Fairfax Financial (FFH.TO)

It is a good defensive pick in a market like this. They have a fantastic long term investing track record. They have had a lot of cash historically and are now starting to invest that. Their insurance operations are operating as well as they have in a long time. It is only at 1.1 times book value. He has been buying as recently as last week. (Analysts’ target: $749.47).

It fell recently because the HBC deal is not likely to go well for them. He feels it will go back to $780. Interest rates rising would be good for their insurance companies. They have a hedge against inflation. They tend to make good calls. (Analysts’ target: $749.47).

Prem Watsa is often described as the Warren Buffett of Canada. He is opportunistic, not afraid of taking risk. Some of his bets have not worked so well but many have. Insurance companies make money in two ways: core earnings from underwriting, and the investment returns from premiums. Warren Buffett initiated a different approach for investing insurance premiums. Rather than putting it into very safe, but low-yielding, bonds, he invested in stocks. Watsa follows this model and Fairfax has benefitted. The recent rises in interest rates are also very positive for all insurance companies because all of them still buy long-term assets. Fairfax has done nothing for investors for a long while, but he is proposing a top pick in the insurance industry today, and believes that the category has promise.

He bought it on the break out above $650 back in Q4 2017. He probably won’t hold it much above $780. Yield 1.7%. (Analysts’ price target is $746.97)

This is a big investment company. He's held this stock for a very long time. It's consolidated the last few years and is beahving well again after some good investments. Buy it now and put it away. It manages a ell-run, diversified portfolio.

He has been a shareholder of this company for a long time. Underperformed for the last couple of years mainly for some contrarian bets the CEO has made. Just made an investment on Toys r Us that looks interesting for the Real Estate. Good cash position. Good book value. (Analysts’ price target is $746.97)

Run by the brilliant Prem Watsa, but Watsa's made some bad calls about the direction of the markets in recent years. He thinks the street is coming back to this stock. He's owned it for five years. His portfolio is a little strange, like holding Sporting Life. That said, he believes in Prem and will be patient.

Management has been very good at calling macro moves. It does not hit his metrics, however. It is a relatively stable stock. A low payout ratio and low yield. You can hold it for stability for the long haul. It is an implied hedge against the market.

(A Top Pick Dec 1/16. Up 10%.) He still likes this. There is a chance the insurance markets are going to improve with improved pricing after all the catastrophe losses last year. This is a great long-term investor, and if you take a long-term view it’s a company that will be able to compound Book Value at an above average rate. You should think of this as a 5-10 year investment.

Prem Watsa owns a lot of businesses in India, so if you want an indirect way to play India out of a very volatile ETF, this is a way to do it. They also run and Indian ETF. This is an insurance company, so there is a lot of hedging being done. The stock sometimes does better in a poorer market because of the hedges.

(A Top Pick Oct 31/17. Down 5%.) The stock was moving up, started to round over. This has India. Has insurance interests, which can be affected by the West Coast buyers. He’s at the point where he is trying to decide if this is a real breakdown or should he keep it. Watch this before buying if you are in new investor.

(A Top Pick Dec 28/16. Up 4.99%.) This has been a little bit all over the board. It would still be a Buy today, but as far as the insurance space goes, there are probably better names. With this one, you get potential for improvement in their insurance underwriting.

Prem Watsa's investing approach is often compared to Warren Buffett's. He believes that over the long-term, the stock price is going to reflect a company's ROE relative to the Price to Book that you are paying for. If you take a very long-term view of this company, it is a fairly safe place to invest. If there was any pullback, this would be a very, very good buy.

(A Top Pick Oct 31/17, Up 1%) It's been doing very well and thinks that the stock will get into the $750 range. He likes the diversification outside of Canada. It’s an undervalued stocks.

Just reported results yesterday and made a huge amount of money, almost $500 million. He likes Prem Watsa. Like everybody else, he is not perfect. Took his hedges off earlier this year. They are very diversified, not just in insurance, but are in India, Ireland, etc. Wouldn't say this was cheap by any metric. He owns the preferreds. Wouldn't be buying now.