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Oracle of Toronto Still Not Ready to Wade Back into Stocks


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Canada’s best-known value investor still isn’t ready to wade back into equities. Instead, Prem Watsa defended his company’s stock-market hedging Thursday.


The chief executive of Fairfax Financial Holding Ltd. told investors at the company’s annual meeting that he remains concerned about deflation, high private and public indebtedness in developed countries and what’s likely to be a very long period of ultra-low interest rates and sluggish global economic growth.


That wariness has kept Fairfax on the sidelines, with $8.1 billion, or 30% of its equity portfolio, tucked away in cash. It’s equity position is also fully hedged, protecting against any stock market losses.


“Our first rule is not to lose money,” said Mr. Watsa. “We think that there are opportunities, but the background is a tough world with all sorts of unintended consequences.”


One stock he’s clearly more comfortable with: Research In Motion Ltd. BB.T +0.14%Early last year, he announced a big stake in the BlackBerry maker, took a board seat, and then doubled down, eventually buying up 10% of RIM shares.


On Thursday, he underscored that commitment. The company is rolling out its new phones, the BlackBerry Z10 and keyboard-equipped Q10.


“Time will show that BlackBerry will do very well,” he said.


Mr. Watsa is sometimes called the Warren Buffett of Canada. (Every country has one, right?) In turn, he credits his success to the late investing guru Sir John Templeton, and Fairfax made all of Mr. Templeton’s books available for shareholders to buy at Thursday’s meeting.


Mr. Watsa said Fairfax has returned almost 23% growth in book value per share compounded since he started the company 27 years ago. That’s better than any of his peers, including Mr. Buffett’s Berkshire Hathaway BRKB +0.05%, which returned 17% over the same period.



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“We think that there are opportunities, but the background is a tough world with all sorts of unintended consequences.”


So he's presently more macro than "value" oriented now? It sounds like he has found a few potential opportunities but it's the macro picture and his theory on deflation that is stopping him from continuing

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