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Little Piece on Fairfax/Prem in Forbes


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Prem Watsa is CEO of Fairfax Financial Holdings, a Toronto-based insurance corporation in the likeness of Berkshire Hathaway (BRK.A)(BRK.B) — he uses the float to invest while growing the book value of the company and making acquisitions. Also like Buffett, he pens insightful, widely-read annual letters in which he discusses his company, the economy and investing in general. In this year’s annual letter he said where he saw the stock market heading in the next decade. He also mentioned six of his stocks: IRE, LVLT, RIMM, WFC, USB, JNJ. Watsa invests according to Ben Graham value principles and has earned a 9.6% average return over the last 26 years. His ten-year cumulative average is 154.6% versus 16.4% for the S&P 500.


While Watsa worries about a 1930s-style GDP stagnation in the U.S. as it “digests the excesses of the past 20 years,” he is bullish on common stock for the long term. He is fully hedged as he expects major risks in the next three years, but will gradually remove the hedges as the risks get discounted in common stock prices.

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