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Cloning


AzCactus
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I am sure I am not the only one on this board who has seen/read Mohnish Pabrai speeches about cloning and its potential benefits. 

 

Whether part of your investment strategy includes cloning or not, I would be interested in seeing your top 5 13f's to clone.  I'll start

 

Pabrai (Dalal Street, LLC)

Meacham (Arlington Value)

Greenberg(Brave Warrior)

Ackman (Pershing Square)

Buffett/Combs/Weschler(Berkshire Hathaway)

 

I am really fascinated to hear about the list you have and also the qualities that the managers have in common (other than solid returns).  I am also aware that some people may follow 15-20, but there are only so many good ideas that can fit in portfolio of 10-15 stocks (my ideal size).

 

Thank You,

David

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KC---I agree.  If you look at those names the top holding accounts for more than 20% of the portfolio in every case.  That's a lot of conviction.  And basically I would say that all those names are up substantially more than their average % gain amongst their other holdings.

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I track the following:

 

Paulson & Co filings

Whitney Tilson via KASE Capital letters on ValueWalk

Doug Kass via Twitter

Jim Cramer via CNBC articles

 

If there is some crossover between what I own and those guys, I am probably wrong about my thesis.  I begin to doubt myself and find out why/how I am wrong.  Sometimes I will short those stocks I used to own.

 

I have a list of the good filers, but I like to keep those to myself....  ;D

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I track the following:

 

Paulson & Co filings

Whitney Tilson via KASE Capital letters on ValueWalk

Doug Kass via Twitter

Jim Cramer via CNBC articles

 

If there is some crossover between what I own and those guys, I am probably wrong about my thesis.  I begin to doubt myself and find out why/how I am wrong.  Sometimes I will short those stocks I used to own.

 

I have a list of the good filers, but I like to keep those to myself....  ;D

 

LOL!  For a split second, I was getting all ready to try and help you out by beginning to gently persuade you how horrible this list was, then my sarcasm meter went off, just in time to save me.

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I track the following:

 

Paulson & Co filings

Whitney Tilson via KASE Capital letters on ValueWalk

Doug Kass via Twitter

Jim Cramer via CNBC articles

 

If there is some crossover between what I own and those guys, I am probably wrong about my thesis.  I begin to doubt myself and find out why/how I am wrong.  Sometimes I will short those stocks I used to own.

 

I have a list of the good filers, but I like to keep those to myself....  ;D

 

Picasso, if Buffett can share his brilliant ideas I am sure you can too :)

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A few years ago I spent a good amount of time thinking of what should be the criterias for successful cloning. I came out with the following criterias:

 

  • Concentrated portfolio
  • Low turnover
  • Long history of outperformance
  • Value investor
  • History of ethical behaviour

 

Very few money managers fit the bill:

  • Buffett
  • Watsa
  • Chou
  • Berkowitz
  • Einhorn

 

To tell you guys the truth I don't think the strategy has produced above average returns. I attribute the poor performance to two reasons:

 

[*]In an up market you can never buy at the same price that the Guru has bought.

[*]You are always 45 days late

 

Overall I am seriously thinking of going back to a more active management of my portfolio. I could access much more companies that the big guys could not and that gave me a major hedge. Much better than what I can have right now.

 

BeerBaron

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A few years ago I spent a good amount of time thinking of what should be the criterias for successful cloning. I came out with the following criterias:

 

  • Concentrated portfolio
  • Low turnover
  • Long history of outperformance
  • Value investor
  • History of ethical behaviour

 

Very few money managers fit the bill:

  • Buffett
  • Watsa
  • Chou
  • Berkowitz
  • Einhorn

 

To tell you guys the truth I don't think the strategy has produced above average returns. I attribute the poor performance to two reasons:

 

[*]In an up market you can never buy at the same price that the Guru has bought.

[*]You are always 45 days late

 

Overall I am seriously thinking of going back to a more active management of my portfolio. I could access much more companies that the big guys could not and that gave me a major hedge. Much better than what I can have right now.

 

BeerBaron

 

Hi Beer,

 

I agree with the criteria you have laid out in terms of the qualities to look for in managers.  That having been said there was a study shown regarding investors results if they had just imitated Buffett for a 30 year period.  I would say that some of the managers mentioned above do fit that Bill especially Mecham and Pabrai.  The other thing I would mention is that even if the market is moving up it does not necessarily mean that the security purchased went up by a corresponding amount or at all.  Lastly, given the low turnover you mention being 45 days late is not a huge deal when viewed over a 3-5 year holding period.  Hope this helps. 

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I have been selectively coattailing (based on thesis i can understand and agree with) since jan 2012.  So far, for all the closed positions, i have gained 52% more than if i had invested in SPY. 

 

My criteria for choosing a manager is same as that of many folks here - concentrated portfolios, low turnover, business/value investor.  In fact, i found that many names drop after being bought by these managers, so if you are comfortable with the rationale, it is a better buying opportunity. 

 

Some manager coattailed include Einhorn, berkowitz, pabrai

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[*]In an up market you can never buy at the same price that the Guru has bought.

[*]You are always 45 days late

 

 

Sometimes that's a great thing. Take Chou. He bought Eurobank and Intralot for double what they were trading for just two weeks ago. He was either wrong or the security just got even cheaper. If you can then further identify a reason for the share price collapse outside actual business results (in Intralot's case it just got dragged down with the Greek stock index while it has 95% of revenue outside Greece), you are possibly sitting on a very attractive security.

Sure, maybe both were a mistake and maybe he sold out at a big loss. Time will tell.

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I look at 13Fs too. Who doesn't? But if you're filing a 13F, then you're managing at least $100 million and/or have a bunch of clients, which is unlike most people on this board (I think). Not having clients or managing a ton of money is an advantage to us and I think spending time cloning individual investors who don't suffer from those contraints, and who focus on small cap stocks is as good an idea, if not better.

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Hi Investor-man,

 

It goes without saying that everyone looks at 13f-s.  The main purpose of my post however was to hone in on a few specific 13f's that people find most align with their investment philosophy/mindset.  Additionally, I would agree there are some huge advantages to managing a smaller amount of money.

 

David

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Chou was once asked about why he owned Radioshack.  He mentioned that it was a basket bet along with other names.  It goes without saying that cloning their high concentration ideas, their 1-3% positions may not be the best to tag along. 

 

 

 

[*]In an up market you can never buy at the same price that the Guru has bought.

[*]You are always 45 days late

 

 

Sometimes that's a great thing. Take Chou. He bought Eurobank and Intralot for double what they were trading for just two weeks ago. He was either wrong or the security just got even cheaper. If you can then further identify a reason for the share price collapse outside actual business results (in Intralot's case it just got dragged down with the Greek stock index while it has 95% of revenue outside Greece), you are possibly sitting on a very attractive security.

Sure, maybe both were a mistake and maybe he sold out at a big loss. Time will tell.

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Chou was once asked about why he owned Radioshack.  He mentioned that it was a basket bet along with other names.  It goes without saying that cloning their high concentration ideas, their 1-3% positions may not be the best to tag along. 

 

This is the basis of my cloning. I follow a lot of 13-Fs but only look at positions that are >5%.

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I follow Jeffrey Ubben of Value Act and Murray Stahl of Horizon Kinetics. 

 

Ubben is a semi activist investor who takes very concentrated bets:

 

MSFT

VRX

MSI

ADBE

 

Value Act recently bought about 800M worth of Agrium which looks very interesting.

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WC Any specific names you would like to add to the conversation?

 

Munger and Icahn are two big names I haven't seen mentioned (though Munger's 13-F changes like every 3 years). Ubben and Stahl are both good mentions as well.

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