Prem Watsa’s Fairfax Financial Holdings Portfolio Tracking – Q2 2024 Update (FRFHF)

This article is part of a series providing an ongoing analysis of changes to Prem Watsa’s 13F portfolio on a quarterly basis. Based on Watsa’s regulatory Form 13F filed on 08/14/2024. Please visit our Fairfax Financial Holdings portfolio tracking series by Prem Watsa to get an idea of ​​his investment philosophy and ours previous update for fund movements in Q1 2024.

In this quarter, the value of Watsa’s 13F portfolio decreased from $1.23 billion to $1.18 billion. There are 38 titles in the portfolio, but it is concentrated among a few big bets. The focus of this article is on larger stock holdings (greater than 0.5% of the portfolio each). The top three positions are Occidental Petroleum, Orla Mining and Kennedy-Wilson. Together, they represent ~61% of the entire 13F portfolio.

Note 1: Fairfax Financial (OTCPK:FRFHF) (TSX:FFH:CA) 13F holdings represent only a small portion of their total investment portfolio. The total size in Q2 2024 was ~$64 billion, of which ~$7.7 billion was in cash and short positions. FRFHF is currently trading at ~$1181 compared to book value (Q2 2024) of ~$980 per share. The equity portfolio has been 100% hedged since 2003, but was delisted in Q4 2016.

Note 2: Prominent equity allocations not included in the 13F report include investments in Greece and India. The Greece allocation consists primarily of a ~34% ownership of Eurobank (OTCPK:EGFEY) (OTCPK:EGFEF). Other major stakes include Fairfax India (OTCPK:FFXDF), which includes Bangalore International Airport Limited, Thomas Cook India, Poseidon, Stelco Holdings, Go Digit Infoworks and Quess Corp Limited.

New stakes:

Under Armor (UA): UA represents 2.38% of the portfolio position purchased this quarter at prices between $6.28 and $7.02, and the stock is currently trading well above that range at $8.27.

Meta Platforms (META): The 0.55% META stake was priced between ~$430 and ~$527 this quarter, and is now at ~$528.

Note: Meta Platforms is back in the portfolio after a gap of one quarter. A very small 0.52% stake was built in Q4 2022 and Q2 2023 at prices between ~$90 and ~$280. The sale in the last quarter was at prices ranging from ~$347 to ~$512.

Stake Removal:

Crescent Capital BDC (CCAP): CCAP represented 2.73% of the portfolio stake purchased in Q1 2020 at prices ranging from $6.21 to $17.10. The position was sold this quarter at prices ranging from $16.48 to $18.78. The stock is currently trading at $18.36.

Stake Increases:

Vanguard S&P 500 ETF (VOO): The ~4% portfolio share in VOO was built primarily this quarter at prices between ~$454 and ~$503, and the stock is now above that range at ~$517.

Taiwan Semi (TSM): TSM is now a ~2% position. The initial small stake was up ~50% this quarter at prices ranging from ~$127 to ~$180. The stock is currently trading at ~$171.

Capri Holdings (CPRI): The very small 0.56% CPRI position saw a minor increase of ~7% this quarter.

Stake Drops:

Micron Technology (MU): MU’s initial small position saw a ~60% increase in holdings in Q1 2019 at prices between $31 and $44. Q1 2020 saw a ~115% increase in stake at prices between $34.50 and $60. This was followed by a huge ~400% increase in stake in Q3 2022 at prices between ~$49 and ~$65. The stake has been reduced by 82% in the last quarter to prices ranging from ~$79 to ~$119. This quarter, the stake was almost sold at prices ranging from ~$107 to ~$153. The stock is currently trading at ~$103.

Constantly maintained:

Occidental Petroleum (OXY): OXY is now the largest 13F stock at ~32% of the portfolio. It was built over the four quarters to Q2 2023 at prices between ~$57 and ~$67. The stock is now near the low end of this range at $57.24.

Orla Mining (ORLA): ORLA represents approximately 18% of the portfolio stake acquired in Q3 2022 at prices between ~$2.40 and ~$3.70. Q1 2023 saw a ~45% increase in the stake at prices between ~$3.85 and ~$4.90. This was followed by another increase of ~30% in the next quarter to prices between ~$3.90 and ~$4.85. The position was increased by 56% in Q3 2023, at prices between ~$3.57 and ~$4.76. This was followed by another ~20% increase in the next quarter to prices between ~$2.70 and ~$3.50. The last quarter also saw a 48% increase in stake at prices between $3.10 and $3.79. The stock is currently trading at $4.34.

Note: They control ~18% of the business.

Kennedy-Wilson Holdings (KW): KW stake is a large (top three) ~11% of the 13F portfolio position first purchased in 2010. Q4 2016 saw ~40% growth at prices between $20 and $23 and this was followed by a up ~8% in Q1 2018 KW currently trades at ~$11.

Note: They also have warrants that they purchased as part of preferred capital investments made in 2021-22. Their total stake in the business is ~20% (31.32 million shares).

Blackberry Limited (BB): The BB stake is now at ~10% of the portfolio. The position was first bought in 2010 at about $50 for 2 million shares. The stake was raised aggressively to 46.7 million shares over the next few years. Their net cost on a fully converted basis is ~$10 per share and the stock is currently trading at $2.42. For the past eleven years, there has been very little activity.

Note: In Q4 2013 Fairfax co-sponsored a $1 billion cash infusion via convertible bonds ($10 conversion price earning 6% interest) – they funded $500 million of that deal and the rest was funded by a consortium of other investment funds. In Q3 2016, those shares were repurchased and new ones were issued ($605 million in 3.75% convertible bonds at $10 due 11/13/2020) to the same entities in a private placement. On 09/02/2020, they were redeemed and new ones were issued ($330 million in 1.75% bonds convertible at $6 due 11/13/2023). On 11/13/2023, these were redeemed and new ones were issued ($150 million in 1.75% bonds convertible at $6 due 02/15/2024 with an optional extension possible until 05/15/2024). These were redeemed and new ones were issued in January ($175 million in 3% bonds convertible at $3.88 due 2/15/2029).

Alphabet Inc. (GOOGL): GOOG is a 4.23% stake purchased in Q1 2020 at prices ranging from ~$53 to ~$76. There was a ~22% increase in participation in Q4 2020 at prices between ~$71 and ~$91. Q4 2023 saw a discount of ~18% to prices between ~$123 and ~$143. The stock is currently trading at ~$167.

Franklin Resources (BEN): The 1.89% BEN position was established in Q1 2020 at prices between $15.30 and $26.25 and is now at $20.94.

Alibaba Group Holding Limited (BABA), Bank of Nova Scotia (BNS), General Motors (GM), Helmerich & Payne (HP), Intel Corp. ( INTC ), Johnson & Johnson ( JNJ ), Merck ( MRK ), and Pfizer Inc. (PFE): These small stakes (less than ~2% of the portfolio each) were held constant this quarter.

The spreadsheet below highlights changes to Watsa 13F shares in Q2 2024:

Source: John Vincent. Data constructed from Fairfax Financials’ 13F filings for Q1 2024 and Q2 2024.

Editor’s Note: This article discusses one or more securities that are not traded on a major US exchange. Please be aware of the risks associated with these stocks.