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Chou America Funds!

Parsad

By Parsad
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txlaw Newbie

txlaw

Posted
Posted

Ouch! My one year results are -20% for the Equity fund, and -15% for the Income fund. So much for outsourcing some of my investing capital in the name of diversification.

 

I take it you sold out?

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Guest misterstockwell

Guest misterstockwell

Posted
Posted

 

I take it you sold out?

 

No, not yet. I put money into this and two hedge funds. The two hedge funds are both up double digits, and the Chou investment down double digits. Luckily the hedge funds got a bigger percentage of my dollars. I'll give Francis a chance to come back. I cringe when I look at his holdings, but I will put that out of my mind and trust in his experience.

Guest Hester

Guest Hester

Posted
Posted

 

I would really love to know what is the obsession with OSTK from the whole Watsa crew. I personally don't get it.

 

We all must do our part to fight the sith lord. Even if it means slowly bleeding your mutual fund's returns...

Guest

Guest

Posted
Posted

As of right now, why would I buy from OSTK instead of AMZN? From my experience, AMZN has superior prices and service.

AZ_Value Newbie

AZ_Value

Posted
Posted

 

I would really love to know what is the obsession with OSTK from the whole Watsa crew. I personally don't get it.

 

We all must do our part to fight the sith lord. Even if it means slowly bleeding your mutual fund's returns...

 

Lol... Come on now, it can't be all about the whole deep capture story and them wanting to support Byrne in his crusade against the hedgies.

 

I'm sure they see something in OSTK but to me that business just seems to be such a 10 foot hurdle to try and jump especially when the headwinds you're facing are called Jeff Bezos and Amazon.

 

Kinda like the money Fairfax keeps dumping in RIMM, I don't get that one either. Is it Ontario folks sticking together this time?

By the way, I took a look at the phones that Nokia and MSFT are starting to put out, and I am now ready to unilaterally call the death of RIMM. Iphone and Android were tough enough, now Nokia and MSFT just joined them. Somebody stick a fork in RIMM, they're done!

 

All this being said I am a happy Fairfax shareholder and I have zero intention of selling my shares, probably ever! Prem has proven his worth time and again.

 

 

 

Guest Hester

Guest Hester

Posted
Posted

 

Lol... Come on now, it can't be all about the whole deep capture story and them wanting to support Byrne in his crusade against the hedgies.

 

 

I think it is. Watsa has been wrong on many heavily shorted ideas where he didn't have an edge. RIMM, Sino Forest bonds. Maybe Chou has some other reason for having 12% of his fund in Overstock, he does seem to love dying retailers. To Watsa's credit he sizes the bets appropriately, and has the ability to make spectacular macro bets, not so much for Chou. I would be very comfortable betting that Chou will continue to underperform.

PlanMaestro Newbie

PlanMaestro

Posted
Posted

I think it is. Watsa has been wrong on many heavily shorted ideas where he didn't have an edge. RIMM, Sino Forest bonds. Maybe Chou has some other reason for having 12% of his fund in Overstock, he does seem to love dying retailers. To Watsa's credit he sizes the bets appropriately, and has the ability to make spectacular macro bets, not so much for Chou. I would be very comfortable betting that Chou will continue to underperform.

 

I do not get it, Francis Chou mentions explicitly the buy of the decade but then goes and buys some dying retailers with all their complications. Why not burn the boats and just buy those damn banks instead of diworsifying into a sector that would suffer a lot, maybe even more so, if the economy tumbles?

 

Why?

 

Not that banks are not retailers (retail banking, duh) but they have higher switching costs and barriers to entry. And it is not easy for a pure play internet bank.

 

Parsad Grand Master

Parsad

Posted
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Posted

 

Lol... Come on now, it can't be all about the whole deep capture story and them wanting to support Byrne in his crusade against the hedgies.

 

 

I think it is. Watsa has been wrong on many heavily shorted ideas where he didn't have an edge. RIMM, Sino Forest bonds. Maybe Chou has some other reason for having 12% of his fund in Overstock, he does seem to love dying retailers. To Watsa's credit he sizes the bets appropriately, and has the ability to make spectacular macro bets, not so much for Chou. I would be very comfortable betting that Chou will continue to underperform.

 

You're quite incorrect here.  The CDS idea was Francis' and Brian Bradstreet's, but Francis couldn't get approval from the Ontario Securities Commission in time to buy the credit default swaps, whereas Fairfax was able to execute on the idea right away.  By the time Francis received approval, the prices of the swaps had started to rise and he could never get back in.  Francis is probably one of the most intelligent investors out there, and you don't have to take my word for it...just ask Prem, Brian Bradstreet or Sam Mitchell.  Investors should examine their results over a decade not a couple of years.   

 

In regards to Overstock, he's making a bet that a company with $1.1B in revenues and 25M customers can earn a 1.5-2.5% net profit margin long-term.  That would undercut their competitors and value a growing business at less than 10 times earnings.  Overstock's problems haven't been the business model, but a distracted CEO who seems to be in denial regarding his obligations to shareholders and his obligation to an ethical dilemma.  Hopefully the recent setbacks in the lawsuits restores focus back on the business.  Cheers!

Guest

Guest

Posted
Posted

Sanj,

 

A ton of insight as always. Thanks, man!

Guest Hester

Guest Hester

Posted
Posted

 

Lol... Come on now, it can't be all about the whole deep capture story and them wanting to support Byrne in his crusade against the hedgies.

 

 

I think it is. Watsa has been wrong on many heavily shorted ideas where he didn't have an edge. RIMM, Sino Forest bonds. Maybe Chou has some other reason for having 12% of his fund in Overstock, he does seem to love dying retailers. To Watsa's credit he sizes the bets appropriately, and has the ability to make spectacular macro bets, not so much for Chou. I would be very comfortable betting that Chou will continue to underperform.

 

You're quite incorrect here.  The CDS idea was Francis' and Brian Bradstreet's, but Francis couldn't get approval from the Ontario Securities Commission in time to buy the credit default swaps, whereas Fairfax was able to execute on the idea right away.  By the time Francis received approval, the prices of the swaps had started to rise and he could never get back in.  Francis is probably one of the most intelligent investors out there, and you don't have to take my word for it...just ask Prem, Brian Bradstreet or Sam Mitchell.  Investors should examine their results over a decade not a couple of years.   

 

In regards to Overstock, he's making a bet that a company with $1.1B in revenues and 25M customers can earn a 1.5-2.5% net profit margin long-term.  That would undercut their competitors and value a growing business at less than 10 times earnings.  Overstock's problems haven't been the business model, but a distracted CEO who seems to be in denial regarding his obligations to shareholders and his obligation to an ethical dilemma.  Hopefully the recent setbacks in the lawsuits restores focus back on the business.  Cheers!

 

I carefully worded myself by saying Watsa had the ability to make spectacular bets, which gels with what you said. I never said Chou couldn't dream any up. The mutual fund structure is too prohibitive. It's better for just plain vanilla stock pickers who ignore the macro.

 

Overstock's problems are mostly Patrick Byrne I agree. The brand change to O.Co means the business model now has problems (maybe temporary), although that's really the fault of management, not an original business model flaw.

Guest

Guest

Posted
Posted

Does anyone know who Lily Pinarello and David McLean are? I know they are independent trustees of the fund, but they have $0 invested. Maybe they live in Canada and it wouldn't make sense, but I know there are plenty of other independent trustees that invest in funds.

  • 3 weeks later...
Guest misterstockwell

Guest misterstockwell

Posted
Posted

Just got my tax paperwork from Chou. I hate it when I lose my ass on an investment and I have to pay taxes to boot.  >:(

  • 1 year later...
  • 2 months later...
mhdousa Newbie

mhdousa

Posted
Posted

New portfolio, as of 3/31/13 out from Chou Equity:

Top Holdings

 

As of March 31, 2013

Top 10 Holdings percentage of assets

Resolute Forest Products Inc. 17.5%

Overstock.com Inc. 16.6%

Sears Holdings Corp. 4.9%

MBIA Inc. 4.5%

MannKind Corp. 4.3%

Bank of America warrants 3.6%

JPMorgan Chase warrants 3.6%

ASTA Funding Inc. 2.6%

UTStarcom Holdings 2.5%

Wells Fargo warrants 1.6%

 

Close to 40% cash now.

Per http://portfolios.morningstar.com/fund/holdings?t=CHOEX&region=USA&culture=en-us, he

-upped his RFP stake by a 1/3

- decreased OSTK and MBI by about 10% each (right before earnings and the BAC deal, respectively....oof!)

-dropped SHLD by about 40%

-unloaded over 1/2 his Mannkind

-dropped UTStarcom by almost 1/2

-dropped almost 1/2 his BAC warrants

 

Any other comments?

  • 3 months later...
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