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‘Warren Buffett’ of Canada Prem Watsa Resolute - Paper, Pulp and Peers

April 02, 2013 | About:
Sally Jones

Sally Jones

49 followers
Compared to its paper-making peers, Resolute Forest Products Inc. (RFP) is still the smallest and the cheapest stock price for a paper company, and a favorite of Guru Prem Watsa, a mega shareholder.

Headquartered in Montreal, Canada, Resolute Forest Products Inc. calls itself a global leader in the forest products industry including newsprint, commercial printing specialty papers, market pulp and wood products. The company owns or operates over 40 pulp and paper mills and wood products facilities in the United States, Canada and South Korea, and sells its products in 90 countries.

Billionaire Prem Watsa, founder of Fairfax Financial Holdings, has earned the prestigious moniker of “the Warren Buffett of Canada.” Watsa owns 24,776,519 shares of Resolute Forest Products Inc. (RFP), with a portfolio weighting of 13.1%. Resolute Forest shares are traded at around $16.07 with a P/E ratio of 55.9 and P/S ratio of 0.4.

His holding history:



With a market cap of $1.52 billion, Montreal’s Resolute Forest Products is especially geared to documenting sustainability practices. The company’s 2012 Annual Report describes a company still emerging from credit protection.

Comment Dites Vous AbitibiBowater?

Filing for creditor protections in the U.S and Canada in 2009, with a debt of approximately USD6 billion, the company, then named “AbitibiBowater,” won court approval to finance restructuring. The company emerged from creditor protection in December 2010, and changed its operating name from AbitibiBowater to Resolute Forest Products about a year later.

Resolute Forest Products generates revenue per category, as follows: newsprint for 36%, specialty papers for 25%, market pulp for 18%, wood products for 11% and coated papers for 10%. These products combined generated 2012 total sales at $4.5 billion, with an adjusted EBITDA of $3.86 billion. Net cash provided by operating activities is listed at $2.66 billion.

Comparing Paper and Pulp Peers

Still the smallest company and the cheapest stock price, Montreal’s Resolute Forest Products has a market cap of $1.52 billion. International Paper (IP), with a market cap of $20.48 billion, makes industrial packaging, printing papers and consumer packaging, and is the largest manufacturer of container board in the U.S. Weyerhaeuser Co. (WY), with a market cap of $17.04 billion, trades in pulp and timber, and grows and harvests trees, builds homes and makes a range of forest products. Sonoco Products Company (SON), with a market cap of $3.51 billion, makes industrial and packaging products.

Today’s share prices:

International Paper (IP) $46.31

Sonoco Products Company (SON) $34.59

Weyerhaeuser Co. (WY) $31.33

Resolute Forest Products Inc. (RFP) $16.07

In the same year Resolute was emerging from credit protection, 2010, the company joined with Greenpeace and other organizations to become a founding member of the Canadian Boreal Forest Agreement. The group formalized an agreement to protect the diversity of ecosystems and wildlife within the Boreal region.

In his 2012 message to shareholders, Resolute’s Richard Garneau, president and CEO, stated, "We work hard to integrate sustainability into the way we do business because we believe this approach brings value to our customers, our shareholders, our employees and the communities where we live and work."

In 2012 Resolute Forest Products reported progress on its key sustainability commitments, including the areas of carbon management, fiber sourcing, forest certification, health and safety and product stewardship that involves using less fiber and fewer chemicals than competitive papers. The company has also developed and published a formal policy on First Nations relations with Canada’s indigenous tribes.

According to CEO Garneau, "Resolute recognizes that focusing on sustainability is good business. Our decision to produce a report combining financial and sustainability performance demonstrates our commitment to balancing environmental, social and economic priorities.”

“Canada’s Warren Buffett,” Prem Watsa’s top buys, sells and holdings:



About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 4.0/5 (5 votes)

Comments

kfh227
Kfh227 premium member - 1 year ago
Prem bought more. I own some. And i still don't fully understand Prem's reasoning.

Please leave your comment:


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