Tracking Francis Chou’s Chou Associates Portfolio - Q4 2016 Update

• Chou’s 13F portfolio increased from $270M to $313M during the quarter.
• Chou increased Valeant while reducing Sears.
• JPMorgan Chase warrants at ~16% of the portfolio is the largest position.

Francis Chou’s Chou Associates Portfolio increased ~16% from $270M to $313M during the quarter. The portfolio continues to be very concentrated with just 28 positions. Below is a look at his largest stakes:

1. JPMorgan Chase Warrants (JPM-WT): The 15.94% stake in JPMorgan TARP Warrants was acquired in 2011 and the price has doubled. The position has remained relatively steady since. Chou is sitting on large long-term gains.

2. Berkshire Hathaway (BRK.A): The ~12% portfolio position is the second-largest 13F equity stake. The last major activity was a 50% reduction in Q1 2016 at prices between $187,000 and $214,000. The stock is now at $263,160.  

3. Valeant Pharmaceuticals (VRX): VRX is a ~9% portfolio position established in Q1 2016 at prices between $26 and $102 and increased by ~48% the following quarter at prices between $19 and $36. There was another ~35% increase this quarter at prices between $13.50 and $24.50. The stock currently trades below those ranges at $13.06.

4. Resolute Forest Products (RFP): The ~8.5% 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. The five quarters through Q1 2016 also saw a ~20% combined increase at progressively lower prices between $4 and $19. The stock is now at $4.60.

Note: Regulatory Filings since the quarter ended show Chou Associates owning ~7.2M shares (8% of the business).

Below is a spreadsheet that highlights the changes to the portfolio as of Q4 2016. Please check out our previous update to have an idea on how the portfolio is progressing:

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