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The Chou Funds 2007 Semi-Annual Report
Submitted by admin on Tue, 08/28/2007 - 00:42
Canadian Value Investor Francis Chou says "Despite the current turmoil in the marketplace we continue to have problems finding compelling bargains in common stocks. We are starting, however, to see some interesting developments. The prices of public debt securities of some companies have come down to levels that may provide returns similar to equities. These securities also come with the added safety feature of being senior to equities in the corporate capital structure."
"While the prices of public debt securities are starting to look cheap, they are not as cheap as they once were in the year 2000. The current yield to maturity (YTM) for some of these more attractively priced debt securities is approaching 12%, whereas in the year 2000 they were closer to 30%. Consider also that the bank debt (which is senior to public debt) appears to be disproportionately large relative to public debt when compared to the historical average. As such, the public debt may not be as safe, or have as much asset coverage as it has had in the past."
Read Chou Funds 2007 Semi-Annual.
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