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James Li
James Li
Articles (1250)  | Author's Website |

Francis Chou Slims 4 Positions in the 1st Quarter

Canadian guru releases portfolio. Sells include major Berkshire bank holding Bank of America.

Francis Chou (Trades, Portfolio), manager of Chou Associates, disclosed this week that he curbed his holdings in DaVita Inc. (NYSE:DVA), Bausch Health Companies Inc. (NYSE:BHC), JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp. (NYSE:BAC) during the first quarter.

Chou, who met Fairfax Financial Holdings Ltd. (TSX:FFH) CEO Prem Watsa (Trades, Portfolio) in the 1980s, said that some of his key investing tips include buying bargains and thinking independently. Chou’s investing process emphasizes the assessment of a company’s balance sheet, cash flow characteristics, profitability, industry position, special strengths, future growth potential and management ability.

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As of the quarter-end, Chou’s $100 million equity portfolio contains 19 positions with no new holdings. The top three sectors in terms of weight are financial services, health care and basic materials, representing 60.93%, 27.54% and 6.46% of the equity portfolio.

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DaVita

Chou sold 68,000 shares of DaVita, reducing the position 67.50% and the equity portfolio 2.97%. Shares averaged $78.69 during the first quarter.

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The Denver-based company provides dialysis services in the U.S. GuruFocus ranks DaVita’s profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, consistent revenue growth and an operating margin that is outperforming over 83% of global competitors.

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Berkshire owns 38,095,570 shares of DaVita as of March quarter-end, down approximately 1.22% from the prior quarter holding.

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Bausch Health

Chou sold 60,000 shares of Bausch Health. The transaction trimmed the position just 3.71% despite reducing the equity portfolio 1.04%. Shares averaged $24.35 during the first quarter.

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The Laval, Quebec-based company manufactures products for the dermatology, gastrointestinal and ophthalmology markets. GuruFocus ranks the company’s financial strength 2 out of 10 on several warning signs, which include interest coverage and debt ratios underperforming over 95% of global competitors.

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JPMorgan Chase

Chou sold 10,000 shares of JPMorgan Chase, reducing the position 22.59% and the equity portfolio 0.81%. Shares averaged $122.27 during the first quarter.

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The New York-based bank operates four financial service businesses: consumer and community banking, corporate and investment banking, commercial banking and asset and wealth management. GuruFocus ranks the company’s financial strength 3 out of 10 on the back of equity-to-asset and debt-to-equity ratios underperforming over 70% of global competitors, warning signs of high leverage.

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Berkshire owns 57,714,433 shares of JPMorgan Chase as of the March quarter, down 3.03% from the prior quarter holding.

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Bank of America

Chou sold 10,000 shares of Bank of America, reducing the position 35.24% and the equity portfolio 0.20%. Shares averaged $30.21 during the first quarter.

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The Charlotte, North Carolina-based bank operates four business segments: consumer banking, global wealth and investment management, global banking and global markets. According to GuruFocus, Bank of America’s financial strength ranks 3 out of 10 on the heels of increasing long-term debt over the past three years, contributing to debt ratios that underperform over 67% of global competitors. Despite this, Bank of America’s equity-to-asset ratio of 0.10 outperforms 51% of global banks.

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Berkshire owns 925,008,600 shares of Bank of America as of the March quarter. With a weight of 11.19%, the bank represent’s Berkshire’s second-largest holding.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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