Chou funds mid-year report out

[wondering]

http://choufunds.com/pdf/SEMI-AR 2021 EN.pdf

 

I know Francis Chou gets kicked around a lot for this performance in the last few years, but he is absolutely killing it recently (see his 1 year returns).

 

Interestingly, he took some profit on Resolute and Blackberry.  I am not sure if that was because these stocks were already a major part of the portfolio, and if he had to sell because of mutual funds limiting the percentage of the portfolio that can be in one stock.

[Guest]

Good for him on the year but man, he's trailed the market over 3, 5, 10, 15 and 20 year time periods. And that's before taxes. I like Chou but I'm not convinced he's a superior investor. Not convinced at all. 

[Rod]

5 minutes ago, stahleyp said:

Good for him on the year but man, he's trailed the market over 3, 5, 10, 15 and 20 year time periods. And that's before taxes. I like Chou but I'm not convinced he's a superior investor. Not convinced at all. 

I'm convinced he's not.

[fareastwarriors]

He seems like a nice guy but he's un-investable.

[Parsad]

On 8/30/2021 at 5:21 PM, fareastwarriors said:

He seems like a nice guy but he's un-investable.

 

For you Monday morning quarterbacks...he's killing it at Wintaai and Stonetrust as well...so far a 72% CR for 2021...destroying it both on the insurance side and investment side.  He's finally running the type of vehicle that allows him to use all of his talent...no limits on concentration, his insurance expertise and float leverage.  And for those that complain about Fairfax's complexity...Francis is keeping it simple at Stonetrust...more like Markel.  Cheers!

 

 

Wintaai Financial Highlight (June 2021).pdf

[Guest]

5 hours ago, Parsad said:

 

For you Monday morning quarterbacks...he's killing it at Wintaai and Stonetrust as well...so far a 72% CR for 2021...destroying it both on the insurance side and investment side.  He's finally running the type of vehicle that allows him to use all of his talent...no limits on concentration, his insurance expertise and float leverage.  And for those that complain about Fairfax's complexity...Francis is keeping it simple at Stonetrust...more like Markel.  Cheers!

 

 

Wintaai Financial Highlight (June 2021).pdf 74.87 kB · 13 downloads

 

I wonder if the ability to concentrate hurts him or helps him. Judging by his funds, it seems that the more diversified approach stopped him from blowing up completely. 

 

Like I said, he's a nice guy and I hope he does well though.

[wondering]

Chou Funds is out with their mid year report again

hold

https://choufunds.com/pdf/SEMI-AR 2025 EN.pdf

 

At the moment, the returns are nothing to write home about, however what stands out for me is the large percentage of cash that Francis is holding in each of his funds

 

Associates (US et al) 21.9% cash

RRSP (mostly Canadian) 23.8% cash

Bond 55.4% cash

Europe 40.9% cash

Asia 33.3% cash

 

I guess he isn't finding too many bargains.

[hardcorevalue]

Any idea what it was for the past few years or is this a big increase in cash?

[wondering]

as a point of comparison, as of June 30 2024, cash position in his funds were as follows

 

Associates 32.4%

Asia 26.6%

Europe 22.3%

Bond 42.6%

RRPS 43.3%

 

Your point is taken.  Seems like Francis has been bearish for a while.  

[dwy000]

58 minutes ago, wondering said:

as a point of comparison, as of June 30 2024, cash position in his funds were as follows

 

Associates 32.4%

Asia 26.6%

Europe 22.3%

Bond 42.6%

RRPS 43.3%

 

Your point is taken.  Seems like Francis has been bearish for a while.  

that certainly helps explain why returns are nothing to write home about.  If one third or more of your assets are in cash it's tough to beat a rising market.

[hardcorevalue]

Good to see the associates fund had a 1/3rd of its cash deployed vs 2024

[villainx]

Is there an article or other source about Francis' early years?  Most everything I found online is came from India to Canada at around 20, started investment club with coworkers a few years later, rest is history.

 

 

[Parsad]

2 hours ago, villainx said:

Is there an article or other source about Francis' early years?  Most everything I found online is came from India to Canada at around 20, started investment club with coworkers a few years later, rest is history.

 

 

 

He's closing in on 70...that's almost 50 years of information out there...what else is there to know?    He's also too humble to write a book about himself, so I guess we may never know.

 

Although, you could ask him if you go to the Fairfax AGM.  He'll probably tell you a little about himself when he was a youngster.  Cheers!

[jfan]

4 hours ago, villainx said:

Is there an article or other source about Francis' early years?  Most everything I found online is came from India to Canada at around 20, started investment club with coworkers a few years later, rest is history.

 

 

https://a.co/d/fmB3NbT

 

Market masters by Robin Speziale has one of the few rare written interviews of Francis. I think he does discuss his earlier years.

 

 

Edited September 3, 2025 by jfan

[Parsad]

8 minutes ago, jfan said:

https://a.co/d/fmB3NbT

 

Market masters by Robin Speziale has one of the few rare written interviews of Francis

 

 

 

I've got lots of articles on Francis.  Cheers!

Fund Manager of the Decade - Dec 2004.pdf Globe & Mail - February 2007.pdf Globe & Mail - March 14, 2008.pdf Globe & Mail - May 2, 2014.pdf Globe & Mail - May 22, 2008.pdf Globe & Mail - May 31, 2008.pdf Globe & Mail - September 2, 2004.pdf Investment Executive - December 6, 2004.pdf Moneysense - Feb-Mar 2006.pdf Montreal Gazette - April 23, 2007.pdf Morningstar - July 2004.pdf WSJ - November 16, 2012.pdf

[jfan]

32 minutes ago, Parsad said:

 

I've got lots of articles on Francis.  Cheers!

Fund Manager of the Decade - Dec 2004.pdf 159.64 kB · 2 downloads Globe & Mail - February 2007.pdf 65.05 kB · 1 download Globe & Mail - March 14, 2008.pdf 34.96 kB · 1 download Globe & Mail - May 2, 2014.pdf 118.66 kB · 1 download Globe & Mail - May 22, 2008.pdf 48.53 kB · 1 download Globe & Mail - May 31, 2008.pdf 25.88 kB · 1 download Globe & Mail - September 2, 2004.pdf 23.61 kB · 1 download Investment Executive - December 6, 2004.pdf 49.1 kB · 1 download Moneysense - Feb-Mar 2006.pdf 40.19 kB · 1 download Montreal Gazette - April 23, 2007.pdf 52.08 kB · 1 download Morningstar - July 2004.pdf 79.47 kB · 2 downloads WSJ - November 16, 2012.pdf 406.59 kB · 3 downloads

 Lol...I've got one the first one posted up in my office. I'm waiting for someone to start selling the bronze bust version of him. 

 

The youtube videos of his interviews at ivey business school are quite informative of his thinking process.

 

I lost my spreadsheet on analysing his rolling three year returns for his Chou associates fund but what I recall is that he is that he is a 10-11% investor but with narrow spreads or distribution over time. No large home runs of 50% then drawdowns of 30%, despite running a fairly concentrated portfolio. I think that's hard to do. 

 

With his permanent capital vehicle, I think he will do even better over time without temperamental fund investors complaining about shorter term frame outcomes. 

 

Interesting he stated in this report that Fairfax was an 18% fund holder since early 2000s.

[villainx]

2 hours ago, Parsad said:

He's closing in on 70...that's almost 50 years of information out there...what else is there to know?    He's also too humble to write a book about himself, so I guess we may never know.

 

More of his India and then India to Canada story.  Most of the articles pick up from investment club on.  More for my kids to learn about his early history.  But there might be reasons that part is glossed over.

 

 

 

 

[villainx]

From the WSJ 2012 article, this was the kinda details I was looking for!  Thanks!

 

Bargain-hunting is a skill that Mr. Chou, now 56, honed as a boy.Born in India to Chinese parents, he wandered among food stalls in the small northern Indian city of Allahabad, clutching a shopping list from his mother.

 

Because there were no refrigerators, milk had to be bought almostevery day. While his mother worked as a Chinese-language teacher, the young Mr.Chou wouldcheck for freshness, turning the glass bottles to see the milk'scolor and thickness. He tried to discern which were priced too high, those likely to spoil soon and others that were watered down.

 

In 1973, Mr. Chou's older brother immigrated to Canada. Mr. Chou joined him three years later, with $200 to his name. Eventually he landed a job as a repairman for Bell Canada. But when Mr. Chou stumbled on an article about value investing, he felt he had found his calling.

 

A year after starting his club in 1981, Mr. Chou went looking for value-oriented firms. He introduced himself to Bob Tattersall, then at Bolton Tremblay Funds Inc., a Montreal investment-counseling firm that later grew into Canadian fund manager Montrusco Bolton.

 

"I have two weeks' holiday," Mr. Chou said at the time. "Can I work for you for free?"

 

Mr. Tattersall said yes. He was impressed by Mr. Chou's insights and asked him to analyze auto-parts maker Kelsey-Hayes Canada Ltd.

 

"He did a good job on the report, and he was pretty excited at the end when we called the CFO, put him on the speaker phone and did a telephone interview," Mr. Tattersall recalls.

 

For Mr. Chou, the two-week stint was a chance to scout Bay Street investment advisers, especially those who shared his value-oriented philosophy.

 

In 1984, he left Bell Canada for good, joining investment firm Gardiner Watson Ltd. as an analyst, working beside value investor Prem Watsa. It was Mr. Watsa who pressed for his hire. "My boss asked me give him 10 minutes. We spoke for a half- hour. I have never been more impressed with anyone than I was in that half-hour."

 

At Mr. Chou's urging, Mr. Watsa bought control of teetering Markel MKL +0.75% Financial of Canada, the Canadian unit of insurer Markel Corp. It eventually became Fairfax Financial Holdings Ltd., FFH.T +1.57% of which Mr. Watsa now is chairman and chief executive.

 

Mr. Chou worked at Fairfax for about a decade, managing the company's surplus cash while running the grown-up version of the investment club launched at Bell Canada.

Edited September 3, 2025 by villainx

[Parsad]

2 hours ago, jfan said:

 Lol...I've got one the first one posted up in my office. I'm waiting for someone to start selling the bronze bust version of him. 

 

The youtube videos of his interviews at ivey business school are quite informative of his thinking process.

 

I lost my spreadsheet on analysing his rolling three year returns for his Chou associates fund but what I recall is that he is that he is a 10-11% investor but with narrow spreads or distribution over time. No large home runs of 50% then drawdowns of 30%, despite running a fairly concentrated portfolio. I think that's hard to do. 

 

With his permanent capital vehicle, I think he will do even better over time without temperamental fund investors complaining about shorter term frame outcomes. 

 

Interesting he stated in this report that Fairfax was an 18% fund holder since early 2000s.

 

Yes, but they withdrew their capital later on so that they and Francis would avoid any conflict of interest, as he was still a VP of Fairfax at the time.  I think when the hedge funds were attacking someone brought that subject up, and Francis resigned from Fairfax so that wasn't an issue any more.  Yet today, shareholders would be ecstatic if he rejoined the company!

 

Also in terms of returns, mutual funds have enormous restrictions that limit what he could do...such as low maximums on allocation, no use of derivatives or leverage, no investing in private enterprises, high expense ratios in Canada, etc.  Now that he is running his own vehicle, you can see the types of returns he is capable of with far fewer limitations.

 

Francis is simply an extraordinary investor...and as extraordinary a human being as well!  Cheers!

[jfan]

14 hours ago, Parsad said:

Yes, but they withdrew their capital later on so that they and Francis would avoid any conflict of interest, as he was still a VP of Fairfax at the time. 

Not that it matters a whole lot, but this was in his semi-annual report. He's never included this statement before, I wonder why all the sudden this disclosure?

 

14 hours ago, Parsad said:

Francis is simply an extraordinary investor...and as extraordinary a human being as well!  Cheers!

Totally agree. He and his team are hidden gems. 

[Parsad]

3 hours ago, jfan said:

Not that it matters a whole lot, but this was in his semi-annual report. He's never included this statement before, I wonder why all the sudden this disclosure?

 

Totally agree. He and his team are hidden gems. 

 

Looks like they must have put the money back in at some point...or perhaps I misunderstood and they never removed it.  Regardless, I hope they use Francis even more long-term.

 

Cheers!

[investmd]

On 9/9/2021 at 12:30 AM, Parsad said:

 

For you Monday morning quarterbacks...he's killing it at Wintaai and Stonetrust as well...so far a 72% CR for 2021...destroying it both on the insurance side and investment side.  He's finally running the type of vehicle that allows him to use all of his talent...no limits on concentration, his insurance expertise and float leverage.  And for those that complain about Fairfax's complexity...Francis is keeping it simple at Stonetrust...more like Markel.  Cheers!

 

 

Wintaai Financial Highlight (June 2021).pdf 74.87 kB · 41 downloads

BRK, FFH & MKL are examples of successful insurance businesses where float can be invested well.
 

Others have tried without as much success.  

 

In modern era, Chou bought the insurance vehicle, Stonetrust, from Pabrai after MP admitted trying the insurance business & investing the float was a failure - too many regulations to allow him to do what he needed. Thus, I’m curious as to thoughts on why deep value investor Chou could do well at Stonetrust whereas deep value investor  MP couldn’t? 

[Gopinath]

6 hours ago, investmd said:

BRK, FFH & MKL are examples of successful insurance businesses where float can be invested well.
 

Others have tried without as much success.  

 

In modern era, Chou bought the insurance vehicle, Stonetrust, from Pabrai after MP admitted trying the insurance business & investing the float was a failure - too many regulations to allow him to do what he needed. Thus, I’m curious as to thoughts on why deep value investor Chou could do well at Stonetrust whereas deep value investor  MP couldn’t? 

I think Francis Chou is more experienced with lumpy insurance results (long association with FFH), with a lot of experience with fixed income investments and generally have more patience/better temperament than MP.

[Parsad]

8 hours ago, investmd said:

BRK, FFH & MKL are examples of successful insurance businesses where float can be invested well.
 

Others have tried without as much success.  

 

In modern era, Chou bought the insurance vehicle, Stonetrust, from Pabrai after MP admitted trying the insurance business & investing the float was a failure - too many regulations to allow him to do what he needed. Thus, I’m curious as to thoughts on why deep value investor Chou could do well at Stonetrust whereas deep value investor  MP couldn’t? 

 

Francis worked on and turned around insurance companies when he was a VP at Fairfax.  Understanding insurance and actually running an insurance company are two different things. 

 

Also, Francis bought Stonetrust from Mohnish after Mohnish finished pouring money into it.  Mohnish bought an under reserved insurance company...Francis bought a well-reserved insurance company. 

 

Lastly, Francis operates with a very prudent level of risk management in everything he does...whether it is his mutual funds, his personal wealth management, investment management, insurance management...he's a pure Ben Graham type of investor. 

 

I think if you compare the types of investments generally that Mohnish buys and his asset allocation, and you compare it to Francis, you will see there is more of a risk management, pure Ben Graham distressed asset type of philosophy at work with Francis.  Cheers!  

[investmd]

1 hour ago, Parsad said:

 

Francis worked on and turned around insurance companies when he was a VP at Fairfax.  Understanding insurance and actually running an insurance company are two different things. 

 

Also, Francis bought Stonetrust from Mohnish after Mohnish finished pouring money into it.  Mohnish bought an under reserved insurance company...Francis bought a well-reserved insurance company. 

 

Lastly, Francis operates with a very prudent level of risk management in everything he does...whether it is his mutual funds, his personal wealth management, investment management, insurance management...he's a pure Ben Graham type of investor. 

 

I think if you compare the types of investments generally that Mohnish buys and his asset allocation, and you compare it to Francis, you will see there is more of a risk management, pure Ben Graham distressed asset type of philosophy at work with Francis.  Cheers!  

Well said. Thanks.