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Dianne Tordillo
Dianne Tordillo
Articles (179)  | Author's Website |

Prem Watsa’s Q3 Portfolio Updates: Three New Buys were NXY, FSIN, EDU

Canadian value investor Prem Watsa of Fairfax Financial Holdings reported his third quarter portfolio updates per the earnings season, which consisted of 10 total transactions: three new buys, two shareholding additions, three reductions and two complete sells of all his shares of companies.

As of the end of the third quarter, Watsa had a total of 42 stocks in his portfolio, a value of $1.85 billion, and a quarter-over-quarter turnover rate of 11%.

Currently, his top five holdings are:

1. Johnson & Johnson (JNJ) representing 22.2% of his portfolio, which is 0.22% of shares outstanding.

2. Research in Motion Ltd. (RIMM) representing 21.1% of his portfolio, which is 9.89% of shares outstanding.

3. Level 3 Communications Inc. (LVLT) representing 16.1% of his portfolio, which is 5.96% of shares outstanding.

4. Resolute Forest Products Inc. (RFP) representing 13.3% of his portfolio, which is 19.11% of shares outstanding.

5. U.S. Bancorp (NYSE:USB) representing 5.8% of his portfolio, which is 0.16% of shares outstanding.

Technology, financials and health care are the leading sectors represented in his portfolio. His complete sector weightings are as follows:

Technology 25.90%
Financials 24%
Health Care 22.60%
Telecom 21.60%
Consumer Services 3.20%
Oil & Gas 2%
Consumer Goods 0.40%
Industrials 0.40%

Among all of his third quarter updates, the transactions that created the most impact to his portfolio were:

1. His 93.14% increase of his current stake of the company, Research In Motion Ltd. (RIMM), which impacted his portfolio by 10.18%

2. His 99.37% reduction of his current stake of the company, USG Corp. (NYSE:USG), which impacted his portfolio by 6.76%.

3. His 30.03% reduction of his current state of the company, US Bancorp (NYSE:USB), which impacted his portfolio by 2.25%.

Prem Watsa completely sold out of his shares of investment firm, Taiwan Fund Inc. (NYSE:TWN) and toy company, Jakks Pacific Inc. (JAKK), after lasting only one quarter in his portfolio (both were acquired in the second quarter of this year).

Below are Prem Watsa’s newest stock buys for the third quarter.

Nexen Inc. (NXY)

Prem Watsa’s new holding of Canada-based global energy company, Nexen Inc. (NXY), amounted to 57,500 shares.

With a market cap of $12.66 billion, Nexen is in the business of developing energy resources worldwide. About 70% of its production comes from offshore facilities, according to its website, specifically in the UK North Sea, Gulf of Mexico and the Atlantic Ocean (near West Africa). Its onshore drilling occurs in Canada, Yemen and Columbia.

In the course of 10 years, Nexen’s revenue growth rose at a rate of 12.5 percent, positively; however, in the past 12 months, its revenue has seen a slight decline at a negative trend rate of 5.4 percent.

Nexen ‘s trading price is close o a one-year high, along with its P/B and P/S ratios. At $24.52 per share, it is trading close to its recorded maximum price of $24.69.

Nexen is ranked two stars in Business Predictability, 6 out of 10 in Financial Strength and 7 out of10 in Profitability and Growth. View Nexen’s 10-Year Financials to see its financial standings.

Fushi Copperweld Inc. (FSIN)

Prem Watsa’s new holding of bimetallic producer, Fushi Copperweld Inc. (FSIN) amounted to 87,000 shares.

With a market cap of $355.3 million, Fushi Copperweld was developed in 2007, after the merger of China-based Fushi international and Copperweld Bimetallics LLC. Its global headquarters is in Beijing, while its American headquarters is in Nashville. The company prides itself for producing high quality, completely solid copper-clad steel, setting it apart from competitors who only coat products with copper.

1352933892262.pngFSIN data by GuruFocus.com

Fushi Copperweld’s Financial Strength is at a 9 out of 10. Its 10-Year Financials show a rising rate of free cash flow, and a steady elimination of long-term debt. Its Profitability and Growth Rank is at a 6 out of 10, showing a positive revenue trend line a solid interest coverage.

New Oriental Education & Technology Group Inc. (NYSE:EDU)

Prem Watsa’s new holding of the China-based educational services provider, New Oriental Education & Technology Group Inc. (NYSE:EDU) amounted to 22,200 shares.

With a market cap of $2.7 billion, New Oriental is a largely-recognized brand in China for private education. Founded in 1993, New Oriental has built a network of 55 schools, 726 learning centers, 5000 third-party book stores, in about 50 cities as well as online, according to its website.

New Oriental is currently trading at $18.50 per share, categorized under two Good Signs; its only Severe Warning sign denotes an asset growth faster than revenue growth.

1352935285707.pngEDU data by GuruFocus.com

View the rest of New Oriental’s 10-Year Financials to see its current financial standings.

To read more about Prem Watsa, view our GuruFocus article and interview archives. Also view the rest of his third quarter portfolio updates here, as well as his undervalued stocks, top growth companies and high yield stocks.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website

Rating: 3.5/5 (15 votes)


Marcolanaro - 5 years ago    Report SPAM
Hi Dianne,

do you have any information about the hedges in Fairfax portfolio?

thank you

sean barry
Sean barry - 5 years ago    Report SPAM
Diane him I believe your terminology is unfortunately a bit misleading.

For instance with Johnson & Johnson at 22% ownership, it gives the impression that he owns 22% of Johnson & Johnson.

Perhaps it would be better to say 22% of his portfolio.


Dianne Tordillo
Dianne Tordillo - 5 years ago    Report SPAM
Sean, great point. I have updated it to clarify it better to readers. Really glad you caught that and I appreciate it very much.
Dianne Tordillo
Dianne Tordillo - 5 years ago    Report SPAM
Hi Marcolanaro, Here's a link to Fairfax's shareholder letters. These will have information about the hedges: http://www.fairfax.ca/financials/letter-to-shareholders/default.aspx

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