Fairfax Financial reports fourth-quarter loss on hedges

TORONTO Thu Feb 13, 2014 7:01pm EST

Fairfax Financial Holdings Ltd. Chairman and Chief Executive Officer Prem Watsa speaks during the company's annual meeting in Toronto April 11, 2013. REUTERS/Aaron Harris

Fairfax Financial Holdings Ltd. Chairman and Chief Executive Officer Prem Watsa speaks during the company's annual meeting in Toronto April 11, 2013.

Credit: Reuters/Aaron Harris

Related Topics

TORONTO (Reuters) - Fairfax Financial Corp, the Canadian property and casualty insurer run by veteran investor Prem Watsa, said on Thursday it had a loss in the fourth quarter, as its equity hedges lost money in a strong market.

The Toronto-based company said it had a net loss of $5.5 million, or a loss of 98 cents a share, in the fourth quarter. That compared with a profit of $406.4 million, or $18.82 a share, a year ago.

Fairfax, which has hedged its stock portfolio since 2010, lost a net $329.1 million on investments as losses on the equity hedges more than offset gains on equity holdings.

Fairfax Chief Executive Watsa said in a statement that the stock portfolio continues to be fully hedged, and that he expected unrealized losses to reverse in the future.

Since taking over the company in 1985, Watsa has built a reputation as a shrewd investor with moves such as betting against the U.S. housing market and then reaping huge profits when the market collapsed five years ago.

The company's latest big bet has been on hard-hit smartphone market BlackBerry Ltd. Fairfax is the top shareholder in the company.

(Reporting by Cameron French; Editing by Cynthia Osterman)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

How to get out of debt

Financial adviser Eric Brotman offers strategies for cutting debt from student loans and elder care -- and how to avoid money woes in the first place.  Video