Colliers International Group: Prem Watsa's Undervalued Real Estate Play for 2025

Prem Watsa, the legendary value investor and CEO of Fairfax Financial, has long been a contrarian force in the stock market. His latest move—positioning Colliers International Group Inc. (NASDAQ:CIGI) as one of his top stock picks for 2025—reflects a calculated bet on an undervalued sector amid macroeconomic turbulence. With a $3.29 million stake and an estimated 44% upside potential, CIGI’s inclusion in Watsa’s portfolio signals a compelling opportunity for investors seeking stability in a volatile market.

The Financial Foundation: Growth Amid Headwinds

CIGI’s recent financial performance underscores its resilience. In Q4 2024, the company reported a 22% year-over-year revenue surge to $1.5 billion, while adjusted EBITDA rose 14% to $225 million. A standout segment was its engineering division, which saw revenue jump 61%, driven by recent acquisitions that have bolstered its service offerings. This growth, particularly in high-margin engineering and development services, positions CIGI to capitalize on infrastructure demand even as broader real estate markets face uncertainty.

Strategic Acquisitions Fuel Expansion

CIGI’s acquisition of Triovest in 2023 marked a pivotal move to solidify its dominance in Canadian commercial real estate. The deal expanded its managed portfolio to over 95 million square feet and added $15 billion in projects under development. This scale not only diversifies its revenue streams but also strengthens its negotiating power with clients in sectors like healthcare, logistics, and technology—areas expected to see steady demand post-recession.

Navigating Sector Challenges

Despite its progress, CIGI faces headwinds. U.S.-China trade tensions, rising interest rates, and recession risks have dampened investor sentiment in real estate. JPMorgan, for instance, recently lowered its price target to $142 from $167, citing macroeconomic concerns. Yet Watsa’s strategy hinges on a contrarian view: when fear drives prices down, value stocks like CIGI become overlooked bargains.

Watsa’s Playbook: Value Investing in a Tech-Dominated World

Watsa, often called “Canada’s Warren Buffett,” has long prioritized undervalued companies with strong fundamentals. His focus on CIGI aligns with a broader shift in his portfolio toward sectors poised to rebound once economic conditions stabilize. While momentum-driven tech stocks face corrections due to inflation and rate hikes, Watsa argues that real estate—particularly in services and development—offers a safer, higher-return alternative.

“Value stocks are now the offensive plays,” Watsa noted in a recent interview, emphasizing that Fairfax’s $1.5 billion portfolio is “positioned for long-term growth, not short-term trends.”

The Case for CIGI: 44% Upside and a Strong Balance Sheet

Analysts project CIGI’s stock could rise from its April 2025 price of $98.50 to $142.25—a 44% upside—based on improving margins and asset valuations. While JPMorgan’s caution is valid, the company’s balance sheet remains robust, with $1.2 billion in cash and a manageable debt-to-equity ratio of 0.6. This liquidity buffer allows CIGI to weather near-term slowdowns while capitalizing on acquisition opportunities.

Conclusion: A Patient Investor’s Prize

CIGI’s inclusion in Watsa’s top picks is no accident. Its 22% revenue growth, strategic acquisitions, and discounted valuation present a rare combination of safety and upside in today’s market. Even with macroeconomic risks, the company’s diversification across sectors like healthcare and logistics, coupled with its dominant Canadian position, positions it to thrive once global trade and investment normalize.

With a 44% upside potential and a track record of outperforming peers in recovery cycles, CIGI exemplifies Watsa’s philosophy: patient value investing pays off when others panic. For investors willing to look beyond the tech-driven frenzy, this could be a cornerstone of a resilient portfolio in 2025 and beyond.

Data sources: Fairfax Financial Q4 2024 SEC filings, Colliers International investor presentations, JPMorgan analyst reports (April 2025).