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.
14. Restaurant Brands International Inc. (NYSE:QSR)
Number of Hedge Fund Holders: 29
Fairfax Financial Holdings’ Stake: $3 million
Restaurant Brands International Inc. (NYSE:QSR) is one of the world’s largest quick-service restaurant companies, with over $40 billion in annual system-wide sales. The following attributes underline the company’s potential as an investment. The first and most compelling factor that makes this company worth investment is its positive financial growth depicted in the report for the third quarter of 2024. For instance, consolidated comparable sales were 0.3%, and net restaurants grew 3.8% versus the prior year, showing long-term growth and future prospects that may drive future revenue and expand market share. Additionally, Adjusted Operating Income was $652 million, showing an increase of 6.1% organically, versus the prior year, indicating strong operational performance and its ability to improve profitability without relying on external factors. Secondly, the company also plans to buy China’s franchise of its Popeyes brand and invest in Tims China along with private-equity firm Cartesian Capital. Moreover, the company has introduced a five-year growth outlook in 2024, targeting the opening of at least 7,000 new restaurants in international markets, with a focus on expanding the Burger King brand.
13. KKR & Co. Inc. (NYSE:KKR)
Number of Hedge Fund Holders: 66
Fairfax Financial Holdings’ Stake: $3 million
KKR & Co. Inc. (NYSE:KKR) offers alternative asset management as well as capital markets and insurance solutions. The following factors demonstrate the company’s promise as a solid investment. Firstly, the report for the third quarter of 2024 showed great results as Fee Related Earnings (FRE) and Total Operating Earnings (TOE) had their highest quarters in the company’s history. Reported Fee-Related Earnings were $1 billion in the quarter, showing an increase of 79% year-over-year. Additionally, Total Operating Earnings (TOE) was $1.3 billion in the quarter, up 71% year-over-year. These metrics reflect the company’s strong revenue growth and operational success. Secondly, KKR has entered into a binding agreement with the shareholders of Dawsongroup to acquire the Group. The acquisition will be made as part of KKR’s Global Climate strategy, dedicated to scaling net-zero solutions and transitioning and decarbonizing higher emitting assets, which closely aligns with Dawsongroup’s long-term sustainability-led ambitions. Moreover, KKR and Gulf Data Hub are committing to support over $5 billion of total investment to build out data centre capacity, supporting the significant rise in hyper-scale demand, AI and digital-focused national priorities across the Gulf countries.
12. Colliers International Group Inc. (NASDAQ:CIGI)
Number of Hedge Fund Holders: 18
Fairfax Financial Holdings’ Stake: $3.8 million
Colliers International Group Inc. (NASDAQ:CIGI) is a real estate brokerage professional services and investment management company. This company presents a strong investment case based on the following factors. Firstly, as per the report of the third quarter of 2024, revenues reported were $1.18 billion, showing an increase of 12% and Adjusted EBITDA was $154.6 million, increasing up 7% as compared to the prior-year quarter. Additionally, Adjusted EPS was $1.32, showing an 11% increase from $1.19 in the prior year quarter. The GAAP diluted net earnings per share were $0.73, up 38% from $0.53 in the prior year quarter. These metrics reflect strong operational performance with improved efficiency and profitability. This growth indicates that the company is executing well in the market and improving its financial position year-over-year. Secondly, the company has announced the expansion and extension of its unsecured multi-currency revolving credit facility for a new five-year term, maturing in November 2029. The updated Credit Facility replaces the previous agreement, which was set to mature in May 2027, and increases borrowing capacity to $2.25 billion from $1.75 billion. Moreover, the company has released its 2025 Global Investor Outlook, revealing renewed investor optimism and confidence that the commercial property market has moved past an inflexion point following two years of muted transactions.
11. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 107
Fairfax Financial Holdings’ Stake: $8.3 million
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. The following highlights demonstrate why the company is a compelling investment opportunity. Firstly, as per the reports of the third quarter of 2024, revenue was $7.75 billion versus $6.81 billion for the prior quarter and $4.01 billion for the same period last year. Additionally, GAAP net income was $887 million, or $0.79 per diluted share and non-GAAP net income was $1.34 billion, or $1.18 per diluted share, indicating significant revenue growth and strong profitability, especially when adjusted for non-recurring items. Secondly, Micron signed a non-binding Preliminary Memorandum of Terms (PMT) with the US Department of Commerce for up to $275 million in funding under the CHIPS and Science Act to support Micron’s plans to invest approximately $2 billion over the next several years to expand and modernize its facility in Manassas, Virginia. This may hold investment potential as this project would onshore Micron’s 1-alpha technology to its Manassas facility, advancing US supply chain resiliency and creating over 400 manufacturing jobs and up to 2,700 community jobs at the peak of the project. Moreover, the company plans to break ground on a leading-edge manufacturing fab in Boise, Idaho, which would be the first new memory manufacturing fab in the United States in 20 years.
10. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 81
Fairfax Financial Holdings’ Stake: $11.9 million
Johnson & Johnson (NYSE:JNJ) makes and sells healthcare products. The following highlights demonstrate why the company is a compelling investment opportunity. Firstly, the report for the third quarter of 2024 indicates a sales growth of 5.2% to $22.5 billion, with operational growth of 6.3%, adjusted operational growth of 5.4%, and earnings per share (EPS) of $1.11. This demonstrates that the company has achieved solid sales growth, indicating strong demand and good execution in its core business. Secondly, the company plans to buy neurological drug maker Intra-Cellular Therapies and open a new tab for $14.6 billion, which is the biggest deal in more than two years, boosting its presence in the market for brain disease treatments. The deal would help accelerate growth in J&J’s drugs business after the company spun off its consumer health unit in 2023. It has made several transactions in the past few years to boost its pharmaceuticals and medical devices units, including a $13.1 billion deal for Shockwave Medical in 2024.
9. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 80
Fairfax Financial Holdings’ Stake: $13.3 million
Pfizer Inc. (NYSE:PFE) discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The following points illustrate the company’s robust investment outlook. Firstly, as per the report for the third quarter of 2024, performance was driven by focused commercial execution and robust double-digit revenue growth across the product portfolio. Additionally, the company raised full-year 2024 revenue guidance to a range of $61 to $64 Billion and raised adjusted diluted EPS guidance to a range of $2.75 to $2.95. This demonstrates the strong business growth of the company and its confidence in its future performance. Secondly, the company has selected its preferred once-daily modified-release formulation for danuglipron, an oral glucagon-like peptide-1 (GLP-1) receptor agonist. Pfizer plans to conduct dose optimization studies, evaluating multiple doses of the preferred modified release formulation to inform the registration enabling studies.
8. The Bank of Nova Scotia (NYSE:BNS)
Number of Hedge Fund Holders: N/A
Fairfax Financial Holdings’ Stake: $15.8 million
The Bank of Nova Scotia (NYSE:BNS) is a Canadian multinational banking and financial services company headquartered in Toronto, Ontario. The following highlights demonstrate why the company is a compelling investment opportunity. Firstly, as per the report of the third quarter of 2024, revenue of $29.6 billion was reported, showing an increase of 1.3% from FY 2023. This growth indicates that the company has increased its sales and generated revenue. Secondly, Scotiabank agreed to invest approximately $2.8 billion for a stake in KeyCorp. This may hold investment potential as this move targets one of its key markets, with the investment in KeyCorp significantly boosting its capital deployment in the US. Moreover, the bank has expanded its partnership with Google Cloud, naming it the enterprise cloud platform of choice for the next phase of the Bank’s cloud acceleration journey. The bank will leverage Google Cloud technology to enhance client and employee experience, strengthen security, and adopt new technologies, like generative AI, more quickly. This announcement builds on Scotiabank’s strategic partnership with Google Cloud, extending its cloud-first commitment and accelerating its global data and analytics strategy.
7. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 64
Fairfax Financial Holdings’ Stake: $16.8 million
General Motors Company (NYSE:GM) is a multinational automotive manufacturing company headquartered in the United States. The following attributes underline the company’s potential as an investment. Firstly, as per the reports of the third quarter of 2024, reported revenue was $48.8 billion, a 10% increase compared to the same period in 2023 and net income was $3.1 billion, reflecting strong operational performance. Additionally, the company raised its full-year EBIT-adjusted guidance to a range of $14 billion to $15 billion, which indicates confidence in sustained profitability. Secondly, the company has signed an agreement with Graniterock in which GM Energy will identify fleet electrification opportunities for Graniterock’s operations through EVs, electric vehicle service equipment (EVSE), battery energy storage systems, vehicle-to-grid services, and other potential applications. GM Energy will utilize a diverse set of hardware and software energy management solutions to conduct a feasibility study, providing Graniterock with opportunities to develop and scale the electrification of their fleet moving forward. Moreover, the company is collaborating with Pacific Gas and Electric Company to enable residential customers to use their compatible EVs, along with a bidirectional charger, as backup power for essential home needs during short-term power outages.
6. Helmerich & Payne, Inc. (NYSE:HP)
Number of Hedge Fund Holders: 27
Fairfax Financial Holdings’ Stake: $16.9 million
Helmerich & Payne, Inc. (NYSE:HP) provides drilling services and solutions for exploration and production companies. The following reasons highlight the company’s strength as an investment target. Firstly, for fiscal year 2024, the company reported net income of $344 million, or $3.43 per diluted share, from operating revenues of $2.8 billion. The net income per diluted share includes $0.07 of after-tax losses composed of select items. Additionally, net cash provided by operating activities was $685 million in fiscal year 2024 compared to $834 million in fiscal year 2023. This shows the company’s profitability, cash flow generation, and operational efficiency. Secondly, Helmerich & Payne has completed its acquisition of KCA Deutag International Limited, establishing a global leader in onshore drilling. This may hold investment potential as this initiative will enhance its global footprint, exceptional service capability and superior technology offering. Moreover, the company has also announced that Saudi Aramco has finalized the contractual terms related to a recent 7-rig tender award. The seven super-spec rigs were awarded 5-year contracts with 1-year options and are expected to commence operations shortly after delivery.
5. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 86
Fairfax Financial Holdings’ Stake: $19.6 million
Merck & Co., Inc. (NYSE:MRK) provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products. The following reasons highlight the company’s strength as an investment target. Firstly, in the report for the third quarter of 2024, the company’s operational excellence is highlighted. For instance, as per the above-mentioned report, total worldwide sales were $16.7 billion, an increase of 4% from the third quarter of 2023. Secondly, Moderna and Merck announced that Merck had exercised its option to jointly develop and commercialize personalized cancer vaccine (PCV) mRNA-4157/V940 pursuant to the terms of its existing Collaboration and License Agreement. mRNA-4157/V940 is currently being evaluated in combination with KEYTRUDA, Merck’s anti-PD-1 therapy, as adjuvant treatment for patients with high-risk melanoma in a Phase 2 clinical trial being conducted by Moderna.
4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 158
Fairfax Financial Holdings’ Stake: $24.6 million
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. The first quality that makes this company worth investment is its robust financial growth, as illustrated in the report for the third quarter of 2024. For instance, a 39% increase in revenue year-over-year, reaching NT $759.69 billion, and a 54.2% rise in net income was reported. The company attributes its growth to robust demand for its advanced 3-nanometer and 5-nanometer technologies, driven by smartphone and AI-related markets. TSMC’s impressive financial performance underscores its leadership in the semiconductor industry, making it an attractive prospect for investors. Secondly, the US Department of Commerce and TSMC Arizona announced up to $6.6 billion in direct funding under the CHIPS and Science Act, fulfilling a goal to bring the most advanced chip manufacturing in the world to the United States. TSMC also announced plans to build a third fab at TSMC Arizona. This third fab brings TSMC’s total US investment to more than $65 billion, making this the largest foreign direct investment (FDI) in Arizona’s history and the largest FDI in a greenfield project in US history.
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 202
Fairfax Financial Holdings’ Stake: $45.6 million
Alphabet Inc. (NASDAQ:GOOGL) is a California-based technology company that owns and runs the internet search engine Google. This company’s investment appeal is driven by the following key factors. The first thing that makes this company worth investment is its strong financial health and commitment to shareholder value. As per the report of the third quarter of 2024, dividend payments to stockholders of Class A, Class B, and Class C shares were $1.2 billion, $173 million, and $1.1 billion, respectively, totalling $2.5 billion for the three months ended September 30, 2024. Secondly, Google is entering a strategic partnership with Intersect Power and TPG Rise Climate to synchronize new clean power generation with data centre growth in a novel way. The tri-party partnership brings a new approach that can enable US leadership in AI development while thoughtfully building data centre load next to new additional power generation where possible — reducing both the timeline to operation and the amount of new transmission required. Moreover, the company has also partnered with IIMA Ventures to support 22 AI startups in India, fostering innovation in the AI ecosystem.
2. BlackBerry Limited (NYSE:BB)
Number of Hedge Fund Holders: 15
Fairfax Financial Holdings’ Stake: $122.4 million
BlackBerry Limited (NYSE:BB) provides intelligent security software and services to enterprises and governments worldwide. These aspects illustrate why the company stands out as an investment opportunity. The first thing that makes this company a great investment choice is its solid finish to the fiscal year 2024, setting a number of new records in the process. As per the report for the fourth quarter of 2024, the total revenue was $173 million, and the total non-GAAP and GAAP gross margin increased to 75%. Additionally, IoT revenue was an all-time quarterly record $66 million, a 25% year-over-year increase; IoT gross margin remained at 85%. All these metrics give the company a competitive edge and show the company’s strategic focus on high-growth areas like IoT and financial health. Secondly, the company has collaborated with Advanced Micro Devices to revolutionize next-generation robotic systems. Moreover, QNX, a division of BlackBerry Limited, has announced collaborating with Microsoft to make it easier for automakers to build, test, and refine software within the cloud, accelerating the development of Software-Defined Vehicles (SDVs).
1. Kennedy-Wilson Holdings, Inc. (NYSE:KW)
Number of Hedge Fund Holders: 22
Fairfax Financial Holdings’ Stake: $147.2 million
Kennedy-Wilson Holdings, Inc. (NYSE:KW) operates as a real estate investment company. These key points underline why the company is a sound investment decision. The first compelling factor that makes this company a great investment choice is its ability to generate consistent cash flow from its core operations, which is essential for meeting obligations and distributing profits to stakeholders, as illustrated in the report of the third quarter of 2024. For instance, the estimated Annual NOI grew to $492 million, from $485 million in Q2-24, primarily driven by asset stabilizations and partially offset by non-core asset dispositions. Additionally, investment management fees grew by 39% in Q3-24, vs Q3-23, to $22 million, primarily as a result of increasing levels of recurring base management fees and originations from KW’s debt investment platform. Secondly, the company partnered with Canada Pension Plan Investment Board to launch a new single-family rental housing joint venture in the United Kingdom. CPP Investments will initially commit £500 million, with Kennedy Wilson committing £56 million. The JV will have an initial target of approximately £1 billion of asset value, including leverage, with the potential to commit further capital depending on market opportunities.
While we acknowledge the potential of Kennedy-Wilson Holdings, Inc. (NYSE:KW) as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than Kennedy-Wilson Holdings, Inc. (NYSE:KW) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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