CHOU 2020 Letter to unit holders

[valueinvestor]

Either way to write so clearly that you understand the man's investing philosphy is rare these days - it is a gem.

[Gregmal]

Its just incredible to me how one ends up owning such a diverse portfolio of dogs. I get underperforming if you run high concentration strategies...duh. A position or two of size will hurt you if its goes against you. But its like everything some of these dudes own you wouldn't have been able to match if you dreamed up a perfect short portfolio. WFC, RFP, BHC, XCO....its almost funny. Just not as bad as Einhorn, who matches Chou 1 for 1 on the long side but then does the same thing on the short side as well. I remember one year he actually had the nerve to joke about how he owned like 3 of the top 5 worst performing S&P components, and was short 2 of the top 5 best performers....But it was just "bad luck"...

[Xerxes]

A deep value investor would have bought RFP years ago based on whatever thesis was out there at the time.
A patient deep value investor (not me certainly) would have bought it at $1-2 during the downdraft.

If value investing was all about margin of safety, that aspect has become ten-times more important in todays market.
If you are a cigarbutt type investor, 20 cent on the dollar is the new 60 cents on the dollar.

"Having said that, it is quite comical to experience how a commodity stock can be hammered beyond all logical comprehension. RFP paid a special dividend of US$1.50 a share in 2018, and it was trading as low as US$1.17 per share in April 2020. Back in March 2020, the company announced that it would buy back 15% of its common shares for US$100 million. At the lowest year-to-date price of US$1.17, the whole market capitalization would be approximately US$99 million. In other words, instead of buying back 15% of the company with US$100 million, it could repurchase 100% of the company at one point. RFP shares have since recovered 300% to US$4.69 as of August 25, 2020."

[Spekulatius]

I read his letter and think it’s odd that he doesn’t think banks have been impaired. That doesn’t make any sense to me. Sure, we can debate If bank stocks have been overly punished, but there is little debate that they have been seriously impaired by higher loan losses and lower interest rates.

This alone would question me a money manager’s judgment.