Tracking Francis Chou’s Chou Associates Portfolio – Q1 2018 Update

• Chou’s 13F portfolio value increased from $234M to $237M during the quarter.
• Chou increased Valeant Pharmaceuticals & Endo International while reducing Bank of America TARP warrants.
• Berkshire Hathaway at ~19% of the portfolio is the largest position.

Francis Chou’s Chou Associates portfolio value increased marginally from $234M to $237M during the quarter. The portfolio continues to be very concentrated with just 24 positions. Below is a summary:

1. Berkshire Hathaway (BRK.A): The ~19% portfolio position is the 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 $282,000.   

2. JPMorgan Chase Warrants (JPM-WT): The ~5% stake in JPMorgan TARP Warrants was acquired in 2011 at much lower prices. The position had remained relatively steady since. Q1 2017 saw a ~44% selling as the underlying traded between $83 and $94 and that was followed with a similar reduction in Q3 2017 as the stock traded between $82.50 and $95. Last quarter saw another ~50% selling as the stock traded between $95 and $108. JPM currently goes for $104.

3. Resolute Forest Products (RFP): The ~16% 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 $10.35. There was a ~7% trimming last quarter.

4. Valeant Pharmaceuticals (VRX): VRX was the largest position at ~15% of the portfolio as of Q3 2017. The stake was almost eliminated last quarter at prices between $11 and $22. The original position was from 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 in Q4 2016 at prices between $13.50 and $24.50 and that was followed with a ~20% increase the following quarter at prices between $10.50 and $17. Q2 2017 saw another ~30% increase at prices between $8.50 and $17.30. There was a ~10x stake increase this quarter at prices between $15 and $24. The stock currently trades at $23. Chou realized losses and is now building the stake back up again.

Below is a spreadsheet that highlights the changes to the portfolio as of Q1 2018. Please check out our previous update to have an idea on how the portfolio is progressing:

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