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

April 03, 2014 | About:
Holly LaFon

Holly LaFon

250 followers
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.

In the fourth quarter, Chou’s RRSP fund added one new stock and dramatically increased its stake in BlackBerry Ltd. (TSX:BB).

New Buys

Retimans Canada Ltd. (TSX:RET.A)(TSX:RET)

Chou purchased 122,300 shares of Reitmans Ltd. A shares, costing $7 a share on average in the fourth quarter. The holding is 1% of his portfolio. He also purchased 9,000 shares of Reitmans Ltd. common shares, costing $7 a share on average in the fourth quarter. That holding is worth 0.075% of his portfolio.

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Reitmans (Canada) Ltd. is a ladies' wear specialty apparel retailer conducting its retail and e-commerce activities under various trade names. Reitmans Ltd. has a market cap of $372.015 million; its shares were traded at around $5.76 with a P/E ratio of 29.30 and P/S ratio of 0.38. The dividend yield of Reitmans Ltd. stocks is 11.28%. Reitmans Ltd. had an annual average earnings growth of 1.30% over the past 10 years.

BlackBerry Ltd. (TSX:BB)

Chou increased his stake in BlackBerry by 185.97% to 529,040 shares, from his previous holding of 185,000 last reported in June 2013. The holding is 5.1% of his portfolio. The stake, purchased for $4,122,657, has a market value of about $4,174,000 as of April 3, 2014.

BlackBerry Ltd., formerly Research in Motion Ltd., was incorporated under the Business Corporations Act (Ontario) (OBCA) on March 7, 1984 and commenced operations at that time. Blackberry Ltd. has a market cap of $4.77 billion; its shares were traded at around $9.05 with and P/S ratio of 0.63. Blackberry Ltd. had an annual average earnings growth of 43.60% over the past 10 years.

For more stocks of the Chou RRSP Fund (Trades, Portfolio), go to the portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days here!


Rating: 4.8/5 (4 votes)

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Comments

pravchaw
Pravchaw premium member - 3 months ago

Chou is a great investor but you really need a stomach of steel to keep up with him.

vgm
Vgm - 3 months ago

Chou is a great investor who has the courage of his (valuation) convictions which allows him to buy the unloved and misunderstood. This quote from his Dec 2013 letter describes it:

"We substantially raised our position in the common stocks of Resolute Forest Product and Sears Holdings when their stock prices fell to a level where we felt they were compelling bargains. As a result, investors should be advised that due to our portfolio’s high exposure to these two stocks, the net asset value of the Fund can be volatile. However, we are not bothered by this volatility because our focus has always been, and continues to be, on how inexpensive we believe the stocks are, relative to their intrinsic value. Based on year-end prices, in our view, these two stocks are trading at significant discounts to their intrinsic value."

He obviously feels the same about BBRY and RET, both of which are close to all-time lows. (I am long BBRY - undervaluation combined with John Chen's vision and strategy makes a compelling story.)

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