Chou Investment Funds, managed by Francis Chou, represent a value-oriented approach to investing, often characterized by a concentrated portfolio, a long-term horizon, and a willingness to hold significant cash positions. The funds are known for their contrarian strategies, seeking out undervalued securities that are out of favor with the market. Francis Chou’s investment philosophy draws heavily from the teachings of Benjamin Graham and Warren Buffett. He prioritizes capital preservation and aims to generate above-average returns over the long run by purchasing securities at prices significantly below their intrinsic value. This margin of safety acts as a buffer against potential errors in valuation and market volatility. A key feature of Chou Investment Funds is the concentrated nature of their portfolios. Unlike many mutual funds that hold hundreds of different stocks, Chou typically invests in a relatively small number of companies, often less than 20. This allows him to deeply understand each business and to allocate capital to his highest conviction ideas. This approach, however, can also lead to higher volatility than a more diversified fund. Another hallmark of Chou’s strategy is a long-term investment horizon. He is not concerned with short-term market fluctuations and is willing to hold investments for years, even decades, if the underlying business continues to perform well. This patience allows the companies to compound their earnings and for the market to eventually recognize their true value. Chou Investment Funds are also known for their willingness to hold substantial cash positions when attractive investment opportunities are scarce. Rather than forcing capital into overpriced assets, Chou prefers to wait for better opportunities to arise. This can lead to periods of underperformance relative to the market during bull markets, but it also provides dry powder to deploy when market corrections occur. The funds typically invest across a wide range of industries and geographies, but they have historically favored companies with strong balance sheets, proven management teams, and defensible competitive advantages. Chou often seeks out companies undergoing temporary difficulties or facing negative sentiment, believing that these situations can create opportunities to purchase securities at bargain prices. Due to the contrarian nature of Chou’s investment approach, the funds may experience periods of significant underperformance, particularly when growth stocks are in favor or when the overall market is overvalued. However, Chou believes that his disciplined adherence to value investing principles will ultimately lead to superior long-term returns. Investors considering Chou Investment Funds should be aware of the potential for volatility and be prepared to remain patient through market cycles. It is an investment style best suited for those who share Chou’s long-term, value-oriented perspective.