Prem Watsa, chairman and CEO of Fairfax Financial Holdings, joins BNN Bloomberg’s Amanda Lang for an exclusive interview. They discuss Watsa’s views on Canada’s competitiveness and why he says he wouldn’t have invested in BlackBerry if it weren’t for John Chen.
Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
Fairfax’s Prem Watsa Sees Investment Opportunities in India and U.S.
Canada is a wonderful country. I came here 46 years ago. Anything I’ve done would not have happened if I didn’t come to Canada. A kind of a fantastic country a country that you know I didn’t know anyone I came with almost no money and people supported me for my first job for the money to fund Fairfax when we began.
So Canada the wonderful country and but we have to be careful because we have the United States as our partners next to us and when they get very business friendly policies then by comparison ours are less friendly. And so if we are attracting investment then of course investment could go to the United States as opposed to Canada.
But we love that we benefit from the fact that by next to the U.S. So if the U.S. says well we do well you arrived here as the legend goes with eight rupees in your pocket. You might have been eight dollars found your way. You’ve got an education you’ve got a good job because a good steady job.
That was the success story. Yeah. And then you decided to buy a company. What was it about you that your background or your experiences that made you take that. I wish I could say that what makes me my dad was a teacher. It’s a no business expense at all. You didn’t really care about business. He cared about the fact that I had a good education. So I had an engineering degree before I came to Canada and and I was fortunate to go to the Ivey business school.
But but it was just an opportunity that I was in the investment business and I was in the investment business for about eight years. But the idea was and this company didn’t believe in great place to work but not not enough incentives and so that someone came and hired me. Gardner Watson as a boy you might have read and they hired me and got me a job as a portfolio manager. But then they felt that they were being bad business was suffering from commissions because the client said you know Prem’s going to compete with their clients. So we had to set up our old company. Ivan Watson Messman counsel and that was like 1983 and then there I met and Gundan once and I met a fellow who told me about the float.
This is 83 a long time ago. But Buffett studied Henry single and studied Larry Tesch and that’s when I was introduced to the floating and in a little company called kind of financial was available in 1985 with know having a financial problem. I got to meet them. And one thing led to another and we took control of that company. That’s how Fairfax began.
We named it Fairfax that was trucking insurance and that was the beginning. Then you began to build this insurance. So it was trucking insurance and it was called Macau financial the holding company and the insurance company was called McCowen insurance trucking trons. So we thought we’d expand and McCalla Financial. The name didn’t apply because there was going to be more than one subsidiary. So we changed it. You go to your board you go to your management.
Our secretary said you know you talk about friendly acquisitions Hubbert fair friendly acquisitions x Fairfax stock we bought 100 Foote’s 100 shares that traded on the Stock Exchange. As Fairfax we bought it put it in a nice little you know Posta and gave it to us and said she retired and sold it because he put it at all was going to be with it as it were building. What has become an insurance empire. Did the incumbents see you as somebody trying to trip up when you were. You know it’s funny they didn’t that we were 10 million in premiums. You could have squashed us right. And that’s why I say that’s huge opportunity in Canada and whatever you area you do you have to provide very good service to be focused and need to look after the people who are who you employ. And you’ve got to be in the free enterprise system you get to make a return. But really the talk of return over time.
We don’t talk about any return in three months or six months. All week long tome and and then in our case we give back to the community. We do business you know. We’re not company began the whole company before we finance it with 2 million in the last three four five years. Amanda we have reinvested in the communities worldwide about 20 to 25 million to the free enterprise system. Capitalism is a six of them have experienced it and it’s one that I’m you know a great proponent of because I just think it’s such a wonderful system open to everyone. Do you ever invest in the investment portfolio emotionally.
Was there ever a secondary reason for the impact if I do the people around me that will stop me BlackBerrying wouldn’t be an example of kind of Canadian loyalty or old friends that BlackBerry. I got to know through the founders and Bedrick press me to requested me to go on the board. And the reason we put a lot of money on that and that company with because of John Chen Chung Chen is an outstanding executive long track record. And I met him just like that in San Francisco. And like you and I are chatting and and he had a terrific turnaround at a company called Sybase and then he says you know bought every BlackBerry that existed and I really don’t want this company to go down. So I have said would you look at perhaps joining the company anytime I got to talk to my wife. But what if she says yes I will and she said yes and join this. So it was John and if he hadn’t come we likely would not put any money.
And is it going the way you had hoped it would go. It’s funny in the tech business it’s you know you have all the downsides of technology. Something new comes in. Apple was BlackBerry and Apple does really well BlackBerry sales going up. But you can change that around. And so what he’s done if he’s gone into software and Billig software now and he’s Steve when he came in the company was losing a billion as you might remember. It’s broken even. They’ve got two and a half billion in cash and tons of opportunity ahead of them.
So John you know John in Sybase the stock was about 5 4 5 dollars when he came in most people thought it would go bankrupt in the next year or two and he didn’t. He wanted to stabilize it and then ten years later 10 years later he sold it for sixty five dollars to Sep. So it’s a long term but that grito return from five to 65 with a pretty good.