Fairfax Financial Holdings Limited is a financial services holding company whose corporate objective is to achieve a high rate of return on invested capital and build long term shareholder value.
Period: Q1 2013
Portfolio date: 31 Mar 2013
No. of stocks: 40
Portfolio value: $2,577,934,000
* Reported Price is the price of the security on the portfolio date. This value is significant in that it indicates the portfolio manager's confidence in the stock at that price and suggests at least some level of undervaluation and/or margin of safety.
Sector % analysis
Articles & Commentaries
A turnaround at Research In Motion Ltd. (RIM) may take three to five years and the BlackBerry maker’s stock is undervalued, one of RIM’s biggest investors said today.
With all due respect to Mr. Watsa, RIM will likely not survive. There may be some value in the company's assets and cash generated in 'wind down' mode. But the real question is, how much of that will flow back to shareholders instead of being squandered on futile 'turnaround' projects!
I have attended the Berkshire Hathaway shareholders’ meeting since there were only 200 shareholders in attendance about 30 years ago. I still find I learn something each year from Warren and Charlie. At the meeting in 2010, I met Bill McMorrow through Alan Parsow, who is a money manager based in Omaha and a great friend. Bill founded Kennedy Wilson, a real estate services and investment company, in 1988, and he now owns 26% of the company. As a result of this meeting, we invested $100 million in a Kennedy Wilson 6% preferred convertible at $12.41 per share, and later purchased $32.5 million of a 6.45% preferred convertible at $10.70 per share and 400,000 common shares at $10.70 per share. Fully diluted we own 18.5% of the company. In 2010 and 2011, we also invested $290 million in several real estate deals with Kennedy Wilson in California, Japan and the U.K. – deals at significant discounts to replacement cost and with excellent unlevered cash on cash returns, in which Kennedy Wilson is the managing partner and a minority investor. We are thrilled to be partners with Bill and his team, who always focus on the downside and have the expertise to manage these investments and finally harvest them. You never know what you will find at a Berkshire meeting!! ...
Mr. Watsa, Fairfax, and other companies related to them bought 6,499,500 shares of RIM on Wednesday and an additional 7,550,700 on Thursday, according to filings with U.S. securities regulators.
Prem Watsa, who patterns his value investments after Warren Buffett, said his Canadian insurance company may buy more shares of Research In Motion Ltd. after Watsa was appointed to the board of the BlackBerry maker.
“We are very pleased to acquire such a pre-eminent retailer as Sporting Life,” said Prem Watsa, chief executive officer of Fairfax. “Today’s acquisition is consistent with our ongoing interest in acquiring strong, established franchises from entrepreneurial founders who want to find a long-term home for their business.”
"For the past 25 years, the book value of Prem Watsa's Fairfax Financials has compounded a cumulative 24,424%, versus 979.7% for the S&P500," says Jacob Wolinsky, who is the vice-president of business development for SumZero LLC, the world's largest community of buy-side analysts. "His performance is spectacular and he ranks among the best investors in Canada and in the world."
But it isn’t just the United States and Europe that Prem Watsa is worried about. The potential bursting of a property bubble in China has him even more concerned. And if Chinese demand for commodities dries up at the same time as U.S. consumers are shutting their wallets, then the global economy is in for a lengthy period of pain.
(Reuters) - Canada's Fairfax Financial Holdings is leading a group of investors who have agreed to pay 1.1 billion euro ($1.6 billion) for a stake of up to 37 percent in Bank of Ireland , Irish media reported on Tuesday.
"The underlying fundamentals are there for everyone to see, but it's boring... No one wants to buy something that will take five, six years to double in value."
Fairfax Financial is an insurance holding company that has followed a path to success similar to Berkshire Hathaway. When investing in Fairfax, you are really investing in CEO Prem Watsa’s abilities to allocate capital (the insurance float) into investments that are profitable. It is precisely Watsa’s ability to do this that has generated such above-average returns for shareholders over the past 25 years...
Fairfax Financial Holdings reports purchase of 3,774,059 shares of AbitibiBowater Inc...
He is particularly troubled by the number of pension funds throwing cash at the commodities market. “You aggregate that, there’s a lot of money going into a small market,” he said. “Takes the price through the roof.”
Fairfax Financial Holdings, managed by Prem Watsa, reported further purchases of SandRidge Energy's common stock.
Last year gave us an outstanding opportunity to add to our investment holdings of excellent companies with fine long term track records. All things being equal, we expect to hold these common stocks for the very long term. Wells Fargo, Johnson & Johnson, Kraft, US Bancorp.
While the stock markets have rebounded significantly from March 9, 2009, we continue to have a cautious view on the U.S. economy. The massive U.S. government stimulus programs (and government programs of other countries) appear to be working in the short term, but the enormous deleveraging by business and individuals continues to counter in varying degrees the positive effects of this stimulus. Our reading of history – the 1930s in the U.S. and Japan since 1990 – shows in both periods nominal GNP remained flat for 10 to 20 years with many bouts of deflation. While good companies with excellent management will continue to do well, this may be a particularly treacherous time period. Of course, being long term value oriented investors, we expect this to be a great environment for us to ply our trade – perhaps not unlike the 1975 to 1996 period.
The Greenspan policy was part of the problem. If Paul Volcker had been chairman of the U.S. Federal Reserve would this have happened? Not likely. He would have put interest rates up in 1996 when Greenspan warned about "irrational exuberance" and the tech bubble. Mr. Volcker would have let Long Term Capital Management go bust, raised interest rates and we never would have been in this current situation. The financial collapse happened because we had 20 years of boom time, and bubbles, without any significant recession.
Fairfax will continue to invest in equities such as Wells Fargo & Co., Johnson & Johnson and Kraft Foods Inc. Watsa said he also likes U.S. Bancorp...
“Stock prices are reflecting a lot of the pessimism that people see,” Watsa told reporters after the meeting. “We are liking stocks because a lot of it is discounted already.”
Prem Watsa is the richest, savviest guy you’ve never heard of. He predicted the crash of ’87, the Japanese collapse of 1990 and last year’s meltdown, which he parlayed into a huge payoff. Now he’s gobbling up shares at rock-bottom prices. What he knows and why you should pay attention...
In November of 2008, after the stock markets had dropped 50% from their highs, we decided to remove the equity hedges on our portfolio investments. Also, as the yield on long (30-year) U.S. Treasuries began to drop below 3%, we sold almost all our U.S. Treasuries.
In previous annual reports, we have discussed the holding of some common stock positions for the very long term. Last year we identified Johnson & Johnson as one name and said that Mr. Market may give us more opportunities in the future. As shown in the table below, at the end of 2008 we had taken advantage of the major decline in stock prices to purchase additional positions in outstanding companies with excellent long term track records which we contemplate holding for the long term:
- Johnson & Johnson
- Kraft Foods
- Wells Fargo Bank
“We think we are facing a long and deep recession... with many unintended consequences,” Mr. Watsa said.
“But as value investors we are seeing some excellent buying opportunities in common stocks for the first time in a long time, and we are taking advantage of them.”
“We consider this a time of opportunity,” he declared, as stock markets have fallen by half globally and spreads between the yields from corporate bonds and government bonds are near record highs.
However, “when I say that, I always say that with a five-year view. We really don't know what'll happen in the next three months, six months, a year from now. But five years from now, looking back, we think these prices will seem attractive,” Mr. Watsa added.