Watsa began his company holding in the fourth quarter of 2010, starting off with about 13.2 million shares. At the time, Resolute Forest Products was still known as AbitibiBowater, trading under the stock symbol ABH. It was not until November 2011 that the company changed its name to what it is today.
Name change or not, Watsa remained loyal to the company, growing his stake and not reducing once. Over the years, his holding blossomed to, now, much more than the 18.91 percent ownership he claimed in the third quarter of this year.
Resolute Forest Products is a large producer of newsprint, commercial printing papers, market pulp and wood products, as it operates 21 pulp and paper mills and 22 wood product facilities in the U.S., Canada and South Korea. The company’s stock is up 0.15 percent around noon, trading at the price of $12.93. Year to date, the stock’s market value has appreciated almost 10 percent.
In the third quarter, Resolute reported a decrease in adjusted EBITDA compared to not only year-over-year’s data, but also the second quarter. The company also experienced a drastic operating income decline, reporting $26 million in the quarter compared to $72 million in the third quarter of 2011.
The main contributor for the change in operating income was Resolute’s volume decline to reduce its exposure to newsprint export markets, which its fiscal release stated was “pressured by the strong U.S. dollar” (Resolute is a Canada-based company). Additionally, September’s lumber shipments dropped, combined with the company’s continuous effort to optimize its assets.
“Our cost-focused strategy allowed us to maintain attractive margins in the paper and wood products segments despite lower shipments overall,” said Richard Garneau, Resolute Forest’s president and CEO. “This is the direct result of our focus on the items we control: selling only profitable tons and maintaining world-class operational standards.”
Resolute Forest Products remains one of Watsa’s top holdings, along with Johnson & Johnson (JNJ), Research In Motion Ltd. (RIMM) and Level 3 Communications Inc. (LVLT).
Besides Watsa, other Gurus who have a holding of Resolute Forest Products include Paul Tudor Jones, Francis Chou, Donald Smith and Jeremy Grantham. (RFP: Guru Trades)
See Prem Watsa’s portfolio here. Also check out his Undervalued Stocks, Top Growth Companies and High Yield stocks.
About GuruFocus Real Time Picks
GuruFocus Real Time Picks alerts you of the stock purchases and sales that Gurus have made within the last two days. Follow your favorite Gurus closely with GuruFocus' Premium Membership! If you are not a Premium Member, we invite you for a 7-Day Free Trial.