Chou Funds 13-F

[Parsad]

Francis' 13-F for the 2nd Q is out.  Cheers!

 

http://www.sec.gov/Archives/edgar/data/1389403/000095012309035094/d68838e13fvhr.txt

[wisdom]

Chou funds letter is usually out by mid- March. But, I haven't seen one for 2013. Any idea when it is likely to be out?

[Nnejad]

Sorry if I've got no clue, but is it this?

 

http://choufunds.com/pdf/AR13.pdf

[ourkid8]

Does anyone know which stock Francis is referring to?

 

An interesting anecdote to the said Russian pharmaceutical company: When companies trade on

different exchanges and they spin-off a subsidiary, one would expect them to do it on the same

record and/or ex date. This Russian company traded both on the Russian stock market (“Russia”)

and the London Stock Exchange (“London”). However, when it spun-off its subsidiary, which was

roughly 25% of the value of the parent company, it did so on separate dates. So, if you bought the

shares in Russia, in order to get the shares of the spun-off company in January 2014, you needed to

have been a registered owner by the record date in late December. But if you bought them in

London, the record date to get the shares of the spun-off company is in late March 2014.

 

You would expect that shares listed in Russia would trade ex-spinoff at a price 25% lower than the

ones listed in London, until such time of the London spin-off occurs. However, the shares in London

took their cue from the prices in Russia and traded at roughly the same prices as those in Russia.

The shares in London are still entitled to the spin-off company, which is worth 25% of the parent

company. The shares were already cheap, trading at less than three times free cash flow, and we

bought our shares in London. We have not revealed the name as it was bought in 2014, but for the

curious and the enterprising investor, enjoy your early Easter egg hunt.

 

Tks,

S

[bennycx]

Haha ok very interesting..

I think he refers to Farmstandart OAO. Ordinary shareholders in Russia will get the spun off stock on Dec 23 and you can see a drop of ~20% in Russia and in London. However London shareholders only get the spun off stock after Mar 27 and there you see another 20% drop in the London market and not the Russian market.

 

It looks like the 'arbitrage' period is only from Mar 14 - Mar 24 or so.. if I've not mistaken

[randomep]

Does anyone know which stock Francis is referring to?

 

An interesting anecdote to the said Russian pharmaceutical company: When companies trade on

different exchanges and they spin-off a subsidiary, one would expect them to do it on the same

record and/or ex date. This Russian company traded both on the Russian stock market (“Russia”)

and the London Stock Exchange (“London”). However, when it spun-off its subsidiary, which was

roughly 25% of the value of the parent company, it did so on separate dates. So, if you bought the

shares in Russia, in order to get the shares of the spun-off company in January 2014, you needed to

have been a registered owner by the record date in late December. But if you bought them in

London, the record date to get the shares of the spun-off company is in late March 2014.

 

You would expect that shares listed in Russia would trade ex-spinoff at a price 25% lower than the

ones listed in London, until such time of the London spin-off occurs. However, the shares in London

took their cue from the prices in Russia and traded at roughly the same prices as those in Russia.

The shares in London are still entitled to the spin-off company, which is worth 25% of the parent

company. The shares were already cheap, trading at less than three times free cash flow, and we

bought our shares in London. We have not revealed the name as it was bought in 2014, but for the

curious and the enterprising investor, enjoy your early Easter egg hunt.

 

Tks,

S

 

What the heck? you mean he got a 75% discount for 3months? How much worth of stocks are were talking about here? I mean who is selling these shares at 75% discount..... can't be too many before the seller(s) figure it out right?

 

My god this is the biggest example of stockmarket inefficiency I have ever heard!

 

That should be the nail in the coffin for EMT.....

 

 

 

 

 

[bennycx]

The press release says all holders receive the spunoff stock and the presentation afterwards also says so.. So I think people assume all holders including GDRs listed in London? It is only later that they announced the London ones are a later date it seems. I haven't really digged into it as the opportunity has passed

[NormR]

He seems to be working harder on his letter these days.

[wisdom]

thanks - Nnejad

[Green King]

The company was OJSC Pharmstandard and spin off sub OTCPharm.

[Parsad]

He seems to be working harder on his letter these days.

 

Well, he's never slacked off, but he always kept comments relatively brief and concise.  This was probably the best letter I've read by Francis in years, and one of the best letters I've read this year by any manager.  Cheers!

[NormR]

He seems to be working harder on his letter these days.

 

Well, he's never slacked off, but he always kept comments relatively brief and concise.  This was probably the best letter I've read by Francis in years, and one of the best letters I've read this year by any manager.  Cheers!

 

I think it's a little more polished this year. 

[phil_Buffett]

thanks for the posting. great letter. Francis is a great guy.

[cubsfan]

Does anyone know which stock Francis is referring to?

 

An interesting anecdote to the said Russian pharmaceutical company: When companies trade on

different exchanges and they spin-off a subsidiary, one would expect them to do it on the same

record and/or ex date. This Russian company traded both on the Russian stock market (“Russia”)

and the London Stock Exchange (“London”). However, when it spun-off its subsidiary, which was

roughly 25% of the value of the parent company, it did so on separate dates. So, if you bought the

shares in Russia, in order to get the shares of the spun-off company in January 2014, you needed to

have been a registered owner by the record date in late December. But if you bought them in

London, the record date to get the shares of the spun-off company is in late March 2014.

 

You would expect that shares listed in Russia would trade ex-spinoff at a price 25% lower than the

ones listed in London, until such time of the London spin-off occurs. However, the shares in London

took their cue from the prices in Russia and traded at roughly the same prices as those in Russia.

The shares in London are still entitled to the spin-off company, which is worth 25% of the parent

company. The shares were already cheap, trading at less than three times free cash flow, and we

bought our shares in London. We have not revealed the name as it was bought in 2014, but for the

curious and the enterprising investor, enjoy your early Easter egg hunt.

 

Tks,

S

 

What the heck? you mean he got a 75% discount for 3months? How much worth of stocks are were talking about here? I mean who is selling these shares at 75% discount..... can't be too many before the seller(s) figure it out right?

 

My god this is the biggest example of stockmarket inefficiency I have ever heard!

 

That should be the nail in the coffin for EMT.....

 

Strange thing happen in these overseas markets. About 1 year ago, I bought DKSH (Malaysia) at a 6 PE. Meanwhile, it's Swiss parent DKSH, traded

at around a 30 PE. They were essentially similar profiles, and Malaysian sub contributed plenty of profit to the parent. 12 months later DKSH in

Malaysia is a 3X bagger.

 

I couldn't believe you could find stuff like this, but it happens. So much for EMT!

[Kiltacular]

Does anyone know which stock Francis is referring to?

 

An interesting anecdote to the said Russian pharmaceutical company: When companies trade on

different exchanges and they spin-off a subsidiary, one would expect them to do it on the same

record and/or ex date. This Russian company traded both on the Russian stock market (“Russia”)

and the London Stock Exchange (“London”). However, when it spun-off its subsidiary, which was

roughly 25% of the value of the parent company, it did so on separate dates. So, if you bought the

shares in Russia, in order to get the shares of the spun-off company in January 2014, you needed to

have been a registered owner by the record date in late December. But if you bought them in

London, the record date to get the shares of the spun-off company is in late March 2014.

 

You would expect that shares listed in Russia would trade ex-spinoff at a price 25% lower than the

ones listed in London, until such time of the London spin-off occurs. However, the shares in London

took their cue from the prices in Russia and traded at roughly the same prices as those in Russia.

The shares in London are still entitled to the spin-off company, which is worth 25% of the parent

company. The shares were already cheap, trading at less than three times free cash flow, and we

bought our shares in London. We have not revealed the name as it was bought in 2014, but for the

curious and the enterprising investor, enjoy your early Easter egg hunt.

 

Tks,

S

 

What the heck? you mean he got a 75% discount for 3months? How much worth of stocks are were talking about here? I mean who is selling these shares at 75% discount..... can't be too many before the seller(s) figure it out right?

 

My god this is the biggest example of stockmarket inefficiency I have ever heard!

 

That should be the nail in the coffin for EMT.....

 

Strange thing happen in these overseas markets. About 1 year ago, I bought DKSH (Malaysia) at a 6 PE. Meanwhile, it's Swiss parent DKSH, traded

at around a 30 PE. They were essentially similar profiles, and Malaysian sub contributed plenty of profit to the parent. 12 months later DKSH in

Malaysia is a 3X bagger.

 

I couldn't believe you could find stuff like this, but it happens. So much for EMT!

 

Nicely done!  Posts like this remind me that these discrepancies are often as real as they look. 

 

In a similar vein -- though not the same as an exchange arbitrage -- these Korean preferreds discussed in another thread appear to just be "sitting" there.  Yes, many of them have already exploded higher but that doesn't mean they aren't cheap.

 

As an example, Hyundai motors common stock trades for about an 8 PE...the preferreds for about a 4 PE.

 

It is just sitting there -- you can buy Hyundai for a 4x earnings via these preferreds and the only reason for a discount is lack of voting rights...the Berkshire B shares don't trade at half the A's. 

 

I mean, it is weird enough that it has taken me a while to accept it -- "what" am I missing.  It is just too simple.  But, I don't think I'm missing anything.

 

 

[phil_Buffett]

does someone has pharmstandard in his Portfolio?

 

Francis argues that it is very very cheap on fcf basis

[muscleman]

does someone has pharmstandard in his Portfolio?

 

Francis argues that it is very very cheap on fcf basis

 

It looks like a Russia company. PE is about 5. What is your opinion on its operate governess?

[phil_Buffett]

does someone has pharmstandard in his Portfolio?

 

Francis argues that it is very very cheap on fcf basis

 

It looks like a Russia company. PE is about 5. What is your opinion on its operate governess?

 

i heard that pharmstandard wanted to take the Company private last year, something like that for a very low Price. but they get a lot of headwind and in the end doesnt do it. but the stock Price was fallen very much.

 

russia company´s  are very hated and in Panic mode right now. i like an basekt Approach.

 

like: lukoil gas/oil

pharmstandard  pharma

ctc media  media

sistema conglomerat

sberbank  bank

 

that would be my basket

[indythinker85]

This is a very good write up on CTC (I  own some sberbank, CTC and RSX) http://www.valuewalk.com/2014/03/russias-ctc-media-smart-investment-of-the-week/