We recently compiled a list of the Billionaire Prem Watsa's Top 15 Long-Term Stock Picks.In this article, we are going to take a look at where KKR & Co. Inc. (NYSE:KKR) stands against Prem Watsa's other long-term stock picks.
Prem Watsa is a Canadian billionaire, entrepreneur, and investor often referred to as the Canadian Warren Buffett for his value-based investment approach and long-term focus. As the founder, chairman, and CEO of Fairfax Financial Holdings, Watsa has built a reputation for transforming his company into one of the leading insurance and investment firms in the world. His ability to identify undervalued opportunities and navigate financial crises has cemented his place as one of the most respected figures in global finance. Watsa was born in India in 1950 to a middle-class family. He earned a degree in chemical engineering from the Indian Institute of Technology, one of India’s premier institutions. In 1972, Watsa immigrated to Canada to pursue an MBA at the University of Western Ontario’s Richard Ivey School of Business.
After completing his MBA, Watsa began his career in the insurance industry, where he gained valuable experience that would later shape his business philosophy and success. In 1985, Watsa acquired control of Markel Financial, a struggling Canadian insurance company. He renamed it Fairfax Financial Holdings, short for Fair and Friendly Acquisitions, and set out to implement his vision of combining insurance underwriting with value-oriented investing. Fairfax operates as a holding company, similar to Berkshire Hathaway, with investments spanning insurance, reinsurance, and other businesses. Under Watsa's leadership, Fairfax has grown exponentially.
As of the end of the third quarter of 2024, Fairfax manages over $1 billion in 13F securities. The company has delivered a compound annual growth rate of approximately 15% in book value per share since its founding. Prem Watsa is a staunch proponent of value investing, inspired by the teachings of Benjamin Graham and Warren Buffett. His strategy involves identifying undervalued assets, particularly during times of market distress, and holding them for the long term. Watsa has been a strong advocate of investing in India, acquiring stakes in companies like Thomas Cook India and launching the Fairfax India fund to capitalize on the country’s growth. Watsa famously anticipated the 2008 financial crisis, using derivatives to protect Fairfax’s portfolio and earning over $2 billion in profits during the crash.
For this article, we selected stocks by combing through the 13F portfolio of Fairfax Financial Holdings at the end of the third quarter of 2024. Only the companies that have been in the 13F portfolio of the fund consistently for the past three years were selected. These stocks are also popular among other hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
KKR & Co. Inc. (KKR): Here's Why Jim Defends the Firm Amid Legal Challenges
A modern looking financial adviser sitting in front of a trading monitor, gesturing to a group of investors.
KKR & Co. Inc. (NYSE:KKR) offers alternative asset management as well as capital markets and insurance solutions. The following factors demonstrate the company's promise as a solid investment. Firstly, the report for the third quarter of 2024 showed great results as Fee Related Earnings (FRE) and Total Operating Earnings (TOE) had their highest quarters in the company’s history. Reported Fee-Related Earnings were $1 billion in the quarter, showing an increase of 79% year-over-year. Additionally, Total Operating Earnings (TOE) was $1.3 billion in the quarter, up 71% year-over-year. These metrics reflect the company's strong revenue growth and operational success. Secondly, KKR has entered into a binding agreement with the shareholders of Dawsongroup to acquire the Group. The acquisition will be made as part of KKR’s Global Climate strategy, dedicated to scaling net-zero solutions and transitioning and decarbonizing higher emitting assets, which closely aligns with Dawsongroup’s long-term sustainability-led ambitions. Moreover, KKR and Gulf Data Hub are committing to support over $5 billion of total investment to build out data centre capacity, supporting the significant rise in hyper-scale demand, AI and digital-focused national priorities across the Gulf countries.
Overall KKR ranks 13th on our list of billionaire Prem Watsa's top long-term stock picks. While we acknowledge the potential of KKR as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than KKR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
