The Buffet of Canada warns against tech-bubble
Moneylife Digital Team 11 March 2015
Prem Watsa, Chairman of Fairfax Financial Holdings Ltd., warns against the “bubble” of tech companies with huge valuations; predicts it will end “very badly”
Often referred to as the “Warren Buffet of Canada”, Prem Watsa, in the annual letter to shareholders issued by his holding company Fairfax Financial Holdings Ltd, has warned against the “bubble” of tech firms – confident that the speculation will end “very badly”. His stance is consistent with his statements from previous years. In the company's annual meeting last year, he had stated that the tech rally would, “end in tears”, just like it did for the “dot-com era.” 
In the letter to shareholders, he substantiates his stance by pointing that the huge valuations of several tech companies like Twitter, Netflix and Facebook are a result of heavy speculation. He cites Uber as an example, whose valuation at $41.2 billion is 14.7 times the $2.8 billion cumulative equity capital it raised. A similar pattern can be observed in many of the big tech firms – including Snapchat and Xioami. Watsa observes that speculation is rampant in both public and private tech firms.
The letter also refers to a piece of data from Wall Street Journal, according to which  there are 73 companies that are valued at more than $1 billion by venture capital investors, versus half that number prior to the crash. His prediction for these companies also mirrors the fate of the dot-coms, which was spectacularly dismal.
However, he still defends the company's decision to remain a key shareholder of Blackberry. “I have learned that the tech world is very difficult to predict and things change very quickly. Yesterday’s hit can be today’s dog, but with the right leadership, things can also change very quickly for the positive. We continue to be excited to be long term shareholders of BlackBerry and have no intention of supporting a takeover of BlackBerry.” 
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