New Pabrai Interview on Barron's

[augustabound]

We all know his portfolio from SEC filings, it contains stocks that every value investor and his mother is bullish on: BAC, C, GM, the only unusual name is ZINC.

Last I heard a few months ago, he only had about 40% of his portfolio in the U.S.

But I understand your point about following the herd here.

[alwaysinvert]

So, going by the general atmosphere in this thread and keeping in mind the regular pattern of when these kinds of threads turn this way (Berkowitz, Fairfax) I'd say now would be a pretty good time to, if any, invest in his fund. Or at least look more closely at his holdings.

[AzCactus]

We all know his portfolio from SEC filings, it contains stocks that every value investor and his mother is bullish on: BAC, C, GM, the only unusual name is ZINC.

Last I heard a few months ago, he only had about 40% of his portfolio in the U.S.

But I understand your point about following the herd here.

 

Augusta,

Can you please clarify the 40% of his portfolio in the US.  Based on last 13F the market value was $413 MM and if he has a $700 MM dollar fund per Barron's article that equates to more like 60%?

 

Thanks,

David

[Guest notorious546]

i thought that non usa stocks don't need to be disclosed? i'm guessing that the other poster had some information that we don't have.

[karthikpm]

Fiat ( a sizeable holding) was not disclosed earlier in 13Fs. They should now be disclosed at next 13f.  He has some India holdings in addition

[merkhet]

So, going by the general atmosphere in this thread and keeping in mind the regular pattern of when these kinds of threads turn this way (Berkowitz, Fairfax) I'd say now would be a pretty good time to, if any, invest in his fund. Or at least look more closely at his holdings.

 

I was just about to post the same message.

[augustabound]

We all know his portfolio from SEC filings, it contains stocks that every value investor and his mother is bullish on: BAC, C, GM, the only unusual name is ZINC.

Last I heard a few months ago, he only had about 40% of his portfolio in the U.S.

But I understand your point about following the herd here.

 

Augusta,

Can you please clarify the 40% of his portfolio in the US.  Based on last 13F the market value was $413 MM and if he has a $700 MM dollar fund per Barron's article that equates to more like 60%?

 

Thanks,

David

 

That's just based on my memory of previous threads whereby people asked about his 13F holdings not translating to the AUM he's known to have.

 

I was merely commenting on the fact that 40% (or 60%) if I have the percentages reversed, are unknown and aren't neccessarily in household names like BAC etc.

Fiat aside of course.  ;D  He's known to hold an Indian bank, no other North American investor holds that most likely.

 

Since he started his fund his methods have changed a bit every few years, tweaking his formula. I think he just sees a huge price discrepancy with BAC, C etc and is buying based on that. It has nothing to do with stocks or warrants that every fund manager or individual holds. It's price alone.

 

He still holds to his ideal that a stock must show him 2-3 times upside in 2-3 years for him to invest.

[augustabound]

So, going by the general atmosphere in this thread and keeping in mind the regular pattern of when these kinds of threads turn this way (Berkowitz, Fairfax) I'd say now would be a pretty good time to, if any, invest in his fund. Or at least look more closely at his holdings.

 

I was just about to post the same message.

 

Count me 3.  ;D

 

I was thinking that his 13f's don't seem that interesting anymore but then if I think that, so do other people and there will be fewer people cloning the cloner.

 

...............it's almost too easy.  ;)

[moody202]

 

And you have to look at it another way. We all know his portfolio from SEC filings, it contains stocks that every value investor and his mother is bullish on: BAC, C, GM, the only unusual name is ZINC.

 

Given that he's a self proclaimed cloner I wound't have expected to find anything different in his portfolio...would you?

[nkp007]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

[investor-man]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

+1

[AzCactus]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

 

I don't think anybody is trying to hate on Pabrai.  I have learned a lot from Pabrai as well and he seems like an incredible human being.  However, those things are independent of the performance cited in the article.  I hope he continues to do well and outperform--but hopefully by more than 1.5% over the next ten years. 

[Kraven]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

 

I don't think anybody is trying to hate on Pabrai.  I have learned a lot from Pabrai as well and he seems like an incredible human being.  However, those things are independent of the performance cited in the article.  I hope he continues to do well and outperform--but hopefully by more than 1.5% over the next ten years.

 

I've learned nothing from him and he seems like a pretty regular human being to me with good points and bad points, just like all of us.  Sometimes we all grow a mustache or do something we think looks good until our wife or a friend tells us it's ridiculous.  All gurus are guys sitting in an office (albeit a nice office) making their investment decisions the best they can.  Why anyone would attribute some kind of super power to them is beyond me.  I will say he was disingenuous in not revealing his performance by stating it's illegal to do so.  It is clearly not.  If he doesn't want to say it, fine, that's his right.  Then just say it's not his policy to do so.

[Guest]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

 

I don't think any of us hate him or even dislike him (speaking at least on my end). I actually like him. He's a solid investor and does a lot of good around the world. With that said, I am a bit surprised that his 10 year returns are around the 10% or so mark when I hear so much about the 25%+ since inception returns so often.

 

That leads me on of a few things:

 

1) the article is incorrect. His returns are better

2) As others pointed out, he has a few funds. Perhaps that 25% annualized return is based on that

3) His outperformance over the first 4-5 years was so incredible that it still generated the hefty long term numbers in spite of the solid, but not spectacular 10 year mark.

 

I've learned some things from him and I enjoy his presentations. However, the returns seem a bit different than what we all hear.

[AzCactus]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

 

I don't think any of us hate him or even dislike him (speaking at least on my end). I actually like him. He's a solid investor and does a lot of good around the world. With that said, I am a bit surprised that his 10 year returns are around the 10% or so mark when I hear so much about the 25%+ since inception returns so often.

 

To this end if his goal is to compound at 26% per annum as his presentations suggest the next years will have to be pretty amazing. 

 

That leads me on of a few things:

 

1) the article is incorrect. His returns are better

2) As others pointed out, he has a few funds. Perhaps that 25% annualized return is based on that

3) His outperformance over the first 4-5 years was so incredible that it still generated the hefty long term numbers in spite of the solid, but not spectacular 10 year mark.

 

I've learned some things from him and I enjoy his presentations. However, the returns seem a bit different than what we all hear.

[Avyalake]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

 

The thread reads unnecessarily uncharitable considering the frankness and his generous willingness to explain his methods. While it is hard for me to know if he averaged >20% over the decades( would be nice to see a buffet like yearly table in a letter) is it really hard to see that he averaged > 20% annualized in the last few years considering the prices he bought bac, gmwsb and fiat or even chk at?

 

Also it is the reporter saying that it is not allowed by law to disclose performance. Mohnish just calls this years perf irrelevant  why is it a red flag?

 

[OracleofCarolina]

Yep, definitely time to go all in with Pabrai! I love the guy and learn  or relearn something from all his

talks...He's a great guy in my view!

[augustabound]

While it is hard for me to know if he averaged >20% over the decades( would be nice to see a buffet like yearly table in a letter)

I've seen one of his letters that was posted to Scribd (it was later taken down as per Mohnish's request) and he does have a performance table for each fund.

This was a few years ago and I couldn't begin to remember his numbers.

 

Also it is the reporter saying that it is not allowed by law to disclose performance. Mohnish just calls this years perf irrelevant  why is it a red flag?

 

Speaking to his comment, he calls all short term irrelevant. I don't see that single comment as anything other than his usual M.O.

[Picasso]

I don't think anyone is saying he isn't a nice guy or does not have success with his stock picks.  There is just a lack of consistency here with his commentary versus reality. 

 

On one hand he can't discuss his picks, but then he wants to give stock tips to random people such as GM warrants or some other stock.  How is that helping anyone?  People on this board should know as well as anyone that telling someone to buy a stock doesn't work for many reasons.  Is Pabrai going to call them to sell when it's overvalued?  Or write them a letter to sell when he realizes his thesis was wrong?  Is he really 100% certain that it is going to produce a lot of profit for his followers?  I think there is another reason for Buffett not giving out stock tips.  It just doesn't turn out well for either party and there's no upside to it for the tip giver.

 

This is the equivalent of loving a small band for years and seeing them sellout to some large music label and watering down what made the band so great.  I think some of us on this board would like to see Pabrai continue doing what made his story so interesting.  But the story is changing and it isn't necessarily a bad thing to have some people call him out on it.

[randomep]

 

And you have to look at it another way. We all know his portfolio from SEC filings, it contains stocks that every value investor and his mother is bullish on: BAC, C, GM, the only unusual name is ZINC.

 

Given that he's a self proclaimed cloner I wound't have expected to find anything different in his portfolio...would you?

 

 

 

Actually I don't really pay too much to what he says because I see a lot of contradictions. I know he recommends cloning, but if you say that then how did he achieve his amazing returns circa 2000? It couldn't have been through cloning. So was he in a different phase of his investing journey? If so when did he change into a cloner?  And maybe we should discuss his pre-cloner results with his cloner results.

 

I really try hard to find what every great investor has to offer, but I cannot learn from Pabrai because he just seems to be all over the place.

 

[AzCactus]

 

And you have to look at it another way. We all know his portfolio from SEC filings, it contains stocks that every value investor and his mother is bullish on: BAC, C, GM, the only unusual name is ZINC.

 

Given that he's a self proclaimed cloner I wound't have expected to find anything different in his portfolio...would you?

 

Interestingly, on a year to date basis his worst performer appears to be Zinc which is the only position that appears to be completely "uncloned."

 

 

Actually I don't really pay too much to what he says because I see a lot of contradictions. I know he recommends cloning, but if you say that then how did he achieve his amazing returns circa 2000? It couldn't have been through cloning. So was he in a different phase of his investing journey? If so when did he change into a cloner?  And maybe we should discuss his pre-cloner results with his cloner results.

 

I really try hard to find what every great investor has to offer, but I cannot learn from Pabrai because he just seems to be all over the place.

[jrunner]

I have also found Pabrai's willingness to share quite helpful.

[oddballstocks]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

 

I don't think any of us hate him or even dislike him (speaking at least on my end). I actually like him. He's a solid investor and does a lot of good around the world. With that said, I am a bit surprised that his 10 year returns are around the 10% or so mark when I hear so much about the 25%+ since inception returns so often.

 

That leads me on of a few things:

 

1) the article is incorrect. His returns are better

2) As others pointed out, he has a few funds. Perhaps that 25% annualized return is based on that

3) His outperformance over the first 4-5 years was so incredible that it still generated the hefty long term numbers in spite of the solid, but not spectacular 10 year mark.

 

I've learned some things from him and I enjoy his presentations. However, the returns seem a bit different than what we all hear.

 

I believe most of(all?) of his returns come from his private fund in the previous decade.  I agree that there's a lot to learn, the guy is a brilliant businessman.  He sold an engineering company and has re-emerged as this "guru" of his own making.  A guy who was doing well with his own capital marketed his performance and then purchased a lunch with Buffett, the ultimate advertising. 

 

Asset management is probably one of the best businesses out there.  You contribute no capital of your own and you make money with other people's money.  Some of the money in his funds is his, but there is no regulatory requirement like a bank or insurance company.  In asset management you are rewarded for raising assets.  Larger asset base means more income.  If he would have stayed at say $10m and done 25% a year on his own money he'd have about $225m right now.  I believe his own wealth is below that.  But he preaches compounding, and this is crucial.  As his assets grow his fee stream will compound at such a high rate that his personal wealth will far surpass what could have been generated on his own.

 

So he's at $700m someone said.  He gets 25% of everything above 6%.  He's a cloner, so say market returns plus a few percent.  Market does 10%, he makes $28m a year on this fund.  At 10% he doubles every seven years, so when he's 57 he's managing $1.5b or so (market returns alone), that's $60m in income.  Another seven years and he's at $120m a year in income.  By the time he hits his 70s he'll be making $250m+ a year and growing.  At that rate he hit's his $1b goal in four years, and that's not counting the hundreds of millions he's made to that point.  You simply can't get to $1b managing your own money without some crazy outsized leveraged bets on something.

 

[alwaysinvert]

 

And you have to look at it another way. We all know his portfolio from SEC filings, it contains stocks that every value investor and his mother is bullish on: BAC, C, GM, the only unusual name is ZINC.

 

Given that he's a self proclaimed cloner I wound't have expected to find anything different in his portfolio...would you?

 

 

 

Actually I don't really pay too much to what he says because I see a lot of contradictions. I know he recommends cloning, but if you say that then how did he achieve his amazing returns circa 2000? It couldn't have been through cloning. So was he in a different phase of his investing journey? If so when did he change into a cloner?  And maybe we should discuss his pre-cloner results with his cloner results.

 

I really try hard to find what every great investor has to offer, but I cannot learn from Pabrai because he just seems to be all over the place.

I'm not sure if he had come up with the "concept" at that point (although Buffett and others practiced it heavily some 50-60 years ago under the name coattailing), but why couldn't he have? You don't have to clone gurus with billions under management. I have cloned a completely unknown close friend of mine on multiple occasions.

[merkhet]

By law, as a hedge fund manager, he is not allowed to publish or disclose numbers for noninvestors, including inquiring reporters, since that constitutes marketing the fund. According to BarclayH

 

Why do people think this isn't true? It actually is -- though I don't know where people got the idea that it's "illegal."

 

By law, if your funds were raised under a private placement, you're not allowed to generally solicit, and talking about your fund returns in an interview would count as a general solicitation.

 

It's not that it would be illegal. It's just that it would place his funds under increased regulation.