During the first quarter, the “Canadian Warren Buffett (Trades, Portfolio)” Prem Watsa (Trades, Portfolio) sold off three of his holdings, two of which are in the education loan industry.
Watsa founded Fairfax Financial Holdings in 1985; the firm is engaged in property and casualty insurance and reinsurance and investment management.
One of the firm’s main objectives is to compound mark-to-market book value by per share over the long term by 15% annually, which is done at the expense of short-term profits if necessary.
Watsa sold out of 723,012 shares of Cresud SA for an average price of $11.84 per share. Cresud is an Argentine agricultural company that produces basic agricultural commodities.
The stock increased 17% over the past year and is now priced at $13.99. Over the past five years, the EBIT per share growth rate was 37.7%, and recorded at $2.70 in 2014.
However, Cresud has been reporting negative net income since 2012, and was $-122 million in 2014. The operating margin was 20.65% in 2014, and has declined about 9% over the past five years.
Navient Corp (NAVI, Financial)
He also sold 15,000 shares of Navient, an education loan company. The stock traded for an average price of $20.55 during the quarter. Watsa purchased the holding in Q2 2014 and made a 24% profit with the sale.
In 2014, the company reported net income of $1,149 million, down from $1,418 million the year before.
Navient currently trades at $19.39 with a P/E ratio of 6.7 and P/S ratio of 2.4. The dividend yield is 3.08% with a payout ratio of 21%.
Watsa also sold out of 15,000 in SLM for an average price of $9.40 per share. Like Navient, SLM originates and services education loans.
The stock appreciated 20% over the past year and now trades at $10.65, with a P/E ratio of 26.6 and P/S ratio of 6.2.
Over the past five years, EBIT per share growth declined 16%, while revenue growth also declined 28.3% over the same time period. In 2014, SLM reported net income of $194.2 million, which had been in decline since 2012.
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