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James Li
James Li
Articles (587)  | Author's Website |

Prem Watsa’s Top 5 Buys of the 1st Quarter

'Canada’s Warren Buffett' establishes position in GE and continues trimming Intrepid Potash position

May 15, 2018 | About:

Prem Watsa (Trades, Portfolio), often referred to as “Canada’s Warren Buffett (Trades, Portfolio),” disclosed on Tuesday he established five positions in the first quarter: General Electric Co. (NYSE:GE), Independence Contract Drilling Inc. (NYSE:ICD), WGL Holdings Inc. (NYSE:WGL), Scana Corp. (NYSE:SCG) and iRobot Corp. (NASDAQ:IRBT).

General Electric

Watsa invested in 309,400 shares of GE for an average price of $15.54 per share. The guru dedicated 0.31% of his portfolio to this transaction.

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GE said on April 20 that adjusted earnings increased 14% year over year, driven by strong growth across several business segments. The company’s profitability ranks 6 out of 10: even though the company’s returns on equity and assets underperform over 80% of global competitors, Boston-based GE still has a three-year compound annual growth rate of sales that outperforms 71% of global diversified industrial companies.

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Hotchkis & Wiley and Richard Pzena (Trades, Portfolio) also established a stake in GE during the quarter. As of March 31, Barrow, Hanley, Mewhinney & Strauss has the largest GE stake with 74,590,954 shares.

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Independence Contract Drilling

Watsa invested in 360,000 shares of Independence Contract Drilling for an average price of $4.39 per share. The guru increased his portfolio 0.10% with this transaction.

Independence Contract Drilling provides land-based contract drilling services for oil and natural gas producers. The company’s profitability ranks a low 4 out of 10 as operating margins and returns underperform over 70% of global competitors.

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WGL Holdings

Watsa invested in 14,000 shares of WGL Holdings for an average price of $84.03 per share. The guru increased his portfolio 0.09% with this transaction.

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WGL Holdings’ primary operating segment, Washington Gas Light, provides energy-related products and services to approximately 1.1 million customers in Maryland, Virginia and Washington D.C. The company’s profitability ranks a modest 5 out of 10: although its operating margin is near a 10-year high of 14.48%, WGL Holdings’ revenue has declined approximately 5.20% per year over the past three years, a rate that underperforms 73% of global competitors.

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Scana Corp.

Watsa invested in 30,000 shares of Scana for an average price of $40.07 per share. With this transaction, the guru increased his portfolio 0.08%.

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Scana engages primarily in generating, transmitting and distributing electricity in South Carolina. Although the company has expanding operating margins and a high dividend yield, its three-year revenue growth rate of -4.10% underperforms 69% of global competitors. Additionally, returns on equity are near a 10-year low of -2.17% and underperforming 87% of global regulated electric companies.

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iRobot

Watsa invested in 15,000 shares of iRobot for an average price of $75.26 per share. The guru increased his portfolio 0.07% with this transaction.

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iRobot designs and sells small, artificially intelligent consumer robots, including the automatic Roomba vacuum and the floor-mopping Braava. The company has six positive investing signs, including zero long-term debt, consistent revenue growth and expanding operating margins. GuruFocus ranks iRobot’s financial strength 9 out of 10, profitability 8 out of 10 and business predictability three stars out of five.

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Guru continues trimming Intrepid Potash

According to GuruFocus real-time picks, Watsa sold 4,155,064 shares of Intrepid Potash Inc. (IPI) on May 8 for $4.05 per share. The guru previously sold 2,093,005 shares for $4.45 per share on May 3.

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Disclosure: No positions.

About the author:

James Li
I am an editorial assistant and 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!

Visit James Li's Website


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