Prem Watsa CM is an Indian-Canadian billionaire with a net worth of approximately $1 Billion. Prem been nicknamed the “Canadian Warren Buffett”. He modelled his fund (Fairfax Financial Holdings) on Warren Buffett’s Berkshire Hathaway and acquired many insurance companies.
Insurance is a great business for an investor as the outstanding payments or “float” can be invested until payouts are required. This has been one of the major growth engines of Warren Buffett’s Berkshire Hathaway. He thus has a similar investment strategy to Tom Gayner.
Fun Fact: Prem Watsa paid his way through school by selling household appliances door to door.
After which he became an investment analyst before creating his own firm (Fairfax Financial Holdings) in 1984.
Investing Strategy: Value Investor, International
1. Put your money where your mouth is
Prem Watsa Investing Legend Hedge Fund Quotes . Credit. www.Motivation2invest.com/Prem-Watsa
“Predicting the rain doesn’t count, building an Ark does” – Prem Watsa. Many pundits on shows such as CNBC will always be predicting a stock market crash around the corner or a terrible outlook for a certain stock, but really none of this matters.
As true conviction of whether it is “going to rain” would mean the investment firm would put hedges in place and thus profit from such an outcome. Thus it’s best to ignore those predicting rain and instead focus on those building Arks.
Billionaire Bill Ackman has recently bet big on rising interest rates caused by the rising inflation.
2. Mr Market
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“Don’t ever think the stock market knows more than you do about the underlying business” – Prem Watsa
Benjamin Graham is the father of value investing and he popularised the analogy of Mr Market.
Mr Market is bipolar person who would some days be very optimistic and other days be pessimistic. Thus when Mr Market is feeling pessimistic you can buy from him and sell when he is wildly optimistic.
3. Do Your Research
Prem Watsa Investing Legend Hedge Fund Quotes . Credit. www.Motivation2invest.com/Prem-Watsa
“We put our heads down, worked hard and have gotten results” – Prem Watsa.
4. Be a Long Term Investor
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“We’ve never had guidance in 23 years, we take a long term view” – Prem Watsa (Legendary Investor)
Long Term investors are extremely common among our list of the greatest investors of all time.
5. Invest with a Margin of Safety
Prem Watsa Investing Legend Hedge Fund Quotes . Credit. www.Motivation2invest.com/Prem-Watsa
“Why do Roman Bridges last for a long time? The people who designed them had to stand underneath, they had a massive margin of safety” – Prem Watsa (Legendary Investor).
Back to the value Investing principles of Benjamin Graham & Warren Buffett, the Margin of Safety. The first step is to value a company, then aim to buy the stock below that fair value. The Margin of Safety acts as a buffer against mistaken analysis and uncontrollable factors.
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