Fairfax Financial

"The big money’s already been made," Chief Executive Officer Prem Watsa of Fairfax Financial Holdings Ltd told investors at Fairfax’s annual meeting today in Toronto. Watsa said Fairfax will sell its remaining positions in the swaps, and that they expect to make “a little bit of money” from the sales. The swaps are financial instruments based on bonds and loans that are used to speculate on a company’s ability to repay debt or to hedge against losses.

Canada’s Prem Watsa, Chair and founder of Fairfax Financial Holdings Limited, is the only major money manager/insurance company to have forecasted and benefited from the current catastrophe. On Oct. 4, he told me in an interview that it was wise for everyone to stay on the sidelines in terms of investment. He now has a new view and last week took off the hedges from his equity holdings and is investing selectively in common stocks.

Watch value investor Prem Watsa of Fairfax Financial talk about Ben Graham.

Cash-strapped USG Corp. said investor Warren Buffett and Fairfax Financial Holdings Ltd. have teamed up to provide USG with a $400 million cash infusion, through the purchase of potentially lucrative contingent convertible notes.

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Fairfax Financial Holdings Ltd., like Campbell's Soup, has defied the stock market carnage as Wall Street and the global financial system melts down. Fairfax has defied gravity because the property and casualty insurance company, led by its Chair Prem Watsa, realized a few years ago this perfect financial storm was about to hit. So it positioned its gigantic portfolio of  premium income and profits to not only withstand the storm, but benefit from it.

The chairman of Ridley Inc. (TSX:RCL) believes Fairfax Financial Holdings Ltd. bought a 69-per-cent stake in his animal feed company as an agricultural play, but he has yet to sit down with Fairfax CEO Prem Watsa to discuss the strategy going forward.

"I think Mr. Watsa is well known to be a very astute investor and looks out for the longer term," Ridley chairman Brian Hayward said Wednesday after the Fairfax deal was announced.

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Prem Watsa, chair of insurance conglomerate Fairfax Financial Holdings Ltd., began to worry about a credit meltdown a few years ago. So he and his investment team devised a defensive strategy. Today, Fairfax is in great shape financially, despite lousy markets.

The company has defied gravity and two weeks ago its credit was upgraded. This reflected its stellar performance on its US$19.8-billion investment portfolio, good operations at its underlying insurance companies and a jump in shareholders' equity from US$2.856-billion in 2006 to US$4.8-billion today.

Fairfax Financial Holdings Ltd., which has just cashed in on a huge bet against the U.S. bond market, has laid down a wager that the credit crunch will hit Europe with a similar force.

The insurance firm yesterday revealed a 2007 profit of $1.1-billion (U.S.), more than quadruple the previous year's results, thanks to its investment in credit default swaps (CDS), which rise in value when market conditions deteriorate. Fourth-quarter profit more than tripled to $564-million.

Southeastern Asset Management has sold about some of their stake in Fairfax Financial, and now owns 3,015,922 shares.

Read SEC filing.

Fairfax Financial Holdings Ltd., the insurance company controlled by reclusive chief executive officer Prem Watsa, said Friday it has increased its stake in CanWest Global Communications Corp. as it continues to invest in slumping media stocks.

Mr. Watsa's company boosted its holdings in CanWest to 13.46 per cent of the outstanding subordinate shares, up from 11.1 per cent, with the purchase of 828,500 shares.

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