In the wake of news that Greece became the first developed
nation to be downgraded to emerging-market status by investment
research firm MSCI,
has announced heightened investment in the country, telling the
Financial Post June 19, "We think that perhaps a bottom has been
Watsa recently invested in another beleaguered eurozone country,
Ireland. In 2011 he and a group of investors purchased a $1.6
billion stake in Bank of Ireland (
), and have since gained approximately 50% on the deal.
The founder of the Canadian insurance conglomerate, Fairfax
Financial Holdings Ltd. (
), which has $25 billion of assets under management, has an eye
for value in troubled companies as well. He made a bold purchase
of a stake in telephone maker Research In Motion (
), which he bought after the company had lost around 90% of its
market cap in five years.
The specific Greek company Watsa told the Financial Post he is
investing in is Eurobank Properties Real Estate Investment Co. (
Founded in 1952, Eurobank Properties' sole objective today is to
acquire and manage real estate and money market instruments. The
real estate fund has a portfolio of investment properties in
Greece and Southeastern Europe that it leases out.
The company has a ?418.96 million market cap and a share price
Friday of 7.05, up from a historic low of under ?3 per share hit
in June 2012.
Though just now being reported to the press, Watsa actually
purchased a 14.78% stake in the company in August 2012,
increasing his ownership to 19.1%. Wade Burton, vice president at
Fairfax's Hamblin Watsa, also joined the company's Board of
Directors and Investment Committee in September.
"It is obvious that the realization of this transaction is
occurred during a crucial period for the Greek economy and shows
the investor's optimism for its future," Eurobank Properties said
in the press release.
At a purchase price of ?4.75 per share in August, Watsa already
has a gain of approximately 48% on the purchase.
He told the Financial Post this week that he plans to invest
another $217 million into the bank to bring his ownership from
19% to 42%.
Eurobank Properties is a classic Watsa investment in that he
typically likes companies selling at discounts to their book
his Bank of Ireland investment with GuruFocus, he noted that it
had a book value of ?0.30, which with then -share price of ?12
per ADR meant it traded at about 25% of its book value.
Eurobank is currently trading at a discount to its ?10.63 first
quarter book value. See its price and P/B ratio share below:
In the first quarter ended May 30, Eurobank reported a year over
year net profit decline to ?9.21 million from ?9.98 million,
citing "escalating macroeconomic problems in the market and
consequently in real estate." It mentioned lower results in
rental income, interest income and interest expense, while
management cut costs for the sixth consecutive year.
Compared to the previous year, the company reduced its debt to
total assets to 10% from 15% and its loans to value to 13% from
15%. Its current ratio increased to 14.4x from 8.0x due to a
reduction in short-term liabilities.
Eurobank Properties has cash and short term deposits of ?160
million compared to ?161 million the previous year.
The results were improved from the outcome of 2012, when it ended
the year with losses of ?28.06 million, due to the decrease in
property prices and fewer rentals.
's portfolio here. Also check out the Undervalued Stocks, Top
Growth Companies and High Yield stocks of Prem Watsa.
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