We recently compiled a list of the Billionaire Prem Watsa’s Top 15 Long-Term Stock Picks. In this article, we are going to take a look at where Kennedy-Wilson Holdings, Inc. (NYSE:KW) stands against Prem Watsa’s other long-term stock picks.
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).
A newly renovated apartment complex with high-end amenities to accommodate tenants.
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.
Overall KW ranks 1st on our list of billionaire Prem Watsa’s top long-term stock picks. While we acknowledge the potential of 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 KW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
