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Top 5 1st Quarter Trades of Prem Watsa

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May 16, 2022
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Prem Watsa recently filed their 13F report for the first quarter of 2022, which ended on 2022-03-31.

The 13F report details which stocks were in a guru’s equity portfolio at the end of the quarter, though investors should note that these filings are limited in scope, containing only a snapshot of long positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They are not required to include international holdings, short positions or other types of investments. Still, even this limited filing can provide valuable information.

Prem Watsa (Trades, Portfolio) was born on Aug. 5, 1950. His parents were originally from the small Christian community in the southern city of Mangalore. He studied at the Indian Institute of Technology, with a major in chemical engineering. On Sept. 11, 1972, Watsa arrived in London, Ontario, with $8 in his pocket and a $600 draft toward the first year's tuition. He attended the MBA program at what later became the Ivey Business School at the University of Western Ontario. He took his first job Confederation Life in 1974. John Watson, the director of research, handed him the book, "Security Analysis." 1985: He met

Francis Chou (Trades, Portfolio), then worked as a telephone technician at Bell Canada. One day, Francis asked Prem almost casually, "Do you know how Warren Buffett (Trades, Portfolio) made his money?" Prem thought he knew the answer, but Francis pointed to something he hadn't noticed: insurance float. He met Steve Markel and set down the terms to buy Markel Financial for $5 million. 1986: Markel Financial was renamed Fairfax Financial. It means "fair, friendly acquisitions." Book value per share grew from $1.52 in 1985 to $10.5 in 1989, which then grew to $38.89 in 1995. Fairfax made a series of acquisitions, and assets reached billions. Fairfax was listed on the NYSE in 2002. It was attacked by hedge fund shorts including Jim Chanos (Trades, Portfolio) and Whitney Tilson (Trades, Portfolio). The stock price went down 40% to $57 Canadian dollars. Regarding to shorts, Prem said, "Our one major worry was that people would no longer deal with us. It never used to be that way, but now everybody looks at the stock price to get a sense in confidence in a company." Fairfax filed a lawsuit against the short-sellers in 2006. Buy CDS. "We bought our first (CDS) contract in 2003 and our last ones in December 2007. We just keep buying more and more, first five-year, then sever-year, because they were so cheap..." At one investment committee meeting where Prem asked, "What's the best idea we've got?" Francis Chou (Trades, Portfolio), who is a pretty shy guy, piped up. "Buy more credit default insurance." In the fall of 2008, Fairfax started to sell its CDS. The company made about $2 billion from those sales. Watsa removed hedges in 2009. Ninety percent of his portfolio was hedged as of September 2011.

As of the latest 13F report, the guru’s equity portfolio contained 66 stocks valued at a total of $3,010,000,000. The top holdings were ATCO(48.76%), RFP(13.09%), and BB(11.56%).

According to GuruFocus data, these were

Prem Watsa (Trades, Portfolio)’s top five trades of the quarter.

Atlas Corp


During the quarter,

Prem Watsa (Trades, Portfolio) bought 25,678,021 shares of NYSE:ATCO for a total holding of 125,715,696. The trade had a 10.2% impact on the equity portfolio. During the quarter, the stock traded for an average price of $13.32.

On 05/16/2022, Atlas Corp traded for a price of $12.8 per share and a market cap of $3,165,277,000. The stock has returned -2.69% over the past year.

GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 7 out of 10.

In terms of valuation, Atlas Corp has a price-earnings ratio of 10.05, a price-book ratio of 0.90, a price-earnings-to-growth (PEG) ratio of 1.50, a EV-to-Ebitda ratio of 9.24 and a price-sales ratio of 2.06.

The price-to-GF Value ratio is 1.06, earning the stock a GF Value rank of 5.

Crescent Capital BDC Inc


Prem Watsa (Trades, Portfolio) reduced their investment in NAS:CCAP by 847,262 shares. The trade had a 0.48% impact on the equity portfolio. During the quarter, the stock traded for an average price of $17.87.

On 05/16/2022, Crescent Capital BDC Inc traded for a price of $17.44 per share and a market cap of $538,493,000. The stock has returned 5.63% over the past year.

GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10.

In terms of valuation, Crescent Capital BDC Inc has a price-earnings ratio of 6.45, a price-book ratio of 0.83 and a price-sales ratio of 6.04.

Tenneco Inc


The guru established a new position worth 358,100 shares in NYSE:TEN, giving the stock a 0.22% weight in the equity portfolio. Shares traded for an average price of $14.26 during the quarter.

On 05/16/2022, Tenneco Inc traded for a price of $15.91 per share and a market cap of $1,321,574,000. The stock has returned 27.14% over the past year.

GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rating of 7 out of 10.

In terms of valuation, Tenneco Inc has a price-book ratio of 24.92, a EV-to-Ebitda ratio of 5.64 and a price-sales ratio of 0.08.

The price-to-GF Value ratio is 1.34, earning the stock a GF Value rank of 3.

Activision Blizzard Inc


The guru established a new position worth 75,400 shares in NAS:ATVI, giving the stock a 0.2% weight in the equity portfolio. Shares traded for an average price of $77.76 during the quarter.

On 05/16/2022, Activision Blizzard Inc traded for a price of $77.62 per share and a market cap of $60,650,548,000. The stock has returned -16.28% over the past year.

GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 9 out of 10.

In terms of valuation, Activision Blizzard Inc has a price-earnings ratio of 24.55, a price-book ratio of 3.41, a price-earnings-to-growth (PEG) ratio of 4.16, a EV-to-Ebitda ratio of 15.81 and a price-sales ratio of 7.32.

The price-to-GF Value ratio is 1.02, earning the stock a GF Value rank of 6.

Nuance Communications Inc


The guru sold out of their 77,000-share investment in NAS:NUAN. Previously, the stock had a 0.14% weight in the equity portfolio. Shares traded for an average price of $55.3 during the quarter.

On 05/16/2022, Nuance Communications Inc traded for a price of $55.99 per share and a market cap of $17,882,407,000. The stock has returned 33.06% over the past year.

There is insufficient data to calculate the stock’s financial strength and profitability ratings.

In terms of valuation, Nuance Communications Inc has a price-book ratio of 11.33, a EV-to-Ebitda ratio of 177.79 and a price-sales ratio of 13.03.


Please note, the numbers and facts quoted are as of the writing of this article and may not factor in the latest trading data or company announcements.

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