A Value Investors Mecca Should Extend Beyond Omaha To Toronto And Prem Watsa

Johnny HopkinsPrem WatsaLeave a Comment

Great article in the AFR that suggests Omaha is not the only place that value investors are heading to for great ideas. It seems Denver and Toronto are becoming equally important destinations, as are the annual meetings of Markel Corporation and Fairfax Financial, as investors prepare for life after Buffett and Munger.

Toronto in time may become the next Omaha. For years, Prem Watsa, the chairman of Canadian insurance group Fairfax Financial, has been heralded as that nation’s version of Warren Buffett.

Here’s an excerpt from that article:

This year, for the first time ever, the Berkshire Hathaway annual general meeting was broadcast live on the internet. It meant that just about anyone could hear the investment insights of Warren Buffett and Charlie Munger, without having to travel to Omaha.

But that didn’t discourage investors Wayne Peters, a 19-year pilgrim, and Nathan Bell, who recently joined the Peters MacGregor global equities fund, from making the long trek to the heart of America.

But like many other value investors, they’re looking beyond Omaha for those great ideas.

Denver and Toronto are becoming equally important destinations, as are the annual meetings of Markel Corporation and Fairfax Financial, as this dedicated group prepares for life after Buffett and Munger.

Toronto in time may become the next Omaha. For years, Prem Watsa, the chairman of Canadian insurance group Fairfax Financial, has been heralded as that nation’s version of Warren Buffett. If Buffet and Munger are the eternal optimists, Watsa is steadfast in his bleakness. He famously made inspired and lucrative “big short” derivative bets against US housing in 2008 that netted the company billions.

Some investors are losing patience, but Watsa isn’t budging. He used a parable about the “stupidest boy in the world” to explain to shareholders why he is sticking to his bearish bets.

The story he tells shareholders is as follows. Each day the barber offered the boy a choice between a dollar coin in one hand, and two quarters in the other, and each day the boy chooses the quarters, to the amusement of the barber and his customer.

Eventually the barber’s customer asks him why, to which the boy responds: “The day I choose the dollar, the game is over.”

You can read the full article here.

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