Prem Watsa (Trades, Portfolio), the founder and chairman of Fairfax Financial Holdings Ltd. TSX:FFH, disclosed this week that his top four trades during the second quarter included a new holding in Gildan Activewear Inc. GIL, increased bets on MasterCraft Boat Holdings Inc. MCFT and NetEase Inc. NTES and a sold-out transaction in Six Flags Entertainment Corp. SIX.
Watsa, an MBA graduate of the University of Western Ontario Ivey School of Business, follows Berkshire Hathaway Inc. BRK.ABRK.B CEO Warren Buffett (Trades, Portfolio)'s idea of insurance float investing. As of the quarter-end, the investor's $1.59 billion equity portfolio contains 59 stocks, with seven new holdings and a turnover of 2%.
Fairfax's equity portfolio contains a 53.15% weight in financial services, followed by an 18.02% weight in technology and 12.85% weight in real estate.
Gildan
Watsa purchased 730,000 shares of Gildan, giving the position 0.71% weight in the equity portfolio. Shares averaged $14.74 during the second quarter.
The Montreal-based company designs and manufactures T-shirts, underwear, socks and hosiery, primarily focusing on blank T-shirts to wholesalers and printers. GuruFocus ranks Gildan's financial strength 4 out of 10 on the back of debt ratios underperforming over 72% of global competitors and a moderately weak Altman Z-score of 2.68.
MasterCraft
Watsa purchased 269,132 shares of MasterCraft, increasing the stake 16.83% and the equity portfolio 0.32%. Shares averaged $12.46 during the second quarter.
The Vonore, Tennessee-based company designs and produces performance sport and outboard boats. GuruFocus ranks the company's financial strength 5 out of 10: Although the interest coverage ratio outperforms 63.27% of global competitors, MasterCraft has a moderately weak Altman Z-score of 2.30 and a debt-to-equity ratio that underperforms 92.61% of global peers.
NetEase
Watsa purchased 7,500 shares of NetEase, increasing the holding 93.75% and the equity portfolio 0.20%. Shares averaged $374.75 during the second quarter.
GuruFocus ranks the Chinese interactive media company's profitability 10 out of 10, driven by a five-star business predictability rank and an operating margin that outperforms 86.51% of global competitors.
Six Flags
Watsa sold 625,000 shares of Six Flags, reducing the equity portfolio 0.54%. Shares averaged $19.77 during the second quarter.
The Grand Prairie, Texas-based company owns and operates over 25 theme parks around North America. GuruFocus ranks Six Flags' financial strength 2 out of 10 on several warning signs, including interest coverage and debt-to-Ebitda ratios that underperform over 80% of global competitors. The website also warns that Six Flags' long-term debt has increased by $577.689 million over the past three years.
Disclosure: No positions.
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