Billionaire investor Prem Watsa (Trades, Portfolio), the leader of Fairfax Financial Holdings (TSX:FFH, Financial), disclosed his first-quarter equity portfolio earlier this week.
Known as “Canada’s Warren Buffett (Trades, Portfolio),” the guru’s investment strategy mimics the practices of the Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) CEO in that his insurance conglomerate purchases entire companies as well as invests its float in publicly traded companies in order to achieve a high rate of return.
For the three months ended March 31, 13F filings show the guru entered two new positions, sold out of 11 stocks and added to or trimmed a number of other existing investments. His most notable trades included increased bets on Occidental Petroleum Corp. (OXY, Financial), Micron Technology Inc. (MU, Financial) and Orla Mining Ltd. (ORLA, Financial). The holdings of Atlas Corp. (ATCO, Financial) and Resolute Forest Products Inc. (RFP, Financial) were both dissolved after being acquired.
Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but the reports can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Occidental Petroleum
The investor upped the Occidental Petroleum (OXY, Financial) stake by 228.86%, buying 2.11 million shares. The transaction impacted the equity portfolio by 9.36%. The stock traded for an average price of $62.13 per share during the quarter.
Watsa now holds a total of 3.03 million shares, which occupy 13.45% of the equity portfolio and is the fourth-largest holding. GuruFocus says he has lost an estimated 4.83% on the investment so far.
The Houston-based oil and gas producer has a $52.74 billion market cap; its shares were trading around $58.91 on Wednesdaywith a price-earnings ratio of 6.74, a price-book ratio of 2.57 and a price-sales ratio of 1.65.
The GF Value Line suggests the stock is fairly valued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 74 out of 100, the GF Score is supported by high ratings for profitability and momentum, middling marks for growth and financial strength and a low value rank. As such, the company is likely to have average performance going forward.
Of the gurus invested in Occidental, Buffett has the largest stake with 23.98% of its outstanding shares. Dodge & Cox, the Smead Value Fund (Trades, Portfolio) and Steven Cohen (Trades, Portfolio) also have large holdings.
Micron Technology
Watsa boosted the Micron Technology (MU, Financial) position by 10.91%, picking up 377,800 shares. The transaction had an impact of 1.62% on the equity portfolio. Shares traded for an average price of $58.60 each during the quarter.
The investor now holds 3.84 million shares total, which account for 16.47% of the equity portfolio and is now the largest holding. GuruFocus estimates he has gained 16.30% on the investment to date.
The semiconductor company, which is headquartered in Boise, Idaho, has a market cap of $71.12 billion; its shares were trading around $65.10 on Wednesday with a price-earnings ratio of 46.83, a price-book ratio of 1.51 and a price-sales ratio of 3.16.
According to the GF Value Line, the stock is modestly overvalued currently.
The GF Score of 77 indicates the company is likely to have average future performance on the back of high ratings for financial strength, profitability, growth and momentum. The value rank, however, was low.
With a 3.56% stake, PRIMECAP Management (Trades, Portfolio) is Micron’s largest guru shareholder. Other top guru investors include Li Lu (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Andreas Halvorsen (Trades, Portfolio), Hotchkis & Wiley, the Parnassus Value Equity Fund (Trades, Portfolio), Mohnish Pabrai (Trades, Portfolio), Daniel Loeb (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Charles Brandes (Trades, Portfolio).
Orla Mining
The guru increased the Orla Mining (ORLA, Financial) holding by 43.51%, investing in 4.66 million shares. The transaction impacted the equity portfolio by 1.55%. During the quarter, the stock traded for an average per-share price of $4.27.
Watsa now holds 15.38 million shares, which make up 5.12% of the equity portfolio. It is also his sixth-largest holding. GuruFocus data shows he has gained around 31.28% on the investment.
The Canadian gold miner has a $1.40 billion market cap; its shares were trading around $4.54 on Wednesday with a price-earnings ratio of 35.47, a price-book ratio of 3.49 and a price-sales ratio of 6.93.
The price chart shows the stock has climbed 9.66% year to date.
The GF Score of 42 implies the company has poor performance potential, driven by a low profitability rank and high ratings for financial strength and momentum. However, the company did not receive growth or value ratings, so its true potential may not be accurately reflected.
Watsa has the largest stake in Orla Mining with 5.02% of its outstanding shares. First Eagle Investment (Trades, Portfolio) and Simons’ firm also own the stock.
Atlas
With an impact of -51.93% on the equity portfolio, Watsa’s 125.08 million-share stake in Atlas (ATCO, Financial) was closed after the company was acquired by Poseidon Acquisition Corp. on March 28. The London-based asset management company’s stock traded for an average price of $15.29 per share during the quarter.
GuruFocus found he gained around 51.61% on the long-held investment, which was previously his largest holding.
Resolute Forest Products
The 30.55 million-share stake in Resolute Forest Products (RFP, Financial) was also exited due to the company being acquired by Paper Excellence in early March. The transaction had an impact of -17.85% on the equity portfolio. During the quarter, shares of the Canadian paper manufacturer traded for an average price of $21.59 each.
According to GuruFocus, Watsa gained an estimated 14.12% on the investment over its lifetime. It was previously his second-largest position.
Additional trades and portfolio composition
During the quarter, Watsa also established positions in Provention Bio Inc. (PRVB, Financial) and PNM Resources Inc. (PNM, Financial), sold out of GE HealthCare Technologies Inc. (GEHC, Financial), reduced its holding of Activision Blizzard Inc. (ATVI, Financial) and boosted holdings like Bank of America Corp. (BAC, Financial) and Intel Corp. (INTC, Financial)
Nearly 35% of the guru’s $1.41 billion equity portfolio, which is made up of 66 stocks, was invested in the technology sector, followed by smaller positions in the energy, real estate and financial services spaces.
