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Watsa Recommends Wells Fargo, J&J, Kraft, US Bancorp Shares


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By Sean B. Pasternak - Apr 20, 2011 10:51 AM ET Tweet inShare.0More

Business ExchangeBuzz up!DiggPrint Email .Prem Watsa, chief executive officer of Fairfax Financial Holdings Ltd. (FFH), recommends shares of Wells Fargo & Co. (WFC), Johnson & Johnson (JNJ), Kraft Foods Inc. (KFT) and US Bancorp. (USB) The Canadian insurer holds a combined $1.9 billion in the four U.S. company shares. Watsa spoke at the insurer’s annual meeting today in Toronto.

 

 

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Have no idea. We shall know more when our fellow board members return from the AM and post their notes.

 

Meanwhile, another hint of Prem's future investments :

 

By The Canadian Press

 

TORONTO - The head of Fairfax Financial Holdings Ltd. (TSX:FFH) says the Toronto-based company is eager to expand it's property insurance business in India as soon as its government relaxes current restrictions.

 

The Canadian insurance and investment company currently has a 26 per cent stake in an Indian insurance business, which is in-line with the amount the government stipulates for foreign ownership.

 

However, Fairfax chief executive Prem Watsa said Wednesday that if India's government follows through with expectations that it will likely raise that cap to 49 per cent, Fairfax would jump at the opportunity.

 

Only about one per cent of people in India currently have property insurance, Watsa said.

 

But with a rapidly growing middle class, there are tremendous opportunities for growth, he said.

Watsa says Fairfax's investments in other emerging markets such as China and Malaysia are also being limited by government rules in those countries.

Fairfax says it's first-quarter balance sheet will be hit by the impact of the recent Japanese earthquake but declined to say how much.

 

It says the impact of the catastrophe there will inevitably have " knock on" effects on disaster insurance rates at operations across the globe.

 

Prices for property insurance could increase as much as five to ten per cent.

Meanwhile, Fairfax says operations in Bahrain, Egypt and Syria have mostly returned to normal following a spate of violence in those countries.

 

It expects to pursue acquisition opportunities in the Middle East and Latin America.

 

 

 

 

 

 

 

 

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Small impact to Fairfax's book value:

The Canadian insurance and investment company currently has a 26 per cent stake in an Indian insurance business, which is in-line with the amount the government stipulates for foreign ownership.

 

However, Fairfax chief executive Prem Watsa said Wednesday that if India's government follows through with expectations that it will likely raise that cap to 49 per cent, Fairfax would jump at the opportunity.

 

Only about one per cent of people in India currently have property insurance, Watsa said.

 

But with a rapidly growing middle class, there are tremendous opportunities for growth, he said.

Watsa says Fairfax's investments in other emerging markets such as China and Malaysia are also being limited by government rules in those countries.

Small writedown of book in the short-term, bigger increase in book in the mid-term:

Fairfax says it's first-quarter balance sheet will be hit by the impact of the recent Japanese earthquake but declined to say how much.

 

It says the impact of the catastrophe there will inevitably have " knock on" effects on disaster insurance rates at operations across the globe.

 

Prices for property insurance could increase as much as five to ten per cent.

Meanwhile, Fairfax says operations in Bahrain, Egypt and Syria have mostly returned to normal following a spate of violence in those countries.

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Well, most of that was taken out of context by the media:

 

There was no such recommendation of stocks.  He only showed those 4 companies as examples of companies that FFH had bought, and would hold, as we all knew already. 

 

Andrew Barnard commented on the earthquake being in the results next week - estimates, and possible price increases in re-insurance.

 

The fellow running the Middle East company spoke for a few minutes about their business. 

 

Alot of the rest of the meeting was retread stuff about the economy, the hedges, and the CPI derivatives. 

 

 

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I am going to let Sanjeev or someone else comment on the details of the dinner and meeting.

 

One thing that board members might be interested in is that some of the FFH employees, including Prem, read this board regularly. 

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I am going to let Sanjeev or someone else comment on the details of the dinner and meeting.

 

One thing that board members might be interested in is that some of the FFH employees, including Prem, read this board regularly. 

 

That is quite interesting.

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Yikes! I hereby retract anything uncomplimentary that I have ever said here.

 

Seriously though, just from the timing of some things that have happened I think that there are some other company execs (FBK?) that also must keep an eye on what is said on this board. Kudos to them for at least listening to other opinions.

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Yikes! I hereby retract anything uncomplimentary that I have ever said here.

 

Seriously though, just from the timing of some things that have happened I think that there are some other company execs (FBK?) that also must keep an eye on what is said on this board. Kudos to them for at least listening to other opinions.

 

Obviously the "Yikes" comment was tongue-in-cheek, but I would be interested in understanding whether Prem and Company get more out of the complementary comments or the critical ones. My guess would be the latter with the reason being that the FFH group is notoriously low on ego. Folks like this tend to welcome contrary thoughts/opinions to challenge pre-conceived notions. Those who are more egotistical tend to want to hear how great they are...the stereotypical "Yes-man". That may not mean that Prem and Co. are reading "Momentum Investors Digest", but hearing critical opinions, provided they are objective and well-thought-out, are ultimately more useful.

 

That's my guess...I'd be curious to know, though.

 

Yes, it goes without saying, I wish I could be in Toronto this week.

 

-Crip

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Agree 100% with Crip. I was brought up to believe that "constructive criticism" is always valuable information and I never cease to be amazed at people who get insulted or offended over helpful advice. It may not always be correct, it may not always be complementary, but it is always useful to see what others think of you or your operation. It involves thinking outside the box.

 

If you are involved in managing a corporation like FFH or some of the other companies mentioned on this board that Sanjeev has built, where a high percentage of the board members are very astute and intelligent investors (not me), it must provide a valuable source of commentary that reflects shareholder's view your operations. It is reassuring to know that FFH management are receptive and interested in outside ideas and criticisms involving their operations.

 

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