Links of Interest – August 27, 2010

Firm Makes Bold Bet on Falling Prices – – Fairfax Financial’s bet on deflation

Overestimating the Safety of Bonds – Bucks Blog – – Be cautious about investing while looking in the rear view mirror.

Must Read Mutual Fund Letters

On August 25, 2010, I posted an article entitled 13 Ideas to Improve your Search Strategy. In it, I recommended following the mutual fund letters of great investors as they are a rich source of investing ideas and wisdom. Today, I am posting letters from three of the best: Francis Chou of the Chou Funds, Steven Romick of the FPA Crescent Fund, and Marty Whitman of Third Avenue Value. Although Marty Whitman is generally well known among investors, Chou and Romick are two formidable investors who are not widely known or appreciated. Both have great long-term track records built on a process of disciplined value investing.

Chou has been part of Prem Watsa’s investment team at Fairfax Financial for over twenty-five years. He also runs the Chou Funds where in 2005 he was named the Canadian fund manager of the decade. Perhaps Romick is not well known because he has been overshadowed by Robert Rodriguez who is at the same firm, FPA Capital. Romick is a smart, disciplined investor with a formidable record who is worth following closely.

Another reason to follow these firms and their funds is that they also invest in bonds, including distressed debt. These disclosures are particularly useful because hedge funds do not typically disclose their positions in debt securities.

FPA Crescent Fund Letter to Shareholders – 2nd Quarter 2010

Chou Funds – Semi Annual Report 2010

Third Avenue funds – Third Quarter Report and Portfolio Management Commentary – July 31, 2010


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