Prem Watsa (Trades, Portfolio), CEO of Canada-based Fairfax Financial Holdings (TSX:FFH, Financial), bought seven stocks in the fourth quarter, according to filings.
Watsa, who is often compared to Warren Buffett (Trades, Portfolio), bought shares of: Bank of Nova Scotia (BNS, Financial), Micron Technology Inc. (MU, Financial), US Silica Holdings Inc. (SLCA, Financial), Bemis Co. Inc. (BMS, Financial), Pacific Biosciences of California Inc. (PACB, Financial), Garrett Motion Inc. (GTX, Financial) and Quarterhill Inc. (QTRH, Financial). His portfolio listed 33 stocks valued at $1.27 billion in aggregate at fourth quarter-end.
Watsa also shrank his holdings in technology, the largest represented sector, to 27.04% of the portfolio, decreasing it for the third consecutive quarter. Industrials, the second-largest sector represented, jumped to 25.68% of holdings from 20.52% in the previous quarter.
Watsa founded insurance conglomerate Fairfax Financial Holdings in 1985 and invests some of the company’s money in publicly listed stocks, similar to Warren Buffett (Trades, Portfolio)’s model at Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial). In recent years, he made outsized bets in two public companies, investing more than half of the portfolio in smart phone pioneer BlackBerry Ltd. (BB) and containership manager Seaspan Corp. (SSW). Both of the positions remained unchanged for the quarter.
In 2016, Watsa removed index hedges from his portfolio that had dampened his returns for years, believing the results of the U.S. election would bring accelerated economic growth.
“Higher economic growth would result, we think, in higher profits for many companies, so that even though the indices may not go up significantly, we think this will be a ‘stock pickers’ market in which a value investor like us can thrive,” Watsa wrote in a 2017 annual shareholder letter discussing the hedges in March 2018.
“So we are back to playing offense again, recognizing of course that the stock market is not cheap. Long interest rates have bottomed out and will likely go higher over the next five years, perhaps significantly higher.”
Watsa’s forthcoming views on the economy and market are likely to come out in March, when he usually releases his annual shareholder letter.
In the fourth quarter, Fairfax swung to a loss on its investments “primarily as a result of marking the investments we hold to market,” Watsa said in a release. The company reported net losses of $664.3 million, compared to net gains of $180.3 million in the fourth quarter of 2017.
Buys
Bank of Nova Scotia (BNS, Financial)
Watsa purchased 247,100 shares of Bank of Nova Scotia, giving it 0.97% portfolio weight. The stock’s fourth-quarter share price averaged $54.
Bank of Nova Scotia has a market cap of $68.99 billion; its shares were traded around $56.47 with a price-earnings ratio of 10.95 and price-sales ratio of 3.25. The trailing 12-month dividend yield of Bank of Nova Scotia stocks is 4.53%. The forward dividend yield of Bank of Nova Scotia stocks is 4.54%.
Micron Technology Inc. (MU, Financial)
Watsa purchased 48,000 shares of Micron Technology, giving it 0.12% portfolio weight. The stock’s fourth-quarter share price averaged $38.
Micron Technology Inc. has a market cap of $47.07 billion; its shares were traded around $41.99 with a price-earnings ratio of 3.46 and price-sales ratio of 1.62. Micron Technology Inc. had an annual average earnings growth of 29% over the past 10 years. GuruFocus rated Micron Technology Inc. the business predictability rank of 3.5-star.
US Silica Holdings Inc. (SLCA, Financial)
Watsa purchased 135,000 shares of US Silica holdings, giving it 0.11% portfolio weight. The stock’s fourth-quarter share price averaged $14.
US Silica Holdings Inc. has a market cap of $1.12 billion; its shares were traded around $14.44 with a price-earnings ratio of 9.20 and price-sales ratio of 0.73. The trailing 12-month dividend yield of US Silica Holdings Inc. is 1.73%. The forward dividend yield of US Silica Holdings Inc. is 1.73%.
Bemis Co. Inc. (BMS, Financial)
Watsa purchased 26,500 shares of Bemis Co. Inc., giving it 0.10% portfolio weight. The stock’s fourth-quarter share price averaged 0.09%.
Bemis Co. Inc. has a market cap of $4.82 billion; its shares were traded around $52.94 with a price-earnings ratio of 22.43 and price-sales ratio of 1.18. The trailing 12-month dividend yield of Bemis Co. Inc. is 2.34%. The forward dividend yield of Bemis Co. Inc. is 2.42%. Bemis Co. Inc. had an annual average earnings growth of 0.50% over the past 10 years.
Pacific Biosciences of California Inc. (PACB, Financial)
Watsa purchased 1,182 shares of Pacific Biosciences of California Inc., giving it 0.08% portfolio weight. The stock’s fourth-quarter share price averaged 0.08%.
Pacific Biosciences of California Inc. has a market cap of $1.06 billion; its shares were traded around $7.13 with a price-sales ratio of 10.67. Pacific Biosciences of California Inc. had annual average earnings growth of 15.10% over the past five years.
Garrett Motion Inc. (GTX, Financial)
Watsa purchased 998 shares of Garrett Motion, giving it 0.08% portfolio weight. The stock’s fourth-quarter share price averaged $13.
Garrett Motion Inc. has a market cap of $1.2 billion; its shares were traded around $16.15 with a price-sales ratio of 0.46.
Quarterhill Inc. (QTRH, Financial)
Watsa purchased 779 shares of Quarterhill, giving it 0.06% portfolio weight. The stock’s fourth-quarter share price averaged $1.
Quarterhill Inc. has a market cap of $115.250 million; its shares were traded around $0.98 with a price-sales ratio of 1.58. The trailing 12-month dividend yield of Quarterhill Inc. is 3.94%. The forward dividend yield of Quarterhill Inc. is 3.87%. Quarterhill Inc. had an annual average earnings growth of 19.40% over the past 10 years.
See Prem Watsa (Trades, Portfolio)’s portfolio here.
