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Fairfax Financial Holdings Buys Sandridge Energy Inc, Zenith National Insurance Corp., International Coal Group Inc., Sells Gannett Co. Inc., Intel Corp., Office Depot Inc.

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Prem Watsa of Fairfax Financial Holdings took the advantages of the financial crisis, and double his company’s book value. He is a great investor. This is the Q4 portfolio update of Fairfax Financial Holdings, Inc.

Prem Watsa owns 38 stocks with a total value of $3.7 billion. These are the details of the buys and sells.

For the details of Prem Watsa's stock buys and sells, go to http://www.gurufocus.com/StockBuy.php?GuruName=Prem+Watsa

This is the sector weightings of his portfolio:

Financials 27.1%
Consumer Goods 14.8%
Industrials 13.9%
Technology 13.6%
Health Care 12.2%
Telecommunications 9.9%
Basic Materials 4.7%
Consumer Services 2.3%
Oil & Gas 1.7%


These are the top 5 holdings of Prem Watsa

  1. Wells Fargo & Company (WFC) - 20,043,700 shares, 14.67% of the total portfolio
  2. Dell Inc. (DELL) - 34,763,489 shares, 13.55% of the total portfolio
  3. Johnson & Johnson (JNJ) - 6,884,300 shares, 12.04% of the total portfolio
  4. General Electric Company (GE) - 26,597,770 shares, 10.94% of the total portfolio
  5. U.S. Bancorp (USB) - 15,857,400 shares, 9.69% of the total portfolio


Added: Sandridge Energy Inc (SD)

Prem Watsa added to his holdings in Sandridge Energy Inc by 640.31%. His purchase prices were between $8.21 and $13.84, with an estimated average price of $10.35. The impact to his portfolio due to this purchase was 1.44%. His holdings were 6,526,600 shares as of 12/31/2009.

SandRidge Energy, Inc. is an oil and natural gas company headquartered in Oklahoma City with its principal focus on exploration and production. Sandridge Energy Inc has a market cap of $1.74 billion; its shares were traded at around $8.45 with a P/E ratio of 12.2 and P/S ratio of 1.5.

Added: Zenith National Insurance Corp. (ZNT)

Prem Watsa added to his holdings in Zenith National Insurance Corp. by 121.08%. His purchase prices were between $27.62 and $32, with an estimated average price of $29.61. The impact to his portfolio due to this purchase was 0.97%. His holdings were 2,191,100 shares as of 12/31/2009.

Zenith National Insurance Corp. is a holding company. Zenith National Insurance Corp. has a market cap of $1.05 billion; its shares were traded at around $28.05 with a P/E ratio of 9.9 and P/S ratio of 1.7. The dividend yield of Zenith National Insurance Corp. stocks is 7.3%. Zenith National Insurance Corp. had an annual average earning growth of 30.4% over the past 5 years.

Added: International Coal Group Inc. (ICO)

Prem Watsa added to his holdings in International Coal Group Inc. by 23.58%. His purchase prices were between $3.59 and $5.08, with an estimated average price of $4.29. The impact to his portfolio due to this purchase was 0.9%. His holdings were 45,155,588 shares as of 12/31/2009.

ICG is a producer of coal in Northern and Central Appalachia and the Illinois Basin. International Coal Group Inc. has a market cap of $568.8 million; its shares were traded at around $3.69 with a P/E ratio of 16.8 and P/S ratio of 0.5.

Added: Frontier Commun Cp (FTR)

Prem Watsa added to his holdings in Frontier Commun Cp by 19.41%. His purchase prices were between $7.12 and $8.46, with an estimated average price of $7.59. The impact to his portfolio due to this purchase was 0.64%. His holdings were 18,620,000 shares as of 12/31/2009.

FRONTIER COMMUNICATIONS CORPORATION, formerly Citizens Communications Company, is a full-service communications provider and one of the largest rural local exchange telephone companies in the country. Frontier Commun Cp has a market cap of $2.37 billion; its shares were traded at around $7.6 with a P/E ratio of 14.7 and P/S ratio of 1.1. The dividend yield of Frontier Commun Cp stocks is 13.1%.

Reduced: Burlington Northern Santa Fe Corp. (BNI)

Prem Watsa reduced to his holdings in Burlington Northern Santa Fe Corp. by 99.81%. His sale prices were between $75.32 and $98.95, with an estimated average price of $92.79. The impact to his portfolio due to this sale was -0.01%. Prem Watsa still held 4,000 shares as of 12/31/2009.

Burlington North/Santa Fe, through its subsidiary The Burlington Northern and Santa Fe Railway Company, operates one of the largest railroad networks in North America. Burlington Northern Santa Fe Corp. has a market cap of $34.14 billion; its shares were traded at around $100.23 with a P/E ratio of 21.3 and P/S ratio of 2.4. The dividend yield of Burlington Northern Santa Fe Corp. stocks is 1.6%. Burlington Northern Santa Fe Corp. had an annual average earning growth of 8.1% over the past 10 years. GuruFocus rated Burlington Northern Santa Fe Corp. the business predictability rank of 2-star.

Reduced: Leucadia National Corp. (LUK)

Prem Watsa reduced to his holdings in Leucadia National Corp. by 40.56%. His sale prices were between $21.36 and $24.94, with an estimated average price of $23.17. The impact to his portfolio due to this sale was -0.11%. Prem Watsa still held 401,800 shares as of 12/31/2009.

LEUCADIA NATL is a diversified financial services holding companyprincipally engaged in personal and commercial lines of property and casualty insurance, life insurance, banking and lending and manufacturing. Leucadia National Corp. has a market cap of $5.37 billion; its shares were traded at around $22.08 with and P/S ratio of 5.1.

Sold Out: Intel Corp. (INTC)

Prem Watsa sold out his holdings in Intel Corp.. His sale prices were between $18.5 and $20.59, with an estimated average price of $19.69.

Intel Corporation, one of the world's largest semiconductor chip maker, supplies the computing and communications industries with chips, boards, and systems building blocks that are integral to computers, servers, and networking and communications products. Intel Corp. has a market cap of $110.77 billion; its shares were traded at around $20.06 with a P/E ratio of 19.7 and P/S ratio of 3.1. The dividend yield of Intel Corp. stocks is 3.1%. Intel Corp. had an annual average earning growth of 0.4% over the past 10 years.

Sold Out: Office Depot Inc. (ODP)

Prem Watsa sold out his holdings in Office Depot Inc.. His sale prices were between $5.75 and $7.52, with an estimated average price of $6.61.

Office Depot, Inc., together with its subsidiaries, is the one of the largest suppliers of office products and services in the world. Office Depot Inc. has a market cap of $1.6 billion; its shares were traded at around $5.82 with and P/S ratio of 0.1. Office Depot Inc. had an annual average earning growth of 5.5% over the past 10 years.

Sold Out: Gannett Co. Inc. (GCI)

Prem Watsa sold out his holdings in Gannett Co. Inc.. His sale prices were between $9.76 and $15.63, with an estimated average price of $12.12.

Gannett Co., Inc. is an international news and information company that publishes daily newspapers in the USA, including USA TODAY, the nation'slargest-selling daily newspaper. Gannett Co. Inc. has a market cap of $3.36 billion; its shares were traded at around $14.21 with a P/E ratio of 7.7 and P/S ratio of 0.6. The dividend yield of Gannett Co. Inc. stocks is 1.2%. Gannett Co. Inc. had an annual average earning growth of 4.9% over the past 10 years.

Sold Out: Viacom Inc. (VIA-B)

Prem Watsa sold out his holdings in Viacom Inc.. His sale prices were between $27.42 and $31.39, with an estimated average price of $29.65.

Viacom is a global entertainment content company whose family of prominent and respected brands includes the multiplatform properties of MTV Networks, BET Networks, Paramount Pictures, Paramount Home Entertainment and DreamWorks. Viacom Inc. has a market cap of $15.71 billion; its shares were traded at around $28.33 with a P/E ratio of 11.8 and P/S ratio of 1.1.


Rating: 3.1/5 (16 votes)

Comments

kfh227
Kfh227 premium member - 4 years ago


Zenith National Insurance Corp. (ZNT)

Well this kinda stinks. I wanted to read up on this one. Did some reading on it and got excited. Then saw that it up today almost 40% becasue it is being sold.

Well, read the recent 10-K. It took about 10 minutes for me to realize that this is a shareholder company that is well run. I'm sadenned to see this opportunity disappear.
kbodawala
Kbodawala - 4 years ago
KHF227,

This is a great run company the problem is they along with the industry faced tremendous head winds with higher medical costs inflation and a slow down in the economy(lower jobs=lower premiums). But through it all they maintained underwriting discipline and did not try to grow thru market share gains but maintained a focus on profitable underwriting. The problem is they were not excellent investors like Buffet or Watsa so their float was invested at the risk free rate of treasuries. Now that Watsa has hold of their investments they should continue to underwrite profitably and their returns on capital will be greater due to the funds being in the hands of a master investor.

By the way I speculated back in 2008 that this one was going to be on FairFax buy list once premiums started to firm up. I was right on that score. See my best ideas for 2008 tread.
kfh227
Kfh227 premium member - 4 years ago
Good call.

Oh, the buyout ... that was Fairfax buying out the entire company.
kfh227
Kfh227 premium member - 4 years ago
kbodawala,

Of all the insurance companies out there, what made you think it would be on the Fairfax list of companies to buy? Kinda curious is all.
kbodawala
Kbodawala - 4 years ago
Well because the company is well run so this would appeal to any value investor. Since, Berkshire already had a presence in California and owned a subsidiary which operated in California it was not likely to bid on the company. Also Berkshire had been a stock holder and sold in 2005. Knowing FairFax had no presence in California and had just made a windfall on derivatives it was a logical choice. Also noting Stanley Zax age it was a good chance that he would be agreeable to selling soon. Mr. Zax founded the company in the 70's and if not for his advanced age this deal would never be done. I think Mr. Watsa and his team feel that they can allocate the float better then Mr. Zax team which has largely been very conservative. But Mr. Zax has created a corporate culture which values profit over market share.This culture plays into Mr. Watsa's philosophy. The combination of Mr. Zax operations and Mr. Watsa's investments will allow Zenith to grow book value faster then all of their competitors. Which will allow them to me more competitive in pricing policies.

If you are looking for another well run insurance company look into Saftey Insurance (SAFT), its an auto insurer that is based in Mass. They are currently selling below book value and have a decent dividend.

Auto insurance is very competitive but this company has a small niche in the whole sale auto underwriting. I haven't been keeping up with whats new with the company but I think you can research and come to your own conclusions. Their investments are also very conservative and earning returns lower then what they could with a good capital allocator. They have operated profitably in the past.

fk
Fk - 4 years ago
Nice work with ZNT kbodawala.

What happens to your ZNT holdings after the buyout is complete?

I wonder how auto insurers are affected by the Toyota recalls on those gas pedal problems. My mom's friend had a camry that was in a fender bender recently, no one seriously hurt (directly due to gas pedal problem). But toyota refused to pay the damages on that accident, so the insurance companies are covering it. I wonder if they get enough cases they will file a class action suit against toyota?

This is one thing that always made me nervous about investing in insurance companies, even Berkshire. You never know what kind of freak accident can come along and wipe them out. I remember reading one of Prem Watsa's interviews talking about early days with Fairfax where they came close to being wiped out.
Cowboy77
Cowboy77 - 4 years ago
This is one that I let get away. Meant to buy on Monday when I saw Watsa was buying more but left with the family on vacation and never got around to it. Saw that it jumped 30% and kicked myself. I figured Watsa was making a run at the company but thought I had more time. Oh well, can't win them all. Next!!

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