companies, the float is the amount of money on hand at any given moment that an insurer has collected in insurance premiums but has not paid out in claims. What makes Fairfax Financial different is that Watsa will hedge against catastrophic events that he foresees.


  • BlackBerry May Have Finally Turned the Corner

    I start this note with a quote from the English economist A.C. Pigou: "The error of optimism dies in the crisis, but in dying it gives birth to an error of pessimism. This new error is born, not an infant, but a giant."

    Blackberry logo


  • Ray Dalio Sells Viacom and Exelon, Trims Apple and Pepsi

    Ray Dalio (Trades, Portfolio) founded Greenwich, Connecticut-based hedge fund Bridgewater Associates in 1975. Now it has more than $165 billion under management. During the first quarter he sold shares in the following stocks:

    The guru closed his stake in BCE Inc. (BCE) with an impact of -0.39% on the portfolio.


  • High Dividend Yield Companies Attract Gurus

    The All-in-One Screener listed Hewlett-Packard Co. (NYSE:HPQ) and International Business Machines Corp. (NYSE:IBM) as two high dividend yield computer hardware stocks. Due to these high dividend yields, many gurus have very large positions in these stocks.

    Screening for big dividends


  • Prem Watsa, Who Fears Once-in-a-Century Financial Storm, Buys 7 New Stocks

    Prem Watsa (Trades, Portfolio) has hedged his portfolio for several years, which has muted his returns but protected his investors from the possibility of a once-in-a-century economic disaster.

    From 2011 to 2015, Watsa’s Fairfax Financial Holdings (TSX:FFH), an insurance conglomerate and investment vehicle styled like Buffett’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), had an average total return on investments of 3%, its lowest period to date because of hedges. Since its founding, Fairfax’s book value increased at a compounded rate of 20.4% and its stock at 19.4% per year.


  • Helmerich & Payne, MasterCard Have Growing Dividend Yields

    Thanks to GuruFocus’ All-in-One Screener, I want to highlight stocks that have a growing dividend yield with sustainable payout ratio. This sustainability is confirmed by long-term company profitability and a very strong financial situation.

    Helmerich & Payne Inc. (HP) has a dividend yield that has grown by 81% over the past five years. The yield is now 4.81% with a payout ratio of 127%. The average ROA of the last five years has been 10.84% and the average ROE during the period was 15.8%.


  • The Art of Piggybacking

    Piggybacking has been a topic that has been discussed frequently these days. Fellow writer the Science of Hitting’s recent article is quite illuminating and definitely worth reading. Inspired by him, I wrote this article to share my observations and thoughts on this subject.

    When I first started investing, I piggybacked many gurus and very frequently. I remember the days when I saw David Einhorn (Trades, Portfolio) or Mason Hawkins (Trades, Portfolio) initiating a position in a stock, and within a few hours I became an owner that the same stock. When I saw Exco (NYSE:XCO) was bought by Prem Watsa (Trades, Portfolio), Howard Marks (Trades, Portfolio) and Wilbur Ross (Trades, Portfolio), I put a good amount of money in it without even finishing up reading the 10-K.


  • Prem Watsa Buys 8 Million Shares of Exco Resources

    Guru Prem Watsa (Trades, Portfolio) added 8 million shares of Exco Resources Inc. (NYSE:XCO) to his portfolio in the fourth quarter.

    Exco Resources is an independent oil and natural gas company that was originally incorporated in October 1955. Exco engages in the exploitation, exploration, acquisition, development and production of onshore U.S. oil and natural gas properties with a focus on shale resource plays. The company's principal operations are conducted in certain key U.S. oil and natural gas areas including Texas, Louisiana and the Appalachia region.


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