Thursday, May 22, 2008 1 comments ++[ CLICK TO COMMENT ]++

Francis Chou: The Best Bargain-Hunting Value Investor from Canada?

The Globe & Mail's investing magazine insert, Globe Investor, has a feature article profiling the Canadian superinvestor hardly anyone has heard of: Francis Chou of Chou Associates Management. Even many Canadian investors who follow the Canadian markets have never heard of him (and it's not as if we have too many successful investors up here). Those value investors somehow miraculously manage to become successful without drawing much attention (some Hollywood stars should take note ;) ).

The article is titled Is Value Dead? and uses the poor performance of value investing of late to ask some pointed questions about the Chou funds and value investing in general. It's a good read so check it out.

(source: Is Value Dead?, Rob Carrick, Summer 2008 Globe Investor)

Warren Buffett, a giant of value investing, has achieved an almost impossible compound average annual return of 21.1% from 1965 through 2007 with his holding company, Berkshire Hathaway Inc. (compared to 10.3% for the S&P 500 Index). Other masters, such as John Templeton and Charles Brandes, have also prospered using this approach, as have Canadian names like Irwin Michael, Peter Cundill, Bob Tattersall and Francis Chou. Until recently, that is. At some point in the past year or two, value investing stopped working. Example: For the 12 months to Feb. 29, three of Chou’s five funds were down 17% or more, as compared with the previous year. Could this be the death of value?


Francis Chou isn't alone; a lot of other value investors, such as Bill Miller, Edward Lampert, Martin Whitman, and so forth, have been suffering as well. Basically anyone that did not overload on commodities & emerging markets or short financials have been beaten up pretty badly...

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1 Response to Francis Chou: The Best Bargain-Hunting Value Investor from Canada?

Bud
May 31, 2008 at 4:10 PM

I think you might like my new self-published book. My book, "The Four Filters Invention of Warren Buffett and Charlie Munger" examines each of the basic steps they perform in framing and making an investment decision. Here is a 10 min. audio book summary: http://www.frips.com/4fsummary.mp3

Here is the review that George at valueinvestingnews.com and fatpitchfinancial.com did on my book. http://www.valueinvestingnews.com/four-filters-invention-warren-buffett-ch-0

As for my own views, “The Four Filters Invention of Warren Buffett and Charlie Munger” at http://www.frips.com is designed to be the next “Intelligent Investor.” It is a small book at 98 pages, and it concentrates mainly on the sequential process outlined by Warren Buffett. How do the best “frame” their investing decisions? The Four Filters cluster around the important business variables of Products, Customer-Sustainablility, Managers, and Price/Value.

The book also strives to prove that Buffett and Munger invented a Behavioral Finance Formula composed of three qualitative steps and one quantitative step, that is underappreciated by the
business and academic communities. In that respect, Buffett and Munger will have a greater long term impact on academics than the Efficient Market Hypothesis.

While my book is concentrated on Munger and Buffett’s approach to framing, this book contains the best of Graham, Carret, Fisher, Buffett and Munger. Read the summary a few times, and you will be motivated and hypnotized into thinking about ways you “frame” your important decisions. This is a subtle peek into sensible and optimal thinking within Behavioral Finance.

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