Prem Watsa, the chairman and CEO of Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH), is reaping a fortune from his investment in Ireland. A report from Financial Post stated that Watsa’s investments in the Bank of Ireland (ADR) (NYSE:IRI) in 2011 gained by approximately 50 percent. The prominent investor is now betting large on recession-battered Greece, stating that the country has already passed the worst situation.
Prem Watsa “Excited” About Greece
According to Prem Watsa, his firm always evaluates possibilities when making investments. He said, “We try to understand the facts, we try to understand the company, we understand the people and we make our own decisions.” He added that his firm did the same thing with Greece, and emphasized that he “excited about the prospects for Greece” over the long-term.
Prem Watsa Compares Greece to Ireland
To support his predictions for Greece, Prem Watsa reflected on the investments made by Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH) in Ireland. He said, “When we made our investment, the 10-year Irish bond rates were running at 13, 14 percent. Eighteen months later they dropped to 4 percent. A huge amount of foreign investment now has come back into Ireland. It wasn’t at the time. So we see the same type of activity happening in Greece.”
Philip Carret was an investor and founder of Pioneer Fund, one of the first mutual funds in the United States. Carret ran the mutual fund for 55 years, during which time an investment of $10,000 became $8 million. That suggests he achieved a compound annual return of nearly 13% for his investors. Q1 2021 hedge Read More
Irish Prime Minister Enda Kenny’s target is to exit from the three-year international bail out by the end of the year. The country’s Finance Ministry projected an economic growth of 1.3 percent this year and 2.4 percent in 2014.
Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH) holds a 9.9 percent stake in the Bank of Ireland (NYSE:IRE). It is one of the five institutions that acquired a combine stake of 34.9 percent in the largest bank in Ireland in July 2011.
Watsa to Invest $217 Million
Going back to Greece, in a previous interview, Watsa noted that the economic situation in Greece has been very tough for the past four or five years. In his comments he reflected that the country’s economy declined significantly and the unemployment rate is high at 27 percent.
“Greece as a country is on a long road of stability and growth from the very difficult times that it’s gone through. We think the Greek people have really had tremendous hardship in the last few years.”
Prem Watsa believes the country already reached its economic bottom. He added, “We do believe it’s now perhaps at the end of the tunnel and that its worst days are behind it.”
According to him, Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH) plans to increase its investment in Eurobank Properties Real Estate Investment Co. (GA:EUPRO) by €164 million ($217 million), bringing its stake in the company from 19 percent to 42 percent.
Watsa explained that Eurobank Properties is raising funds at the right time to take advantage of the many opportunities in Greece. He stated that the state-asset sales program in the country, which include a large real-estate portfolio, could generate significant growth from private investors within the next 5 or 10 years.
The stock price of Eurobank Properties Real Estate Investment Co. (GA:EUPRO) gained more than double since its lowest level in June 2012.
Based on data from Bloomberg, Fairfax Financial Holdings Ltd (PINK:FRFHF) (TSE:FFH) also owns a 7.7 percent stake in Sarantis SA (OTCMKTS:SRTSF), a cosmetics and household goods company, and a 5.4 percent stake Jumbo SA (OTCMKTS:JUMSF), the largest retailer of baby products in Greece.
Prem Watsa’s firm is the largest stockholder of Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB). In April, he increased his stake in the company to 9.9 percent, and he believes that the stock’s fair value is $40. Shares of the company closed at $14.48 per share on Thursday in New York.
Back in April, Prem Watsa stated that the Canadian smartphone manufacturer was starting to turnaround, but that it wouldn’t happen overnight. His projection was long-term.
Wall Street analysts are positive that Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) will report a positive earnings result on Friday, June 28. However, some analysts are uncertain with its long-term profitability, and a significant number of investors are shorting the stock prior to its earnings report.