Fairfax Financial Holdings Ltd., which has largely bet against financial companies since 2003, plans to maintain its holdings in Wells Fargo & Co. and U.S. Bancorp, Chief Executive Officer Prem Watsa said.
The lenders are “two banks that we think are very conservative in their approach to risk,” Watsa told reporters following Fairfax’s annual meeting in Toronto today. “We like banks that are very conservative.”
Watsa, 59, has patterned his company after Warren Buffett’s model of value investing, using the assets of insurance operations to invest in out-of-favor securities. The native of Hyderabad, India has been running Fairfax since 1985.
Fairfax has held shares in San Francisco-based Wells Fargo for about two years, Watsa said. The biggest U.S. home lender posted a fifth-straight quarterly profit yesterday, and said credit costs have “turned the corner.”
Watsa, who answered shareholder questions for more than two hours, said the Toronto-based company doesn’t need to do another acquisition. Fairfax agreed in February to buy Zenith National Insurance Corp. of Woodland Hills, California for about $1.3 billion in cash, its biggest purchase in at least two decades.
Watsa said he’d like to increase his stake in joint venture ICICI Lombard General Insurance to 49 percent once regulations in India permit him to do so. Fairfax owns about 26 percent of the venture.
Fairfax rose C$3.93, or 1.1 percent, to C$379.50 at 4:16 p.m. in trading on the Toronto Stock Exchange. The shares have fallen 7.4 percent this year.