Prem Watsa: Why he continues to invest in Greece

Fairfax Fianancial Holdings boss, Prem Watsa, one of the biggest and most “persistent” investors in Greece, is back, giving a clear signal to the international market to attract other big investment funds.

Fairfax becomes the second largest shareholder in Mytilineos after Evangelos Mytilineos, proceeding with share purchases in two stages, an investment totaling €100m.

This is one of the most important deals this year on the Greek stock market, with Prem Watsa practically confirming the title of the most ardent supporter of the Greek economy.

Since the years of the memoranda

The distinguished investment guru made his first investment in Mytilineos Group back in 2012, when “Grexit” was a global trend. At that time he had bought about 1% of the Greek group.

This was followed by Fairfax’s acquisition of 4.253% of the share capital of Mytilineos in 2013, investing €25.5 million.

At that time, Watsa, against the current, had declared that he believes in the prospects of the Greek economy and is willing to invest in our country.

In addition to Mytilineos, Fairfax had in 2012 invested in Eurobank Properties (now Grivalia) over €180m to acquire 42%.

In 2014 came the turn of Praktiker Hellas, which after the bankruptcy of the German Praktiker AG came under the control of Fairfax.

This was followed by the participation in the capital increase of Eurobank with 1.3 billion in which today Fairfax is the main shareholder with a percentage of 33%, while in August 2016 together with OMERS Administration Corporation they bought 80% of Eurolife ERB Insurance for a price of 324 .7 million euros.

Recently, Fairfax also announced the acquisition of full control of Grivalia Hospitality, which operates in the hotel sector.

It is noted that Fairfax has invested a total of about 1.5 billion euros from the beginning of the last decade until today.

For the sake of history, let us mention that the self-made billionaire’s initial “contacts” with the domestic market were made through his placements in the Jumbo company and Sarantis.

Investing in people

He often praises the executives and heads of Fairfax’s subsidiaries in Greece, since as he has emphasized he invests in people.

Characteristic are his references to Fokionas Karavias (Eurobank), Giorgos Chrysikos (Grivallia) and Alexandros Sarrigeorgiou (Eurolife), for whom he declared that they are among the best managers not only in Europe, but also in the whole world.

Particularly laudatory are his comments about Prime Minister Kyriakos Mitsotakis, whom he has said is the best prime minister in Europe.

Enthusiastic about Greece

He also talks enthusiastically about Greece’s prospects and the returns it can offer.

At the opening of the Delphi Economic Forum held in October, he spoke to the international audience about his own experience and the economic transformation and development of the Greek economy. As he said, despite the “complications” he went through today, he is at an extremely good level, such that it is a country with a favorable investment environment trusted by many of the largest companies in the world.

An immigrant who became the king of the stock markets

With 8 dollars in his pocket, the 72-year-old Prem Wacha from Hyderabad, India, found himself in London, Ontario, Canada, near his brother, who had first taken the path of the Indian diaspora.

With a degree in chemical engineering from the prestigious Indian Institute of Technology, he began an MBA in business administration at the University of Western Ontario in Canada, selling air conditioners and heating systems to finance his education.

After completing his studies he worked as an analyst at the Insurance Confederation of Toronto and then as an equity portfolio manager for pension funds.

The blooming of his career came in 1985 when he acquired a small truck insurance company Markel Financial, which became the basis for the creation of the giant Fairfax Financial Holding.

During his tenure as an analyst, he discovered Benjamin Graham when his boss gave him The Intelligent Investor to read.

The father of valuation investing marked his life, as did Warren Buffett.

It is no coincidence that Watsa’s nickname in the global stock market is “Canada’s Buffett”, as well as the fact that both have named their sons after their teacher.

From Graham, Watsa learned the margin-of-safety approach, that is, precise quantitative guidelines to use for buying stocks from businesses that are selling for less than net equity.

Analysis and discipline are key and if there is no margin of safety investments should be avoided. “You’ll have to turn your back a few times,” says Watsa.

Even the name of Prem Watsa’s company, however, “hides” a lot about his investment philosophy: Fairfax is an acronym for the phrase Fair and Friendly Acquisitions.

Brilliant returns

“I couldn’t get a job in India despite my education and qualifications. I wanted to be my own boss, to determine my own destiny. Since I made it with no business background, anyone can make it. All he needs is to be passionate about what he is doing, not just to do it for the money. It is also important to give back to the community where you invest. Businesses do not operate in a vacuum”, he has said about his career.

Watsa has to his credit successful predictions, such as the crisis of 1987, the Japanese crisis of the ’90, but also the most recent financial crisis of 2008, making significant profits.

Fairfax had in 2021 the best year in its history presenting profits of 3.4 billion dollars increasing the book value of its share by 34.2%.

Fairfax’s current portfolio includes, among others, 17% of metallurgist Stelco, 8% of Blackberry, 5% of International Commerce Bank, 9% of real estate firm Kennedy Wilson and 23% of mining group Foran Mining.