Prem Watsa, Chairman and CEO of Fairfax Financial Holdings (FFH/NYSE), has drawn a lot of attention with his purchases of Overstock.com and Torstar. You've read me post that we shouldn't read too much into those investments because Fairfax's portfolio is very conservative overall.
Prem Watsa spelled out his concerns in a conference call earlier today:
"Also, we continue to be protected from a one-in-50-to one-in-100-year storm in the financial markets."
Watsa noted that cash and government bonds make up 77 per cent of total Fairfax company portfolios, and "we have a hedge against a market decline of approximately 50 per cent of our equity portfolios."
This further down the linked report:
Chief financial officer Greg Taylor emphasized the company's conservative position, citing "the substantial risks that exist today and going forward" in financial markets. The crumbling of the U.S. subprime mortgage business "illustrates that type of risk very well," Taylor observed.
"Where we stand at quarter-end is cash, short-term (investments) and bonds were about $13 billion of our $16.5 billion in total portfolio. Bonds are $10 billion of that, and what I really want to point out is our bond portfolios remain predominantly in U.S. Treasurys and other government securities."
He stressed that Fairfax owns few corporate bonds and no asset-backed securities such as mortgage securitizations or collateralized debt obligations.
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