Prem Watsa, Canada's Warren Buffett

A man who beat the market for 40 years. Compounding at 18.7% a year, nearly four times the government bond.

And yet in a shareholder letter he described himself with one word: "terrible".

Not a rival writing that. Not the press. Himself.

His name is Prem Watsa. People call him Canada's Warren Buffett, but the nickname hides the most interesting part of his story. Because what makes Watsa worth sitting down and reading carefully is not the times he was right. It is how he faced the times he was wrong.

And he was wrong plenty. Once by $4.4 billion.

The boy who left home with $8

In 1972 India had more than 580 million people. Roughly 5,000 of them received emigration visas to Canada. One was Prem Watsa.

He was born in 1950 in Hyderabad, third of four children. His father was a teacher who became a headmaster; not a wealthy family. A line his father often used became his life's compass: work as hard as if everything depends on you, and pray as if everything depends on God.

Watsa studied chemical engineering at IIT Madras, India's hardest engineering school. Then he left for Canada with almost nothing in his pocket. He went to London, Ontario, where his brother lived, and sold air conditioners and furnaces door to door to pay for an MBA. He was poor enough then that he did not dare go to the cinema or eat at McDonald's.

There is an almost unbelievable detail. With his MBA in hand, he ran to an interview at the insurer Confederation Life. A bank robbery had just happened nearby. Police took him for a suspect and pressed him onto a patrol car's bonnet. He still made the interview, and was the only one of four candidates who turned up that day. He got the job at $11,000 a year.

That was the entire starting point. No capital, no connections, no name. Just an investment analyst job and a boss who happened to be about to change his life.

The book that changed everything, and a son named Ben

That boss was John Watson. To help his young analyst improve, he handed Watsa a book: Benjamin Graham's The Intelligent Investor.

Watsa read it, and something clicked. He later said the best advice he ever received was: forget everything business school taught about "efficient markets" and read Ben Graham instead. Either the philosophy fits you or it does not. And he knew immediately this was how he wanted to invest for life.

He loved the book so much that when he had a son, he named him Ben, after the author.

Pause on that for a second. Some people read a book and forget it. Some read it and apply it. And one man read it and named his child after the author. The depth of belief in a philosophy is sometimes measured by small things like that. Watsa did not "try" value investing. He married it.

If you want to understand where the margin of safety begins in the thinking of people like Watsa, the root is in the piece about buying assets with a margin of safety.

Thirty years beside a master

At 28, Watsa met the man who would be his teacher for 30 years: John Templeton.

Templeton, whom we covered in the piece on buying at maximum pessimism, compounded at roughly 15% a year for nearly half a century. Watsa met him at least once a year. And here is what he recalls that stays with me: in each meeting Templeton spent half the time on investing and half on spirituality.

Not on which stock would rise. Not on interest rates. On how to live.

To this day Watsa keeps a large bust of John Templeton in his firm's boardroom. Not to show off. As a reminder: the man who taught him did not only teach how to make money, but how to keep a cool head while the world loses its own.

With Ben Graham (the value foundation) and Warren Buffett (the business model), Watsa had three teachers. But he copied none of them. He took the core of each and assembled his own.

Buying a dying company, then calling it "friendly"

In 1985, Watsa and a few investors put $5 million into a small Canadian trucking insurer called Markel Financial, a struggling company with only about $10 million of premiums. In return he took a controlling stake.

Two years later he renamed it. The new name: Fairfax, short for "fair, friendly acquisitions". It sounds like a marketing slogan, but it was a real principle: treat others as you would want to be treated.

Fairfax's model is simple in idea and hard in discipline. An insurer collects premiums first and pays claims later. The money sitting in between, the "float", is low-cost capital to invest. This is exactly how Buffett built Berkshire. Watsa saw it and followed it, patiently, for 40 years.

He does not decide by committee. He built a decentralised structure where each team is accountable. And he waits. He waits for market panics to buy good things cheaply, in Templeton's spirit.

The moment of genius: 2007–2008

Then came the moment the world learned his name.

Before the 2008 financial crisis broke, Watsa was worried. He looked at the American housing market and saw a time bomb most people were dancing on top of. Rather than just watch, he bought credit default swaps, essentially insurance that would soar if those debts defaulted.

CDS were very cheap then, because almost nobody thought they were needed.

When subprime collapsed, those cheap contracts turned to gold. Watsa made roughly $2 billion from a series of intelligent bets while other institutions burned. While the market bled, Fairfax's book value rose.

That is the kind of moment that makes legends. People called him the prophet of the north. The story could have ended there, neat and complete.

But it did not. And what follows is the most valuable part.

And then he was wrong. For a long time, and expensively.

After being right in 2008, Watsa believed worse was coming. He feared the North American economy would end up like Japan after 1990: prolonged deflation, decades of stagnation.

So he did what someone who has just won big often does: he bet again.

From 2010 he hedged nearly all of Fairfax's equity portfolio, plus bought derivatives betting on deflation. The logic was not wrong. But the market went against him, and kept going against him for years. American stocks soared while Fairfax had tied its own hands.

Year after year, in shareholder letters, he held firm. He quoted Graham repeatedly: only one investor in a hundred survived the 1929–32 disaster without having been bearish from 1925. He wrote: "We continue to be early, and bearish."

By 2016 he did the sums. The total direct cost of the losses from the hedging strategy: $4.4 billion.

And here is what separates Watsa from a mere stubborn man. He did not defend himself. He admitted, directly, that unlike the 2008 big short, the whole hedging effort this time was a mistake. His closest colleague stated the lesson soberly: it turned out their skill was not in shorting. In value investing you buy and hold, and holding a bit long does no harm. In shorting, if you bet the wrong way, the loss is near-unlimited; you do not always "outlive" the market.

Then came BlackBerry.

In 2013, with the once-dominant phone maker dying, Watsa stepped in to rescue it: $500 million of convertible bonds, a new CEO installed. He bought common stock at $17.16. By 2023 it was $3.54.

In a shareholder letter he wrote about himself: "Another terrible investment by your Chairman." He even mocked the opportunity cost: imagine if that money had gone into the large technology stocks; the price paid by shareholders was enormous.

A man who had beaten the market for decades. He did not have to admit anything. And yet he wrote it, black on white, to thousands of shareholders: I was wrong, and it cost you a great deal of money.

18.7% a year, for 40 years

Now step back and look at the whole.

Despite $4.4 billion lost on hedging, despite BlackBerry, since 1985 Fairfax's book value per share has compounded at 18.7% a year, including dividends, for 40 years. In 2025 alone net profit was $4.8 billion, and book value per share rose 21% to $1,260. The investment portfolio passed $74 billion.

Set that 18.7% against a number familiar to Vietnamese investors: the 10-year government bond pays about 5% a year.

One million dong in bonds, after 40 years compounding at 5%, becomes about 7 million.

One million dong compounding at 18.7%, after 40 years, becomes more than 900 million.

The same starting capital. The same period. The gap is not double or triple, but more than a hundredfold. That is the whole power of compounding held with discipline long enough. And what is worth noting: that record was achieved alongside billion-dollar mistakes, not through a perfect run of correct calls. Watsa was badly wrong several times, but none of them killed him. That is the core point.

The man who shies from the spotlight

After all this, how does Watsa live?

His personal wealth is estimated at around $2 billion, the richest person of Indian origin in Canada. But he is described as a founder averse to public attention. He loves chess, lives in Toronto, and chairs the investment committee for a local church. The principle of treating others as you would want to be treated, which he put into the company's name in 1987, is how he lives.

He has received India's Padma Shri, served as Chancellor of the University of Waterloo, co-founded an anti-racism initiative, and chaired a scholarship fund. A man who left home with almost nothing now spends most of his time opening doors for others.

And on succession he says something very Watsa. He wants, literally, to die knowing the companies will never be sold. His son Ben, the name owed to Benjamin Graham, is being prepared to take over. To Watsa this is not an asset to liquidate. It is something to pass on.

The QuietVC lesson

We tend to think a great investor is someone who is rarely wrong. Watsa's story says the opposite: he is great not because he was rarely wrong, but for two other reasons.

First, none of his mistakes was fatal. He lost $4.4 billion on hedging and lost heavily on BlackBerry, but his financial structure was solid enough that those wounds never cut an artery. This is a margin of safety at the level of a career, not of a single stock. You do not need to be right every time. You only need never to bet so large that one mistake ends you.

Second, he is ruthlessly honest with himself. Calling your own investment "terrible" in front of shareholders is not weakness; it is the highest discipline. Because an investor's greatest enemy is not the market but an ego that will not admit error. Vietnamese investors lose most money not from picking the wrong stock but from holding a losing position and refusing to look at it directly, exactly as described in the familiar psychological mistakes.

Watsa shows that value investing is not a string of brilliant decisions. It is the combination of three very ordinary things: a philosophy you believe in so firmly it does not waver, a margin of safety wide enough to survive the times you are wrong, and enough honesty to name the mistake and move on. All of it is entirely achievable in Vietnam, as discussed in the piece on value investing in the Vietnamese market.

A man who left home with $8, beat the market for 40 years, and still sits down to write for everyone to read where he went wrong. That is not luck. That is discipline, the silent kind, repeated year after year, until it compounds into something nobody can break.

Silent discipline. Compound value.