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Monday, November 19th, 2012
apparent mojo

On the front page of the “Business & Finance” section in this weekend’s print edition of the Wall Street Journal was this headline:  “How Chou Income Fund Got Its Mojo.”

Deep in the story is the news that the fund (CHOIX) has been “tops among North American bond funds so far this year, with a return of 28%.”

The article is top-heavy with Francis Chou’s (interesting) personal story and his history as a value investor in equities.  Eventually it gets around to the topic promised in the headline and says that the fund is mostly invested in junk bonds.

We never did find out how the fund got its mojo.  Or what happened the previous year, when it seems to have misplaced its mojo, as you can see in the chart above.

The other lines in the chart show HYG, the largest high yield ETF, and AGG, a good proxy for the broader bond market.  Chou Income Fund has lagged both since the beginning of 2011.

One other interesting fact appeared toward the end of the story.  The fund had just over $6 million in assets as of last week.  By this afternoon it undoubtedly got some more cash to invest from those that like to chase winners.

So, a miniscule fund, an arbitrary time frame that gives the impression of what appears to be mojo, and no real substance for the reader to consider.  The Journal ought to be able to do better than that.  (Chart:  Bloomberg terminal.)

talk about focus

John Hempton of Bronte Capital has delved into the odd situation of Focus Media Group (FMCN), which is supposedly going to be the largest private equity deal in China.  His analysis, his process, and his focus illuminate some key issues about the new era of equity research, as summarized in my latest posting on that topic.