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Prem Watsa's Fairfax Reels In International Seaways in 3rd Quarter

Canadian guru releases quarterly portfolio.

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Nov 15, 2021
Summary
  • Fairfax establishes a holding in marine transportation company.
  • Firm also sells out of Lumen Technologies.
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Prem Watsa (Trades, Portfolio), founder and chairman of Fairfax Financial Holdings Ltd. (TSX:FFH, Financial), disclosed this week that his firm’s top trades during the third quarter included a new buy in International Seaways Inc. (INSW, Financial) and the closure of its position in Lumen Technologies (LUMN, Financial).

In 1985, Watsa met

Francis Chou (Trades, Portfolio), who explained that Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio) made money using insurance float. Deciding to also utilize insurance float to build an investment portfolio, Fairfax seeks a high return on invested capital through a conservative value investment philosophy with emphasis on total returns.

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As of Sept. 30, Fairfax’s $3.11 billion equity portfolio contains 59 stocks, with 11 new positions and a turnover ratio of 1%. The top four sectors in terms of weight are financial services, technology, materials and real estate, with weights of 49.85%, 20.78%, 12.06% and 8.65%, respectively.

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International Seaways

Fairfax purchased 572,954 shares of International Seaways (

INSW, Financial), giving the position 0.37% of the total equity portfolio space. Shares averaged $17.12 during the third quarter; the stock is fairly valued based on Monday’s price-to-GF-Value ratio of 1.11.

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GuruFocus ranks the New York-based marine transportation company’s financial strength 3 out of 10 on several warning signs, which include a weak Altman Z-score of 0.71 and a cash-to-debt ratio that underperforms more than 60% of global competitors.

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Other gurus with holdings in International Seaways include Donald Smith & Co.,

Francisco Garcia Parames (Trades, Portfolio) and Azvalor Internacional FI (Trades, Portfolio).

1460351957582708736.pngLumen Technologies

Fairfax sold all 1.425 million of its shares of Lumen Technologies (

LUMN, Financial); the stock previously had a weight of 0.62% in its equity portfolio.

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Shares of Lumen averaged $12.55 during the third quarter; the stock is modestly overvalued based on Monday’s price-to-GF-Value ratio of 1.25.

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GuruFocus ranks the Monroe, Louisiana-based telecommunication carrier’s financial strength 3 out of 10 on several warning signs, which include a weak Altman Z-score of 0.52 and interest coverage and debt ratios underperforming more than 77% of global competitors.

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