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Prem Watsa's High-Conviction Trades as of 4th Quarter

- By JamesLi

Prem Watsa (Trades, Portfolio), CEO of Fairfax Financial Holdings Ltd. (FFH.TO), has kept increasing his positions in General Electric Co. (GE), Signature Bank (SBNY) and Ampco-Pittsburgh Corp. (AP) over the past three to four quarters according to current portfolio statistics.


Managing a portfolio of 33 stocks, Watsa seeks to invest in assets "on a total return basis" according to Fairfax Financial's website. The manager's conservative investment philosophy seeks to increase long-term shareholder value, including both realized and unrealized gains.

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General Electric

Having added 272,800 shares of GE during the third quarter, Watsa added 318,200 shares during the fourth quarter, increasing the position 29.66%. Shares of GE averaged $12.86 during the third quarter, but just $9.28 during the fourth quarter.

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Although GE's profitability ranks 6 out of 10, GuruFocus lists several warning signs, including declining gross profit and operating profit margins. Additionally, GE's three-year revenue growth rate of 6.80% underperforms 69% of global competitors.

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Other gurus with large positions in GE include Richard Pzena (Trades, Portfolio)'s Pzena Investment Management Inc. (PZN), Mason Hawkins (Trades, Portfolio)' Southeastern Asset Management and Chris Davis (Trades, Portfolio)' Davis Selected Advisors.

Signature Bank

Watsa added 4,800 shares of Signature Bank, increasing the holding 20%. Shares averaged $112.47 during the quarter.

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The New York-based bank offers a wide variety of business and personal banking services. GuruFocus ranks the regional bank's financial strength 3 out of 10 on several weak signs, which include increasing long-term debt over the past three years and an equity-to-asset ratio that underperforms 62% of global competitors.

FPA Crescent Fund manager Steven Romick (Trades, Portfolio) established a 735,280-share position in Signature Bank during the fourth quarter.

Ampco-Pittsburgh

Watsa added 60,000 shares of Ampco-Pittsburgh, increasing the holding 30%. Shares averaged $4.17 during the quarter.

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The Pittsburgh-based diversified industrials company produces forged, hardened steel rolls used to produce steel, aluminum and other metals. GuruFocus ranks the company's profitability 5 out of 10: although the three-year revenue growth rate of 10.20% outperforms 76% of global competitors, Ampco-Pittsburgh's operating and net profit margins are negative and underperform over 85% of global diversified industrial companies.

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Disclosure: No positions.

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This article first appeared on GuruFocus.