Prem Watsa (Trades, Portfolio), chairman and CEO of Fairfax Financial Holdings Ltd. (TSX:FFH, Financial), disclosed in a regulatory filing that his insurance conglomerate’s top new buys during the first quarter included Activision Blizzard (ATVI, Financial), Tenneco Inc. (TEN, Financial), Autohome Inc. (ATHM, Financial) and Industrias Bachoco SAB de CV (IBA, Financial).
The Canada-based guru met in 1985 Francis Chou (Trades, Portfolio), who told him that Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio) made money using insurance float. The Toronto-based insurance conglomerate seeks a high rate on investment capital through a conservative value investment philosophy with an emphasis on total return.
As of March, Fairfax’s $3.01 billion 13F equity portfolio contains 66 stocks, with nine new positions and a quarterly turnover ratio of 1%. The top four sectors in terms of weight are financial services, technology, basic materials and real estate, with weights of 52%, 13.82%, 13.16% and 10.95%, respectively.
Investors should be aware that the 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, so they may or may not be held by the reporting firm today or even when this article was published.
Activision Blizzard
Fairfax invested in 75,400 shares of Activision Blizzard (ATVI, Financial), giving the position a 0.20% weight in the equity portfolio. Shares averaged $77.76 during the first quarter; the stock is fairly valued based on Wednesday’s price-to-GF-Value ratio of 1.03.
Software giant Microsoft (MSFT, Financial) announced in January that it entered into an agreement to acquire Activision Blizzard. The Santa Monica, California-based gaming company has a GF Score of 92 out of 100, driven by a momentum rank of 10 out of 10, a profitability rank of 9 out of 10, a GF Value rank of 6 out of 10 and a rank of 8 out of 10 for financial strength and growth.
Buffett’s Berkshire purchased 49,657,101 shares of Activision Blizzard during the first quarter, expanding the position by 338.77%.
Other gurus with holdings in Activision include PRIMECAP Management (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies.
Tenneco
Fairfax purchased 358,100 shares of Tenneco (TEN, Financial), allocating 0.22% of its equity portfolio to the position. Shares averaged $14.26 during the first quarter; the stock is significantly overvalued based on Wednesday’s price-to-GF-Value ratio of 1.33.
The Lake Forest, Illinois-based vehicle parts company has a GF Score of 71 out of 100, driven by a profitability rank of 7 out of 10 and a momentum rank of 6 out of 10 despite growth, GF Value and financial strength all ranking between 3 and 4 out of 10.
Autohome
Fairfax purchased 110,000 shares of Autohome (ATHM, Financial), giving the position a 0.11% equity portfolio weight. Shares averaged $30.33 during the first quarter; the stock is significantly undervalued based on Wednesday’s price-to-GF-Value ratio of 0.39.
The Beijing-based media company has a GF Score of 74 out of 100, driven by a profitability rank of 9 out of 10 and a rank of 8 out of 10 for both financial strength and growth despite GF Value and momentum ranking below 2 out of 10.
Industrias Bachoco SAB de CV
Fairfax purchased 54,000 shares of Industrias Bachoco (IBA, Financial), giving the position a 0.08% equity portfolio weight. Shares averaged $41.15 during the first quarter; the stock is modestly undervalued based on Wednesday’s price-to-GF-Value ratio of 0.83.
The Mexican meat processing company has a GF Score of 92 out of 100, driven by a rank of 9 out of 10 for financial strength, GF Value and momentum and a rank of 8 out of 10 for profitability and growth.
