Prem Watsa (Trades, Portfolio) runs FairFax Financial Holdings Ltd. (TSX:FFH, Financial), a financial conglomerate that also has a strong investing side, reminiscent of Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial). The investing branch “emphasizes a conservative value investment philosophy, seeking to invest assets on a total return basis, which includes realized and unrealized gains over the long-term,” per the website.
Watsa for the past several years has predicted and invested against a serious market downturn. Since 1985, he has compounded Fairfax’s book value at 19% annually. But recently the growth rate has slowed to 10% because of his portfolio positing. As he explains in his 2012 investor letter:
“Since then, book value per share has increased by only approximately 10% (including dividends) because of our very cautious view of the financial markets (which has led us to be 100% hedged in our common stock portfolios) and, of course, the unprecedented catastrophes in 2011. We ended the year with cash and marketable securities at the holding company in excess of $1 billion.”
In the fourth quarter, he bought seven new stocks, but of humble position sizes. The portfolio overall is valued at $1.31 billion and contains 42 stocks in total.
The New Positions
VioPharma Inc. (VPHM, Financial)
Watsa purchased 10,000 shares of ViroPharma Inc. in the fourth quarter, reflecting 0.038% of his portfolio, as the largest new position. The shares cost $45 on average in the fourth quarter.
ViroPharma Inc. was incorporated in Delaware in September 1994 and commenced operations in December 1994. Viropharma Inc. has a market cap of $3.29 billion; its shares were traded at around $49.96 with and P/S ratio of 8.02. Viropharma Inc. had an annual average earnings growth of 12.20% over the past five years.
Edwards Group Ltd. (EVAC, Financial)
Watsa purchased 48,500 shares of Edwards Group Ltd., reflecting 0.038% of his portfolio. Shares cost $10 on average in the fourth quarter.
Edwards Group Ltd. is a Cayman Islands exempted company with limited liability incorporated on Feb. 10, 2012, and resident in the UK for tax purposes. Edwards Group Ltd. has a market cap of $1.16 billion; its shares were traded at around $10.27 with a P/E ratio of 15.40 and P/S ratio of 1.20.
Provident New York Bancorp (PBNY, Financial)
Watsa purchased 25,000 shares of Provident New York Bancorp, reflecting 0.026% of his portfolio. The average share price of the fourth quarter was $12.
Provident New York Bancorp, a Delaware corporation is a unitary savings and loan holding company. Provident New York Bancorp has a market cap of $1.04 billion; its shares were traded at around $11.72 with a P/E ratio of 52.80 and P/S ratio of 3.71. The dividend yield of Provident New York Bancorp stocks is 2.0%. Provident New York Bancorp had an annual average earnings growth of 0.20% over the past 10 years.
Hewlett-Packard Co. (HPQ, Financial)
Watsa purchased 9,400 shares of Hewlett-Packard Co., reflecting 0.02% of the portfolio. The fourth quarter average share price was $25.
Hewlett-Packard Co. was incorporated in 1947 under the laws of the State of California as the successor to a partnership founded in 1939 by William R. Hewlett-Packard Co. has a market cap of $57.11 billion; its shares were traded at around $29.92 with a P/E ratio of 11.40 and P/S ratio of 0.50. The dividend yield of Hewlett-Packard Co. stocks is 1.90%.
Watsa purchased 7,600 CSX Corp. shares, reflecting 0.017% of his portfolio. Shares cost $27 on average in the fourth quarter.
CSX Corporation was incorporated in 1978 under Virginia law. CSX Corp has a market cap of $27.9 billion; its shares were traded at around $27.69 with a P/E ratio of 15.20 and P/S ratio of 2.30. The dividend yield of CSX Corp stocks is 2.20%. CSX Corp had an annual average earnings growth of 14.20% over the past 10 years. GuruFocus rated CSX Corp the business predictability rank of 4.5-star.
General Dynamics Corp. (GD, Financial)
Watsa bought 2,200 shares of General Dynamics Corp, representing 0.016% of the portfolio. The stock’s price averaged $89 in the fourth quarter.
General Dynamics is a Delaware was incorporated in 1952. General Dynamics Corp. has a market cap of $37.01 billion; its shares were traded at around $108.13 with a P/E ratio of 16.50 and P/S ratio of 1.20. The dividend yield of General Dynamics Corp. stocks is 2.10%.
Penn West Petroleum Ltd. (PWE, Financial)
Watsa purchased 15,900 shares of Penn West Petroleum, representing 0.01% of the portfolio. The shares cost $10 on average in the fourth quarter.
Penn West Petroleum Ltd. is engaged in the operations of light oil in Canada. Penn West Petroleum Ltd. has a market cap of $3.99 billion; its shares were traded at around $8.16 with and P/S ratio of 2.20. The dividend yield of Penn West Petroleum Ltd. stocks is 9.60%.
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