Santangel's Review

Commentary

Checking in on Prem Watsa of Fairfax Financial Holdings

Prem Watsa has had a very successful track record while at the helm of Fairfax Financial, growing book value by 24.7% (compounded annually) over the last 25 years. That type of long-term performance deserves study so we try to keep tabs on what Watsa is doing and thinking. We recently found two articles about Watsa and Fairfax.

The first is an interview Watsa did in the July/August issue of CFA Magazine. In this interview he says he is being “careful, cautious, and concerned”. He thinks that Portugal, Greece, Spain, and Ireland will see tough economic times for the next 3-5 years and that because interest rates are so low, there is little that can be done to help them. He thinks that markets are overpriced and that investors are not being paid enough for the risk. He notes that he is hedging his portfolios.  While very bearish, he did say that he thinks the US will get its fiscal house more in order and will work to correct the deficit situation.

The second Watsa sighting is an article about Fairfax’s decision to enter the Indian market to purchase listed and unlisted companies. One of Watsa’s lieutenants is quoted as saying “We strongly believe in the India growth story and particularly see opportunities in consumer products, consumer services and niche manufacturing sectors.”