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Update: Chou refiled his first-quarter 13F on May 18. The position in Westmoreland Coal Co., previously reported as representing 35.4% of his portfolio, did not appear on the new 13F filing. - GuruFocus editorial
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Francis Chou (Trades, Portfolio), founder of Chou Associates Management, bought only three stocks last year, but roughly made up for it in the first quarter, starting two new positions of significant size.
First, Chou bought 13.6% of coal company Westmoreland Coal Co. (WLB, Financial), which now represents 35.4% of his portfolio, making it his largest holding. The second was embattled pharmaceuticals company Valeant Pharmaceuticals International Inc. (VRX, Financial), a position worth 6% of the portfolio that makes it his fourth largest holding.
Valeant lost 75% of its market value this year amid mentions of federal drug pricing regulations, faulty balance sheets and questions about its accounting. Charlie Munger (Trades, Portfolio) has called the company, which grew mainly by raising the prices of acquired drugs by hundreds of percentage points, a “sewer,” and Bill Ackman (Trades, Portfolio) has simultaneously joined the board and tried to solve the problems of the company, in which he has a sizable stake.
Chou, a value investor, buys at deep discounts to intrinsic value, looking for margin of safety.
Chou purchased 2.523 million shares of Westmoreland Coal Co. (WLB, Financial), which had an average share price in the first quarter of $6.
Westmoreland Coal Co. has a market cap of $143.280 million; its shares were traded around $7.73 with and P/S ratio of 0.10.
Chou purchased 976,843 shares of Valeant Pharmaceuticals International Inc. (VRX, Financial), which had an average share price in the first quarter of $75.
Valeant Pharmaceuticals International Inc. has a market cap of $8.82 billion; its shares were traded around $25.71 with and P/S ratio of 0.86. Valeant Pharmaceuticals International Inc. had an annual average earnings growth of 19.7% over the past 10 years.
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