Renowned investor Prem Watsa, often referred to as the "Canadian Warren Buffet," recently disclosed his firm's Q2 2023 portfolio updates. Watsa, known for his value investing approach, has a reputation for making long-term investments in undervalued companies. His investment philosophy is deeply rooted in the principles of Benjamin Graham, focusing on safety of principal and an adequate return.
As of the end of Q2 2023, Watsa's portfolio contained 60 stocks with a total value of $1.53 billion. The top holdings were Occidental Petroleum Corp (OXY, Financial) with 23.11%, BlackBerry Ltd (BB) with 16.87%, and Micron Technology Inc (MU) with 16.01%.
Top Trades of the Quarter
The most significant move in the quarter was the purchase of 2,989,991 shares of Occidental Petroleum Corp (NYSE:OXY), bringing the total holding to 6,020,418 shares. This trade had an 11.48% impact on the equity portfolio. The stock traded for an average price of $60.03 during the quarter. As of August 14, 2023, OXY had a market cap of $57.53 billion and a stock price of $65.005. Despite a slight negative return of -0.12% over the past year, GuruFocus rates the company's financial strength and profitability 5 and 7 out of 10, respectively. The valuation ratios indicate a potentially undervalued stock with a price-earnings ratio of 11.04, a price-book ratio of 2.81, a EV-to-Ebitda ratio of 4.98, and a price-sales ratio of 2.03.
Significant Sell-Outs
Watsa's firm completely sold out its investment in Bank of America Corp (NYSE:BAC), previously holding 3,402,000 shares. The shares were traded for an average price of $28.54 during the quarter. As of August 14, 2023, BAC had a market cap of $244.66 billion and a stock price of $30.775. Despite a negative return of -12.87% over the past year, GuruFocus rates the company's financial strength and profitability 4 and 6 out of 10, respectively. The valuation ratios, including a price-earnings ratio of 8.85, a price-book ratio of 0.96, a PEG ratio of 1.61, and a price-sales ratio of 2.49, suggest a potentially undervalued stock.
Another significant sell-out was Chevron Corp (NYSE:CVX), where the firm sold all its 314,000 shares. The shares were traded for an average price of $160.37 during the quarter. As of August 14, 2023, CVX had a market cap of $312.10 billion and a stock price of $163.69. The stock has returned 5.98% over the past year. GuruFocus rates the company's financial strength and profitability 8 and 7 out of 10, respectively. The valuation ratios, including a price-earnings ratio of 10.37, a price-book ratio of 1.93, a PEG ratio of 1.15, a EV-to-Ebitda ratio of 5.52, and a price-sales ratio of 1.47, suggest a potentially undervalued stock.
These moves reflect Watsa's investment philosophy of focusing on undervalued stocks with strong fundamentals. It will be interesting to see how these investments play out in the coming quarters.
