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Chou Funds 2009 Semi-Annual Report Out


Parsad
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I always wait to see what Francis writes, because it gives me some idea of what the guys at Hamblin-Watsa may also be thinking about.  Francis' 2009 Semi-Annual report is out, and in there he discusses interest rate swaps to protect against inflation.  He's also the only mutual fund manager I know of that refunds management fees if he's unhappy with his performance.  Cheers!

 

http://www.choufunds.com/pdf/SeAR%2009%20printing.pdf

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Thanks for posting Sanjeev.

 

If Hamblin-Watsa thinks like he does right now, I really, really like it. Forget about this Hoisington crap. Yahoo!  ;D

 

By the way, I tried buying these constant maturity swaps or interest rate caps, but without success. Big Canadian banks don't seem to have time for retail investors to buy these things. You may want to buy as many contracts as an institution, but still no time for you. If anyone had a different experience please let me know.

 

Cardboard

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I like the read. Thanks for posting it.

 

I don't understand most of the "swaps" things out there. I don't know if this Charlie Munger comment would apply on these swaps, but here is what Charlie Munger had to say in a recent interview about some derivative stuff :

 

You and your partner, Warren Buffett, have for years warned about the dangers of the modern derivatives markets, particularly credit derivatives, and about interest rate swaps, currency swaps, and equity swaps.

 

Interest rate swaps have enormous dangers given their size and the accounting that has been allowed. But credit default derivatives took that danger to new levels of excess—from something that was already gross and wrong. In the '20s we had the "bucket shop." The term bucket shop was a term of derision, because it described a gambling parlor. The bucket shop didn't buy any securities. It just enabled people to make bets against the house and the house furnished little statements of how the bets came out. It was like the off-track betting system.

 

Comments and information would be appreciated and welcome.

 

Lastly, one can never say never, but I would be surprised to invest directly in these kind of things one day because actually, I may be really wrong on that, what does it sound to me is some synthetic tools of speculation that have significant counterparty risk.

 

Cheers!

 

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I never compared until just now but is it normal for Chou's fund to be so totally dissimilar from the FFH holdings? Example, none of FFH's top 10 holdings appear on the Chou funds holdings. Conversely, only two of Chou's top 10, King Pharma and Berkshire appear on FFH's 13B. I would not expect the these to line up perfectly, but I would have expected some more corrolation.

 

-Crip

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Hi Sanj,

 

This is the first year of Francis' new US$/C$ currency hedging policy.  Apparently, he had some clients who were uncomfortable with the currency shifts.  If you're talking to Francis, I would be curious to know what his thoughts are on the US$/C$ going forward.  He previously was of the opinion that the US$/C$ was a long cycle that didn't have significance since the swings were roughly cyclical around a mean.  Has his view changed now that the US (deficit $2T on $15T GDP ~ 13%) is in a significant recession while Canada (deficit $0.05T on $1.5T GDP ~ 3%) is in a milder recession?  Buffett seems to think that the US$ vs world currency basket is going to decline.

 

BTW: good luck on the burger quest!

 

-O

 

I always wait to see what Francis writes, because it gives me some idea of what the guys at Hamblin-Watsa may also be thinking about.  Francis' 2009 Semi-Annual report is out, and in there he discusses interest rate swaps to protect against inflation.  He's also the only mutual fund manager I know of that refunds management fees if he's unhappy with his performance.  Cheers!

 

http://www.choufunds.com/pdf/SeAR%2009%20printing.pdf

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