For a man who once said, "You have to turn your back
sometimes," pertaining to his tendency to go against the grain
and delve in out-of-favor bets, one cannot help but be lured into
the fascinating investment moves of Canadian investor,
Take his top holding of the stock, Research in Motion Ltd. (
), for example.
Acquiring shares of the company in the third quarter of 2010,
RIMM declined in market share and stock prices for years, despite
its more recent bounce back in market value. As the stock
downgraded, Watsa's holding sky-rocketed. He added 93 percent to
his stake in the third quarter, alone.
To add on to the media's scrutiny of RIMM, as reported by
Barron's, the stock is among the ones that will be dropped from
the Nasdaq 100 index on Dec. 24, switched with stocks that drip
with more appeal in market value.
Regardless, RIMM remains Watsa's second largest holding as of the
end of the third quarter, right after Johnson & Johnson (
), with RIMM representing 21.1 percent of his 42-stock portfolio,
which is valued at about $1.8 billion.
As a widely known contrarian investor, Watsa is approximated to
have produced an average return of 8.5 percent in the last 12
predicts. His portfolio has extracted about a 23.4 percent return
since inception. He is one of GuruFocus' nominees for Investment
Guru of 2012.
With the business world's recent magnification of RIMM, and the
fact that Watsa's name is attached to the stock, it is always
delighting to find reading material, new and old, about the value
One in particular, a popular read for Watsa followers, was an
article in Toronto Life magazine, titled "$2-Billion Man," which
spotlighted the life of Watsa. Published in 2009, below is an
"Professor Andrew Lo, the director of MIT's Laboratory for
Financial Engineering, studies the psychology of the market.
While Lo believes the markets are capable of rational behaviour,
he says they become irrational when investors' animal instincts
take over and their pleasure or fear receptors are activated...Lo
believes that individuals who, like Watsa...have a more highly
developed instinct for fear. They can sniff out trouble well
before the average unsuspecting investor. They might be naturally
temperate (a kind of market ascetic), but they are also a more
highly evolved animal.
'Either he has experienced this before, so he has a memory of
pain or loss,' Lo says, 'or he has developed certain models or
forecasts that trigger in his brain the potential for pain.'
In Watsa's case, it's a bit of both. He's not only a
long-time student of crashes; he also has first-hand knowledge of
what it means to almost lose it all."
(Read the rest of $2-Billion Man here.)
The article impeccably captured who Watsa was, and who he
continues to be. It provided details that enabled followers to
understand his methods as a value investor. Perhaps the article
could have even provided a closer understanding about Watsa's
mindset, used each time in crafting his stock picks every
Throughout the year, there were various stocks that produced
prodigious returns in Watsa's portfolio.
Starting with His Largest Holdings
Year to date,
Johnson & Johnson
has appreciated by 8.17 percent in market value. While its stock
is down today by 0.13 percent, it is trading close to this year's
high of $72 in October - its share price is currently $70. The
lowest it traded this year was in June around $51.
Watsa belongs in the top 10 group of investors (that GuruFocus
follows) who owns the most shares of JNJ. As of the third
quarter, he reported a total holding of 5.9 million shares. This
accounts for 22.2 percent of his portfolio.
data by GuruFocus.com
Level 3 Communications Inc.
) makes up 16.1 percent of Watsa's portfolio, or almost 6 percent
of shares outstanding. Year to date, its market value has gone up
almost 27 percent.
Level 3's stock price surged the highest in March around $27, and
traded the lowest in January around $17. Currently, the stock is
up 6 percent for today's trading, priced at $23.07 per share.
LVLT data by GuruFocus.com
Making up the fourth largest represented stock in Watsa's
Resolute Forest Products Inc.
) stock has gone up 1.31 percent year to date. Watsa first
acquired the stock in the second quarter of this year. He
currently owns almost 19 million shares of the company, and
represents 18.91 percent of the company's shares outstanding.
Up almost 4 percent today, Resolute Forest Products is trading at
RFP data by GuruFocus.com
Watsa has 3.1 million shares of
), which is 5.8 percent of his portfolio. The stock has gone up
18.15 percent this year, trading its highest in October around
$35, and trading its lowest in January around $27.
Watsa's latest move on the stock was a stake reduction in the
third quarter by 30 percent.
USB data by GuruFocus.com
Watsa's 52-Week High Stocks
Using the GuruFocus All-in-One Screener, the following stocks
were the results that turned up as Watsa's stocks that changed
the most in a 52-week time frame.
) is one of Watsa's smaller holdings. He currently claims about
42,000 shares of the stock. However, USG price has reported the
most positive change in market value in 52 weeks.
It has garnered a price increase of 169 percent year to date. Its
stock is up 3.18 percent this afternoon, trading at a price of
$28.26. It traded its lowest in January when its price was around
USG data by GuruFocus.com
Watsa owns 35,000 shares of
Nam Tai Electronics Inc.
). He first acquired the stock in the first quarter of 2008,
starting off with only 25,000 shares. In 2010, he added 10,000
more shares to his holding, and has not touched the stock ever
Nam Tai has gone up 163.47 percent this year, trading near its
November peak price of $15. Its current price is $13.99, its
stock up 3.86 percent this afternoon. The lowest that it traded
this year was in March around $4.
NTE data by GuruFocus.com
) in the third quarter of this year, and has not touched the
company ever since, purchasing more almost 3.4 million shares. It
makes up 1.9 percent of Watsa's portfolio, and Watsa owns 14.45
percent of its shares outstanding.
Year to date, Overstock has delivered 82.78 percent in market
value. It traded its highest in November around $15 and traded
its lowest in April at $5.
OSTK data by GuruFocus.com
View Prem Watsa's latest stock picks here, as well as his
undervalued stocks, top growth companies and high yield
stocks.About GuruFocus: GuruFocus.com tracks the stocks picks and
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