Fairfax Financial (FFH.TO)

Has been watching this for a very long time. He likes Prem Watsa and the company, but Prem was doing some goofy things with hedging, etc. and it showed in the stock price. He just bought this and thinks there is a lot more room to go. Prem has got back to the basics of investing, and he thinks this is going right back to the top of its trading range of around $750. (Analysts' price target is $699.16.)

(A Top Pick Aug 18/16. Down 5%.)He still loves this. Technically, it is just past some resistance and had a really good day today. Chart is showing a nice upward trend from the beginning of July. He also likes Prem Watsa's way of doing business. Still a BUY.

He admires management very much. It is interesting that they are getting a reasonable toe-hold in India. They seem to have a good knowledge of that area. They were negative on equity markets for some time, but Prem Watsa has finally come around that this market is going to run a little further. Hopes they get a little more aggressive. Expects you will see better results over the next 12 months.

Sell or Hold? This is very difficult to analyse. It’s like a black box and he doesn’t know what the earnings are going to be. There is the insurance side, but he doesn’t know exactly what the investments are all the time. For the first 7-8 years after the crash, because Prem Watsa owned all these Puts, it did really well in the crash, and he was able to grow BV on the insurance side and made gains on the portfolio, but you never knew where they where. Prem finally had a loss on the Puts but was overwhelmed by gains on the other stuff. He owns a lot of their bonds and preferreds. Because of their uncertainty, they always trade at a discount, so the yields are higher.

It is on his buy list. He likes that management has been switching out of more hedgy types of positioning and into traditional long approaches to the market. FFH-T has good exposure to India. He likes it.

This is essentially a bet on the acumen of Prem Watsa. Fairfax just bought Allied World for $4.9 billion, which gives them the brokerage market and the Fortune 1000 companies. The stock is off 15% because of his bet on it being deflationary where he lost $5 billion, but he made 5 billion on the other side in terms of his investments. Dividend yield of 2%. (Analysts’ price target is $553.13.)

Owns some of their preferred shares. Doesn’t think he would buy the common shares now. Has a huge insurance operation in many, many countries. He likes what they do. They made a major mistake during the recession, when they hedged on the basis of the market going to go down, but the market has done fantastic.

(A Top Pick June 30/16. Down 7%.) He still loves this name and thinks it will do quite well. Interest rates going up is really good for financials.

Technically, the chart is showing a bearish triangle, and we haven’t broken above that. When you break below a support line, you want to break above it before you consider it. This is not the seasonal period for this company. If you are interested in this, wait until it goes above $600 and then have a look.

This had a spectacular growth spurt, and since that time the growth has pretty much levelled out for a long time. Now it just kind of trades in a nice trading range. As time has gone on, the market has become less and less interested, as Prem Watsa has not been able to deliver the returns of the glory days. The stock price and Fair Market Value, as he measures it, are exactly the same. He is concerned that there may be a further set back.

Prem Watsa has an enviable track record of calling the market and making long-term investments. The issue is always trusting his ability to make the right calls. So far, he’s proven he’s worth it. The company has been fairly bearish on the market for a long time, so the results haven’t really kept up with what the index has been doing. Thinks they’ll be able to create value over the long-term.

He stays away from the stocks where there is a larger than life type of figure heading them, especially when it is an asset manager. A little bit too black box complex to understand. Dividend yield of 2.3%.

Prem Watsa is a terrific insurance operator and has made some very interesting distressed investments, but overall, some of his picks have been awful, and his timing sometimes has been awful. This is a stock to own when things get rocky. He would rather own a Berkshire Hathaway.

This stock has nothing to do with seasonality. Technically, the chart shows it is in a trading range, but has been in a downward trend. It is holding its support in the $590 level. If that support level holds, that’s great, but if it doesn’t, then there is a problem.

This is a large insurance company with assets around the world. Prem Watsa was very bearish on US markets a number of years ago and made a huge bet on deflation. He is now becoming more bullish. He hasn’t done a good job of growing BV over the last 5 years. This is trading at a multiple to BV.