Founded by Watsa in 1985, Fairfax’s corporate goal is to achieve a high rate of return on invested capital and create long-term shareholder value. Fairfax seeks to differentiate itself by combining disciplined underwriting with investing its assets on a total return basis, which Fairfax believes provides above-average returns over the long term.
On June 11, the company’s largest participation, Atlas (ATCO, Financial), increased 31.86% with the addition of 31.79 million shares. Atlas announced on June 14 that it had completed an exchange and modification of a total principal amount of $ 600 million of senior notes from Seaspan Corp., its wholly owned subsidiary. The changes included $ 250 million 5.5% notes due 2025, $ 250 million 5.5% senior notes due 2026 and $ 100 million 5.5% senior notes maturing in 2027, referred to as the Fairfax Notes. These Fairfax Notes are held by companies affiliated with Fairfax Financial Holdings, according to the company’s press release.
On trade day, Atlas shares were trading at an average price of $ 13.97 per share. GuruFocus estimates that the company gained 30.48% on the established holding in the third quarter of 2018. Overall, the new addition had an impact of 13.42% on the equity portfolio.
âFairfax Financial has been a committed and strategic sponsor of the growth and transformation of Atlas, Seaspan and APR Energy for which our team is grateful, and our shareholders have benefited. Today’s announcement reflects the both a strong and ongoing partnership as well as the significant progress made by Atlas over the past three years. As we continue to generate quality growth and strengthen our competitiveness, we have now simplified our balance sheet with more flexibility in our structure of capital to pursue attractive opportunities and sustainable value creation, âsaid Bing, president and CEO of Atlas Chen said.
As of June 15, Atlas stock was trading at $ 13.81 per share with a market cap of $ 3.41 billion. According to the GF Value Line, the stock is trading at a significantly overvalued rating.
GuruFocus gives the company a financial strength rating of 3 out of 10, a profitability rating of 6 out of 10 and a review rating of 6 out of 10. There are currently four serious warning signs issued for the company. , including poor financial strength and an Altman Z-Score of 0.62 placing the company at higher risk of bankruptcy. The company’s cash-to-debt ratio of 0.06 ranks it well below the majority of the asset management industry.
Watsa’s Fairfax is by far the largest shareholder with 53.32% of the shares outstanding. Other major shareholders include
Capital Research Global Investors (professions, portfolio),
Dimensional Fund Advisors LP (trades, portfolio) and
Morgan stanley (trades, portfolio).
The company’s portfolio contains 57 stocks, with eight new holdings in the first quarter. It is valued at $ 2.87 billion and has seen a 2% turnover rate. Major holdings include Atlas, BlackBerry Ltd. (BB, Financial), Resolute Forest Products Inc. (Call for tenders, Financial), Kennedy-Wilson Holdings Inc. (KW, Financial) and Crescent Capital BDC Inc. (CCAP, Financial).
By weight, the three main sectors represented are financial services (51.57%), technology (16.28%) and basic materials (11.73%).
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