With yesterday’s news about Fairfax Financial making an official attempt to BlackBerry private, we realize not everyone knows much about Fairfax Fiancial, who they are or what they do. We thought we’d put together a quick post on Fairfax and its highly successful CEO, Prem Watsa.
Fairfax Financial is a property, casualty and life insurance company based out of Toronto. The company has been around (under various names) since 1951 and has over 8,200 employees. As of 2010 Fairfax had total assets of around $31.7 billion. The company has their hand in various large investments ranging from Overstock.com to Alliance Insurance.
Prem Watsa is a 63 year old highly successful CEO and investor who controls almost half of Fairfax. Born and then orphaned in India, he went on to excel in school. He’s a chemical engineer, an MBA and he also holds a CFA (chartered financial analysts) designation. When he came to Canada, he reportedly did so with only $8 in his pocket. There is no doubt this man deserves all kinds of respect.
The CrackBerry nation knows Watsa because he was on the board of BlackBerry for a while before leaving in August, but he’s most well known as the CEO of Fairfax Financial. He’s known as Canada’s Warren Buffet, and reportedly he predicted the stock market crash of 1987, the US housing collapse of 2008 and other major global financial disasters.
The comparison between Warren Buffet and Prem Watsa comes because both men are value focused investors. Interestingly, though, Warren Buffet tends to avoid technology stocks. It’s well known that Buffett claims to not really “get” technology so he stays away from it. Watsa, on the other hand, made a major bet on Research In Motion (prior to the name change to BlackBerry) and amassed a 10% position in the company. Fairfax Financial holds more of BlackBerry than its founder, Mike Lazaridis, who owns about 5.7% of the shares.
So far, Watsa’s bet on BlackBerry has not paid off. As excellent of a track record as Watsa has, it’s quite possible that technology isn’t his forte, and that this investment could end badly for him, and for FairFax.
In January of 2012, Prem Watsa joined the board of directors of then-named Research In Motion at the request of Mike Lazaridis. The two men met at the University of Waterloo, where Lazaridis was chancellor prior to Watsa.
According to a story in Canada’s Financial Post Watsa joined only after he was assured that Lazaridis and his “technology genius” would not be leaving the company. Lazaridis and former co-CEO Jim Balsillie had already announced they were stepping down. But both men were still on the board of directors and Lazaridis was also the chair of the board’s new “innovation committee”.
When the Financial Post interviewed Watsa upon his board appointment, he told them, “Mike’s not going anywhere…. If he were going to retire, I would not have gone on the board.” Fourteen months later Lazaridis announced his retirement, leaving BlackBerry behind but still holding his shares.
Prem Watsa resigned his board seat this summer, concurrent with BlackBerry announcing the formation of a special committee to explore strategic options. We hadn't heard much from him regarding the company after his departure until the news broke that Fairfax Financial has agreed to buy BlackBerry for $4.7 billion.