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In past periods of underperformance he has withheld his management fee - but has not done so lately. Will be interesting to see if he comments on his performance in his semi-annual letter - likely out in August. Recently, in his letters he seems defensive about his results without offering an academic explanation of 1)what happened & 2)what he has learned to prevent such outcomes. In my view, it's unfortunate that he has taken a "that's just the way it is" approach to explaining his 10 year outcomes. It's sad because I think he has a lot to offer.

If 5-10 years to tipping point, from an investment point of view, is now the time to get in? Take a broad perspective (i.e. ETF) whilst still on the ground floor? In 5-10 years, the industry will be much more mature. There will be good companies in the space - i.e.: the Apples of today - but valuations much steeper.

With recent news from Volvo (all cars to be electrified by 2019) & Tesla (Model 3 delivery) combined with govts of France, UK, & India all declaring no sales of combustion engine vehicles by 2030-2040, the horse appears to be out of the barn for electric cars. If so, how will the current worldwide electrical grid supply the energy for these cars. Given a new supply source of energy is needed, and that solar is "clean" and the cost of solar has decreased tremendously, is now the time to invest in Solar?? Realize this is a top down macro bet that would generally be frowned upon by bottom up deep value investors. TAN and KWT seem to be 2 major solar ETFs - both down some 90% since their highs in 2008. Both paying a dividend of approx 3.5%. TAN has 10x of assets under management vs. KWT. Both have a high MER for an ETF (0.71% vs. 0.65%). Am keen to hear thoughts from the Board. Is this the time to dip into solar?

It's 25% above a 6% return, resetting annually. High water mark to not allow a loss, then a performance fee because of getting back to even. The docs have a 2% fee that I waive. My attorney told me to add it initially because if I ever wanted to pivot later (charge mgmt fee) I would need new docs. Only know a few structures world wide like that. Would you provide a link?

IMO, all are too expensive. Does NOT make sense to pay BOTH a management AND a performance fee. Huge challenge for a professional manger to beat the markets over time due to a number of logistics. Challenge becomes close to insurmountable when fees are factored in. I don't know of anyone with that structure that has beaten the "best" index over a period of 10-15 years. Would suggest going with a) 0%MER and performance fee with a high water mark hurdle structure, or b) low fee manager or c)index funds. Getting into a situation with management fee and performance fee, means getting into a lot of nebulous hedge fund structures that have not made sense to me when I have tried to understand them. Look forward to hearing other opinions,

I wonder whether the "inconsistencies" you mention have to do with his entrepreneurial view of life. He doesn't seem to get burdened by his mistakes. He's good at admitting and learning from his mistakes, but is then not afraid to try new things whereas some of us might be inhibited. Recently, the idea of owning an insurance company or buying private companies has not worked out - so he has admitted it and is moving on from Dhandho Funds. The Junoon ETF idea didn't work out. A lot of effort was put into both endeavours. However, he is starting something new in India with a Dhandho India Fund... My impression is that he is a)good assessor of undervalued equity prices who keeps getting better b)serial entrepreneur - willing to explore new ideas - run with the good ones. Drop the bad ones and move on.

Regarding being misleading, isn't the 26% compounding his goal? It's good to aim for something tangible. He has NOT achieved it, but could it still not be a goal?

+1 ...yup I'm curious. What was the inciting event causing the Board to turn on Pabrai? Did it have to do with HorseHead Holdings?

Wow. Not surprising when he had AZO at double digit percentage. The algos were all looking back. AZO had a remarkable run with huge buy back. It is a shame that the algos didn't consider the slowdown in revenue growth. Pabrai has underperformed all indices last 10 years. His main fund account that has bulk of assets has underperformed all indices since inception (2003). It just goes to show how far a person can go by uttering Buffett's name and giving his quotes nonstop. A+ in marketing C- in investing. There is a recurrent sentiment on this Board re: Pabrai's "A+ marketing" skills and salesmanship that I don't understand. No denying that 10 year returns have been subpar (although YTD up 30%). However, Pabrai Funds has been mostly closed to new money for years. Why would he focus on "marketing" if he is not accepting new investors? This does not seem to be a Ponzi scheme with him getting rich off others or am I missing something?

To the experienced members on the board: I've only been following FFH since 2005'ish and have been confident in its long term prospects. Was not aware of the valuations prior to 2003. Why did FFH decrease 90% from 1999 to 2003??? Did it have to do with the shorting of the stock by a US hedge fund?? Was a $600/share "fair" value in 1999 or was it massively overvalued from a metrics point of view?? Do current investors need to be worried about a >50% correction in FFH stock price? One of the reasons I got into FFH was the fact that it is a diversified holding that should provide safety, combined with the fact that insurance float is attractive if you have folks who know how to invest $s.

- Patient visits are billed to their respective provincial medical system through a billing code and the patient's care card number...no different than a patient visiting their physician in Canada...fee goes to goevisit, while physician/nurse practitioner is paid an hourly or shift rate. - Non-resident patients pay a $49.95 fee for use. - goevisit receives revenues through every prescription filled through their Canada online pharmacy - goevisit is signing up large insurance/administrative companies as the service reduces medical costs for these companies...they recently signed up essentially the majority of post-secondary institutions across Canada and a deal with the largest insurer of foreign exchange students...some of these agreements have annual fees paid to goevisit or add users to the system. - they are working on a number of other new initiatives that I can't talk about...some revenue generation-related...and a couple that would be completely game-changing! Cheers! This type of platform is part of the future of medicine. Benefits the patients (clients), reduces burden on healthcare by improving access and allowing early treatment before medical issues intensify. In the long run, some (not all) of the questions being dealt with on this telemedicine platform can be done via Artificial Intelligence and decrease the need for medical personnel. So, it's a great idea. However, from an investment point of view, hard to see where the earnings come from unless you have AI. By the time, the company pays for hourly physician salary, nurse salary, some overhead and malpractice insurance (as errors could be more easily made when direct patient contact is not available), there is little left in terms of profit. The following shows how much the province of Alberta would pay for a visit - prob $15-$30 - not much: Telehealthassistanceservice ....................... 33.78V Physician to patient secure videoconference ................ 15.88 In summary, this type of service should be supported by the government. However, unless very high volume, or use of artificial intelligence to defray cost, monetizing is difficult. Doesn't mean it's not the right thing to do

Thanks for sharing. I see that Chou thinks that stocks are going nowhere: "...there is hardly anything to buy...I think if you break even over the next five years, you will have some of the best numbers five years down the road".

Thanks for sharing this. Good talk. Easy to listen to. Like the philosophy of being "unreasonable" as it relates to sticking to what appeals and letting other topics pass on - serves one well in investments but also other aspects of life.

I suspect the interest rates are the main reason. It's both...the number of shares that will need to be issued for Allied and the fed raising rates slightly. Funny thing is that Fairfax has over $10B cash in the portfolio which is sitting in 75% cash and bonds. It doesn't matter what Fairfax's price does as stocks fall or rates rise...they will be able to buy when everyone else is selling and looking for cash. As PI said, you are essentially buying Fairfax at nominally higher than book value now. Their insurance businesses are now world-class and fully profitable across the board. The number of non-insurance businesses has increased dramatically and by region. Like Berkshire, as they add better and better insurance and non-insurance businesses, intrinsic value will start to increase faster than book value due to GAAP and IFRS. It is already a business that should be valued at 1.5 times book based on the cash flow of the underlying businesses and return on the investments per share. The one area that I think they should remain cautious is their debt load. While still very manageable and staggered well, I hope they remain conscious and vigilant on this front. One of Berkshire's advantages is that they are beholden to none. I really would like Prem and Fairfax to follow that culture and model. Cheers! Would Watsa consider a share buyback? If FFH has >$10B in cash, is looking for opportunity to deploy and it's own stock is trading at a substantial discount to where Parsad says it should be trading at (1.5x BV), does it make sense to do a buyback/set a floor on the stock price?

Cwericb: Am curious if you decided to buy more. I'm in the exact same position of wondering if I should be adding to my largest position already! I was initially wondering if the recent 20% drop in price was a delayed reaction to removing his bearish hedges. Comments so far suggested negative reaction to purchase of Allied or interest rates (interest rates are at historical lows and any recent moves have been small in the larger picture of things).

6% return over 17 years. Similar over past 5 years. Why does he not report 10 year result? It's clear that he doesn't see value in current environment. Has been bearish for a long time. What is not clear is what his strategy is to navigate through current environment of high valuations. The only thing he mentions is that he is hoping for a correction in banking stocks to buy more and counting on higher oil price a year from now (Really?? This macro bet was a surprise for me to read from a deep value type investor!). He's a brilliant investor, with strong ethics and aligned interests. But as with so many, the strategy doesn't work when charging to invest $'s for others. Perplexing! and frustrating.

My point wasn't simply averaging in, but that the best managers can and will have periods (sometimes long periods) of underperformance. From 1971 to 1975, over a 5-year period, the brilliant Charlie Munger underperformed the market: http://awealthofcommonsense.com/2014/09/charlies-munger-becoming-better-investor/ If Charlie Munger can underperform for 5 years, would it not make sense that merely very good investors might underperform for periods longer than 5 years? If you had stayed with Munger from beginning to end, you would have done extremely well, even with that poor 5-year period. For most investors, it's difficult to stay with a manager during challenging periods. Indirect has been a Pabrai Funds client from shortly after the 1st year. He has stuck with Mohnish through good and bad times, and thus has finished ahead of the index. He was also smart enough to buy when Mohnish was down and add to his account...thus he is miles ahead of the index, even though Mohnish is modestly ahead of the index over the life of PIF2. Cheers! Agree that if one checked results of quarterly investments in Chou Assoc vs. index, the index would still win out. Few thoughts: 1) 5 yr results can definitely be poor -as shown above in your example - but 10 years is a reasonable time to assess an active money manager as 10 years allows for a combination of some boom and bust periods. Especially since we are not talking about absolute results but results relative to an index. 2)Re: the example of investing in Pabrai funds when it was down: One difference btw Pabrai Funds and Chou is that Pabrai has been open about mistakes, what he has learned from them and taken steps to prevent them from recurring, i.e.: the CheckList, explaining how he missed the leveraging and debt in HorseHold Holdings...While I'm sure that Chou is a smarter investor today than 10 years ago, he hasn't been open about what he has learned and what steps he has taken to avoid "value traps". He writes extensively about "margin of safety", but given the end result of VRX, SHLD, RFP, RadioShack and others, was the "margin of safety" adequate. He hasn't told us how he might avoid these type of situations in the future. 3)When we talk about passive vs. active management, there has to be a way of objectively assessing the active money manager beyond, nice guy, honest, smart etc...

Has the opinion on Chou changed over the past 5 years? His 10 yr returns while not great (4%-Chou Associates, 5% Chou Asia & negative 0.5% Chou Europe) may be acceptable, if the philosophy is still sound. However, Chou has not given any insight as to why mistakes were made that lead to large losses, what he has learned and why it may be different going forward. The 2016 annual letter is disappointing when he explains results by saying one bad year can ruin your 5 or 10 year result. That doesn't cut it. There will always be negative years. However, over time they should be averaged out by great years. Chou put in $80-90 million - approx 20% of assets of Chou Associates in Valeant Pharmaceuticals. The investment is down 60-70%. In the future, would he put >20% of the fund into a similar investment? An explanation as to why or if he would do the same in the future with a different company or has learnt something to prevent massive losses would be fair. Admitting that 10 years is a fair time to judge an investor would be honest. I've just re-read each of his annual letters for the past 20 years. He is bright, has insight and good thought process. He definitely has the ability to pick stocks that have potential to be multi-baggers. However, has he been able to learn how to avoid value traps and large losses (Valeant, Sears, Radio Shack...) that have held back results? Is he a smarter investor today than 15 years ago and will that translate into improved outcomes?

Francis is the kindest person I know in the financial industry, and that says alot because I know Prem, Mohnish and Tim McElvaine, and they are also some of the most generous people I know. But Francis is unique...very unique! If I were a captain in the investment industry, he is who you hire to be your right hand man. His honesty is beyond reproach! And he will never take credit for anything. Has anyone ever heard from Francis that the CDS idea was his? Nope! You heard it from Brian Bradstreet. We all know how talented the team is at Hamblin-Watsa, but all those principals there hold Francis in very high regard. That should tell you something. Everyone else can have Sprott, I'll take Francis. Cheers! Has the opinion changed over the past 5 years? 10 yr returns of 4% (Chou Associates), 5% (Chou Asia) and negative 0.5% (Chou Europe) may be acceptable if the philosophy is still sound. However, Chou has not given any insight as to why mistakes were made that lead to large losses, what he has learned and why it may be different going forward. The 2016 annual letter is disappointing when he explains results by saying one bad year can ruin your 5 or 10 year result. That doesn't cut it. There will always be negative years. However, over time they should be averaged out by great years. Chou put in $80-90 million - approx 20% of assets of Chou Associates in Valeant Pharmaceuticals. The investment is down 70%. Would he put >20% of the fund into a future investment? take a similar risk? An explanation as to why or if he would do the same in the future with a different company or has learnt something to prevent massive losses would be honest. Admitting that 10 years is a fair time to judge an investor would be honest. Overall, he has great individual company analysis and has the ability to pick stocks that have potential to triple or more but has not been able to ward off the huge losses - Buffett's first rule.

I think reducing or returning fees during periods of under-performance is a very admirable trait. Additionally, being in business since 1987 (30 years) is an awesome accomplishment by itself. With that said calculating the returns based on if you had acquired units in his worst years can start to sound a little like trying to time things. His return is what is---good years are factored in and bad years are factored in---they all matter. Also agree, that return are what they are - you have to factor the bad in with the good. Out of a $500M fund, believe $80-90M was invested in Valeant which is down 70% from his average cost. Am OK with concentration and bets of conviction. We don't want to pay a money manger for their 65th best idea in the name of diversification. However, if a huge concentrated bet doesn't work out, it has to count in the results and the underlying reason for loss should be worked in to a future algorithm as how to avoid large losses. If he is continuously "holding his nose" & "buying when there is a stench" and the strategy hasn't delivered over 10 years...is it an appropriate strategy that can outperform a passive index fund investing strategy??

I think reducing or returning fees during periods of under-performance is a very admirable trait. Additionally, being in business since 1987 (30 years) is an awesome accomplishment by itself. With that said calculating the returns based on if you had acquired units in his worst years can start to sound a little like trying to time things. His return is what is---good years are factored in and bad years are factored in---they all matter. Agree. Returning fees during periods of under performance is very difficult and a reflection of honesty. It's the kind of trait that makes him stand out as someone who is not following "herd mentality". However, I haven't seen him return fees for a few years - last I know was several years ago on the Chou Europe fund.

Invested with Chou because he is not afraid to go against the crowd, does his own work on valuation and has insight. This "different" approach is bound to have lumpy up and down results. Ten years is a good period of time to assess a money manager as it allows for boom and bust cycles. The past 10 years is a perfect example. Unfort. 10 year results have been below par. He has picks that have been doubles and triples but others that have lost >50% of value. Question I have is has he changed his strategy based on last 10 years? Has he come up some algorithms to avoid large future losses? I do NOT agree with his example in the annual letter saying that one negative 20% return can negatively affect 10 year result and that is the way it is.Thought that was weak on his part and dissapointing. Funds do not generally make 8% a year as in his example- they do that through lumpy results that average out to 8%. Over 10 years, index has done better.

Don't see the 2016 annual report on choufunds.com website. 2015 is the latest one listed.

I have emailed him and got variable responses in the past. He did not respond to this question a couple of months ago, but I did ask him to consider discussing in his annual letter.

Have been a believer in the Chou philosophy and admired his candid nature, thoughtful analysis and ability to go against the grain. However, 10 year returns on all his funds have been less than 5% annualized. Whilst value investing is a long term game, 10 years is a fair time period to analyze a money manager. Are there any structural reasons to think that the next 10 years will be drastically different? I wish Francis Chou would explain what he has learned over the past decade and how he plans to avoid the same type of mistakes. Is there a fundamental flaw in his philosophy? Or does he believe decision making tree was appropriate and would do the same thing again? His explanations for investing in SHLD, Valeant, RFP, Blackberry all seem insightful but 10 years later the result isn't there....