Editor’s note: This article was first published in September 2013, around Fairfax’s $9-a-share ($4.7bn) offer for BlackBerry. That buyout did not go ahead in that form. Fairfax’s market cap, BlackBerry’s share price of about $8 and the comment on BlackBerry’s future are 2013 data.
Prem Watsa has been nicknamed the Warren Buffett of Canada, although until now he had stayed practically anonymous in the financial media. That changed when it emerged that he had made an offer for BlackBerry of 9 dollars a share, or in other words, 4.7 billion for the company. But what’s the story behind this little-known billionaire?
Prem Watsa is the founder, chairman and CEO of Fairfax Holdings, a company he founded in 1985 that currently has a market capitalisation of 14.24 billion dollars. The Canadian press says that Watsa is probably the most accomplished businessman you’ve never heard of. Nobody knows exactly how much he is worth. So where does this man come from?
Watsa was born in Hyderabad, India, in 1950 and was orphaned as a child. He is said to have had a very unfortunate childhood, but that didn’t stop him from excelling at school. His family was extremely poor, so he had to combine his studies with work from the age of 9. He eventually went on to study chemical engineering at the Indian Institute of Technology.
Watsa knew he wouldn’t have many opportunities in India, so he decided to pack his bags and emigrate to Canada to study at the University of Western Ontario. According to some reports, when he landed in Canada he had only 8 dollars in his pocket, so he had to start working straight away.
Watsa says being an immigrant was the best thing that could have happened to him, because he developed survival skills he didn’t even know he had.
In his words: I learned to work very hard, because you’re at the bottom, the very lowest rung of the company. That toughens you up in a way that young people born in the country never get to experience. Once you’ve been through that, you’re ready to get through anything else.
The key to Prem Watsa’s success lies in one sentence: work as hard as you can, and act as if everything depends on you.
Over time, Watsa heard about a certain Warren Buffett, a man from Nebraska who had been a student of Benjamin Graham and had already taken off in the financial world. Watsa wanted exactly that, so in 1985 he founded Fairfax, which, like the company of his idol Warren Buffett, was involved in insurance and would later also become a major fund manager.
Mr Watsa started putting all his hours of reading to work to take his company to the top, to the point that his company has come out ahead in every crisis since then. He is also considered one of the best fund managers, as he applies only Benjamin Graham’s theories.
Of course, he has also been on the receiving end of the wrath of other big hedge fund managers, most notably Dan Loeb and Steve Cohen, who took short positions against Watsa’s company and encouraged the markets to do the same. Watsa eventually sued these fund managers, and an email from Loeb to Watsa was made public in which he wrote: “Die, Prem, die”, which is obviously not very professional in this industry.
Today, you could say that BlackBerry’s future is in Prem Watsa’s hands, since nobody else has turned up crazy enough to make such a generous offer for a company that is practically bankrupt. Watsa, on the other hand, has said that he can turn BlackBerry into the leading company in the phone market.
If so, buying BlackBerry shares could be a bargain, as they are currently trading at around 8 dollars, compared with a price of 200 dollars a share in 2007, although for now the risk is too high.
Further reading
- The fascinating life and career of Bill Gates
- 15 habits and choices for success in business and your career
- 17 brilliant ideas for business success, by T. Boone Pickens
Featured image: செல்வா at Tamil Wikipedia, CC BY 3.0, via Wikimedia Commons.
