Prem Watsa is Chairman of Fairfax Financial, a Canadian P&C firm in the mold of Berkshire Hathaway. Prem is sometimes called Canada’s Warren Buffett. We held a profitable position in Fairfax for a while, but no longer hold any interest in the firm.
Like Klarman, Prem focuses on managing the downside and lets his value-investing philosophy and process take care of the upside. Prem had opened large short positions and bought Credit Default Swaps in the known bad guys–Bear, Lehman, Fannie, Freddie, etc–before the financial crisis and his investors profited handsomely. Here are some of his thoughts about current macro conditions:
First and foremost, we take a long-term, value-oriented view. That said, we currently believe that most markets are overpriced and we are not being adequately paid for risk. As a result, we have taken a number of steps to hedge our portfolios.
Amen, brother.
Source: CFA Magazine: http://viewer.zmags.com/publication/d42aa7ee#/d42aa7ee/25
