Picking stocks is not an easy thing. There are thousands of different options you can choose from and no one (that's right, no one), can predict whether a stock will go up or down. Despite this, there are some people who have proven to be quite successful in the stock market. Many of us know about Warren Buffett and all that he has been able to accomplish. However, there exists a man who is often called the “Canadian Warren Buffett” who many of you may not know, unless you are a serious investor.
His name is Prem Watsa and he is the founder and chairman of Fairfax Financial Holdings. He is worth more than a billion dollars and was born in India and moved to Canada with only $8 in his pockets. He is an inspirational figure to many people and here are a few tips for how you can pick stocks and think like Prem Watsa.
Look for Deep-Value Investments
Like Buffett, Watsa loves value investing and believes it is the best way to go. However, he often takes this a step further than Buffett does in that he mainly looks for stocks that have a ton of value. He looks for stocks that no one else seems to even want. For example, he is a big investor in Blackberry, as well as Resolute Forest Products (a newsprint and paper product company. These are both stocks that many would consider bad or “dying”. The reason he invests in them is simple. Because these stocks are extremely cheap and the companies have a lot of assets, which often goes undervalued by investors. While some may disagree with his choices, he has put his money where his mouth is, and it has worked pretty well for him in the past.
Read Prem Watsa's Annual Letters
One of the best things that Watsa does for his shareholders is that he sends them an annual letter. In March of every year, Prem Watsa writes and posts a letter that discusses his company, the economy, investing, his future outlooks in the market and more. This letter is extremely valuable for those who want to know how he thinks and feels. The letter is insightful and is read by thousands and thousands of people. The letter is also posted online so anyone who wants to learn about him and his views can read it, even those who aren't a shareholder. Simply put, this is one of the best ways to pick stocks and think like Prem Watsa.
Read the “Intelligent Investor” by Ben Graham
Back in 1928, Benjamin Graham began teaching the idea of value investing at Columbia University. The basic idea of value investing is investing in stocks or funds that have seemingly been underpriced by the market. Since then, many of the best and brightest investors in the world (including Warren Buffett and Prem Watsa) have adopted his principles and made billions. The Intelligent Investor was written by Graham and focuses on the topic of value investing. If you want to pick stocks and think like Watsa, there is no better way than to read what he read.