Tracking Francis Chou’s Chou Associates Portfolio - Q2 2016 Update

• Chou’s 13F portfolio decreased from $308M to $262M during the quarter.
• Valeant Pharmaceuticals and Sears Holdings were increased while establishing a minutely small new stake in General Motors warrants.
• Berkshire Hathaway at 12.42% of the portfolio is the largest position.

Francis Chou’s Chou Associates Portfolio decreased ~15% from $308M to $262M during the quarter. The portfolio continues to be very concentrated with just 27 positions. Among the larger (more than 0.5% of the portfolio each) positions, there were only a couple of changes. Below is a look at his largest stakes:

1. Valeant Pharmaceuticals (VRX): VRX is a 11.12% portfolio position established last quarter at prices between $26 and $102 and increased by ~48% this quarter at prices between $19 and $36. The stock currently trades at $24.49.

2. Sears Holdings (SHLD): Sears (SHLD) and its spinoff entities Sears Canada (SRSC) and Sears Hometown & Outlet (SHOS) are together another large presence at a combined 11.72% of the portfolio. Sears is a long-term position that has been in the portfolio for well over a decade and their cost-basis is high. This quarter saw a ~39% increase at prices between $10.70 and $18.65. The stock is now at $17.08.

3. Berkshire Hathaway (BRK.A): The 12.42% portfolio position is the largest 13F equity stake. The last major activity was a 50% reduction last quarter at prices between $187,000 and $214,000. The stock is now at $221,890.  

4. Resolute Forest Products (RFP): The 9.90% RFP position has been in the portfolio since 2010 (Abitibibowater at the time) and the cost-basis is much higher compared to the current price. Q2 2013 saw a one-third increase at prices between $13 and $16. Last five quarters also saw a ~20% combined increase at progressively lower prices between $4 and $19. The stock is now at $5.89.

5. JPMorgan Chase Warrants (JPM-WT): The 8.70% stake in JPMorgan TARP Warrants was acquired in 2011 and the price has almost doubled. The position has remained relatively steady since. Chou is sitting on large long-term gains.

6. Nokia Corp (NOK): NOK is a 8.14% stake that has been in the portfolio since 2009. The bulk of the current stake was purchased in Q2 2012 at ~$3 per share. The stock is now at $5.70.

Below is a spreadsheet that highlights the changes to the portfolio as of Q2 2016. Please check out our previous update to have an idea on how the portfolio is progressing:

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