Fairfax's Watsa Recommends Wells Fargo, J&J, Kraft, US Bancorp Shares

Fairfax Financial Holdings Ltd. (FFH) Chief Executive Officer Prem Watsa said he wants to boost his company’s stake in an insurance venture with India’s ICICI Bank Ltd. (ICICIBC) when rules allow for increased foreign ownership.

Watsa, who said he sees a “huge amount of opportunity in India,” wants 49 percent of ICICI Lombard General Insurance Company Ltd., he told investors today at the company’s annual meeting in Toronto. Fairfax owns 26 percent of the joint venture, the maximum allowed under the country’s rules, he said.

“They’ve been telling us for the last five years that it’s one year away -- and so I just have to wait,” for rules to be eased, Watsa told reporters following the meeting. “When they allow us the opportunity, we’ll look at taking advantage of it.”

Watsa, 60, has modeled Fairfax after Warren Buffett’s Berkshire Hathaway Inc. by investing the assets of insurance operations, often in out-of-favor securities. Born in Hyderabad, India, Watsa was been running Fairfax since 1985.

He recommended shares of Wells Fargo & Co. (WFC), Johnson & Johnson (JNJ), Kraft Foods Inc. (KFT) and US Bancorp. (USB) Fairfax owns a combined $1.9 billion in the four U.S. company shares.

“The underlying fundamentals are there for everyone to see, but it’s boring,” Watsa said. “No one wants to buy something that will take five, six years” to double in value.

Fairfax, which owns insurers including Northbridge Financial and Crum & Forster, plans to release first-quarter results on April 28. Watsa declined to say what impact the damages of the March 11 earthquake in Japan may have on results.
Earthquake

“If it was material, we would disclose it,” Watsa said.

Fairfax is being “cautious” on investments and is focusing on preserving capital, Watsa said. The CEO said he likes government and municipal bonds and the company is selling some corporate bonds after gains. Fairfax is also investing in consumer price index-linked derivative contracts.

Through its subsidiaries, Fairfax is one of the largest investors in publisher Torstar Corp. and toymaker MEGA Brands Inc. (MB), according to Bloomberg data.