Prem Watsa’s Fairfax Financial Doubles Stake in RIMM

Fairfax Financial Holdings Ltd (FRFHF), the insurance firm run by Prem Watsa, has taken on a 5.12% stake in Blackberry maker Research in Motion (RIMM) according to a filing with the SEC dated January 26. The news comes less than a week after Watsa joined RIMM’s board.

The SEC filing lists that Prem Watsa owns 26,848,500 shares or shared voting. As of the close of trading on January 27, Watsa’s stake in the company was worth over $450 million. RIMM closed trading at $16.80 a share. Watsa had owned just under 11.8 million shares in RIMM at the end of the third quarter. Fairfax bought 6.5 million shares on January 25 and another 7.6 million shares on January 26. RIMM share prices on January 25 ranged from $14.93 to $16.43 a share, while trading January 26 was slightly less volatile, producing a price range of $16.09 to $16.77.

Prem Watsa

RIMM fell 75.40% in 2011. It opened 2011 at $58.94 but was trading at just $14.50 a share on December 30th. The difference is stark but RIMM is arguably priced to buy. Some analysts recommend the stock as a hold, estimating the stock will perform with the market. It carries an analyst recommendation of 3.2 on a scale in which 1.0 means “strong buy” and 5.0 means “sell,” but the range of analyst estimates on this stock is huge. One-year target estimates for the company range from $8, or less than half RIMM’s current price, to $40, which is more than double its price. In any case, the stock is priced well, at just 5.73 times its forward earnings and, right now, is trading at less than book value with free cash flow. Yet, the company still has a growing subscriber base and increases in revenue.

The Indian-born Watsa has been called the “Warren Buffett of Canada” because he has been following the footsteps of Warren Buffett and investing in Buffett’s favorite stocks such as Wells Fargo & Co. (WFC), Johnson & Johnson (JNJ), Kraft Foods Inc. (KFT) and US Bancorp (USB). He also maintains investment in Buffett’s Berkshire Hathaway (BRK.A) (BRK.B). But, Watsa is more than just a value investor. He is also a good one. His Fairfax Financial has increased its book value by almost 25% annually since 1985. It also boasts returns close to 100% since 2007 vs. a loss of 20% for the S&P 500 during the same period. Watsa made $2.7 billion in 2008 by buying up credit-default swaps on lenders. At the end of the third quarter Watsa’s Fairfax Financial had large positions in Johnson&Johnson, Dell Inc (DELL), Level 3 (LVLT), Abitibibowater (ABH), and Frontier Communications (FTR). Prem Watsa is a long-term investor and usually don’t make a lot of trades from one quarter to the next. During the third quarter, he didn’t make any changes in 36 of the 44 positions Fairfax had.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!