MUMBAI: Prem Watsa, the 63-year-old Canadian billionaire behind the $4.7-billion BlackBerry deal,
is seen as the saviour of the struggling smartphone maker. Born in
Hyderabad in 1950 and son of a school teacher, Watsa is a
first-generation entrepreneur who moved to Canada in the early '70s
where he went on to build a multi-billion-dollar financial services and
investment empire virtually out of scratch. Fondly referred to as the
'Warren Buffett' of Canada in some circles for his sagacious and mostly
long-term bets, against short-term gains, Watsa today controls a
business empire that spans across continents, including an exposure in
India.
After
passing out from the Hyderabad Public School, Watsa went on to complete
a degree in chemical engineering from IIT, Madras. After cracking the
IIM entrance test in the second attempt, he dropped the plan and went on
to pursue an MBA at the University of Western Ontario Business School
(later known as the Richard Ivey School of Business) in Canada, as his
elder brother was settled in that country. He left India with $8 in his
pocket and he had to sell air conditioners and furnaces to fund his
education at the university.
After MBA, Watsa began his professional career in 1974 as he joined the investment wing at the now-defunct Confederation Life Insurance Co in Toronto as a research analyst. Watsa concedes that it was a lucky strike for him as he was the only one who turned up for the interview out of four candidates called. He proved his mettle soon enough and became one of the stock portfolio managers for pension clients. His manager, John Watson, was the first major influence on his professional career and taught him all that he knew about investing based on British-born American investor Benjamin Graham's theories of value investing. Graham's theories of safe investing have remained with Watsa all through his career as he rejected theories of quick returns, rather focusing on long-term investments, something that he shares in common with Buffett whom he idolizes.
After nearly a decade with Confederation Life, Watsa worked with a start-up asset management firm, but quit a year later to start his own venture Hamblin Watsa Investment Counsel with a few partners in 1984. His big break finally came in 1985 when he took control of a small Canadian trucking insurance company Markel Financial, which was nearing bankruptcy. That became the base for today's Fairfax Financial Holdings. He re-organized this company and in May 1987, renamed it Fairfax Financial Holdings (Fairfax: short for "fair, friendly acquisitions"). Fairfax has served both as an insurance holding company and Watsa's investment vehicle.
The company thrived under Watsa's leadership. The compounded annual growth in book value per share for Fairfax has been 23% between 1985 and 2012, while the common stock price has compounded at 19% annually. In 2012, gross premium earned was $7.2 billion across the group compared to $17 million in 1985. While Watsa's business success has been legendary, he remained away from the media glare for the most part of his initial professional life. For first 15 years at the company, he barely spoke to a reporter, and he only started holding investor conference calls in 2001. It was for the same reason that one of the magazines described him as the "richest, savviest guy you've never heard of".
While not being very aggressive in his positioning, Watsa showed his fighting spirits when he launched a $6-billion lawsuit against a group of hedge funds in 2006, accusing them of conspiring to drive down Fairfax's shares so they could be shorted. A short position enables an investor to profit when a stock drops.
He has also shown an uncanny sense of sensing trouble, when everybody is gung ho.
He predicted the crash of 1987, the Japanese collapse of 1990 and also the 2008 meltdown in the US. He gained from the US slowdown by picking up shares at rock-bottom prices when others were counting massive losses. And, it is not just business that Watsa is dedicated to. In an interview, he counted his family as one of the pillars behind his success. He met his wife, Nalini Loganadhan, during the final year at IIT and married her a few years later. The couple today has three children - two daughters and a son.
After MBA, Watsa began his professional career in 1974 as he joined the investment wing at the now-defunct Confederation Life Insurance Co in Toronto as a research analyst. Watsa concedes that it was a lucky strike for him as he was the only one who turned up for the interview out of four candidates called. He proved his mettle soon enough and became one of the stock portfolio managers for pension clients. His manager, John Watson, was the first major influence on his professional career and taught him all that he knew about investing based on British-born American investor Benjamin Graham's theories of value investing. Graham's theories of safe investing have remained with Watsa all through his career as he rejected theories of quick returns, rather focusing on long-term investments, something that he shares in common with Buffett whom he idolizes.
After nearly a decade with Confederation Life, Watsa worked with a start-up asset management firm, but quit a year later to start his own venture Hamblin Watsa Investment Counsel with a few partners in 1984. His big break finally came in 1985 when he took control of a small Canadian trucking insurance company Markel Financial, which was nearing bankruptcy. That became the base for today's Fairfax Financial Holdings. He re-organized this company and in May 1987, renamed it Fairfax Financial Holdings (Fairfax: short for "fair, friendly acquisitions"). Fairfax has served both as an insurance holding company and Watsa's investment vehicle.
The company thrived under Watsa's leadership. The compounded annual growth in book value per share for Fairfax has been 23% between 1985 and 2012, while the common stock price has compounded at 19% annually. In 2012, gross premium earned was $7.2 billion across the group compared to $17 million in 1985. While Watsa's business success has been legendary, he remained away from the media glare for the most part of his initial professional life. For first 15 years at the company, he barely spoke to a reporter, and he only started holding investor conference calls in 2001. It was for the same reason that one of the magazines described him as the "richest, savviest guy you've never heard of".
While not being very aggressive in his positioning, Watsa showed his fighting spirits when he launched a $6-billion lawsuit against a group of hedge funds in 2006, accusing them of conspiring to drive down Fairfax's shares so they could be shorted. A short position enables an investor to profit when a stock drops.
He has also shown an uncanny sense of sensing trouble, when everybody is gung ho.
He predicted the crash of 1987, the Japanese collapse of 1990 and also the 2008 meltdown in the US. He gained from the US slowdown by picking up shares at rock-bottom prices when others were counting massive losses. And, it is not just business that Watsa is dedicated to. In an interview, he counted his family as one of the pillars behind his success. He met his wife, Nalini Loganadhan, during the final year at IIT and married her a few years later. The couple today has three children - two daughters and a son.