Tracking Francis Chou’s Chou Associates Portfolio – Q2 2018 Update

·         Chou’s 13F portfolio value increased from $237M to $264M during the quarter.

·         Chou decreased Nokia while adding DaVita.

·         Resolute Forest Products at ~19% of the portfolio is the largest position.

Francis Chou’s Chou Associates portfolio value increased ~11% from $237M to $264M during the quarter. The portfolio continues to be very concentrated with just 26 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 $310,000.   

2. JPMorgan Chase Warrants (JPM-WT): The ~4% 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. Q4 2017 saw another ~50% selling as the stock traded between $95 and $108. JPM currently goes for $107.

3. Resolute Forest Products (RFP): The ~19% 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 $11.85. There was a ~7% trimming in Q4 2017 while this quarter saw a marginal increase.

4. Bausch Health (BHC) previously Valeant: BHC 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 last quarter at prices between $15 and $24. The stock currently trades at $22.20. 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 Q2 2018. Please check out our previous update to have an idea on how the portfolio is progressing:

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