mhdousa

Sanjeev, You make excellent points. The issue is that Mohnish has put himself out there. There's a reason that his meetings attract 100s of people, when probably less than half are actually invested with him, and he has about 500m in assets. He is as close to a "rock star" as it gets in this arena. He has written two books, one of which you can link to buy from Amazon directly from his website. He paid hundreds of thousands to have lunch with Buffett. This all screams, "Pay attention to me. I know what I'm doing." It's not like Charles Barkley complaining that NBA players shouldn't be role models. Mohnish is being paid to manage people's money. I have every reason to expect thoroughness and consistency of thought in how he does this. My concern is that his blowups (I'll give him a pass on SHLD, because a lot of people still believe in Lampert for good reasons, but Delta Financial and Compucredit seem entirely avoidable) and his adoption of checklists after the fact indicate that he was not, in fact, thorough or consistent. -M

I'll let someone else come up with the full details of the meeting, but I just thought I would my thoughts. I'm not invested with Pabrai, but have been strongly considering it, and really enjoyed reading the Dhandho Investor. This was my first Pabrai meeting. Overall, I wasn't impressed. He got hammered last year, which isn't news to anyone. What was news to me is that happened for someone who wrote a book with the mantra "Heads I win, tails I don't lose much." His answers to some very good questions were not great. Specifically, he was asked about his investment in Harvest National Resources, a Venezuelan company, and whether he was concerned about the risk of nationalization. He seemed to circle around the question. "Heads I win, tails I get nationalized" isn't that appealing of a situation. He described himself as "not a macroeconomist" but then mentioned some very macro reasons for his investments (the world is going to eat more, inflation is on the horizon, and one other reason I can't remember). He also had a slide about selling out of his investment in Fairfax and how that came at the right time as his decision to increase his positions to 20. It struck me as a lot of handwaving, especially when he discussed that the 18% of redemptions allowed him to get rid of the "riff-raff" in his portfolio. You have 10 stocks - what the hell are you doing with "riff-raff" in your portfolio? He spent much of his presentation discussing his use of checklists and the inspiration behind it. This all sounds wonderful. However, you are running a portfolio of 10 stocks with 500 million in AUM. In my opinion (I have never managed money professionally, so I may thinking too idealistically), when you're throwing $50m into a stock that represents 10% of your portfolio, how have you not done the equivalent of a checklist already? How have you not agonized over every single detail of this company before deciding to invest in it? I just feel like he got surprised badly last year and is scrambling. A year ago, he referred to BRK as his cash equivalent (ridiculous when your cash equivalent can drop 50%, which lessens your cash amount when you could use it most). Now he's put it into the "too difficult" pile?? And as oldye mentioned, what Buffett is doing isn't that out of the ordinary. He mentioned the plan to close at $1b in assets, and later said that the change to 20 holdings would be good because having 5% of his assets in a position would prevent him from having to file some of the paperwork that having 10% would require him to do. Again, handwaving. The solution to this isn't to diversify - it's too close well before you get to the point that your asset size reduces your investment universe. I know I'm being incredibly harsh on Mohnish. But I came away from this meeting incredibly disappointed in his investment process. Essentially, I worry that he's swimming naked. Most of the people on this board have MUCH more knowledge about the investment business than I do. Again, I have never professionally managed money. I know that it's a harsh and incredibly humbling business. So, please let me know if you think my criticisms are unfounded. One highlight of the evening (which won't be nearly as funny in written form): During dinner, Mohnish told the story of when he told Charlie Munger about Atul Gawande (the brilliant surgeon who wrote two excellent books and the essay "The Checklist"). Mohnish asked Gawande whether Munger had contacted him: Gawande: "He did. He said he really liked my books and what I was doing. Interestingly, a couple weeks after I talked to him I got, in the mail, a handwritten envelope from him. I opened it up and inside was a check addressed to me for $20,000. I called him up and said 'Mr. Munger, I got your envelope. Thank you for the check, but I can't accept this.'" Munger: "No, no, use it for something good." Gawande: "Sir, I'm a surgeon. I'm seeing patients all the time. I can't really just spend $20000 to do 'something good.'" Munger: "No, no, you're smart. You'll figure something out." Gawande: "Okay, if you really want me to do something with it, I can give it to the Harvard School of Public Health." Munger: "You fool! If I wanted to give it to the damn Harvard School of Public Health, I would've written a damn check to the Harvard School of Public Health." Gawande then decided to send it back. A week later, he opens his mail to find another envelope from Munger. Inside were two checks for $20000. One to Gawande, and one to the Harvard School of Public Health. -M

FWIW, Steven Markel has sold about 3700 shares (at ~324) in the last couple days. This is less than 2% of his total shares, so it probably means nothing.

Anyone have thoughts on MVC Capital (MVC), a business development corporation? It's trading at an almost 50% discount to its most recent NAV. In 3/09, it was at an almost 65% discount. It has very little debt and is giving off a nice 5-6% yield. As far as I can tell, the managing principal, Michael Tokarz, has an excellent reputation. Thanks. -M

anyone else think that was just a terrible article? i have no idea what was her point other than to say "I went to Omaha, met a few people, and took a couple notes that I'm throwing down on the page".

Read the letter and I continue to really like his thought process and humility. He makes big bets and is net short now, but he has great reasons for what he does.

Just curious as to why? If a good value investor can identify an undervalued position, isn't the corollary also true? I am intersted to hear what others have to say on this but to me being long always looks better on risk/reward basis as compared to being short specially when market has long term upward bias. You've effectively made my point. Successful shorting, as you've described, is often harder than making money going long. So, shouldn't that be a positive aspect of Lindmark, that he is able to effectively identify under- and overvalued securities and succesfully capitalize on this? In "Margin of Safety", Klarman makes the point that, far from being a negative thing, shorting actually contributes to market sanity by putting downward pressure on overvalued securities. I'm always surprised that more good investment managers, like Pabrai, don't actively short. Up until 2008, Lindmark didn't allow it in his fund, and then seems to have changed the charter when things got too frothy.

Just curious as to why? If a good value investor can identify an undervalued position, isn't the corollary also true?

Sanjeev, I appreciate the honesty and good thoughts about him, especially given the conflict of interest. -M

Has anyone here invested with Peter Lindmark? I got the name when I brought up the question of which investment partnerships were using the Buffett fee structure. I'm attaching his 2008 letter to partners. It's hard not to be impressed with his 60% gain last year, but what's more impressive to me is the way he articulates his investment ideas and goals. He throws in a little macro commentary as well, but, at the core, seems to remain a bottom-up investor. I'd welcome any thoughts anyone has after reading it. Thanks. -M

Hi - thanks for the very detailed thoughts. Any specific opportunities that you're aware of after the recent big run-up? Thanks.

Thanks for your honest thoughts. I looked through my past emails and realized I had sent an email to the Lion Fund about 8 or 9 months ago, but never received a response back. If anyone knows of any way to invest new money with them, I'd love to hear about it. Adding to the list of funds using the Buffett partnership fee structure, there is the recently launched 402 Fund by an old investment analyst of Buffett, Ian Jacobs. I'm not sure how excited to get about this fund and whether he's just piggybacking on the Buffett name. You had posted a little blurb about this fund a few months back on the Corner of Berkshire and Fairfax main page. Thanks again.

Hi Parsad, thanks for the thoughts. Of these funds that you mentioned (with the exception of yours), would you consider investing with any of them over Pabrai? Thanks again.

After some bad blowups (DFC) and a supposed change in his investment style towards less concentration, what are people's thoughts towards Pabrai and his funds now? He has reduced his minimum to 1m. Would you invest your money with him? I'm very impressed with his fee structure (as far as I know, the only fund still using the old Buffett structure). Thanks. This board has been incredibly helpful.

A month ago, there was a blog post on this board about a 402 Fund, being started by Ian Jacobs, who was an investment analyst for Berkshire. Other than the original press release: http://www.reuters.com/article/marketsNews/idUSN2149391820090122 , I can't find any info anywhere on this. Anyone have any further information or thoughts on whether or not this might be a worthy investment vehicle? Thanks. -M

Appreciate it. Did you listen to it? Any thoughts?

Barrons had a nice article on this company (L) this weekend. Has anyone looked into this conglomerate at all? Thoughts? Thanks in advance. -M