Prem Watsa Drifts Deeper Into MasterCraft

Billionaire investor Prem Watsa (Trades, Portfolio), the head of Fairfax Financial Holdings Ltd. (TSX:FFH), revealed last week he boosted his stake in MasterCraft Boat Holdings Inc. (NASDAQ:MCFT) by 200.37%.

Often called “Canada’s Warren Buffett (Trades, Portfolio),” the guru’s investment strategy is similar to that of the Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) CEO in that his insurance conglomerate purchases entire companies as well as invests its float in publicly traded companies.Warning! GuruFocus has detected 1 Warning Sign with MCFT. Click here to check it out.MCFT 30-Year Financial DataThe intrinsic value of MCFTPeter Lynch Chart of MCFT

According to GuruFocus Real-Time Picks, a Premium feature, Watsa invested in 1.06 million shares of the Vonore, Tennessee-based company on March 17. He now holds a total of 1.59 million shares, which represent 0.58% of his equity portfolio. The stock traded for an average price of $7.41 per share.

GuruFocus estimates Watsa has lost 33.26% on the investment since establishing it in the third quarter of 2019.

MasterCraft

The company, which manufactures recreational powerboats under the MasterCraft, NauticStar, Crest and Aviara brands, has a $137.2 million market cap; its shares were trading around $6.90 on Monday with a price-earnings ratio of 7.14, a price-book ratio of 1.49 and a price-sales ratio of 0.29, which GuruFocus noted are near five-year lows.

The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.

In early February, the boat maker reported its second-quarter 2020 financial results. MasterCraft posted adjusted earnings of 43 cents per share on $99.6 million in revenue, which were down from the prior-year quarter.

In a statement, CEO Fred Brightbill said that after collecting feedback from “customers, dealers, employees, business partners and investors” in regard to their opinion on MasterCraft’s strengths and future opportunities, the company has implemented a new strategic growth plan that will “focus on improving the customer experience, expanding brand awareness, further advancing operational excellence and developing a customer-focused culture.”

“I am confident that with a renewed focus on these initiatives, MasterCraft will be better positioned to increase our share of the boating market across all our brands and generate significant value for the Company and our shareholders,” he said.

With the outbreak of the Covid-19 virus, the company announced on March 25 that it is taking measures to protect the company itself along with its employees, dealers and communities, which include suspending manufacturing operations, increasing its available liquidity and financial flexibility and withdrawing its guidance for the full year.

“In this challenging market, MasterCraft continues to work closely with dealers to help manage their inventory levels and support the overall health of their businesses,” Brightbill said. “We are monitoring the situation closely, and stand prepared to take additional action as necessary to position MasterCraft and its stakeholders for success over the longer term.”

GuruFocus rated MasterCraft’s financial strength 5 out of 10 on the back of adequate interest coverage. The Altman Z-Score of 2.58, however, indicates the company is under some financial pressure since its assets are building up at a faster rate than its revenue is growing.

The company’s profitability fared better, scoring an 8 out of 10 rating on the back of an expanding operating margin. MasterCraft also has strong returns that are outperforming a majority of competitors, as well as a moderate Piotroski F-Score of 5, which implies business conditions are stable.

With an 8.48% stake, Watsa is now the company’s largest guru shareholder. Chuck Royce (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies also have positions in the stock.

Portfolio composition and performance

Over half of the Canadian guru’s $2.03 billion equity portfolio, which consisted of 41 stocks as of the end of fourth-quarter 2019, was invested in the industrials sector, followed by smaller positions in the technology (16.63%) and real estate (14.70%) spaces.

Other companies in the vehicles and parts industry that Watsa owned as of Dec. 31 were Garrett Motion Inc. (NYSE:GTX) and General Motors Co. (NYSE:GM).

According to GuruFocus data, Watsa’s firm returned 14.8% in 2019, underperforming the S&P 500’s 31.48% return.

Disclosure: No positions.

Read more here:Spiros Segalas Starts the New Year Adding 5 Stocks to Portfolio5 Stocks Top Earners Steven Cohen and David Tepper Agree OnDavid Tepper Is ‘Nibbling’ at Stocks as Coronavirus Uncertainty Continues

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Also check out:

Prem Watsa Undervalued StocksPrem Watsa Top Growth CompaniesPrem Watsa High Yield stocks, andStocks that Prem Watsa keeps buying

About the author:

Sydnee Gatewood I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

亿�掏蹲收逷rem Watsa(Trades，Portfolio)，费尔法克斯�毓捎邢薰咀懿谩�(TSX：FFH)上周透露，他�送镉瓮Э毓晒�(MasterCftBoatHoldingsInc.)。(纳斯达克市场代码：mcft)下跌200.37%。

这位�１怀莆凹幽么致装头铺�(Trades，Portfolio)”，他的投资策略类似于伯克希尔哈��(NYSE：BRK.A)(纽约证券交易所市场代码：BRK.B)的首席执行官，他的保险集团收购了整�荆⒔渖鲜型蹲视谏鲜泄尽uruFocus用MCFT检测到一�嫘藕拧５慊锊榭础CFT 30年期��--MCFTPeterLynch图的内在价值

根据高级功能GuruFocusRealTimePicks的说法，Watsa于3月17日投资了田纳�峙刀镜�106�善保壳八芄渤钟�159�善保妓善蓖蹲首楹系�0.58%。这只股票的平均价�抗�7.41美元。

GuruFocus估计，自2019年第三季度成立以来，Watsa的投资��33.26%。

舰载机

该公司的市值为1.372亿美元；该公司周一的股价约为6.90美元，市盈率为7.14美元，市盈率为1.49，售价为0.29，GuruFocus指�杏式咏�5年低点。

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2月�饧以齑竟剂�2020年第二季度的财报。�锕嫉牡嫖抗�43美分，营收为9，960�仙夏晖谟兴陆怠�

首席执行官弗雷德·布莱特比尔(FredBrightBill)在一份声�担谑占恕翱突А⒕獭⒃惫ぁ⑸桃岛献楹屯蹲收摺倍酝锏挠攀坪臀蠢椿饧霉臼凳┝艘幌钚碌恼铰栽苹眉苹安嘀赜诟纳瓶突逖椤⒗┐埔馐丁⒔徊教嵘擞吭剿胶头⒄挂钥突行牡奈幕薄�

他说：“我有信心，如果我们重新重视这些措施，�锝芨玫靥嵘颐窃谒衅放浦械氖谐》荻睿⑽竞凸啥粗卮怠！�

随着科维德-19病毒的爆发，该公司于3月25日宣布，它正在采取措施保护公司本身及其员工、经销商和社区，包括暂停制造业�淇捎玫牧院筒莆钚裕⒊废甑闹傅挤秸搿�

BrightBill说：“在这�氖谐≈校锛绦刖堂芮泻献镏芾硭堑目獯嫠剑С炙且滴褰】怠！薄拔颐钦诿芮泄刈⒕质疲⑺媸弊急覆扇”匾亩钔庑卸雇锛捌淅嫦喙卣咴诔て谀谌〉贸晒Α！�

GuruFocus对MasterCraft的财�辛似兰叮渲�5/10是基于足够的利息覆盖。然而，Altman Z-评分为2.58，这表�菊媪僖欢ǖ牟莆Γ渥什脑俣瓤煊谑杖氲脑�

该公司的盈利能力更好，在不断扩�道闹С窒拢镜钠兰段种恕Ｍ镆灿星烤⒌幕乇ǎ硐钟庞诖赫允郑约拔潞偷钠ぐ峦兴够鵉-得分为5，这意味着业�俏榷ǖ摹�

Watsa持有8.48%的股份，现在是该公司最�怕彻啥huckRoyce(Trades，Portfolio)和JimSimons(Trades，Portfolio)的复兴技�疽苍诠善敝谐钟型反纭�

投资组合组成和业绩

截至2019年第四季度末，这位加拿�Φ�20.3亿美元股票组合中，有超过一半投资于工业领�渲�41只股票，其次是科技(16.63%)和房地产(14.70%)领�闲⊥反纭�

截至12月31日，Watsa在汽车和零部件行业拥有的其他公司是GarrettMotionInc.。(纽约证券交易所市场代码：GTX)和通用汽车公司(纽约证券交易所：GM)

根据GuruFocus的数据，Watsa公司在2019年的回报率为14.8%，低于标准普尔500指数31.48%的回报率。

披露：无职位。

在这里阅读更多信息：斯皮罗斯·塞加拉开始新年，在Portfolio5�性只股票

不是GuruFocus的高级成员�渭游谄咛斓纳；骨肟矗篜rem Watsa低估了股票Prem Watsa顶级成长型公司Prem Watsa高收益股票以及Prem Watsa一直购�赜谧墓善保�

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