Watsa stays bullish on U.S. under Trump, despite Twitter rants
Star investor praises president’s economic team, corporate tax policy
When the United States does well, the rest of the world does well. We certainly do well here in Canada.”
Prem Watsa, one of Canada’s most powerful investors, told a Bay Street crowd Thursday that he remains bullish on the U.S. economy under President Donald Trump, but urged Trump to pipe down.
“I think he’s got that advice from 100, 1,000 people: stop using that Twitter account,” Watsa, founder and chief executive at Fairfax Financial Holdings Inc., told about 250 people gathered at a Canadian Club luncheon.
Watsa held up his thumb to mimic the act of typing on a smartphone: “And just stay quiet.”
Watsa praised Trump’s economic team and their plans to cut corporate taxes from 35 per cent to 15 per cent, roll back regulation and invest in infrastructure. He said growth in the U.S. economy will benefit Canada.
“If they are able to do that, we are in for a long period of growth. When the United States does well, the rest of the world does well. We certainly do well here in Canada.”
But Watsa suggested someone rein Trump in.
“The problem with Mr. Trump is he’s incorrigible,” said Watsa, the bulk of whose 22,000 employees live in the United States.
“He doesn’t listen to anyone. Those Twitter messages — I know some of the people there — no one checks them. He gets up in the morning and he sends them.”
After his speech, Watsa, who made hundreds of millions on credit default swaps when the U.S. housing market crashed in 2008, repeated his warning that Canada’s housing market is overvalued.
“Anything that goes up significantly and so quickly in the past has tended to come down,” he said. “I hope it doesn’t happen, but I’d be careful. Buy a home for your family, not an investment.”
Watsa spoke as part of the Canadian Club’s Global Leaders Series. Watsa, who immigrated from India to London, Ont., 44 years ago, said his company has succeeded through his kinder, gentler style of investment. Fairfax, which stands for “fair, friendly acquisitions,” has never done a hostile takeover, he said.
“We’ve got many people who want to join our company because of this culture: team-oriented, treating people well. That’s our competitive advantage, in a sense.”
No president has ever left Fairfax after the company came under the Fairfax umbrella, Watsa said. Fairfax is decentralized, with just 35 people in its Toronto head office, and gives the presidents of its divisions autonomy.
The Bank of Ireland restructuring succeeded, Watsa said, because he and other investors left in place Richie Boucher, the chief executive.
“House prices in Dublin went down 50 per cent,” he recalled. “Every bank went bankrupt. The only one that survived was the Bank of Ireland, and it was on its way to going bankrupt. We, with three or four other investors, saved it, but it was because of Richie.”
“Ireland is coming back in spades,” added Watsa.
He has also invested in Greece, and noted, “Greece is yet to come. At the moment we are taking a big hit on it, but we think that will happen there too.”
Watsa, 66, father of three with five grandchildren, earned his loudest applause when he thanked his wife, Melanie, who attended the lunch.
He said Fairfax is not for sale, and never will be.
“I have arranged my affairs so that even after my death Fairfax will not be subject to a takeover, and continue to be a Canadian company headquartered in Toronto, operating with our guiding principles,” he said.
“Because the shares will not be sold.”