From humble beginnings as a phone technician at Bell Canada, a Francis Chou
emerged as one of the leading Canadian value investors of the decade. With a mere 12th
grade education, and a desire to invest after reading literature from legendary investor Ben Graham, Chou, with the trust and loan of $51,000 endowed upon him from fellow employees, launched Chou Associates. Such a low-key beginning would lead to the formation of one of Canada’s most successful investment management firm that now manages over $827 million in assets as of the third quarter of 2011.
From his arrival in Canada with a mere $200, Chou embodies that of the true value seeker, in both personality and investments. Driving a bland Dodge Caravan, and utilizing a Costco-branded credit card, Chou’s personality is a far cry from flashier wealth managers. Perhaps such conservation stems from Chou’s tutelage under the “Warren Buffett
of Canada,” Prem Watsa
. Like most value investors, he seeks equities under-priced from their intrinsic value. Chou prefers a margin of safety of approximately 50%, and a return on equity of 15% or greater. He also likes to purchase baskets of what he so eloquently nicknamed CRAP, or Cannot Realize a Profit. These are companies that are teetering on the edge of liquidation, but due to market irrationality, are trading at less then the value of the full liquidation of the company. Continue Reading »