In this article, we discuss the top 15 long-term stock picks of billionaire Prem Watsa.
Prem Watsa is a Canadian billionaire, entrepreneur, and investor often referred to as the Canadian Warren Buffett for his value-based investment approach and long-term focus. As the founder, chairman, and CEO of Fairfax Financial Holdings, Watsa has built a reputation for transforming his company into one of the leading insurance and investment firms in the world. His ability to identify undervalued opportunities and navigate financial crises has cemented his place as one of the most respected figures in global finance. Watsa was born in India in 1950 to a middle-class family. He earned a degree in chemical engineering from the Indian Institute of Technology, one of India’s premier institutions. In 1972, Watsa immigrated to Canada to pursue an MBA at the University of Western Ontario’s Richard Ivey School of Business.
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After completing his MBA, Watsa began his career in the insurance industry, where he gained valuable experience that would later shape his business philosophy and success. In 1985, Watsa acquired control of Markel Financial, a struggling Canadian insurance company. He renamed it Fairfax Financial Holdings, short for Fair and Friendly Acquisitions, and set out to implement his vision of combining insurance underwriting with value-oriented investing. Fairfax operates as a holding company, similar to Berkshire Hathaway, with investments spanning insurance, reinsurance, and other businesses. Under Watsa’s leadership, Fairfax has grown exponentially.
As of the end of the third quarter of 2024, Fairfax manages over $1 billion in 13F securities. The company has delivered a compound annual growth rate of approximately 15% in book value per share since its founding. Prem Watsa is a staunch proponent of value investing, inspired by the teachings of Benjamin Graham and Warren Buffett. His strategy involves identifying undervalued assets, particularly during times of market distress, and holding them for the long term. Watsa has been a strong advocate of investing in India, acquiring stakes in companies like Thomas Cook India and launching the Fairfax India fund to capitalize on the country’s growth. Watsa famously anticipated the 2008 financial crisis, using derivatives to protect Fairfax’s portfolio and earning over $2 billion in profits during the crash.
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For this article, we selected stocks by combing through the 13F portfolio of Fairfax Financial Holdings at the end of the third quarter of 2024. Only the companies that have been in the 13F portfolio of the fund consistently for the past three years were selected. These stocks are also popular among other hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Billionaire Prem Watsa’s Top 15 Long-Term Stock Picks
15. Garrett Motion Inc. (NASDAQ:GTX)
Number of Hedge Fund Holders: 34
Fairfax Financial Holdings’ Stake: $2.3 million
Garrett Motion Inc. (NASDAQ:GTX) is a company primarily involved in engineering, development and manufacturing of turbochargers and related forced induction systems for ground vehicles. The following highlights demonstrate why the company is a compelling investment opportunity. The first compelling factor that adds worth is the company’s solid financial performance reported in the third quarter of 2024. For instance, operating performance allowed the company to expand adjusted EBITDA margin by 160 basis points year-over-year to 17.4% and generated $71 million in adjusted free cash flow while the company continued to execute on capital allocation priorities, including $226 million of share repurchases through the first three quarters of 2024. Secondly, the company has announced the adoption of a long-term capital allocation framework, under which it will target returning 75% or more of its Adjusted Free Cash Flow to shareholders over time through a combination of share repurchases and a regular quarterly cash dividend.
