Many of you must have heard very little about Mr Prem Watsa. Here is bit about him.
Prem Watsa, a legendary value investor of Indian origin is popularly known as the 'Canadian Warren Buffett'. Mr Watsa is chairman and chief executive of Toronto based firm Fairfax Financial Holdings. As per an article in Gurufocus, Mr Watsa has delivered a 5-year cumulative return of 176%, versus 12.2% by the S&P 500. In 2008, when the major markets were witnessing pressures, he could yet achieve 21% return for his clients versus US benchmark indices witnessing a loss of 37%.
As per an article in The Times of India, this value investor is looking to invest in India, with a kitty of around US$ 1 bn through its firm Fairfax India. The firm targets to invest in 5-7 businesses. Mr Watsa has high hopes on the Narendra Modi government and hence believes India has strong long term investment prospects. However, he has some predefined criteria and is looking to invest only in those businesses which can match up to his investment philosophy.
Being a value investor, he is looking to invest from a long term perspective. Hence, he is looking for companies where the promoters are honest, have long term track record, and are in for the long term. Mr Watsa's inclination is for such companies where the promoters believe in building the business and do not want to sell and exit the business.
Interestingly, Mr Watsa is not keen on e-commerce, since he does not find the valuations appealing. Instead he focuses on services and brick-and-mortar outfits. Readers would recall, Equitymaster too has been warning investors of sky-high valuations of these loss making entities.
These are important lessons that investors should take from Mr Watsa. One should look for companies that have durable economic moats and a sound management. As long as the companies are well-managed and have strong future prospects then one need not worry about the stocks they have as part of their portfolio.