This article is part of a series that provides an ongoing analysis of the changes made to Prem Watsa’s 13F portfolio on a quarterly basis. It is based on Watsa’s regulatory 13F Form filed on 5/15/2024. Please visit our Tracking Prem Watsa’s Fairfax Financial Holdings Portfolio series to get an idea of his investment philosophy and our previous update for the fund’s moves during Q4 2023.
This quarter, Watsa’s 13F portfolio value decreased from $1.47B to $1.23B. There are 42 securities in the portfolio, but it is concentrated among a few large stakes. The focus of this article is on the larger (greater than 0.5% of the portfolio each) equity holdings. The top three positions are Occidental Petroleum, Orla Mining, and Blackberry. Together, they account for ~60% of the entire 13F portfolio.
Note 1: Fairfax Financials’ (OTCPK:FRFHF)(TSX:FFH:CA) 13F holdings only represent a small portion of their overall investment portfolio. The total size as of Q1 2024 was ~$63B of which ~$7.8B was in cash and short-term positions. FRFHF currently trades at ~$1129 compared to Book Value (Q1 2024) of ~$945 per share. The equity portfolio was 100% hedged starting from around 2003 but those were removed in Q4 2016.
Note 2: Prominent equity allocations not in the 13F report include investments in Greece and India (OTCPK:FFXDF). Greek allocation primarily consists of a ~32% ownership of Eurobank (OTCPK:EGFEY) (OTCPK:EGFEF). Other prominent stakes include ~27% of Thomas Cook India, 54% of Bangalore International Airport Limited, and 31% of Quess Corp Limited.
Stake Disposals:
Meta Platforms (META)(META:CA): The very small 0.52% META stake was built during Q4 2022 and Q2 2023 at prices between ~$90 and ~$280. The disposal this quarter was at prices between ~$347 and ~$512. The stock currently trades at ~$466.
Stake Increases:
Orla Mining (ORLA): ORLA is a ~17% of the portfolio stake purchased during Q3 2022 at prices between ~$2.40 and ~$3.70. Q1 2023 saw a ~45% stake increase at prices between ~$3.85 and ~$4.90. That was followed with another ~30% increase in the next quarter at prices between ~$3.90 and ~$4.85. The position was increased by 56% during Q3 2023 at prices between ~$3.57 and ~$4.76. That was followed by another ~20% increase in the last quarter at prices between ~$2.70 and ~$3.50. The position was increased by 48% this quarter at prices between $3.10 and $3.79. The stock currently trades at $4.04.
Note: They control ~18% of the business.
Stake Decreases:
Micron Technology (MU): MU is currently at ~7% of the portfolio. The original small position saw a ~60% stake increase in Q1 2019 at prices between $31 and $44. Q1 2020 saw a ~115% stake increase at prices between $34.50 and $60. That was followed by a whopping ~400% stake increase during Q3 2022 at prices between ~$49 and ~$65. The stake was decreased by 82% this quarter at prices between ~$79 and ~$119. The stock currently trades at ~$126.
Crescent Capital BDC (CCAP): CCAP is a 2.73% of the portfolio stake purchased in Q1 2020 at prices between $6.21 and $17.10. The stock currently trades at $17.81. There was a ~7% trimming this quarter.
Note: Regulatory filings since the quarter ended show them owning ~1.8M shares (4.9% of business). This is compared to ~1.95M shares in the 13F report.
Vanguard S&P Index (VOO): The very small 0.31% stake in VOO was reduced by ~80% this quarter.
Kept Steady:
Occidental Petroleum (OXY): OXY is now the largest 13F stake at ~32% of the portfolio. It was built during the four quarters through Q2 2023 at prices between ~$57 and ~$67. The stock is now at $61.96.
Blackberry Ltd (BB): BB stake is now at 10.42% of the portfolio. The position was first purchased in 2010 at around $50 for 2M shares. The stake was aggressively built up to 46.7M shares in the following years. Their net cost on a fully converted basis is ~$10 per share and the stock currently trades at $2.84. There has only been very minor activity in the last eleven years.
Note: In Q4 2013, Fairfax co-sponsored a cash-infusion of $1B through convertible debentures ($10 conversion price earning 6% interest) – they financed $500M of that transaction and the remaining was funded by a consortium of other investment funds. In Q3 2016, those shares were redeemed, and new ones issued ($605M in 3.75% debentures convertible at $10 due 11/13/2020) to the same entities in a private placement. On 9/2/2020, those were redeemed, and new ones issued ($330M in 1.75% debentures convertible at $6 due 11/13/2023). On 11/13/2023, those were redeemed and new ones issued ($150M in 1.75% debentures convertible at $6 due 2/15/2024 with an optional extension possible to 5/15/2024). Those were redeemed and new ones issued in January ($175M in 3% debentures convertible at $3.88 due 2/15/2029).
Kennedy-Wilson Holdings (KW): KW stake is a large (top five) 9.29% of the 13F portfolio position first purchased in 2010. Q4 2016 saw a ~40% increase at prices between $20 and $23 and that was followed with a ~8% increase in Q1 2018. KW currently trades at $9.97.
Note: They also have warrants that they acquired as part of preferred equity investments made in the 2021-22 timeframe. Their overall ownership stake in the business is ~20% (31.32M shares).
Alphabet Inc. (GOOG)(GOOG:CA): GOOG is a 3.37% stake purchased in Q1 2020 at prices between ~$53 and ~$76. There was a ~22% stake increase in Q4 2020 at prices between ~$71 and ~$91. The last quarter saw a ~18% reduction at prices between ~$123 and ~$143. The stock currently trades at ~$175.
Franklin Resources (BEN): The 2.29% BEN position was established in Q1 2020 at prices between $15.30 and $26.25 and it is now at $23.13.
Alibaba Group Holdings (BABA), Bank of Nova Scotia (BNS), General Motors (GM), Helmerich & Payne (HP), Intel Corp. (INTC)(INTC:CA), Johnson & Johnson (JNJ)(JNJ:CA), Merck (MRK), Pfizer Inc. (PFE)(PFE:CA), and Taiwan Semi (TSM): These small (less than ~2% of the portfolio each) stakes were kept steady this quarter.
The spreadsheet below highlights changes to Watsa’s 13F stock holdings in Q1 2024:
Prem Watsa – Fairfax Financial Portfolio – Q1 2024 13F Report Q/Q Comparison (John Vincent (author))
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Read the full article here
