Prem Watsa (Trades, Portfolio) is a cautious investor, whose vigilance has been heighted in recent years by what he perceives as a mix of factors indicating an economic storm up ahead. He has had extraordinary performance at his insurance conglomerate Fairfax Financial (FFH.TO), compounding book value per share at 21.3% since inception. His return on his stock portfolio has lagged, however, as he hedges against potential future market instability. According to his 2013 annual letter, threats he sees to the market include: high U.S. total debt/GDP ratio with significant deleveraging remaining, weak economic growth in the Western world, inflation, QE's lack of impact on the real economy, real estate bubble in China and low U.S. and junk bond yields.
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In the first quarter, Watsa started three new positions, in Steel Partner Holdings LP (SPLP), Morgan Stanley Asia Pacific Fund Inc. (APF) and Harvest Natural Resources Inc. (HNR).
Steel Partner Holdings LP (SPLP)
Watsa purchased 30,000 shares of his new buy Steel Partner Holdings, giving it just a minor 0.036% position in the portfolio. The first quarter's average share price for Steel Partner was $17.
Steel Partners Holdings LP is a diversified holding company that engages in multiple businesses through consolidated subsidiaries, associated companies and other interests in various industries including energy, defense, banking, food products, etc. Steel Partner Holdings LP has a market cap of $446.2 million; its shares were traded at around $16.04 with a P/E ratio of 30.0 and P/S ratio of 0.60.
Morgan Stanley Asia Pacific Fund Inc. (APF)
Watsa purchased 24,500 shares of Morgan Stanley Asia Pacific Fund in the first quarter, making up a scant 0.029% of his portfolio. The share price averaged $16 in the first quarter.
Harvest Natural Resources Inc. (HNR)
Last, Watsa as his smallest purchased 100,000 shares of Harvest Natural Resources, a 0.026% portfolio segment. The fourth quarter average price was $4 per share.
Harvest Natural Resources Inc. was incorporated in 1989 under the Delaware law. Harvest Natural Resources Inc. has a market cap of $195.700 million; its shares were traded at around $4.65. Harvest Natural Resources Inc. had an annual average earnings growth of 21.50% over the past five years.
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This article first appeared on GuruFocus.
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