Prem Watsa: How To Find Companies That Can Survive For 100 Years – ValueWalk Premium

Prem Watsa: How To Find Companies That Can Survive For 100 Years

In his latest 2021 Annual Shareholder Letter, Prem Watsa discussed his latest outstanding results and how to find companies that can survive for 100 years. Here’s an excerpt from the letter:

Q4 2021 hedge fund letters, conferences and more

We had the best year in our history in 2021 as the world began to return to normalcy. We earned a record $3.4 billion* and our book value per share increased by 34.2% (adjusted for the $10 per share dividend) to $631 per share. At $23.8 billion, our gross premiums grew by 25.4% or $4.8 billion – essentially all organic and the most in any one year in our history.

It took us 18 years from our inception to write $4.8 billion in annual gross premiums, while in 2021 our premiums increased by that in one year! The 25% growth is perhaps the highest among the top 25 P&C companies in the world and we rank in that august group.

The S&P 500 came roaring back in 2021 with a 29% return and the rotation to value continued. As Ben Graham said a long time ago, the “renaissance of value” has begun – but only just begun. Our investment net gains were a record $3.4 billion: as I have said many times – we like lumpy!

Since we began in 1985, 36 years ago, our book value per share has compounded by 18.9% (including dividends) annually while our common stock price has compounded by 16.9% (including dividends) annually.

Companies That Have Survived 100 Years

Last year, I highlighted for you the characteristics of companies that have survived for over 100 years. To repeat:

1. They are sensitive to the business environment, so that they always provide outstanding customer service.

2. They have a strong culture – a strong sense of identity that encompasses not only the employees but also the community and everyone they deal with. Managers are chosen from the inside and considered stewards of the enterprise.

3. They are decentralized, refraining from centralized control.

4. They are conservatively financed, recognizing the advantage of having spare cash in the kitty.
We continue to focus on these characteristics as we build for the future – long after I am gone.

You can read the entire letter here:

Prem Watsa Annual Letter 2021

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Article by Johnny Hopkins, The Acquirer's Multiple.


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