The Times of India had an article earlier this week about Prem Watsa. The article focused on Prem’s fantastic returns, his investment in the Bank of Ireland, and his investment philosophy.
The majority of readers on this site is from America and might not be familiar with The Times of India. However, India is now competing with Canada and the UK for the #2 spot, in terms of visitors to the site, so some readers will be familiar. For those who are not, The Times of India, it is the largest English-Language newspaper by circulation, and 8th largest by total circulation (larger than any US paper).
I was contacted by someone who works with the newspaper and was writing an article about Prem Watsa. I told him to contact Francis Chou (whose resource page I am working on now) as he knows far more about Prem than me (they have been friends for 25+ years, and Francis was one of the first investors in Prem Watsa’s Fairfax Holdings). Francis Chou, Mohnish Pabrai (another great value investor originally from India), and myself were quoted in this article. I am both honored and humbled to be quoted with two people far more knowledge able than me.
As a side note: my friends from India were kind enough to mail me a copy of the print edition.
Below are some of my comments followed by a link to the full article:
“For the long-term investors, the returns have been off-the-charts,” says Mohnish Pabrai, who has been an investor in Fairfax for more than seven years. “If you had joined Prem 25 years or so ago, when they started, the stocks have gone from single digits- $6, or $7, or $8 a share- to nearly $400 today. They did really well over that period.”
“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.”
Wolinsky, who also runs a blog on value investing called Value Investor, points out that Fairfax’s compounded book value compares favourably to even Warren Buffett’s Berkshire Hathaway, which has had compounded book value by a cumulative 5,716% during the same period. However, he is quick to add that Buffett “manages much more assets than Watsa, which makes it harder to produce such spectacular returns.”
Watsa reaped billions of dollars when he bought very cheap credit default swaps (CDSs) of mortgaged backed securities and bond insurers from betting on the US housing bubble burst.
“He made money for Fairfax by buying very cheap CDSs on bonds before the crisis, which rose tremendously in value as the sub-prime crisis erupted,” says Wolinsky.
His friend Chou says Watsa has a remarkable capacity to identify assets that are undervalued. “Prem is outstanding at that,” he says. “To be a successful value investor you have to be a contrarian, and he is one.”
Below is a link to the full article-Prem Watsa: The Indian who bailed out Bank of Ireland