Tuesday , May 18 2021

The Canadian Warren Buffet has been down by 26% since June – the time to buy Fairfax Financial Holdings Ltd (TSX: FFH)?

If you're not familiar with the Canadian Warren Buffet, it's time to get to know each other. Prem Watsa escaped Fairfax Financial Holdings Ltd. (TSX: FFH) for more than 25 years. During that time, he increased the book value of the company by approximately 20% per annum – which is in line with Warren Buffet Berkshire Hathaway Inc.

A major component of this long-term success was its ability to hold thoughts on the first principles, the methodology recently celebrated Tesla Inc CEO Elon Musk. About 2000 years ago, Aristotle introduced the idea of ​​the first principles, defining them as "the first ground on which something is known". Basically, you are not thinking about the world through other perspectives; you are thinking of the world as it is.

Prem Watsa is an expert on thinking about the first principles

Although the first principles can seem simple, it is very difficult to implement them in real time. When markets are running up, even the most capable investors are burned by betting right at the wrong time.

It is well known that Warren Buffet bought the shares ConocoPhillips in the worst possible time for more than 30 years. – Without encouraging Charlie [Munger] or anyone else, I bought a large amount of ConocoPhillips shares when oil and gas prices were close to their peak, "wrote Buffet in his letter to shareholders in 2008. "In no way did I expect a dramatic decline in energy prices in the last half of the year." He lost billions of this bet, although at that time the market felt it was a clever decision.

However, in the long run, Warren Buffet has managed to avoid multitudes, often choosing investments that are not in a favorable position in vulnerable industries. Prem Watsa showed the same ability, and in some cases showed superior ability.

Since 2006, Fairfax shares surpassed TSX by more than 300%. How? Avoiding risky bets when market optimism is the biggest. For example, when global markets were in turmoil in 2008 and 2009, while some stock markets fell by 40% or more, Fairfax shares had positive returns both years.

Fairfax can be your safe harbor in the storm

Often, investors think that their success is achieved over the years, but avoiding capital loss when the markets are in a free fall is a tremendous advantage. This has always been the specialty of Prem Wats, which is interesting because Fairfax stocks have been lagging in the market over the last few years in the middle of a multi-year market.

Since the end of 2014 Fairfax shares are roughly flat, which is a rare occurrence. But in recent years, Fairfax has built some perspective positions. The most important thing is that it is launched Fairfax India Holdings Corp. (TSX: FIH.U) i Fairfax Africa Holdings Corp. (FAH.U). These vehicles, of which Fairfax Financial owns large shares, are unique ways to profit from long-term opportunities in India and Africa, both regions that were difficult for investors to be exposed to.

Prem Watsa has a deep network of entrepreneurs and partners in both of these regions and uses them to get attractive deals. Many of these jobs are private, which means that very few external investors can participate. For example, Prem Watsa has decided to start Fairfax Africa after he realizes that Fairfax Financial receives a growing number of attractive investment opportunities across the continent. Creating a dedicated vehicle enables the company to bring focused, well-informed decisions.

Fairfax Financial is the best of both worlds

Investing in Fairfax Financial gives you Prem Wat's investment capability and unique growth opportunities in Africa and India. As markets grow increasingly nervous, it is difficult to find this combination of protection and long-term growth. And when stocks drop by more than 20% from June, new investors get a rare opportunity to buy at a discounted price.

Prediction of a Japanese billionaire will give you goats

The famous Japanese billionaire sounds alarmed at what could be trillion dollar technology. Actually, he is now preparing a $ 100 billion "war chest" to fully invest in this "scary" new technology that could bring enormous profit to investors.

And if it is right, early investors in this super-trend could become rich. Because this potentially trilateral market … is still ignored by most ordinary investors.

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Fool Associate Ryan Vanzo has no position in the said shares. Fairfax Financial is a recommendation Stock Consultant Canada.

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