Greece, BlackBerry - 'cautious' bets for Canada's Fairfax

Wed Dec 4, 2013 4:09am EST
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By Laura Noonan

LONDON (Reuters) - Bets on debt-ravaged Greece or ailing phone maker BlackBerry would make many investors flee, but for Prem Watsa both are part of a "cautious" strategy he employs to manage Fairfax Financial's $23.3 billion portfolio.

Indian-born Watsa, 63, often compared to U.S. investor Warren Buffet, another self-made man, prides himself on a strategy of investing in stocks and markets others avoid.

In 1990, he was on the right side of the Tokyo market crash, and seventeen years later, his bet against the U.S. housing market bubble left him with billions of dollars in profits while less prescient peers took a battering.

His 2011 investment in Bank of Ireland (BKIR.I: Quote) - the only domestic Irish bank not forced into state ownership after a financial crisis - has almost trebled in value to 845 million euros ($1.15 billion).

Investments in Greece and a $4.7 billion bid for BlackBerry, which has faded almost to irrelevance in a competitive smartphone market, fit the pattern of contrarian investments, but it's too early to say if they will succeed.

"We've got lots of cash, we've got 30 percent cash," Watsa told Reuters in a rare interview by telephone on Friday, referring to the portion of his fund that is invested in cash.

The high cash exposure comes despite record low interest rates as central banks on both sides of the Atlantic implement quantitative easing (QE) to pump economies with cheap money.

Reticent about what many investors have seen as the bet of the year in U.S. equities, where the broad S&P500 index of leading shares has gained more than 26 percent so far in 2013, Watsa said the market was overstretched.   Continued...

Fairfax Financial Holdings Ltd. Chairman and Chief Executive Officer Prem Watsa speaks during the company's annual meeting in Toronto April 11, 2013. REUTERS/Aaron Harris