1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Holly LaFon
Holly LaFon
Articles (9200)  | Author's Website |

5 Stocks Warren Buffett and Prem Watsa Both Own

Two of the greats think alike on these holdings

Prem Watsa (Trades, Portfolio) and Warren Buffett (Trades, Portfolio) have many things in common. Watsa runs global insurance conglomerate Fairfax Financial Holdings (TSX:FFH), and Buffett oversees the famed insurance holding company Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B). Both financiers also invest their companies' “float,” or money an insurer has collected but not paid out in premiums yet.

They can boast unmatched track records with their respective businesses, too. Buffett has compounded book value at Berkshire Hathaway by 19.1% annually since 1965. Watsa compounded book value at Fairfax Financial by 19.5% since 1985.

Further overlap occurs in their investing philosophies. They take a long-term approach, have a value investing perspective and are devotees of Ben Graham, the founder of value investing. Watsa even named his son Ben in Graham’s honor.

Watsa and Buffett have distinctive contrasts, however. While Buffett has been more prone to buy quality businesses at reasonable prices, Watsa adheres to the Graham notion of finding mispriced bargains.

“The most important principle [Graham] taught us was the margin of safety,” Watsa said in a talk at the Richard Ivey School of Business in 2011. “That whatever you buy, try to buy a dollar for 50 cents. Try to figure out what a company’s worth and try to buy it for 50 cents.”

This advice has steered Watsa into some troubled situations, such as that of smartphone maker BlackBerry (NYSE:BB). He bought the company when it was down and out after massive competition from Apple (NASDAQ:AAPL)’s iPhone decimated its market share. The stock suffered a relentless dive in 2008, falling 68% from a high above $130 in June through the end of the year. By August 2012, it traded around $6.

Watsa invested $500 million into the company and joined its board that year to help support its turnaround effort. So far, that has included a halt to production of hardware for its smartphones and a move to software and services, where it derived 85% of its sales in 2017. The company is still in flux, with shares down 18% year to date and trading at $10.55 per share Friday.

Buffett has preferred more steady companies, choosing stocks such as Coca-Cola (KO), Apple and Bank of America (BAC) to populate his top holdings. He also started a stake in IBM (IBM) in 2011 near around its all-time high price.

Agreement occurs in some of their investment picks, however. According to an analysis of GuruFocus data, the two great minds think alike on five stocks as of the end of the first quarter: USG Corp. (NYSE:USG), Johnson & Johnson (NYSE:JNJ), Wells Fargo & Co. (NYSE:WFC), US Bancorp (NYSE:USB) and Monsanto Co. (NYSE:MON).

USG Corp. (NYSE:USG)

Watsa owns 1,530,522 shares of USG, valued at $62 million, which accounts for 4.6% of his equity portfolio. Buffett owns 39,002,016 shares of USG, valued at $1.58 billion, which accounts for 0.83% of his equity portfolio.

Prem Watsa's holding:

391f422f0d9d974728252af8cd4a5601.png

Warren Buffett's holding: 

56f497dd7de535c4e7ac79c1237ddbda.png

USG is a manufacturer of gypsum wallboard and ceiling tile used in construction. USG Corp. has a market cap of $6.03 billion; its shares were traded around $43.27 Friday with a P/E ratio of 92.07 and P/S ratio of 1.94. USG Corp. had an annual average earnings growth of 11.80% over the past five years.

Johnson & Johnson (NYSE:JNJ)

Watsa owns 148,650 shares of Johnson & Johnson, valued at $19.05 million, accounting for 1.42% of his equity portfolio. Buffett owns 327,100 shares of the company, valued at $41.92 million, accounting for 0.02% of his equity portfolio.

Watsa's holding:

11c426de13be8786fb107d104e222b7c.png

Buffett's holding:

5adaf96642b9bed01609ffa27e3dc863.png

Johnson & Johnson is the world’s largest diverse health care company. Johnson & Johnson has a market cap of $336.66 billion; its shares were traded around $125.52 Friday with a P/E ratio of 321.85 and P/S ratio of 4.36. The trailing 12-month dividend yield of Johnson & Johnson stocks is 2.75%. The forward dividend yield of Johnson & Johnson stocks is 2.88%. Johnson & Johnson had an annual average earnings growth of 3.90% over the past 10 years. GuruFocus rated Johnson & Johnson the business predictability rank of 2-star.

Wells Fargo & Co. (NYSE:WFC)

Watsa owns 35,800 shares of Wells Fargo, valued at $1.88 million, accounting for 0.14% of his equity portfolio. Buffett owns 456.5 million shares of the company, valued at $23.93 billion, accounting for 12.66% of his equity portfolio.

Watsa's holding:

4ee38ea4ec98df1fcc7728f5ab0739f2.png

Buffett's holding:

d077f2bde75cd6d6d5b3e01e697df7fe.png

Wells Fargo is one of the largest banks in the U.S., with an emphasis on community banking, wholesale banking, and wealth and investment management. Wells Fargo & Co. has a market cap of $272.98 billion; its shares were traded around $56.02 with a P/E ratio of 13.81 and P/S ratio of 3.23. The trailing 12-month dividend yield of Wells Fargo & Co. stocks is 2.78%. The forward dividend yield of Wells Fargo & Co. stocks is 2.82%.

US Bancorp (NYSE:USB)

Watsa owns 23,200 shares of US Bancorp, valued at $1.17 million, accounting for 0.09% of his equity portfolio. Buffett owns 90.85 million shares of the company, valued at $4.59 billion, accounting for 2.43% of his equity portfolio.

Watsa's holding:

8df1a3659f2445e2e02a2a126b959b29.png

Buffett's holding:

594ad4152ec5e4a811aaddb95630db47.png

US Bancorp, the fifth-largest bank in the U.S., does business in lending, depository service, investment management services and others. US Bancorp has a market cap of $82.57 billion; its shares were traded around $50.27 Friday with a P/E ratio of 13.77 and P/S ratio of 3.81. The trailing 12-month dividend yield of US Bancorp stocks is 2.40%. The forward dividend yield of US Bancorp stocks is 2.40%.

Monsanto Co. (NYSE:MON)

Watsa owns 6,200 shares of Monsanto, valued at $723 million, accounting for 0.05% of his equity portfolio. Buffett owns 18.97 million shares of the company, valued at $2.21 billion, accounting for 1.17% of his equity portfolio.

Watsa's holding:

73c2860dd703b0ba955df21948d2aab7.png

Buffett's holding:

329b6b829c993de47933a3b6b1eaf752.png

Monsanto is focused on the agriculture industry, producing seeds, crop protection substances and data science products. Monsanto Co. has a market cap of $56.46 billion; its shares were traded around $127.95 Friday with a P/E ratio of 22.93 and P/S ratio of 3.90. The trailing 12-month dividend yield of Monsanto Co stocks is 1.69%. The forward dividend yield of Monsanto Co. stocks is 1.69%. Monsanto Co. had an annual average earnings growth of 7.20% over the past 10 years. GuruFocus rated Monsanto Co. the business predictability rank of 3.5-star.

See Warren Buffett (Trades, Portfolio)’s portfolio here. See Prem Watsa (Trades, Portfolio)’s portfolio here.

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


Rating: 5.0/5 (7 votes)

Voters:

Comments

spinoff.strategy
Spinoff.strategy premium member - 5 months ago

Watsa owns 6,200 shares of Monsanto, valued at $723 million, accounting for 0.05% of his equity portfolio. Buffett owns 18.97 million shares of the company, valued at $2.21 billion,

Kevin Anderson
Kevin Anderson premium member - 5 months ago

USG is the target of a takeover by Knauf, a German construction materials company. Managements have agreed to $44 as the buyout price so, unless something highly unlikely happens, it’s dead money for both Watsa and Buffett.

Ryan Harding
Ryan Harding - 5 months ago    Report SPAM

Monsanto stock stopped trading in June as its $128.00/share acquisition by Bayer completed. I believe it was a merger arbitrage by Berkshire Hathaway.

Please leave your comment:


Performances of the stocks mentioned by Holly LaFon


User Generated Screeners


maxerHK stocks price is 80% of EPV
maxerMorningstar wide moat
maxerUS & HK Healthcare - Price is
MYDemarayLow EV/EBITDA w/ Rev Growth
jkmarine.splprice below 50%
BNPEV:EBIT & P/FCF & >$100k volum
DANGORDON12-13-18 15% 1 YR EARNINGS GRO
kislevamnontrial2
jmeekinsUnder Book Value
cspunarHi ROA Lo Debt Div
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK