When Prem Watsa makes a significant portfolio move, people notice. Not because he's flashy or trades on momentum, but because his investing style is patient, methodical, and backed by serious conviction.
His latest play? A massive bet on Under Armour Inc (UA).
Through Fairfax Financial Holdings, Watsa increased his Under Armour stake by more than 560%, making it nearly 10% of Fairfax's entire portfolio. This isn't minor rebalancing or a speculative flier. This is a statement about where he thinks the value lies.
This Looks Like Conviction, Not Speculation
Watsa built his reputation buying unloved, misunderstood companies when sentiment is awful and patience is essential. A position this large suggests he sees Under Armour as significantly undervalued, with the downside largely priced in.
Translation: this appears to be a turnaround investment, not a short-term trade hoping for a quick pop.
What Could He Be Seeing?
Under Armour has spent recent years doing the boring but necessary work. They've cut bloated inventory, exited money-losing distribution channels, and refocused on what they do best: performance athletic apparel. Revenue growth hasn't exactly dazzled anyone, but improved cost discipline and a cleaner balance sheet tell a different story.
For value investors, that's often where real opportunities emerge. Not when the headlines turn glowing, but when operational risks start stabilizing and the worst-case scenarios become less likely.
The Challenges Are Still Real
Let's be clear: this isn't a sure thing. Under Armour continues battling fierce competition from much larger rivals, facing uneven consumer demand, and dealing with persistent margin pressure. Having a legendary investor on your cap table doesn't automatically fix execution challenges.
Turnarounds also take time, often years. The stock can remain choppy and frustrating even if the underlying business gradually improves.
What Investors Should Take Away
Watsa's aggressive accumulation doesn't mean Under Armour's turnaround is complete or guaranteed. What it does suggest is that sophisticated capital believes the risk-reward equation has fundamentally shifted.
The relevant question isn't whether Under Armour rallies next week. It's whether this represents the early, unglamorous phase where long-term recoveries quietly take root before most investors pay attention.