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 Micron Technology (NASDAQ:MU) 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 close-up view of a computer motherboard with integrated semiconductor chips.
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.
Overall MU ranks 11th on our list of billionaire Prem Watsa’s top long-term stock picks. While we acknowledge the potential of MU 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 MU 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.
