Prem Watsa’s Fairfax Financial is out with their 2012 annual shareholder letter. Commonly referred to as the “Warren Buffett of Canada”, Prem Watsa has built up a successful insurance company and is a spectacular investor. The 2012 letter is filed with great nuggets from Watsa so I recommend reading the whole thing. Below is a section I found particularly interesting. Watsa discusses the short term nature of traders/speculators and how times have changed. Below is a brief excerpt followed by the full document in scribd:
I am amazed at how much trading takes place in the marketplace these days. For example, in 2012 BlackBerry had 0.5 billion shares outstanding and traded 1.49 billion shares – i.e., a turnover of three times. In Fairfax’s case, trading in our shares in the 7 years before we delisted from the NYSE averaged approximately 129,000 shares per day, while in the three years since that trading averaged only approximately 47,500 shares per day – over 85% on the Toronto Stock Exchange. Our share turnover has dropped in this time period from two times to 0.6 times. As our company is run for long term shareholders, we hope our turnover drops even further. By the way, you can buy or sell Fairfax shares on the Toronto Stock Exchange in either Canadian or U.S. dollars!
In this frenzied, hyper environment, activist investors and hedge funds have become dominant – all focused on short term gains. Managements are replaced, employees laid off, divisions sold and companies auctioned off so that these investors can make a quick gain. Many a good company can be destroyed by these actions. We continue to take the long view, always friendly and always supportive of management.