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James Li
James Li
Articles (1322)  | Author's Website |

Prem Watsa's Top 4 Trades in the 2nd Quarter

Canadian guru releases portfolio

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. (NYSE:GIL), increased bets on MasterCraft Boat Holdings Inc. (NASDAQ:MCFT) and NetEase Inc. (NASDAQ:NTES) and a sold-out transaction in Six Flags Entertainment Corp. (NYSE:SIX).

Watsa, an MBA graduate of the University of Western Ontario Ivey School of Business, follows Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.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%.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Six Flags

Watsa sold 625,000 shares of Six Flags, reducing the equity portfolio 0.54%. Shares averaged $19.77 during the second quarter.

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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.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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Cowboy77
Cowboy77 - 1 month ago    Report SPAM

Fairfax may be the worst stock pickers I've ever seen. Utterly clueless.

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