BlackBerry Ltd (BBRY), Resolute Forest Products Inc (RFP), SandRidge Energy Inc. (SD): Fairfax’s Top 3 Picks Account for Almost Half Its Equity Portfolio’s Value

Fairfax Financial Holdings, the hedge fund founded and managed by Prem Watsa, recently made public its long equity holdings for the second quarter of 2014. The portfolio, worth more than $1.46 billion, saw 5 new stocks arrive over the period, and another 5 positions closed out. In this article we will take a look at the fund´s top holdings for the quarter, which remained the same as in the first quarter.

For the third consecutive quarter, the fund placed its largest bet on Resolute Forest Products Inc (NYSE:RFP), a $1.6 billion market cap owner and operator of pulp and paper mills and wood products facilities in the United States, Canada and South Korea, and power generation assets in Canada. Despite the fact that Fairfax kept its stake unchanged over the quarter, the position lost value, as the stock price plunged about 10.6% between April and June. The fund disclosed ownership of 29 million shares of Resolute Forest Products Inc (NYSE:RFP), worth almost half a billion dollars. This position accounts for approximately 1/3 of its equity portfolio’s total market value, and makes Fairfax the largest hedge fund shareholder of record (amongst those we track) at the company.

Prem Watsa

Another major hedge fund that acknowledged holding a big chunk of Resolute Forest Products Inc (NYSE:RFP)’s stock is Francis Chou’s Chou Associates Management, which kept its stake unchanged over the second quarter, at 4.11 million shares, worth more than $73 million.

Second in line is BlackBerry Ltd (NADSAQ:BBRY), the $5 billion market cap designer, manufacturer and marketer of wireless solutions for the mobile communications market. Fairfax declared ownership of 46.65 million shares of the company, worth roughly $477 million, up from $376 million by the end of the first quarter. BlackBerry Ltd (NADSAQ:BBRY)’s stock returned 21.7% over the second quarter, and 27% year-to-date. However, it still trades at 1.3 times the company’s sales, at half it’s peers’ average valuation.

Once again, Mr. Watsa is the largest hedge fund shareholder of record at the company. Another fund that disclosed no changes in its position, and ranks amongst BlackBerry Ltd (NADSAQ:BBRY)’s top ten hedge fund investors, is Fang Zheng’s Keywise Capital Management, which owns 3.6 million shares of the company, worth almost $37 million.

Last in this list is SandRidge Energy Inc. (NYSE:SD), a $2.6 billion market cap oil and natural gas company engaged in exploration, development and production activities in the Mid Continent, Gulf of Mexico and Gulf Coast. Similar to BlackBerry Ltd (NADSAQ:BBRY)’s case, SandRidge Energy Inc. (NYSE:SD)’s stock gained 14% over the second quarter of the year, making the Fairfax’s stake worth more than $232 million. However, the stock price has plummeted over the past month, losing more than 20%, largely affecting the fund’s returns for the third quarter of the year.

Leon Cooperman’s Omega Advisors also saw its stake in SandRidge Energy Inc. (NYSE:SD) gain value over the second quarter of the year. However, the fund sold almost 1 million shares over the period, profiting from the price increase, and slightly diminishing the impact of the recent stock price fall. Omega Advisors last disclosed ownership of 46.78 million shares of the company, worth approximately $334 million. However, at current stock prices, the position is worth only $243 million.

Disclosure: Javier Hasse holds no position in any stocks or funds mentioned.

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