In this article, we discuss 5 stocks to buy according to Francis Chou’s Chou Associates Management. If you want to read our detailed analysis of Chou’s investment philosophy and performance, go directly to 10 Stocks to Buy According to Francis Chou’s Chou Associates Management.
5. JPMorgan Chase & Co. (NYSE:JPM)
Chou Associates Management’s Stake Value: $3,309,000
Percentage of Chou Associates Management’s Portfolio: 1.76%
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) provides financial services to clients worldwide. Berenberg analyst Peter Richardson raised JPMorgan to Hold from Sell on July 18 with a price objective of $120. In the first quarter, Chou Associates Management sold 10,000 shares of JPMorgan Chase & Co. (NYSE:JPM), reducing its remaining stake by about 30%. At the end of the quarter, the hedge fund still held 24,275 shares of JPMorgan Chase & Co. (NYSE:JPM), worth about $3.31 million, representing 1.76% of its portfolio.
Hedge funds are piling into JPMorgan Chase & Co. (NYSE:JPM). At the close of Q1 2022, Insider Monkey found 110 hedge funds long JPMorgan Chase & Co. (NYSE:JPM), up from 107 funds in the previous quarter.
Here is what Ariel Investments had to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter:
“In our view, inflation will not just be a 2021 phenomenon. Inflationary expectations are only now working themselves into the labor market with historically low unemployment, resurgent labor unions, and higher wages. These labor cost pressures are only starting to show up in the Consumer Price Index. The most recent Producer Price Index showed a +9% year over year increase, the highest since it was created in 2010. Higher input prices generally lead to rising consumer prices.
“In our view, inflation will not just be a 2021 phenomenon.”
Consumer balance sheets are in excellent shape with lower unemployment and banked stimulus checks. A recent analysis from JP Morgan Chase (JPM) showed average checking accounts have 50% higher balances than pre-Covid. The U.S. money supply as measured by M2 (a calculation that includes cash, checking accounts, and “near cash” such as money market securities) is up +38% versus year-end 2019. Higher consumer cash holdings and higher money supply mean more spending and demand for goods. Some emphasize supply issues to explain current inflation. Going forward, we see very strong demand as well, too much money chasing too few goods.”
4. MBIA Inc. (NYSE:MBI)
Chou Associates Management’s Stake Value: $9,227,000
Percentage of Chou Associates Management’s Portfolio: 4.9%
Number of Hedge Fund Holders: 18
MBIA Inc. (NYSE:MBI) offers financial guarantee insurance services to public finance markets. The hedge fund chaired by Chou held 599,530 shares in MBIA Inc. (NYSE:MBI), worth over $9.23 million in Q1 2022. It is the fourth largest holding of Chou Associates Management.
Kahn Brothers is the leading shareholder of MBIA Inc. (NYSE:MBI), with 4.83 million shares worth over $74.32 million. Next on the list is Hosking Partners, which owned 2.51 million shares of MBIA Inc. (NYSE:MBI), worth over $38.60 million.
MBIA Inc. (NYSE:MBI) experienced an increase in hedge fund interest recently. MBIA Inc. (NYSE:MBI) was in 18 hedge fund portfolios at the end of the first quarter of 2022. There were 17 hedge funds in our database with MBIA Inc. (NYSE:MBI) holdings at the end of the previous quarter.
In its Q4 2021 investor letter, Horos Asset Management mentioned MBIA Inc. (NYSE:MBI). Here is what Horos Asset Management has to say about MBIA Inc. (NYSE:MBI) in its Q4 2021 investor letter:
“We completely sold our stake in MBIA after its good performance during the period. Although we still see upside and we believe that an eventual corporate transaction will come (the management team itself wants it to), time is working against its shareholders, so we are demanding a greater margin of safety in this investment.”
3. Bausch Health Companies Inc. (NYSE:BHC)
Chou Associates Management’s Stake Value: $17,480,000
Percentage of Chou Associates Management’s Portfolio: 9.3%
Number of Hedge Fund Holders: 48
Together with its subsidiaries, Bausch Health Companies Inc. (NYSE:BHC) creates, produces, and distributes a variety of pharmaceuticals, medical devices, and over-the-counter (OTC) drugs, particularly in the fields of dermatology, gastroenterology, and eye health.
With a $793.38 million stake in Bausch Health Companies Inc. (NYSE:BHC), Carl Icahn’s Icahn Capital LP owned 34.72 million shares of the company as of the end of the first quarter of 2022, making it the most significant shareholder of the company. In addition, our database shows that 48 hedge funds held stakes in Bausch Health Companies Inc. (NYSE:BHC) as of the end of the first quarter of 2022, versus 53 funds in the fourth quarter of 2021.
On June 13, JPMorgan analyst Chris Schott initiated coverage of Bausch Health Companies Inc. (NYSE:BHC) and assigned an Overweight rating and a price objective of $12. The hedge fund managed by Chou owned 765,000 shares in Bausch Health Companies Inc. (NYSE:BHC), worth over $17.48 million, representing close to 9.3% of its portfolio.
2. Resolute Forest Products Inc. (NYSE:RFP)
Chou Associates Management’s Stake Value: $39,975,000
Percentage of Chou Associates Management’s Portfolio: 21.26%
Number of Hedge Fund Holders: 21
Together with its subsidiaries, Resolute Forest Products Inc. (NYSE:RFP) engages in worldwide and domestic business in the forest products sector. Resolute Forest Products Inc. (NYSE:RFP) shares have offered investors more than 75% in returns over the past twelve months as of July 27.
Based on its 13F holdings for the first quarter of 2022, Chou Associates Management owned 3.10 million shares of Resolute Forest Products Inc. (NYSE:RFP), valued at $39.98 million. As of the end of the first quarter, 21 hedge funds in Insider Monkey’s database of 912 funds held stakes in Resolute Forest Products Inc. (NYSE:RFP), compared to 15 funds in the previous quarter.
Fairfax Financial Holdings is the biggest stakeholder of Resolute Forest Products Inc. (NYSE:RFP), with 30.55 million shares worth $394.07 million. After Resolute Forest Products Inc. (NYSE:RFP) announced a deal to be bought by Paper Excellence Group for $2.7 billion, TD Securities analyst Sean Steuart downgraded the business on July 7 from Buy to Hold with a price objective of $23, up from $16. Steuart stated that the proposed valuation was fair.
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
Chou Associates Management’s Stake Value: $52,892,000
Percentage of Chou Associates Management’s Portfolio: 28.14%
Number of Hedge Fund Holders: 104
Berkshire Hathaway Inc. (NYSE:BRK-B) operates globally in the insurance, freight, rail transportation, and utilities sectors. Berkshire Hathaway Inc. (NYSE:BRK-B) has featured on Chou Associates Management’s portfolio since the fourth quarter of 2010. In the first quarter of 2022, Francis Chou’s Chou Associates Management owned 100 shares in Berkshire Hathaway Inc. (NYSE:BRK-B), worth over $52.89 million. On May 1, Keefe Bruyette analyst Meyer Shields maintained a Market Perform rating on Berkshire Hathaway Inc. (NYSE:BRK-B), while decreasing his price objective from $565,000 to $560,000.
According to our database, the long hedge funds positions in Berkshire Hathaway Inc. (NYSE:BRK-B) decreased at the end of the first quarter of 2022. 104 hedge funds were bullish on Berkshire Hathaway Inc. (NYSE:BRK-B) compared to 108 funds in the previous quarter. Berkshire Hathaway Inc. (NYSE:BRK-B) stands first on the list of 10 stocks to buy according to Francis Chou’s Chou Associates Management.
Here is what Diamond Hill Large Cap Fund has to say about Berkshire Hathaway Inc. (NYSE:BRK-A) in its Q1 2022 investor letter:
“Diversified holding company Berkshire Hathaway reported strong earnings during the quarter and benefited from continued share repurchases below intrinsic value. The company also announced significant deployments of excess cash during the quarter, including the acquisition of Alleghany and a large increase in its stake in Occidental Petroleum.”
You can also take a peek at 10 Stocks to Buy According to Carlson Capital and 10 Stocks to Buy According to Stephen DuBois’ Camber Capital Management
