Francis Chou's Top 4 Sells of the 4th Quarter

Firm dumps Spirit and Allegiant holdings, trims DaVita

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James Li
Feb 23, 2021
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Francis Chou (Trades, Portfolio), manager of Chou Associates Management, disclosed last week that his firm's top four sells during the fourth quarter of 2020 included the closure of its position in Spirit Airlines Inc. (SAVE, Financial) and Allegiant Travel Co. (ALGT, Financial) and a reduction in its holding of DaVita Inc. (DVA, Financial) and Goldman Sachs Group Inc. (GS, Financial).

Chou Associates seeks long-term capital appreciation through a detailed analysis of a company's fundamental data coupled with a value-oriented investing approach. The guru started in 1980, along with six other telephone repairmen, an investment club that follows teachings from Benjamin Graham's investment books. Throughout the 1990s, his firm outperformed the Standard & Poor's 500 index benchmark by at least 7% by "buying bargains, getting the returns slowly, and thinking independently."

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As of the December 2020 quarter, the firm's $136 million equity portfolio contains 18 stocks with 43.38% weight in the financial services sector, 25.45% weight in materials space and 24.45% weight in health care.

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Spirit

Chou Associates sold 50,000 shares of Spirit (

SAVE, Financial), curbing the equity portfolio 0.77%. Shares averaged $20.78 during the fourth quarter.

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GuruFocus ranks the Miramar, Florida-based airline operator's financial strength 3 out of 10 on several warning signs, which include a low Piotroski F-score of 2, a weak Altman Z-score of 0.76 and a debt-to-equity ratio that underperforms over 80% of global competitors.

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Gurus with large holdings in Spirit include

Jim Simons (Trades, Portfolio)' Renaissance Technologies and Steven Cohen (Trades, Portfolio)'s Point72 Asset Management.

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Allegiant

The firm sold 4,317 shares of Allegiant (

ALGT, Financial), reducing the equity portfolio by 0.49%. Shares averaged $153.99 during the fourth quarter.

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According to GuruFocus, the Las Vegas-based travel service provider has a low interest coverage ratio of 0.45 as of December 2020 based on preliminary financial data.

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DaVita

The firm sold 12,000 shares of DaVita, cutting 52.76% of the position and 0.98% of the equity portfolio. Shares averaged $102.16 during the fourth quarter.

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GuruFocus ranks the kidney dialysis provider's profitability 9 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and a high Piotroski F-score of 7.

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Goldman Sachs

The firm sold 2,000 shares of Goldman Sachs, cutting the position 10% and the equity portfolio 0.38%. Shares averaged $222.99 during the fourth quarter.

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GuruFocus ranks the New York-based investment bank's financial strength 3 out of 10 on the back of debt ratios underperforming over 78% of global competitors, suggesting high financial leverage.

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Disclosure: No positions.

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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!