Tuesday 19 March 2013

Dalal Street Q1/Q2 2012: Mohnish Pabrai

Dalal Street, Logo, imaginary

Mohnish Pabrai is a tech guy that started a successful company sold it for a lot money. Started a second company and failed badly. He then changed profession and started to make investments instead. He adopted the old partnership contract that Warren Buffett had with: No yearly fee. Every year when the profit is above 6% for those %-age above Mohnish gets 25%. Ex. Yearly profit (gain) of 10% that means that you get 9% and Mohnish gets 1% of your gain. It is a very reasonable deal and I understand that value investors with some cash in the luggage are knocking on his door.

Mr. Pabrai is working with very few stocks. He himself is a copycat and he admits to it. He observe several of the "big" guys and make a very good selection from what they have bought. I still have not... based on the stocks he owns figured out exactly all of the investors he follows. Warren is of course one of them... Since Pabrai has much fewer stocks he can trade much quicker and it is fare harder to follow him in a successful way.

Mohnish Pabrai once said something that I do not agree with but the principle is maybe not to bad: "If you have an IQ of 75 buy an index fond (~8% per year). If you have an IQ of 100 and want to do slightly better then buy Berkshire Hathaway (~12%) and if you have an IQ of 125 and want to leave the other two behind you then buy the same stocks as Berkshire Hathaway (~14%)"
I did not remember the quote fully so there might be some differences from what Mr. Pabrai really said. Still I hope that the point arrived.

Stocks Q2 2012

Bank of America Corporation
Capital Source Inc OUT
Chesapeake Energy Corp NEW
Citigroup Inc
General MTRS Co NEW
Goldman Sachs Group Inc
Horsehead HLDG Corp
Pinnacle Airl Corp OUT
Potash Corp Sask Inc OUT
Terex Corp NEW OUT

Stocks Q1 2012

Bank of America Corporation
Capital Source Inc
Citigroup Inc
Goldman Sachs Group Inc
Horsehead HLDG Corp
Pinnacle Airl Corp
Potash Corp Sask Inc
Terex Corp NEW

No comments: