Francis Chou

Francis Chou

Last Update: 02-10-2016
Related: Chou RRSP Fund

Number of Stocks: 23
Number of New Stocks: 1

Total Value: $289 Mil
Q/Q Turnover: 3%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Francis Chou Watch

  • Francis Chou's Holdings Trading at Low PE

    Francis Chou (Trades, Portfolio), the fund manager of Chou America Mutual Funds, has been managing the Chou Funds in Canada since 1986. The investment process followed in selecting equity investments for the funds is a value-oriented approach to investing. This involves a detailed analysis of the strengths of individual companies, with much less emphasis on short-term market factors.


    The following are the stocks Chou holds that are trading with lowest P/E.

      


  • Francis Chou Adds to 3 Holdings

    The Chou Associates Fund was started on Nov. 28, 1986 and since its inception it has netted an 11.2% return.


    Chou Associates has multiple funds including The Chou RRSP Fund (Trades, Portfolio), Chou Asia Fund, Chou Europe Fund, Chou Bond Fund, and the Associates fund has been the most successful since their inceptions, according to the Chou Associates website (http://choufunds.com/comp_annual.html).

      


  • Franchis Chou Is Buying In to the John Malone Model

    Francis Chou (Trades, Portfolio)'s rise to guru status is as amazing as it is inspiring. His first victory after coming to Canada with $200 in cash and without a college degree was to get a job at Bell Canada as a telephone repairman. He ended up reading the "Intelligent Investor" and other Graham works that led him to start an investment club with six of his colleagues at Bell. The telephone repairman started compounding the initial $51,000 at 13.6% per year blowing away the Standard & Poor's 500’s 6.8% gains per year over the same period. See his Gurufocus profile page to read more about his amazing story and to check out his entire portfolio. He has been managing Chou Funds in Canada since 1986.


    His latest interesting investment is in Ascent Capital Group (NASDAQ:ASCMA). Ascent is a holding company that owns Monitronics, a home security alarm-monitoring company. This is quite a hot sector, and it is unusual to see a value investor like Chou venture out there. It certainly caught my interest, and that is why I checked out what may be attracting Chou to Monotronics. For one thing, the company got decimated YTD which raises the odds there is some value to be found there:

      


  • Francis Chou Adds to Positions in 3 Companies

    Francis Chou (Trades, Portfolio)’s Chou Associates Fund has been quite successful in its value-oriented approach to investing. Last year, at a time when lower oil prices were taking a toll on many investors, the Chou Associates Fund recorded returns exceeding 12%. In the years preceding 2014, the Fund’s returns were double, even three times that.


    Chou made half a dozen deals in the third quarter, most involving additions to existing stakes, but his most noteworthy third-quarter transaction was his reduction of his stake in Nokia Oyj (NYSE:NOK), a Finland-based communications and information technology company.

      


  • Francis Chou Doubles Stake in Dundee Corp, Sells Out Ridley Inc.

    Francis Chou (Trades, Portfolio) doubled one position and sold out of another in a second quarter that had otherwise light investment activity at Chou Associates Management.


    Chou is a value investor who buys low-priced and typically out-of-favor companies and who was named Morningstar’s Fund Manager of the decade in 2004. His Canada-based firm manages about $650 million and entered a period of underperformance in the past five years while the market soared, returning 9.5% in U.S. dollars versus 17.3% for the S&P 500 compounded annually. In the year ended June 30, the fund fell 8% while the index gained 7.4%, and in the past 15 years, it returned 11% compounded annually, versus 4.4% for the S&P.

      


  • Chou Funds' June 2015 Semiannual Report and Investor Letter



  • Francis Chou Doubles Stake in AstraZeneca

    Francis Chou (Trades, Portfolio) of Chou Associates Management runs a concentrated portfolio of just 22 stocks, trading in only two of them during the second quarter.


    Chou spoke with GuruFocus back in January to answer questions from readers, giving a straightforward response to a question of how he manages large swings in positions due to their heavy weightings.

      


  • Berkowitz Sells Citigroup During First Quarter

    Bruce Berkowitz (Trades, Portfolio), founder and managing member of Fairholme Capital Management, did not see opportunities to invest in new stocks during the first quarter, and instead sold one stock and trimmed his position in eight others.


    The investor runs a concentrated portfolio with 17 stocks, believing that over-diversification can lead to mediocre results.

      


  • Investor Francis Chou Buys 2 New Stocks in Q1

    Prominent value investor of Canada-based Chou Associates Management Francis Chou (Trades, Portfolio) announced Monday that he purchased two new holdings in the first quarter: Sears Holdings Corp (NASDAQ:SHLD.WS) and Ascent Capital Group Inc. (NASDAQ:ASCMA).


    In his annual letter covering the year 2014, the price-conscious Chou said that he is having a guarded approach to markets.

      


  • Chou RRSP Fund's Top Stocks Also Trading At Low P/E

    In his annual shareholder letter, Chou RRSP Fund (Trades, Portfolio) manager Francis Chou (Trades, Portfolio) singled out six stocks that contributed to the fund’s 14.2% return in Canadian dollars, compared to the 10.6% return for the S&P/TSX Index. Coincidentally, three of these stocks — Torstar Corp (TSX:TS.B), Ridley (TSX:RCL), and Canfor Pulp Products (TSX:CFX) — are also trading near the low end of their historical P/E range.


    The fund owns 1,259,416 shares of Torstar Corp, which accounts for 9.2% of the portfolio as of the fourth quarter.

      


  • Francis Chou Comments on Sears Holdings Corp

    As we have indicated before, we believe that Sears Holdings (SHLD) is a misunderstood story. There are many moving parts but we believe Sears Holdings’ intrinsic value lies in its real estate assets. It also has other valuable assets such as Kenmore, Craftsman and Diehard. Being a traditional department store has become a tough business during the last decade but, according to management, Sears is transitioning its historic focus on running a brick and mortar department store into a business that provides and delivers value by serving its members in the manner most convenient for them: whether in store, at home or through digital devices.


    The value of its real estate allows Eddie Lampert, the controlling shareholder and CEO, the time and money to effect the changes. What Lampert is doing is the right thing to do, considering the possible outcomes – if it works, it’ll be a multi-bagger; if the transformation does not work out as expected, we believe the real estate values are high enough that we would not lose money in our investment at current prices after netting out all liabilities. If real estate was the only play from Lampert’s viewpoint, it seems that he would have liquidated the company a long time ago.

      


  • Chou Funds 2014 Annual Report



  • Should you follow these analysts and buy Chicago Bridge and Iron

    Recent correction in oil prices have taken a toll on Chicago Bridge & Iron Company's (NYSE:CBI) share prices and the stock has corrected ~50% from 2014 highs. However, according to many analysts, this correction provides a good opportunity to buy the stock. In his recent report, Jefferies analyst Luke Folta reiterated his buy opinion on the company. He considers the stock a bargain at current levels and has a price target of $75 on the stock. He believes divesture of assets and restructuring could generate more that $100 million in cash flow for the company in 2015 and 2016 which could be used towards stock buy backs.


    Another analyst, John B. Rogers of D.A. Davidson, is also bullish on the stock and has a $70 price target. He believes that with sustained earnings and cash flow, let alone growth, the stock can appreciate substaintially from the current level. He is optimistic on the company's backlog growth due to “LNG export facilities, new gas fired power plants, and other energy/downstream infrastructure that could be awarded in 2015.”

      


  • Francis Chou's New Buys

    Francis Chou (Trades, Portfolio) is the fund manager of Chou America Mutual Funds and he has been managing the Chou Funds in Canada since 1986.


    Web Page: http://www.choufunds.com

      


  • Chou Opportunity Fund Q4 Investor Letter – Discusses A Big Long Position in Sears

    Dear Shareholder,


    During the 12-month reporting period that ended on December 31, 2014, the Chou Opportunity Fund (the “Fund”) was up 4.88%, while the S&P 500 Total Return Index (the “S&P 500”) generated a return of 13.69% during the same period. The Fund’s past performance is not necessarily an indication of how the Fund will perform in the future.

      


  • Guru Francis Chou Answers Readers' Questions

    Francis Chou immigrated to Canada in 1976 with $200 to his name. Without a college degree, Chou worked as a telephone repairman for Bell Canada, then formed an investment club with co-workers after reading about Benjamin Graham's teachings. Today, Chou is the fund manager of Chou Mutual Funds. Below are his answers to questions from GuruFocus readers.


    Commodities have been in a severe bear market for the last three years. What are your thoughts on the valuation of base metal and energy companies at the moment?

      


  • Ask Your Investment Questions to Guru Francis Chou


  • Can Individual Investors Invest Profitably in the Stock Market with Value Investing?

    An anonymous user asked me to answer a question on quora the other day.


    Wanted to share my short response as it’s a common question.

      


  • Francis Chou Funds - Buys and Sells of Second Quarter

    Francis Chou (Trades, Portfolio)’s RRSP fund mainly invests in equity and debt of Canadian businesses, though it sometimes ventures into U.S. investments.  


  • Global Market Valuations and Expected Returns – April 4, 2014

    In January 2014, the U.S. stock market benchmark S&P 500 lost 3.36% after an excellent 2013. The enthusiasm went back as the market gained 4.31% over February. In March, it went up only 0.69%. The market benchmark S&P 500 closed at 1890.90 on April 2, 2014, which is the new record high. What is the situation in the other parts of the world? In March, the key indexes in Europe returned negative. Germany’s DAX index declined 1.40%. France’s CAC-40 index lost 0.38%. The FTSE 100 index was down 3.10%. Stock market performances in Asia were weak too. Japan’s NIKKEI 225 moderately decreased 0.09%. Hong Kong’s Hang Seng Index was down 3.00% and China’s SSE Composite index was down 1.12% due to the weaker-than-expected Chinese economic data.


    Seth Klarman has returned $4 billion to clients at 2013 year-end due to lack of ideas and has 40% of the portfolio in cash. In his 2013 letter to investors, he mentioned the Continuing Problems in Europe, “Europe isn’t fixed either, but you wouldn’t be able to tell that from investor sentiment. One sell-side analyst recently declared that ‘the recovery is here,’ a sharp reversal from his view in July 2012 that Greece had a 90% chance of leaving the Euro by the end of 2013. Greek government bond prices have nearly quintupled in price from the mid-2012 lows. Yet, despite six years of painful structural adjustments, Greece’s government debt-to-GDP ratio currently stands at 157%, up from 105% in 2008. Germany’s own government debt-to-GDP ratio stands at 81%, up from 65% in 2008. That doesn’t look fixed to us. The EU credit rating was recently reduced by S&P. European unemployment remains stubbornly above 12%. Not fixed.

      


  • Chou Funds Triples Investment in BlackBerry, Adds New Stock to Portfolio

    As with all of the Chou Associates Management Inc.’s funds, equities for the Chou RRSP Fund (Trades, Portfolio) are selected based on a company’s “balance sheet, cash flow characteristics, profitability, industry position, special strengths, future growth potential and management ability.” They are purchased if they sell at an acceptable margin of safety, and held for the long term.

    Top industry weightings for the fund are: 39.3% Consumer Services, 25.8% Basic Materials and 1.7% Financials, with 26.8% in cash.  


  • Francis Chou Comments on Dex Media Inc.

    Not every large holding worked out in 2013. R.H. Donnelley’s term loan was down from 68.90 cents on a dollar to 61.20 on a dollar as of December 31, 2013. We bought into it as we believed it was well covered by its earning power, assets, and covenants that are protective to debt holders. In addition, this term loan comes with a cash flow sweep, which means that any free cash flow remaining after all operational needs are met can be used to buy back debt at par from its holders. In April 2013, SuperMedia Inc. and Dex One Corporation, the parent company of R.H. Donnelley and Dex Media West, completed their merger, creating Dex Media, Inc. (DXM) — one of the largest national providers of social, local and mobile marketing solutions through direct relationships with local businesses. Dex Media estimates it will realize approximately $150-$175 million in cost savings by 2015, and expects to preserve Dex One’s remaining tax attributes of roughly $1.8 billion, which can be used to offset income attributable to the combined company following the completion of the transaction. We continue to believe that at current prices, R.H Donnelley is underpriced.

      


  • Francis Chou Comments on Resolute Forest Products

    The common stock of Resolute Forest Products (NYSE:RFP) contributed significantly to the returns of the Fund. We do not normally buy common stock for the Fund but every now and then, due to restructuring, we receive shares for a debt security we hold. Such was the case with RFP. We received shares of RFP for our holdings in McMinn County, Tennessee revenue bonds. To cut a long story short, we purchased 15.48 million bonds for a total consideration of $155,800. We paid roughly one cent on a dollar for each bond, preparing to hold them for several years. We knew McMinn’s obligor was AbitibiBowater and we have been following AbitibiBowater story for a while (AbitibiBowater changed its name to Resolute Forest Products in 2011). McMinn bonds belong to a class of creditors that were in dispute with AbitibiBowater 7.95% class bonds, a dispute many thought would not likely be settled for several years. We figured that even if McMinn lost the lawsuit, and 100% of the disputed claim was awarded to the 7.95% class, we would not lose money on the McMinn bonds considering the price we paid. Lo and behold, a few months later, the lawsuit was settled and we received 52,564 common shares of RFP for our holdings of McMinn bonds. At the year-end price of $16.02, these shares of RFP were worth approximately $842,075.


    Such a windfall comes maybe once every 20 years and we would not recommend this case as a regular way to invest in bonds. You needed a seller who was desperate to sell his holdings within a short time frame but could not find a buyer. And in a fortuitous way, we had invested in RFP for several years and were well acquainted with the story and the lawsuit. Further, the outcome was also dependent on a quick favorable legal judgment. The lawsuit could have dragged on for years which would have diminished the annualized returns by a considerable margin.

      


  • Francis Chou Comments on Sears Holdings

    We believe that Sears Holdings (NASDAQ:SHLD) is a misunderstood story. There are many moving parts but we believe Sears Holdings’ intrinsic value lies in its real estate assets. It also has other valuable assets such as Lands’ End, Kenmore, Craftsman and Diehard. Being a traditional department store has become a tough business during the last decade but, according to management, Sears is transitioning its historic focus on running a brick and mortar department store into a business that provides and delivers value by serving its members in the manner most convenient for them: whether in store, at home or through digital devices. The value of its real estate allows Eddie Lampert, the controlling shareholder and CEO, the time and money to effect the changes. If the transformation does not work out as expected, we believe the real estate values are high enough that we would not lose money in our investment at current prices after netting out all liabilities.


    In general, we believe that stocks and non-investment grade bonds are fairly valued. We do not time the market but when bargains are scarce, we are happy to hold cash equivalents as an alternative.

      


  • Francis Chou Comments on Dell Inc.

    We had a small holding in Dell Inc. (NASDAQ:DELL). It was trading at $10.13 on December 31, 2012. After a protracted battle, the founder Michael Dell (Trades, Portfolio) was able to buy out the shareholders at a price of $13.75 per share, plus a 13 cent special dividend.

      


  • Francis Chou Comments on MBIA Inc.

    Our common stock investment in MBIA Inc. (NYSE:MBI) has also performed well, increasing in value to $11.94 as of December 31, 2013 from $7.85 as of December 31, 2012. There was a big overhang on the stock and that was removed when MBIA Inc. and Bank of America settled their lawsuits. Although MBIA is cheap based on book value, it would make me sleep better if the company receives permission to start writing business again. Investing in companies, where the main operating business is mothballed for a while, makes it harder to evaluate its intrinsic value. Time is not on the side of investors in that type of business.

      


  • Francis Chou Comments on Overstock.com

    Overstock.com (NASDAQ:OSTK) was the largest contributor to the positive performance of the Fund. The stock increased in value to $30.79 as of December 31, 2013, up from $14.31 as of December 31, 2012. At the beginning of the year, we had 875,931 shares, comprising just over 30% of the portfolio. As the price of OSTK has now risen significantly and is trading closer to its intrinsic value, we have drastically reduced our position. We held only 15,000 shares as of December 31, 2013.

      


  • Canadian Guru Francis Chou's Annual Letter - He Believes Sears Holdings Offers Misunderstood Value

    Dear Shareholder,


    During the year 2013, the Chou Opportunity Fund (the “Fund”) was up 29.82%, while the S&P 500 Total Return Index (the “S&P 500”) generated a return of 32.39% during the same period. The Fund’s past performance is not necessarily an indication of how the Fund will perform in the future.

      


  • Francis Chou’s Top Holdings at Year End

    Francis Chou (Trades, Portfolio) is one of the international gurus followed by GuruFocus, and is the President of the Toronto-based Chou Associates Management. The guru immigrated to Canada from India in 1976 and is oftentimes praised and acknowledged for his rags to riches story.


    According to the company’s website, the investment process that the Chou funds operate off of is the value-oriented approach to investing. The fund continues to do intricate research which involves a “detailed analysis of the strengths of individual companies, with much less emphasis on short-term market factors.” The portfolio managers at Chou Associates focus primarily on the assessment of a company’s balance sheet, cash flow characteristics, profitability, industry position, special strengths, future growth potential and management ability.

      


  • 'The first step to getting out of a hole is to stop digging' – A Look at the Performance of Canadian Guru Francis Chou

    Be aware of the risks involved, including that of the manager who does not have a long history of investing heavily in that area.  Caveat emptor!


    -Francis Chou (Trades, Portfolio)

      


  • Francis Chou Buys Sears Canada, Adds to Prem Watsa's Resolute Forest and MEGA Brands

    Founder of Toronto-based Chou Associates Management Francis Chou is a celebrated value investor whose philosophy rests on rigorous analysis of each company’s “balance sheet, cash flow characteristics, profitability, industry positions, special strengths, future growth potential and management ability.” The more a stock appears undervalued as calculated with the above data, the more of his fund he allocates to it, and margin of safety is paramount. For instance, he bought a sizable position in computer-maker Dell (NASDAQ:DELL) when it fell out of favor in the latter half of 2012.

    Chou is also a fan of Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), Resolute Forest Products Inc. (TSX:RFP) and Overstock.com Inc. (NASDAQ:OSTK), which along with Dell hold the top four places in his funds.  


  • Francis Chou Comments on Actavis Inc.

    Another big winner was Actavis Inc. (NYSE:ACT), formerly Watson Pharmaceutical. We first purchased Actavis in 2006 at $25. We kept buying the shares in 2007, and on June 30, 2013, it was priced at $126.22. It shows that when you are accurate in your estimation of intrinsic value and buy them at a significant discount, add in good management and respectable growth in intrinsic value, the investment works out really well. This is true even if you bought them when the market indices were trading at an all-time high. "Value traps" generally occur when you are wrong in your estimation of intrinsic value, pay too much and the company's intrinsic value is static and/or decreasing in value.

    From Francis Chou's semi-annual report 2013.  


  • Francis Chou Comments on Overstock.com

    Overstock.com (NASDAQ:OSTK) was the largest contributor to the positive performance of the Fund. The stock increased in value to $28.20 as at June 30, 2013, up from $13.95 as at December 31, 2012. It is interesting to note that a year ago, on June 29, 2012, it was trading as low as $6.91 per share. Generally, when prices hit a new low, our reaction is to check whether our evaluation of the company's intrinsic value is accurate enough. If it is accurate enough, we either sit put or buy more. Since we already had a fair amount of OSTK in the portfolio, we did not add any more but were comfortable with our investment in the company. There are many ways of evaluating a company and one of them is to check recent transactions within its industry which may provide a sense of its intrinsic value. For example, in 2009 Amazon bought Zappos, a company that is similar to OSTK but different in many ways, at close to one times revenue. At one times revenue, OSTK's intrinsic value is more than $40 per share whereas its stock price closed on December 31, 2012 at $13.95 per share. One important caveat: This type of comparison is fraught with danger and should be viewed as just a frame of reference. At the end of the day, it is OSTK's earning power or its future potential earnings based on its revenue growth (or lack of it) that will determine its intrinsic value. So, be extremely cautious when using only revenue as a basis for estimating intrinsic value. It must be substantiated by earnings. If the earning power is not there, then a company's value is strictly the value of its liquidated assets minus its liabilities. Under that scenario, OSTK would be worth almost nothing.

    If you take a cursory glance of OSTK prices over the last 18 months, it may appear that we had a huge winner in OSTK, but there is more to the story. The investment in OSTK did not pan out as expected. When you are investing, the time value of money must be given serious consideration. We first invested in OSTK in 2006 and since then, the results have been positive but sub-par to say the least. Looking back, we paid too much for it and the intrinsic value that we estimated seven years ago was too high. Since we are a patient investor and can hold on to stocks for seven years or more, it is imperative that the intrinsic value of the company we invest in grows satisfactorily. In that regard, OSTK's growth in intrinsic value was anemic at best.  


  • Real-Time Rodeo and Round Up - Reduction Trades

    The month of May is when rodeo season heats up around the U.S. and cowboys, just like investors, prove their timing, finesse and skill in riding something risky and unpredictable. A review of the GuruFocus "Real Time Picks" report shows the month of May was a virtual rodeo of reductions made by the world’s top investors. Let’s round up the riders and the horses for a real-time reduction rodeo:

    Orchard Supply Hardware (OSH)  


  • Francis Chou Drastic Cut - Overstock Up 237% Over 12 Months

    As of April 23, 2013, Francis Chou, fund manager of Chou America Mutual Funds, reduced his position in Overstock.com (NASDAQ:OSTK) by 12.25%, with current shares after the trade at 1,891,587. Chou sold in the price range of $18.91 per share, for a 1.48% loss to his portfolio. OSTK’s current price is $1.75 with a change from average up 4%. This is Chou’s second reduction so far this year, and his fifth chop since last fall when the share price was around $15.5, according to GuruFocus Real Time Picks.

    His holding history since third quarter 2011 shows an average price for shares bought at $11.8 per share with a 67% gain.  


  • Canadian Value Investing Guru - Francis Chou's 2012 Annual Report



  • Edward Lampert and Francis Chou’s New Stocks See Biggest Gains

    The Score Board of Gurus on GuruFocus gives a picture of how investors’ stock picks have performed in various time periods. Over the short-term period of the past six months, the Gurus whose new stocks have posted the greatest market gains are Edward Lampert and Francis Chou, with average returns of 47.67% and 46.5%, respectively.

    Lampert is the founder of ESL Investments, a hedge fund, who has taken to retail turnaround projects such as with Sears Holdings (NASDAQ:SHLD). Francis Chou operates Chou Associates Management, a group of mutual funds based in Canada with a thoroughly value-oriented perspective.  


  • Guru Early Movers for Monday February 4, 2013

    Markets are under pressure this morning as they try to continue to rally. Specifically, the DOW is meeting some resistance as it tries to move above 14,000 which would complete a 100% move from the lows of the financial crisis.

    Companies will continue to report earnings and give a better picture as to which sectors of the economy are performing well and how certain economies such as China are going to perform in 2013. For example, United Technologies (NYSE:UTX) mentioned that Asian sales will rise 7% to 8% over the next 10 years on demand for elevators and air conditioners that will go into new skyscrapers. At the same time, UTX declared a dividend of $0.53 per share, bringing its forward yield to 2.38%.  


  • Francis Chou Makes Largest Overstock.com Paring Yet

    Francis Chou, fund manager of Chou America Mutual Funds, has for the fourth time since October reduced his stake in Overstock.com (NASDAQ:OSTK). This time, he shed 3.58% of his holding, shrinking his shares owned to 2,155,611 as of Jan. 25, according to GuruFocus Real Time Picks.

    This is the most drastic cut Chou has made to the holding of his four recent parings. The company’s stock spiked 70% in the past six months, though it has declined 5% since the year began.  


  • Top Guru Investors for 2012 - Blum, Eveillard, Chou, Muhlenkamp, Kahn

    As the year draws to an end, it is becoming clear which investors outperformed in 2012. Though official return figures have not come in yet, GuruFocus’ Score Board of Gurus shows which investors produced the largest average returns in the past 6 and 12 months, as well as on a historical basis.

    According to the score board, the Gurus with the highest average returns over the past 12 months were Richard Blum with 40.33 percent, Jean-Marie Eveillard with 37.22 percent, Francis Chou with 30.31 percent, Ronald Muhlenkamp with 21.8 percent and Irving Kahn with 21.25.  


  • Merry Early Christmas to BAC and BAC Warrants Guru Holders as Prices Surge

    Investors who invested in warrants of Bank of America (NYSE:BAC) were rewarded recently: The price has soared 20.5% from low to high in less than a month, to trade for $4.58 on Friday. News that Citigroup (NYSE:C) would lay off 11,000 employees, or roughly 4% of its workforce, pushed that bank’s stock up 6 percent, and affected other banks as well. Bank of America, up 91% year to date, rose about 8% since the layoff news was announced on Wednesday.

    The layoffs signal to investors that Citigroup’s new CEO, Michael Corbat, who replaced Vikram Pandit in October, is willing to trim expenses and increase efficiency, which could mean higher profits. Citi’s revenue has declined for the last three quarters, and net income has yet to meet pre-crisis levels. Meanwhile, its stock has been essentially flat for the past two years.  


  • Francis Chou Joins Prem Wasta in RIMM Bet; Sells USG, WPI, S, GPS, SYA, OSTK

    Canadian value guru Francis Chou joined his friend Prem Watsa in the bet RIMM and Dell (NASDAQ:DELL), according to the latest filings of Chou Funds. Francis Chou bought 200,000 shares of RIMM at the average prices of $7. He also bought another beaten down tech stock Dell at about $11.5 a share. He sold out his position in USG, and reduced holdings in Watson Pharmaceuticals Inc., Sprint Nextel Corp, Gap, Inc., Overstock.com, Inc., etc.

    As we reported back in July, Prem Watsa Doubled Down on Research-In-Motion, Again. Prem Watsa has incurred large losses with RIMM. He started buying when the stock crashed from $140 a share to $50 a share. He kept adding to the position, but the stock prices continue to decline. His latest purchases are in July, in which he doubled down again and lowered his cost per share to about $17 a share. Prem Watsa is still having a more than 50% paper loss with RIMM.  


  • The Latest on Overstock.com and Francis Chou’s Stake with the Online Retailer

    Utah-based Overstock.com (NASDAQ:OSTK) has reported its third quarter results on Oct. 25 per the welcoming of a new earnings season, covering the months between July and September. Guru investor and 10% owner of Overstock, Francis Chou of Chou Associates Management, reduced his holding of the stock one day later.

    Overstock experienced increases in revenue by 7%, gross profit by 21% and diluted earnings per share by $0.44, in a year-over-year comparison with 2011 data.  


  • Research In Motion: An Opportunistic Play For Long-Term Investors

    Research in Motion (RIMM) has been a controversial stock for the last 2 years. Historically, RIMM made a lot of money for investors from 2004 to 2008, but it has also evaporated billions of dollars of shareholders’ wealth since 2008. Here is RIMM’s stock chart in 10 years:

      


  • Francis Chou's Semi-Annual Letter

    Letter originally posted on investor, Francis Chou's fund website, www.choufunds.com, under Semi-Annual Reports  


  • Latest Picks from Francis Chou: USG, NOK; Sells GPS

    Francis Chou, like his friend Prem Watsa, loves to buy cheap stocks, especially if everyone else hates them. Market is giving him a lot of opportunities of doing so, as we can see from his latest portfolio. We have written extensively about Francis Chou. You can read it here: Francis Chou – The Investment Guru That You Never Heard Of. Francis Chou's experience is an amazing success story of value investing. He came to Canada in 1976 at age 20 with $200 in his pocket. Without a college degree, he could only work on blue collar jobs. Finally he landed a job at Bell Canada as a telephone repairman. Somehow he was introduced to the books of Benjamin Graham. As written by Warren Buffett in his famous article, The Superinvestors of Graham-and--Doddsville, "It is extraordinary to me that the idea of buying dollar bills for 40 cents takes immediately to people or it doesn't take at all." The idea apparently took Francis Chou immediately.”

    Francis Chou buys Nokia Corporation (adr), Usg Corporation, sells The Gap Inc., Qiao Xing Mobile Communication Co., Ltd. during the 3-months ended 06/30/2012, according to the most recent filings of his investment company, Chou Associates Management. As of 06/30/2012, Chou Associates Management owns 30 stocks with a total value of $328 million. These are the details of the buys and sells.  


  • Overstock.com Oversold?

    Shares of Overstock.com (NASDAQ:OSTK) are held by value investor extraordinaires Prem Watsa and Francis Chou. But the stock has languished as of late, having lost 2/3's of its value since 2010 and half of its value over the last year. As a result, you have a chance to get in on this stock at better prices than have these wise gentlemen.

    At a market cap of $160 million, Overstock trades for just 15% of sales. But if you subtract the company's relatively large net cash position from the market cap, Overstock trades for just 10% of sales! Yet the company operates in an industry (online retail) that is expected to continue to grow.  


  • Chou Funds 2011 Annual Report – Discusses TARP Warrants (Still Long and Strong)

    Value investor Francis Chou who has close ties to another Canadian value investing legend Prem Watsa, is out with his annual report for 2011.

    Over the past five years the Chou record has not been great. Over the past 10 and 15-year periods it is very good.  


  • Canadian Guru Francis Chou Buys Bank of America Warrants, Citigroup, Sears

    Value investor Francis Chou had a difficult year in 2011. His Chou Associates Fund was down 18.8%. The loss was mainly from the financials he owns. He owns many financial stocks that Bruce Berkowitz owns, too. But apparently Francis Chou does not have the redemption problem that Bruce Berkowitz has. He took the opportunity and added more to the positions that he has conviction in.

    If you are not familiar with Francis Chou, you should be. He came to Canada at a young age, never went to college, and worked as a telephone technician. But he found out about value investing. Since then he has built an amazing track record and manages more than $1 billion. For more about him, please read: Francis Chou – The Investment Guru That You Never Heard Of.  


  • Top Dividend Stocks of Francis Chou

    Francis Chou is the manager of Chou America Mutual Funds and he has been managing Chou Funds since 1986.

    Chou's Equity Opportunity Fund has a mandate: to invest in equity securities of companies located in developed and emerging markets across the world insofar as Chou thinks they are at market prices and less than their value. The idea of the investments is to identify compelling opportunities that, according to the circumstances, ensure a long-term growth of capital. As he puts it: “If you know how to spot a bargain it will make you a good investor.”  


  • A Closer Look at Overstock.com's Frequent Earning Restatements

    There are a lot of arguments relating to the company Overstock.com (NASDAQ:OSTK), and conflicting signals in terms of guru buys, its management, and business and financial performance. Any investors would be scared of the company which has issues with auditors concerning the misrepresentation of financial statement numbers, leading to the restatement of the past reporting figures or to legal disputes with its shareholders. I have briefly looked at the overall performance of the company in the 10-year historical period in my previous post. And today I would like to dig deeper into the restatement of financial figures of the company.

    Looking back the recent history of OSTK, it started in October 2008, when OSTK restated its financial reports for five years, from 2003 to 2008. It had to do this because of errors relating to accounting of customer refunds and credits. The restatement led to the reduction of $12.9 million in revenue and $10.3 million in operating loss, along with nearly $1 million in net loss from continuing operations for the whole five-year period. The restatement just affected the income statement, as it stated in its SEC filings: “The estimated cumulative impact of these adjustments increases the accumulated deficit by $10.3 million as of June 30, 2008. The adjustments for the fiscal years ended December 31, 2007, 2006, 2005, 2004 and 2003 and the quarterly periods ended June 30, 2008 and March 31, 2008 have no cash flow impact.”  


  • Overstock: Interesting Turnaround Story with Warren Buffett CEO, Leading to Francis Chou and Prem Watsa Buy

    It would be a great signal to see one of our gurus begin to accumulate a significant amount of one stock, on the way down, to own a significant stake in the company. Recently, this was the case with Seth Klarman and Targacept (TRGT). And now it is Francis Chou with consistent buying into Overstock (NASDAQ:OSTK).

    Since the third quarter of 2011, Francis Chou began to purchase large amount of OSTK when the price was as high as $9.50 per share, and he was buying on the way down. Now he owns more than 2.3 million shares of the company, and OSTK has made up nearly 5.6% of its total holdings. Beside Francis Chou, Prem Watsa is another large shareholder, owning nearly 3.4 million shares, taking more than 14.5% of the total shares outstanding, and the stake in OSTK represents 1.53% of the total fund value of Prem Watsa.  


  • Francis Chou's Top Dividend Stocks: NOK, RSH, SKM, VOD

    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.  


  • Francis Chou Buys Citigroup Inc., Bank Of America Warrants, Sears, Goldman Sachs

    Canada based value investor Francis Chou just reported his third quarter portfolio. Chou follows the classic Ben Graham’s approach of value investing, and has achieved great long term track record. To understand more how Francis Chou invests, please read our featured article, Francis Chou – The Investment Guru That You Never Heard Of.

    Francis Chou buys Citigroup Inc., Bank Of America Warrants, Sears Holdings Corp., Primus Telecommunications Group Inc, The Goldman Sachs Group Inc., etc., sells Valeant Pharmaceuticals International Inc., Cryptologic Ltd. during the 3-months ended 09/30/2011, according to the most recent filings of his investment company, Chou Associates Management. As of 09/30/2011, Chou Associates Management owns 36 stocks with a total value of $383 million. These are the details of the buys and sells.  


  • New Features We Added to GuruFocus Recently

    At GuruFocus, we are continuously improving the features we have and developing new features. As a subscriber, you just need to let us know what you want, and we will deliver it to you. This is a summary of the features we recently added.

    1. Insider Trends Are Added to Insider Trades Page   


  • Prem Watsa – Highlights from “Fair and Friendly : The First 25 Years of Fairfax”

    One of GuruFocus readers sent us a book published by Fairfax, the Canadian insurance company founded by Prem Watsa. In case you missed this, we have recently interviewed Mr. Watsa. In the interview Mr. Watsa shared his philosophy in running Fairfax, his view on economy, Europe, and his holdings in Bank of Ireland (IRE), Research-in-Motion (RIMM) and Dell (NASDAQ:DELL). You can read the transcript here.

    This article lists some highlights from the book “Fair and Friendly: The First 25 Years of Fairfax”.  


  • Francis Chou 2nd Quarter Letter and Holdings

    Francis Chou who manages the Chou Funds is a true Benjamin Graham type investor. An uglier looking portfolio you will never find. Ugly, but successful:

    15 Year Annual Compounded Rates of Return  


  • Canadian Gurus Francis Chou and Vito Maida Finally Deploy Some of Their Respective Cash Hoards

    I’m a big admirer of these two fund managers because they have the ability to be patient and sit on huge cash positions until real opportunity knocks.  


  • Value Guru Francis Chou Reports Q2 Portfolio

    Canadian Value Guru Francis Chou reported his second quarter portfolio. Headquartered in Toronto, Ontario, Chou’s firm, Chou Associates Management offers five distinctive funds to their clients. To learn more about Francis Chou, please read Francis Chou – The Investment Guru That You Never Heard Of.

    Francis Chou buys The Goldman Sachs Group Inc., Radioshack Corp., Berkshire Hathaway Inc. Cl A, Jpmorgan Chase & Co. Wt, Sears Holdings Corp., Gap Inc., Bank Of America Warrants, sells Valeant Pharmaceuticals International Inc., International Coal Group Inc. during the 3-months ended 06/30/2011, according to the most recent filings of his investment company, Chou Associates Management. As of 06/30/2011, Chou Associates Management owns 32 stocks with a total value of $442 million. These are the details of the buys and sells.  


  • Francis Chou: Investing in Debt Securities

    In aggregate, over the years, our returns for the family of Chou Funds from investment grade and non-investment grade debt securities have been satisfactory.

    While the following focuses on our experience with non-investment grade debt securities, it is largely applicable to investment grade securities as well.  


  • Francis Chou:The Investment Guru That You've Never Heard Of; Comments on ABH, WPI, BAC, BRK.A

    No college degree. No connection. No formal education in finance or business. Living at a place far from Wall Street. Just one assistant in the office. But still achieved an amazing long-term track record and manages more than $1 billion. No, we are not talking about Walter Schloss.

    We are talking about Francis Chou!  


  • Value Investor Francis Chou and His Top Holdings: ABH, WPI, OSTK, S, SHLD

    Chou Associates Management is an investment management firm that offers five distinctive funds to their clients. Headquartered in Toronto, Ontario, the fund is currently led by Francis Chou, a CFA charter holder with over 25 years of experience. Chou’s beginnings can be described as nothing more then humble, as Francis Chou was a blue-collar worked armed with no more then a 12th grade education. Working at Bell Canada for seven years as a phone technician, his decision to read "Security Analysis" by Graham led to a passion that launched an investment club with $51,000 of his coworker’s seed money. This humble investment club would grow into the Chou Associate’s flagship associate fund, and become one of the most well-known firms in Canada.

    “Find bargains and maintain discipline; if you can’t find bargains stay in cash.”  


  • The Value of Vodafone

    Here's an idea for the June contest: Vodafone (NASDAQ:VOD).

    Vodafone is listed on the London Stock Exchange. The share price is about 163 pence for a market cap of roughly £85B. In the US, Nasdaq-traded ADRs representing ten ordinary shares can be bought for $27.  


  • Fairfax Friend Francis Chou's Guide To Successful Bond Investing

    From the Chou Funds recent letter to unitholders:  


  • Canadian Value Investor Francis Chou Buys Abitibibowater, Bank Of America Warrants, Wells Fargo Warrants, Sells Valeant Pharmaceuticals

    Canadian value investor Francis Chou reported his Q4 portfolio. As of 12/31/2010, Chou Associates Management Inc. owns 30 stocks with a total value of $510 million. These are the details of the buys and sells.

    Chou buys Abitibibowater, Bank Of America Warrants, Wells Fargo & Co. Warrants Expiring 10/28/18, Mannkind Corp., sells Valeant Pharmaceuticals International during the 3-months ended 12/31/2010, according to the most recent filings of his investment company, Chou Associates Management Inc.  


  • Francis Chou: Canadian Investing Guru

    In the past, I have mentioned the great Canadian value investor Francis Chou. Chou has been part of Prem Watsa’s investment team at Fairfax Financial for over twenty-five years. He also runs the Chou Funds where in 2005 he was named the Canadian fund manager of the decade.

    I came across an article on Chou in Canadian Business Online that contains some good information on Chou.  


  • Francis Chou - An Interesting Way to Invest in Banks (Warrants That were Issued to the U.S. Treasury)

    I detailed last week the recent letter to shareholders from Francis Chou who one of the best value investors in North America.  


  • New Guru Added: Francis Chou; Buys BP, VOD, Sells Q

    We have added Canadian long term value investor Francis Chou into our List of Gurus. These are his buys and sells during the second quarter.

    Chou has achieved outstanding track record since he started his fund in 1986. His Chou Associates Fund more than doubled in the past 10 years, as the broad market declined. Chou had some difficult times in 2007, his fund lost about 10% as the market continued to its rise at overvalued levels. This year he is outperforming the market.  


  • Francis Chou Semi-annual Letter – Observations From a Man Who Identified Early the Opportunity In Credit Default Swaps

    Francis Chou has become pretty well known among Canadian investors as being perhaps the premier mutual fund manager of the last 15 years. He may not be as well known south of the border, but when he speaks investors from all countries should listen.  


  • Lecture Summary - Francis Chou

    Francis Chou is the President of  Chou Associates Management Inc., based out of Toronto. His funds, which were started as part of an investment club in 1981, won him the Canadian Investment Award title “Fund Manager of the Decade” in 2005.

    The following is a summary of Francis Chou’s lecture, given to the Richard Ivey School of Business on August 19th, 2008.  


  • DARK DAYS FOR THE CHOU FUNDS

    It's been a rough couple of years for the Chou Funds. They came through the tech bust of 2000-2002 unscathed (in fact, they made big profits) but this recession has battered them severely, leaving award-winning manager Francis Chou poorer (he rebated most of the management fees for the Chou Europe Fund and the Chou Bond Fund) and searching for answers as to what happened and why.

    The performance record speaks for itself. Over the year to Feb. 28, the Chou RRSP Fund lost 42%, Chou Europe was down 38.4%, Chou Bond gave back 35.8%, Chou Associates Fund lost 31.6%, and Chou Asia Fund dropped 17.5%. It was a humbling experience for a money manager who until 2006 had consistently made profits for his clients.  


  • PREMATURE ACCUMULATION

    In his recently-published 2008 annual report, award-winning money manager Francis Chou quotes an unhappy investor who suggested the poor performance of the Chou funds was due to "premature accumulation".

    Mr. Chou, who has always accepted full responsibility for bad results, agreed. "We purchased some stocks at prices that, in hindsight, were too high," he frankly admits. "The ensuing economic crisis, credit freeze and deleveraging severely impacted the intrinsic values of some of the stocks we purchased...As a consequence, we suffered a permanent loss of capital investing in those companies."  


  • Shareholder letter; On Banks, Subprime Lenders, and Derivatives

    Francis Chou has achieved 15.7% per year over the past 15 years. He just released his shareholder letter. Francis Chou had very interesting discussion on how to evaluate banks, subprime lenders and his opinion on derivatives.

    "As a result, we have not invested heavily in financial institutions although at times their  


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