Pabrai Funds Up 112%+ YTD!

[Parsad]

PIF 2 - +112.5% YTD

PIF 3 - +118.6% YTD

PIF 4 - +113.0% YTD

 

All three funds are now beating the S&P500 TR by 3% or better since inception.  PIF 2 is beating it by over 17% annualized for the last ten years!  He's still below his high watermarks, but at least he's moved enormously in the right direction.  Assets under management are now back up to $460M, and Mohnish's stake is back up to $37M.  The 2010 AGM's have switched places:  California will be on September 11th, and Chicago will on September 25th next year.  Cheers!

 

 

[dual_bid]

Could you kindly granulate the results? (in terms of positions/yield)

[Parsad]

He didn't mention how many positions he has at this point.  Only his partners will know at year-end when they receive audited information and his annual letter.  Cheers!

[Munger_Disciple]

Parsad,

 

I heard that Pabrai was down 70% last year, so it implies that he needs a gain of over 200% to break-even when compared to Jan 2008 results (which is probably why he is still under the high water mark). You mentioned all his funds were up > 3% when compared to S&P 500. Is the 3% annualized or total? Also, how many years are his funds in business? Thanks in advance for your comments.

[dual_bid]

Only his partners will know at year-end

 

Can't one roughly granulate through 13Fs filings?

[bbmd]

bookmark this Ticker Spy site and you can roughly follow PIF investments day to day. The stocks are always a little out of date (from last quarter), but it's probably pretty close .

 

http://www.tickerspy.com/member.php?mid=-1173334&pid=-1&refer=1921Y2

[Parsad]

You mentioned all his funds were up > 3% when compared to S&P 500. Is the 3% annualized or total? Also, how many years are his funds in business? Thanks in advance for your comments.

 

Yes, even with the huge loss last year, and then the subsequent rise, all of his funds have at least a 3% annualized margin above the S&P500 TR since inception.  So if you invested from day one, you would have grown at a minimum of 3% better than the S&P500 TR when annualized.  In fact, I believe PIF2 has something like a 18% annualized differential since day one.

 

Can't one roughly granulate through 13Fs filings?

 

Yes, you can but I'm not about to do the work for anyone.  Cheers!

[dual_bid]

 

Can't one roughly granulate through 13Fs filings?

 

Yes, you can but I'm not about to do the work for anyone.  Cheers!

 

Don't get me wrong, I like and respect Mohnish. I just thought it would add some substance to your PR-like heading.

[Parsad]

Dual, how about you do the analysis yourself and report back to the board.  Would that not add substance to my PR-like heading? 

[wabuffo]

The Wilshire Equal-Weight 5000 index was up 15.8% in September and 36.0% in Q3.  This is an equal-weight index of ~7000 public stocks that gets re-weighted monthly IIRC -- so its an indicator of how the average stock is performing.  Since most stocks are small caps/microcaps/nanocaps -- I use it as a short-hand indicator of how one would do just throwing proverbial darts at the stock pages. (ie, the famous Forbes magazine dart-throwing monkeys from the late 60s).

 

http://www.wilshire.com/Indexes/calculator/

 

Year-to-date this index is up a whopping 83%.  From March thru Sept, the average stock as measured by this index is up 113.1%.  If you exclude the top 500 mkt cap stocks (via the Wilshire Equal Weight 4500 Index) -- you're looking at +120% from March to Sept 2009.

 

So anyone who basically went all in with a basket of 8-10 micro-caps during the early March lows is probably showing 90-130% y-t-d returns and is thinking they're a stock market genius when in reality they're just a dart-throwing monkey.  ;D

 

In reality, most small caps got crushed in the credit panic of late 2008 and thus were the ones mostly like to bounce back strongly once that credit crunch eased.  I think these results just show that most investors who panicked in late 2008 or late Feb/early March 2009 did exactly the wrong thing by getting out.  Those investors who stayed the course are now glad they did -- and any investors who were fortunate and wise enough to put money to work in the early part of this year are really glad they did!

 

wabuffo

[Guest kawikaho]

I pretty much agree with your assessment.  But, you had to have some guts to have been a dart throwing monkey earlier this year.

 

The Wilshire Equal-Weight 5000 index was up 15.8% in September and 36.0% in Q3.  This is an equal-weight index of ~7000 public stocks that gets re-weighted monthly IIRC -- so its an indicator of how the average stock is performing.  Since most stocks are small caps/microcaps/nanocaps -- I use it as a short-hand indicator of how one would do just throwing proverbial darts at the stock pages. (ie, the famous Forbes magazine dart-throwing monkeys from the late 60s).

 

http://www.wilshire.com/Indexes/calculator/

 

Year-to-date this index is up a whopping 83%.  From March thru Sept, the average stock as measured by this index is up 113.1%.  If you exclude the top 500 mkt cap stocks (via the Wilshire Equal Weight 4500 Index) -- you're looking at +120% from March to Sept 2009.

 

So anyone who basically went all in with a basket of 8-10 micro-caps during the early March lows is probably showing 90-130% y-t-d returns and is thinking they're a stock market genius when in reality they're just a dart-throwing monkey.   ;D

 

In reality, most small caps got crushed in the credit panic of late 2008 and thus were the ones mostly like to bounce back strongly once that credit crunch eased.  I think these results just show that most investors who panicked in late 2008 or late Feb/early March 2009 did exactly the wrong thing by getting out.  Those investors who stayed the course are now glad they did -- and any investors who were fortunate and wise enough to put money to work in the early part of this year are really glad they did!

 

wabuffo

[rranjan]

The Wilshire Equal-Weight 5000 index was up 15.8% in September and 36.0% in Q3.  This is an equal-weight index of ~7000 public stocks that gets re-weighted monthly IIRC -- so its an indicator of how the average stock is performing.  Since most stocks are small caps/microcaps/nanocaps -- I use it as a short-hand indicator of how one would do just throwing proverbial darts at the stock pages. (ie, the famous Forbes magazine dart-throwing monkeys from the late 60s).

 

http://www.wilshire.com/Indexes/calculator/

 

Year-to-date this index is up a whopping 83%.  From March thru Sept, the average stock as measured by this index is up 113.1%.  If you exclude the top 500 mkt cap stocks (via the Wilshire Equal Weight 4500 Index) -- you're looking at +120% from March to Sept 2009.

 

So anyone who basically went all in with a basket of 8-10 micro-caps during the early March lows is probably showing 90-130% y-t-d returns and is thinking they're a stock market genius when in reality they're just a dart-throwing monkey.   ;D

 

In reality, most small caps got crushed in the credit panic of late 2008 and thus were the ones mostly like to bounce back strongly once that credit crunch eased.  I think these results just show that most investors who panicked in late 2008 or late Feb/early March 2009 did exactly the wrong thing by getting out.  Those investors who stayed the course are now glad they did -- and any investors who were fortunate and wise enough to put money to work in the early part of this year are really glad they did!

 

wabuffo

 

For YTD performance, I completely agree with the assessment but if some dart-throwing monkey performs substantially better than average monkey over long duration then we have to see if dart is thrown little bit differently by specific monkey.

 

In case of Mohnish, I would say that over long term he will do better than average. I am not saying this due to his past performance rather I am deducing this based on his investment process. I firmly believe that if process is right result will follow sooner or later. It might not be 100% certain but odds are pretty good for getting good results with right process.

 

There was another thread about Sardar’s performance going forward and someone wanted to see his performance in non-restaurant business to decide if he is good jockey in different condition. I do think that its not bad way to look but if Jockey has done well by following a good process then chances of good future performance will be bright even in absence of long track record in different conditions. I also trust that good jockey will not keep picking fat horses for race :). I am not disputing that you can make good change after verifying the Jockey’s performance in different circumstances but change will be much smaller. 

 

I wasn’t trying to compare or defend anyone here. I was only trying to convey that I will make up my mind looking at the process used by any manager and not pay much attention to their recent performance.   

 

[Mungerville]

I know his average across all funds is better, but beating the index in $US terms by 3% annually means you are either breaking even or losing global purchasing power as the $US continues its decline.  Sequoia has these results for the last 10 years - sounds like Pabrai is doing better than that though across his funds.  Said otherwise, simply investing in $Cnd government bonds with staggered maturities would have trounced those Sequoia returns.

 

I don't mean to be negative.  This has been a very tough environment and I am glad Pabrai is up so much this year - he deserves it and will likely have much better absolute performance in the next decade while beating the index by at least the same amount.  He has character and experience, interest and intelligence - what else to you need?  

 

The lesson here is that sometimes, like this decade, macro matters.  I agree with Eveillard from First Eagle: you have to look for opportunities bottom-up but sometimes you have to watch the macro side as well - you can not just ignore it.  Hedging can be very valuable and many value investors are finding that out.  What looks like a P/E of 10 can become a P/E of 20 if earnings drop in half because revenues dropped 10% - so it wasn't value in the first place even though it looked like it.

[beerbaron]

Said otherwise, simply investing in $Cnd government bonds with staggered maturities would have trounced those Sequoia returns.

 

The question is it possible to do this apriori? One could have also said that investing in gold in 2000 would have trounced returns in many currencies. One shouldnt ignore that we are in a secular bear market. Historically these cycles have lasted for around 20 years since 1900. It all comes to probabilities. We are also in the midst of a change where the center of power is moving from the west to the east.

 

Most investors mistake the word probability with past experience. If you studied probability you should remember that to have a reliable sample data you need a sample large enough. If you take a secular market as you base unit then your sample is very (10 samples maybe) small which makes it an unreliable data.

 

You should take past experience for what it is... an historical past. It is by no means a measure of the future. Especially with a sample rate of that size.

 

You often hear comments in the economic media that state things like "September is historically a bear month". If you'd give that comment to a statistician he would tell you that September is no extraordinary months as it still a low standard deviation. Just like having 12 persons flipping coins 80 times, one is going to be a bigger loser then the others.

 

BeerBaron

[Mungerville]

Yes Shalab, it is if you are paying attention like Eveillard.