Musings by Mohnish Pabrai... |
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Mohnish Pabrai is the founder and Managing Partner of the Pabrai Investments Funds, the founder and CEO of Dhandho Funds, and the author of The Dhandho Investor and Mosaic: Perspectives on Investing.
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Interview for Graham & Doddsville Newsletter, Columbia Business School
10/16/2019
I enjoyed being interviewed for the Graham & Doddsville newsletter from the students of Columbia Business School. I discussed my journey that led to my starting Pabrai Funds, mistakes and learnings from the 2008 financial crisis and the importance of staying within one’s circle of competence.
The interview starts on Page 22:
https://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/files/Graham%26Doddsville_Issue37.pdf
Enjoy!
The interview starts on Page 22:
https://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/files/Graham%26Doddsville_Issue37.pdf
Enjoy!
MOI Global’s Meet-the-Author Summer Forum 2019 Interview
9/12/2019
I very much enjoyed talking to John Mihaljevic for MOI Global’s Meet-the-Author Summer Forum 2019 about my book, The Dhandho Investor. We discussed the Patels and applying their low cost operating business model to investing. We also discussed arbitrage, taking advantage of “offering gaps,” risk-free bets, the art of selling, diversification and the changes I would make to The Dhandho Investor now.
Enjoy.
https://www.youtube.com/watch?time_continue=106&v=OgsKhFzyX2U
If you prefer reading over listening, here is the transcript:
https://moiglobal.com/mohnish-pabrai-the-dhandho-investor-201907/
Enjoy.
https://www.youtube.com/watch?time_continue=106&v=OgsKhFzyX2U
If you prefer reading over listening, here is the transcript:
https://moiglobal.com/mohnish-pabrai-the-dhandho-investor-201907/
Lecture and Q&A with Students of Peking Univ. (Guanghua School of Mgmt.) – May 1, 2019
6/14/2019
I very much enjoyed giving my lecture “Great Businesses vs. Great Investments” to the students of Peking University's Guanghua School of Management in Irvine. We discussed my stock picking games with Guy Spier and other investors, my love of shamelessly cloning, and the ten commandments of investment management.
The presentation included a rich Q&A session on a diverse set of topics. Enjoy!
https://www.youtube.com/watch?v=Kax8XnBU1ik
The presentation included a rich Q&A session on a diverse set of topics. Enjoy!
https://www.youtube.com/watch?v=Kax8XnBU1ik
Trinity College Dublin Talk - February 21, 2019
5/24/19
I very much enjoyed being back in Ireland to give a talk to the Trinity Student Managed Fund at Trinity Business School, Trinity College in Dublin. We took a historical look at the performance of various global markets over time. We also had a wonderful Q&A during which I reflected on key lessons I've taken from Warren Buffett and Charlie Munger.
https://www.youtube.com/watch?v=_0XPurSI9cQ
Enjoy!
https://www.youtube.com/watch?v=_0XPurSI9cQ
Enjoy!
Update: The video inadvertently uses a wrong Nikkei chart at 18:46. Below is the correct chart:
An Ode to the Ten Commandments of Investment Management
5/9/2019
I received a wonderful note from an investor named Johnny Bonner who translated my Ten Commandments of Investment Management into verses that rhyme. I am sharing Johnny’s note here. Thank you Johnny!
Enjoy!
Enjoy!
| Johnny Bonner's ode to Ten Commandments Page 1.jpg |
| Johnny Bonner's ode to Ten Commandments Page 2.jpg |
The Investor’s Podcast
5/9/2019
I very much enjoyed returning to the Investor’s Podcast with Preston Pysh and Stig Brodersen. We dove into cloning, the difficulty of beating a broad-based index like the S&P 500, and my lessons from owning a property and casualty insurance company.
Enjoy!
https://www.theinvestorspodcast.com/episodes/tip241-value-investing-w-mohnish-pabrai/
Enjoy!
https://www.theinvestorspodcast.com/episodes/tip241-value-investing-w-mohnish-pabrai/
GuruFocus Podcast Interview
5/9/2019
I enjoyed speaking with Holly LaFon for the GuruFocus podcast. We discussed the market conditions in 1999 when I started my investment funds and investment opportunities in the U.S., India and other markets. I also answered a few questions from GuruFocus readers.
Enjoy!
https://www.gurufocus.com/podcast.php (Episode 12)
If you prefer reading over listening, here is the transcript:
https://www.gurufocus.com/news/837804/transcript-mohnish-pabrai-interview-with-gurufocus--finding-value-in-india-and-the-us
Enjoy!
https://www.gurufocus.com/podcast.php (Episode 12)
If you prefer reading over listening, here is the transcript:
https://www.gurufocus.com/news/837804/transcript-mohnish-pabrai-interview-with-gurufocus--finding-value-in-india-and-the-us
Q&A session with Dakshana Scholars at Dakshana Valley, Dec. 26, 2018
5/9/2019
I very much enjoyed my Q&A session with the class of 2019 Dakshana scholars at Dakshana Valley on Dec. 26, 2018. I discussed my past failures (like Gandhigiri.org) before Dakshana Foundation, how to fight corruption and how Adam Smith’s ‘invisible hand’ works.
Enjoy!
https://www.youtube.com/watch?v=BUolYZTqiiI&feature=youtu.be
Enjoy!
https://www.youtube.com/watch?v=BUolYZTqiiI&feature=youtu.be
Q&A session with Dakshana Scholars at JNV Kottayam, Dec. 24, 2018
5/9/2019
It was a pleasure to have my annual Christmas Eve Q&A session with the class of 2019 Dakshana scholars at JNV Kottayam, Kerala on Dec. 24, 2018. I talked about how to start a business and why Dakshana Foundation chose IIT-JEE preparation over primary education.
Enjoy!
https://www.youtube.com/watch?v=jRcLBGHsBpw
Enjoy!
https://www.youtube.com/watch?v=jRcLBGHsBpw
The New 2019–2020 Uber Cannibals
3/29/2019
In late December 2016, I co-wrote an article on Forbes.com that introduced the "Uber Cannibals," a 5-stock investing strategy that invests in businesses aggressively buying back their own stock. This is a "set it and forget it for one year" strategy that rebalances every April when 5 companies are selected for the portfolio for the upcoming year.
We are now ready for the April 2019 picks.
Recap of 2018 Uber Cannibals:
As a recap, in my 3/31/17 blog post, we met Ms. Sonia Patel, who had embarked on her Uber Cannibals investing journey with $100,000 from her IRA account at Interactive Brokers. Sonia invested in the first 5 Uber Cannibals on 1/3/17, and then rebalanced her portfolio annually in April. The 2018 - 2019 Uber Cannibals were:
As of 3/29/19, Sonia's $100k was worth $136,656 (after trading costs), up 36.7%. If Sonia had instead invested in the S&P 500 over that period, she would be up 32.4% and her portfolio would be worth approx. $4k less, or $132,389.
Please note, Uber Cannibals performance includes trading costs and also assumes that stocks are bought at the high price of the day and sold at low price of the day, whereas S&P 500 and Small Dogs of the Dow performance does not include trading costs and assumes that stocks are bought at last close.
We are now ready for the April 2019 picks.
Recap of 2018 Uber Cannibals:
As a recap, in my 3/31/17 blog post, we met Ms. Sonia Patel, who had embarked on her Uber Cannibals investing journey with $100,000 from her IRA account at Interactive Brokers. Sonia invested in the first 5 Uber Cannibals on 1/3/17, and then rebalanced her portfolio annually in April. The 2018 - 2019 Uber Cannibals were:
- Sleep Number Corp. (SNBR)
- Corning Inc. (GLW)
- PulteGroup (PHM)
- Discover Financial Services (DFS)
- Lear Corp. (LEA)
As of 3/29/19, Sonia's $100k was worth $136,656 (after trading costs), up 36.7%. If Sonia had instead invested in the S&P 500 over that period, she would be up 32.4% and her portfolio would be worth approx. $4k less, or $132,389.
Please note, Uber Cannibals performance includes trading costs and also assumes that stocks are bought at the high price of the day and sold at low price of the day, whereas S&P 500 and Small Dogs of the Dow performance does not include trading costs and assumes that stocks are bought at last close.
|
Last 12 Months |
Since 1/3/17 |
 Value of $100K invested
on 1/3/17 |
|
|
Uber Cannibals |
4.1% |
36.7% |
$136,656 |
|
S&P 500 |
9.5% |
32.4% |
$132,389 |
|
Small Dogs of the Dow |
19.4% |
28.3% |
$128,288 |
Corning, PulteGroup, Discover and Lear paid dividends totaling $1,950. Per our rules, Sonia reinvested those dividends back into the same businesses.
Below is the 1 year return of the 2018-2019 Uber Cannibals:
|
Company |
1 year return |
|
Sleep Number Corp. |
33.7% |
|
Corning Inc. |
21.6% |
|
PulteGroup |
-3.8% |
|
Discover Financial Services |
1.0% |
|
Lear Corp. |
-25.8% |
The Uber Cannibals strategy makes sense if you intend to follow it for at least a decade or two (or longer). So we shouldn't fixate too much on short term performance. But the Ubers are doing quite well! I am happy to see that Sonia is doing quite well so far.
The New Uber Cannibals:
For 2019 - 2020, our algorithms selected the following five Uber Cannibals:
Sleep Number Corp. (for the second time in a row) and Corning Inc. will continue to be in the portfolio for yet another year. But we have three new kids on the block.
If you invested in the Uber Cannibals in April 2018, then leave Sleep Number Corp and Corning untouched, and sell PulteGroup, Discover and Lear Corp. Then invest the proceeds equally among the three new kids: Asbury Automotive, Quanta Services, and Allison Transmission Holdings.
If you invested in the Uber Cannibals in April 2018 in a taxable account, try to sell the winner (currently Discover Financial Services) after holding it for at least 366 days and the losers (PulteGroup and Lear Corp) after no more than 364 days.
If you are a new investor to the Uber Cannibals, you can just equal weight the five stocks (i.e., invest the same amount of money in each of these five) and keep that portfolio until April 2020, when I'll provide the 2020 - 2021 portfolio on www.ChaiWithPabrai.com. Happy Cannibal Investing!
The five-stock Uber Cannibals strategy can be combined with the five-stock Shameless Cloning and Spinoffs strategies into the 15-stock Free Lunch Portfolio. While the Uber Cannibals rebalance in April, the Shameless Cloning and Spinoffs rebalance in December. You can find the 2019 picks for Shameless Cloning and Spinoffs in my post from December 2018.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
The New Uber Cannibals:
For 2019 - 2020, our algorithms selected the following five Uber Cannibals:
- Sleep Number Corp. (SNBR)
- Corning Inc. (GLW)
- Asbury Automotive Group Inc. (ABG)
- Quanta Services Inc. (PWR)
- Allison Transmission Holdings Inc. (ALSN)
Sleep Number Corp. (for the second time in a row) and Corning Inc. will continue to be in the portfolio for yet another year. But we have three new kids on the block.
If you invested in the Uber Cannibals in April 2018, then leave Sleep Number Corp and Corning untouched, and sell PulteGroup, Discover and Lear Corp. Then invest the proceeds equally among the three new kids: Asbury Automotive, Quanta Services, and Allison Transmission Holdings.
If you invested in the Uber Cannibals in April 2018 in a taxable account, try to sell the winner (currently Discover Financial Services) after holding it for at least 366 days and the losers (PulteGroup and Lear Corp) after no more than 364 days.
If you are a new investor to the Uber Cannibals, you can just equal weight the five stocks (i.e., invest the same amount of money in each of these five) and keep that portfolio until April 2020, when I'll provide the 2020 - 2021 portfolio on www.ChaiWithPabrai.com. Happy Cannibal Investing!
The five-stock Uber Cannibals strategy can be combined with the five-stock Shameless Cloning and Spinoffs strategies into the 15-stock Free Lunch Portfolio. While the Uber Cannibals rebalance in April, the Shameless Cloning and Spinoffs rebalance in December. You can find the 2019 picks for Shameless Cloning and Spinoffs in my post from December 2018.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
2019 Free Lunch Portfolio
12/19/2018
In December 2017, I co-authored an article in Forbes about The “Free Lunch” Portfolio, which combines the power of Uber Cannibals, Shameless Cloning and Spinoffs. As a recap, our algorithms selected these 15 companies for 2018:
Uber Cannibals
Shameless Cloning
Spinoffs
The Free Lunch portfolio was down 17% in 2018, vs. -2.9% for the S&P 500. Our backtests show that the Free Lunch Portfolio outperforms the S&P 500 over a 17+ year period (17.1% annualized for the Free Lunch vs. 5.4% for the S&P 500), but it does not do so every year. In fact, the Free Lunch Portfolio underperformed in 6 out of the 17 years we tested.
Keep the faith and do not overreact to short-term negative performance. This is a long-term “set it and forget it” strategy. We don’t recommend putting more than 10-20% of your nest egg into this strategy. And we think it only makes sense if you follow it for a decade, or two, or longer. Ideally, you would use this strategy in your IRA, so you wouldn’t have to worry about realized gains.
The New 2019 Free Lunch Portfolio
We are now ready to rebalance the Free Lunch Portfolio for 2019. Here are the constituents for the upcoming year:
Uber Cannibals
Shameless Cloning
Spinoffs
If you are a new investor to the Free Lunch Portfolio, you can just equal weight these 15 stocks (i.e., invest the same amount of money in each of these 15) in early January 2019.
If you invested in the Free Lunch Portfolio at the beginning of 2018 and rebalanced the Uber Cannibals in April 2018 when we published the New Uber Cannibals, then you would sell all of the 2018 Spinoffs and Shameless Cloning companies except for Micron, and invest the proceeds equally among the 9 new kids. You can do this in early January 2019 (or now if you’re investing in a taxable account and you’d like to capture losses for 2018).
As a reminder, the Uber Cannibals get published for rebalancing every April, while the Spinoffs and Shameless Cloning ideas rebalance in January. When we publish the new Uber Cannibals in April 2019, sell the Ubers that are no longer on the new list and invest the proceeds equally across the new Uber Cannibal picks. Then in January 2020, you’ll rebalance the Spinoffs and Shameless Cloning ideas.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Uber Cannibals
- Lowe’s Companies (LOW)
- NVR (NVR)
- Sleep Number (SNBR)
- The Hackett Group (HCKT)
- Willis Lease Finance (WLFC)
Shameless Cloning
- Alibaba Group Holding (BABA)
- British American Tobacco (BTI)
- Fiat Chrysler Automobiles (FCAU)
- General Motors (GM)
- Micron Technology (MU)
Spinoffs
- Adient (ADNT)
- CSRA (CSRA)
- GCP Applied Technologies (GCP)
- Lamb Weston Holdings (LW)
- Synchrony Financial (SYF)
The Free Lunch portfolio was down 17% in 2018, vs. -2.9% for the S&P 500. Our backtests show that the Free Lunch Portfolio outperforms the S&P 500 over a 17+ year period (17.1% annualized for the Free Lunch vs. 5.4% for the S&P 500), but it does not do so every year. In fact, the Free Lunch Portfolio underperformed in 6 out of the 17 years we tested.
Keep the faith and do not overreact to short-term negative performance. This is a long-term “set it and forget it” strategy. We don’t recommend putting more than 10-20% of your nest egg into this strategy. And we think it only makes sense if you follow it for a decade, or two, or longer. Ideally, you would use this strategy in your IRA, so you wouldn’t have to worry about realized gains.
The New 2019 Free Lunch Portfolio
We are now ready to rebalance the Free Lunch Portfolio for 2019. Here are the constituents for the upcoming year:
Uber Cannibals
- Corning Inc. (GLW)
- PulteGroup (PHM)
- Sleep Number (SNBR)
- Discover Financial Services (DFS)
- Lear Corp. (LEA)
Shameless Cloning
- Charter Communications (CHTR) – From TCI Fund Management
- Citi Group (C) – From ValueAct Capital
- Micron Technology (MU) – From Appaloosa Management
- Alphabet (GOOGL) – From Sequoia Fund
- Berkshire Hathaway (BRK.B) – From Markel Insurance
Spinoffs
- Hamilton Beach Brands Holding (HBB)
- DXC Technology (DXC)
- Varex Imaging Corp. (VREX)
- Hilton Grand Vacations (HGV)
- Delphi Technologies (DLPH)
If you are a new investor to the Free Lunch Portfolio, you can just equal weight these 15 stocks (i.e., invest the same amount of money in each of these 15) in early January 2019.
If you invested in the Free Lunch Portfolio at the beginning of 2018 and rebalanced the Uber Cannibals in April 2018 when we published the New Uber Cannibals, then you would sell all of the 2018 Spinoffs and Shameless Cloning companies except for Micron, and invest the proceeds equally among the 9 new kids. You can do this in early January 2019 (or now if you’re investing in a taxable account and you’d like to capture losses for 2018).
As a reminder, the Uber Cannibals get published for rebalancing every April, while the Spinoffs and Shameless Cloning ideas rebalance in January. When we publish the new Uber Cannibals in April 2019, sell the Ubers that are no longer on the new list and invest the proceeds equally across the new Uber Cannibal picks. Then in January 2020, you’ll rebalance the Spinoffs and Shameless Cloning ideas.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
ET Now Interview with Guy Spier over Chai and Vada Pav
11/21/2018
I enjoyed being interviewed by ET Now at their office in Mumbai with Guy Spier. We discussed the recent decline in the Indian stock market and housing finance companies, and the problems associated with investing in levered financial institutions. We also discussed why it is important to concentrate on the value of the business and not its stock price. And we did this over some delicious Chai and Vada Pav!
Enjoy!
https://www.youtube.com/watch?time_continue=17&v=OTvzQR9KKT8
Enjoy!
https://www.youtube.com/watch?time_continue=17&v=OTvzQR9KKT8
Q&A session with Dakshana Scholars at Dakshana Valley, Oct. 21, 2018
11/13/2018
I very much enjoyed this joint Q&A session that Kamal Khetan, Managing Director of Sunteck Realty Ltd., and I had with Dakshana Scholars at Dakshana Valley on Oct. 21, 2018. We discussed the motivations behind establishing the Dakshana Foundation and the importance of learning from your failures in life.
The Q&A session is in Hindi. Enjoy!
https://www.youtube.com/watch?v=NrDLcZHkf3I&t=6s
The Q&A session is in Hindi. Enjoy!
https://www.youtube.com/watch?v=NrDLcZHkf3I&t=6s
Keynote Speech at Annual Morningstar India Conference - Oct. 24, 2018
11/13/2018
I enjoyed giving this talk on “The Ten Commandments of Investment Management” at the 8th Morningstar Investment Conference in Mumbai. The talk is followed by a Q&A session where we discussed my takeaways from lunch with Warren Buffett, a fair management fee structure and the Dakshana foundation.
https://www.youtube.com/watch?v=qqbbCZzBZbA&feature=youtu.be
https://www.youtube.com/watch?v=qqbbCZzBZbA&feature=youtu.be
Interview with CNBC – TV18 on Investing Opportunities in India
10/26/2018
I very much enjoyed my chat with Nigel D’Souza on CNBC – TV18. We discussed why it’s important for an investor to simply focus on the businesses and drown out other noise in the market. We also covered my approach to investing in Mumbai real estate and other opportunities in India. Enjoy!
It is a two-part interview:
Part1: https://www.youtube.com/watch?v=rP5Wow-Xpgw
Part2: https://www.youtube.com/watch?v=Ke6GCMixqMc
It is a two-part interview:
Part1: https://www.youtube.com/watch?v=rP5Wow-Xpgw
Part2: https://www.youtube.com/watch?v=Ke6GCMixqMc
The Ten Commandments of Investment Management
10/12/2018
I very much enjoyed giving my talk on “The Ten Commandments of Investment Management” to Prof. Arvind Navaratnam’s class on Value Investing at the Carroll School of Management (Boston College). It was my 8th year in a row! The talk is followed by a Q&A session where we discussed investing in India, a fair management fee structure, 2008 financial crisis and Sergio Marchionne.
https://youtu.be/9tGjXPhnp-s
Enjoy!
Here is an Economic Times article on the talk:
https://economictimes.indiatimes.com/markets/stocks/news/pabrais-10-commandments-for-becoming-a-successful-investor/articleshow/67123851.cms
https://youtu.be/9tGjXPhnp-s
Enjoy!
Here is an Economic Times article on the talk:
https://economictimes.indiatimes.com/markets/stocks/news/pabrais-10-commandments-for-becoming-a-successful-investor/articleshow/67123851.cms
Economic Times Interview: Volatility is the Friend of a Long-term Investor
8/28/2018
I very much enjoyed being interviewed by The Economic Times on the sidelines of the Motilal Oswal Annual Global Investor Conference in Mumbai. We discussed a range of topics including P/E of 1 stocks, cloning and my investment checklist.
Enjoy!
https://economictimes.indiatimes.com/markets/expert-view/volatility-is-the-friend-of-a-long-term-investor-mohnish-pabrai/articleshow/65570377.cms
Enjoy!
https://economictimes.indiatimes.com/markets/expert-view/volatility-is-the-friend-of-a-long-term-investor-mohnish-pabrai/articleshow/65570377.cms
The Trust vs. Truth Talk at JNV Bundi (Rajasthan) on June 2, 2018
7/24/2018
I recently gave the “Trust vs. Truth” talk to the Class of 2019 Dakshana Scholars at JNV Bundi (Rajasthan, India) on June 2, 2018. These scholars will take the IIT entrance exams in 2019. The majority are likely to be accepted by the IITs.
We explored the variables Buffett believes are key to success in life (integrity, intelligence, and energy), Marcus Aurelius’ Stoicism and the importance of adversity, and the motivations behind establishing the Dakshana Foundation.
Enjoy!
https://www.youtube.com/watch?v=j72nRsSPIi0&feature=youtu.be
We explored the variables Buffett believes are key to success in life (integrity, intelligence, and energy), Marcus Aurelius’ Stoicism and the importance of adversity, and the motivations behind establishing the Dakshana Foundation.
Enjoy!
https://www.youtube.com/watch?v=j72nRsSPIi0&feature=youtu.be
Interview for the Leadership show
6/27/2018
I very much enjoyed speaking to Rohilesh Singh, founder and CEO of Populis, for the Leadership Show. We talked about the importance of giving back (in time and resources), the Dakshana Foundation, how to invest in profitable businesses and the importance of checklists in investing. Enjoy!
http://www.populis.com.au/single-post/2018/06/21/CLEVER-INVESTOR-AND-GIVER-Rohilesh-X-Mohnish-Pabrai
https://www.youtube.com/watch?v=m53ukJMuO78
http://www.populis.com.au/single-post/2018/06/21/CLEVER-INVESTOR-AND-GIVER-Rohilesh-X-Mohnish-Pabrai
https://www.youtube.com/watch?v=m53ukJMuO78
Interview with SumZero in Forbes – Advice for Value Investors
6/26/2018
I very much enjoyed my chat with Kevin Harris from SumZero published on Forbes.com. We covered a range of topics including checklists, a fair management fee structure, and the importance of doing your own investment research.
Enjoy!
https://www.forbes.com/sites/kevinharris/2018/06/25/mohnish-pabrais-advice-for-value-investors/#60ce25d122ed
Enjoy!
https://www.forbes.com/sites/kevinharris/2018/06/25/mohnish-pabrais-advice-for-value-investors/#60ce25d122ed
Your deepest desire is your destiny (The Upanishads)
6/14/2018
I very much enjoyed my Q&A session with the Class of 2019 Dakshana Scholars at JNV Silvassa (Union territory of Dadra & Nagar Haveli, India) on February 25, 2018. This all-female batch of Dakshana scholars will take their medical entrance exams in 2019. The majority are likely to be accepted by the best medical schools. Their questions covered a broad range of topics related to my childhood, compounding, lessons from my failures and motivation behind our establishing the Dakshana Foundation.
Enjoy!
https://www.youtube.com/watch?v=jjjI5O_uZUA
Enjoy!
https://www.youtube.com/watch?v=jjjI5O_uZUA
Chai With Pabrai: ET Now Interview
6/4/2018
I very much enjoyed being interviewed by ET Now for a "Chai With Pabrai" segment. We discussed a wide range of topics including my views on stocks in India, circle of competence and Dhandho investing (low risk high uncertainty) in India.
Enjoy!
https://www.youtube.com/watch?v=T7Qr1Ze8vNA
Enjoy!
https://www.youtube.com/watch?v=T7Qr1Ze8vNA
Lecture at Columbia Business School: “Where have we been and where are we headed?”
5/11/2018
I recently gave a talk to Prof. Bruce Greenwald’s "Legends of Value Investing" class at Columbia Business School entitled “Where have we been and where are we headed?” We discussed historical performance periods in the capital markets and lessons we can glean for our future.
Enjoy!
It is best to watch the video using the Firefox browser. It may take a few minutes to load. You may want to turn up the volume for better audio. You can toggle between the slides and the video by clicking on the box in the bottom right of your screen:
https://echo360.org/media/80cb039a-ded1-4395-a673-6b548ab27ea4/public
Enjoy!
It is best to watch the video using the Firefox browser. It may take a few minutes to load. You may want to turn up the volume for better audio. You can toggle between the slides and the video by clicking on the box in the bottom right of your screen:
https://echo360.org/media/80cb039a-ded1-4395-a673-6b548ab27ea4/public
ET Now Interview at Berkshire Hathaway Annual Meeting
5/8/2017
I very much enjoyed being interviewed by ET Now at the Berkshire Hathaway Annual Meeting with Guy Spier and Raamdeo Agrawal. We discussed our experiences attending Berkshire meetings over the years (it was my 21st meeting!) and the lessons that are reinforced every year on our annual pilgrimage to Omaha.
Enjoy!
https://www.youtube.com/watch?v=7FspBQlgu88&app=desktop
Enjoy!
https://www.youtube.com/watch?v=7FspBQlgu88&app=desktop
Talk With Class of 2019 Dakshana Scholars – Dec. 24, 2017
4/30/2018
. I very much enjoyed my Q&A session with the class of 2019 Dakshana scholars at JNV Kottayam, Kerala, India on Dec. 24, 2017. These scholars will take the IIT entrance exams in 2019. The majority are likely to be accepted by the IITs. Their questions covered a broad range of topics related to compounding, as well as the reasons behind our establishing the Dakshana Foundation.
Enjoy!
https://www.youtube.com/watch?v=jqX9AgwgwTY&feature=youtu.be
I suggest the following books to start one's journey into finance and investing:
1) 1958-1970 Buffett Partnership Letters (these are available at various places on the web, including http://pragcap.com/warren-buffett-partnership-letters). Cost: Zero
2) The Warren Buffett letters to Berkshire Hathaway Shareholder. These are posted at www.berkshirehathaway.com. Cost: Zero
3) 1995 published biography called “Buffett: The Making of an American Capitalist” by Roger Lowenstein.
4) 2009 published book “Snowball: Warren Buffett and the Business of Life” by Alice Schroeder.
5) “Poor Charlie’s Almanack” by Peter Kaufman.
6) “The Dhandho Investor” by Mohnish Pabrai.
7) Berkshire Hathaway Letters to Shareholders - 1965-2014
8) Berkshire Hathaway Letters to Shareholders - 1965-2017. Only available on Kindle but cost is just $2.99.
Enjoy!
https://www.youtube.com/watch?v=jqX9AgwgwTY&feature=youtu.be
I suggest the following books to start one's journey into finance and investing:
1) 1958-1970 Buffett Partnership Letters (these are available at various places on the web, including http://pragcap.com/warren-buffett-partnership-letters). Cost: Zero
2) The Warren Buffett letters to Berkshire Hathaway Shareholder. These are posted at www.berkshirehathaway.com. Cost: Zero
3) 1995 published biography called “Buffett: The Making of an American Capitalist” by Roger Lowenstein.
4) 2009 published book “Snowball: Warren Buffett and the Business of Life” by Alice Schroeder.
5) “Poor Charlie’s Almanack” by Peter Kaufman.
6) “The Dhandho Investor” by Mohnish Pabrai.
7) Berkshire Hathaway Letters to Shareholders - 1965-2014
8) Berkshire Hathaway Letters to Shareholders - 1965-2017. Only available on Kindle but cost is just $2.99.
Patel's Business Secrets - Video On the Dhandho Investor
3/30/2018
I enjoyed this video that summarized the Patels’ business practices from "The Dhandho Investor." The video explores how the Patels got into the motel business in the U.S, their low cost operating model and high return on equity. Heads I win, tails I don't lose much! (Note: the video is in hindi).
https://www.youtube.com/watch?v=INSuLnQJvuY&feature=youtu.be&a
Enjoy!
https://www.youtube.com/watch?v=INSuLnQJvuY&feature=youtu.be&a
Enjoy!
The New 2018–2019 Uber Cannibals
3/29/2018
In late December 2016, I co-wrote an article on Forbes.com that introduced the "Uber Cannibals," a five-stock investing strategy that invests in businesses aggressively buying back their own stock. This is a "set it and forget it for one year" strategy that rebalances every April when 5 companies are selected for the portfolio for the upcoming year.
The Uber Cannibals draft season is now upon us, and it's time to pick our 2018 - 2019 team.
As a recap, in my 3/31/17 blog post, we met Ms. Sonia Patel, who had embarked on her Uber Cannibals investing journey with $100,000 from her IRA account at Interactive Brokers. Sonia invested in the first 5 Uber Cannibals on 1/3/17, and then rebalanced her portfolio in April 2017 with the 2017 - 2018 Uber Cannibals, which were:
As of 3/29/18, Sonia's $100k was worth $130,646 (after trading costs), up 30.6%. If Sonia had instead invested in the S&P 500 over that period, she would be up 20.9% and her portfolio would be worth approx. $10k less, or $120,907.
The Uber Cannibals draft season is now upon us, and it's time to pick our 2018 - 2019 team.
As a recap, in my 3/31/17 blog post, we met Ms. Sonia Patel, who had embarked on her Uber Cannibals investing journey with $100,000 from her IRA account at Interactive Brokers. Sonia invested in the first 5 Uber Cannibals on 1/3/17, and then rebalanced her portfolio in April 2017 with the 2017 - 2018 Uber Cannibals, which were:
- Lowe's (LOW)
- NVR (NVR)
- The Hackett Group (HCKT)
- Select Comfort (SCSS)
- Willis Lease Finance (WLFC)
As of 3/29/18, Sonia's $100k was worth $130,646 (after trading costs), up 30.6%. If Sonia had instead invested in the S&P 500 over that period, she would be up 20.9% and her portfolio would be worth approx. $10k less, or $120,907.
|
Last 12 Months |
Since 1/3/17 |
 Value of $100K invested
on 1/3/17 |
|
|
Uber Cannibals |
22.1% |
30.6% |
$130,646 |
|
S&P 500 |
14.0% |
20.9% |
$120,907 |
|
Small Dogs of the Dow |
2.7% |
7.5% |
$107,484 |
Lowe's and Hackett Group paid dividends totaling $744. Per our rules, Sonia reinvested those dividends back into the same businesses.
The Ubers are doing quite well! This strategy makes sense if you intend to follow it for at least a decade or two (or longer). So we shouldn't fixate too much on short term performance. But I am happy to see that Sonia is off to a great start. Keep at it Sonia!
The New Uber Cannibals:
For 2018 - 2019, our algorithms selected the following five Uber Cannibals:
- Sleep Number Corp. (SNBR)
- Corning Inc. (GLW)
- PulteGroup (PHM)
- Discover Financial Services (DFS)
- Lear Corp. (LEA)
Sleep Number Corp. (which recently changed its name from Select Comfort) will continue to be in the portfolio for another year. But we have four new kids on the block.
If you invested in the Uber Cannibals in April 2017, then leave Sleep Number Corp untouched, and sell Lowe's, NVR, Hackett, and Willis Lease. Then invest the proceeds equally among the four new kids: Corning, PulteGroup, Discover Financial Services, and Lear.
Below is the 1 year return of the 2017-2018 Uber Cannibals through 3/29/18:
|
Company |
1 year return |
|
Lowe's Companies |
6.7% |
|
NVR |
32.9% |
|
The Hackett Group |
-17.6% |
|
Sleep Number Corp |
41.8% |
|
Willis Lease Finance |
53.4% |
If you invested in the Uber Cannibals in April 2017 in a taxable account, try to sell the winners (currently Lowe's, NVR and Willis Lease) after holding them for at least 366 days and the losers (Hackett) after no more than 364 days.
If you are a new investor to the Uber Cannibals, you can just equal weight the five stocks (i.e., invest the same amount of money in each of these five) and keep that portfolio until April 2019, when I'll provide the 2019 - 2020 portfolio on www.ChaiWithPabrai.com. Happy Cannibal Investing!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
If you are a new investor to the Uber Cannibals, you can just equal weight the five stocks (i.e., invest the same amount of money in each of these five) and keep that portfolio until April 2019, when I'll provide the 2019 - 2020 portfolio on www.ChaiWithPabrai.com. Happy Cannibal Investing!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
“Compounding is the 8th Wonder of the World” – Lecture & Q&A at Peking University – Dec. 22, 2017
3/27/2018
I very much enjoyed visiting the campus of Peking University's Guanghua School of Management with Guy Spier and Monsoon Pabrai to give my second lecture entitled “Compounding is the 8th Wonder of the World.”
The presentation was followed by a rich Q&A session on a diverse range of topics. The lecture covered my favorite subjects – compounding, Rule of 72 and Warren Buffett. Enjoy!
https://www.youtube.com/watch?v=z74NaYRyMJo&t=6564s
The presentation was followed by a rich Q&A session on a diverse range of topics. The lecture covered my favorite subjects – compounding, Rule of 72 and Warren Buffett. Enjoy!
https://www.youtube.com/watch?v=z74NaYRyMJo&t=6564s
"Compounding is the 8th Wonder of the World” Lecture & Q&A at Dakshana - Dec. 26, 2017
2/16/2018
I very much enjoyed my lecture and Q&A entitled “Compounding is the 8th Wonder of the World” with Dakshana Scholars at the Dakshana Valley Campus on Dec. 26, 2017. The questions covered a broad range of topics related to compounding, including philanthropy, patient investing and choosing equities over other asset classes.
https://www.youtube.com/watch?v=VvpfjxLiO9g&feature=youtu.be
Enjoy!
https://www.youtube.com/watch?v=VvpfjxLiO9g&feature=youtu.be
Enjoy!
Shout-out by Charlie Munger at Daily Journal Annual Meeting – Feb 14, 2018
2/15/2018
It was truly an honor to receive a shout-out by Charlie Munger during the Daily Journal Annual meeting in Los Angeles on February 14, 2018. Charlie was discussing the fair investment management fee structure of the Buffett Partnerships of the 1950s, which I have enthusiastically cloned for 19 years.
https://www.youtube.com/watch?v=lfRWWxo3Y4Y
https://www.youtube.com/watch?v=lfRWWxo3Y4Y
Enjoy!
Q&A session with Dakshana Scholars at JNV Bengaluru Urban, Oct. 26, 2017
1/18/2018
I very much enjoyed this joint Q&A session that Motilal Oswal founder Raamdeo Agrawal and I had with Dakshana Scholars at JNV Bengaluru Urban on Oct. 26, 2017. We discussed compounding, being a learning machine and the importance of learning from your failures in investing.
Enjoy!
https://www.youtube.com/watch?v=_4WRC5W92k8
Enjoy!
https://www.youtube.com/watch?v=_4WRC5W92k8
Interview with Bloomberg Quint on investing in India
1/4/2018
I very much enjoyed my chat with Niraj Shah of Bloomberg Quint for Alpha Moguls. We discussed the importance of sticking to one’s circle of competence, the advantage of auction-driven stock market investing and the prospects of investing in the real estate sector in Mumbai.
Enjoy!
https://www.youtube.com/watch?v=XBY6aLezago&app=desktop
Enjoy!
https://www.youtube.com/watch?v=XBY6aLezago&app=desktop
Interview with MOI Global on Philanthropy
12/19/2017
I very much enjoyed speaking with Shai Dardashti of MOI Global for their Best Ideas 2018 session. We discussed philanthropy, the Dakshana Foundation and the influence that Buffett had on my founding Dakshana.
Here is the link to the recording:
https://www.youtube.com/watch?v=S6fUDLa1Dq0
If you prefer to read, here is the transcript of the interview:
https://moiglobal.com/mohnish-pabrai-philanthropy/
Enjoy!
Here is the link to the recording:
https://www.youtube.com/watch?v=S6fUDLa1Dq0
If you prefer to read, here is the transcript of the interview:
https://moiglobal.com/mohnish-pabrai-philanthropy/
Enjoy!
My 7th Annual Talk at Boston College
I very much enjoyed my discussion with Prof. Arvind Navaratnam’s class on Value Investing at the Carroll School of Management (Boston College). It was my seventh year in a row!
The talk covers the magic of compounding, cloning Buffett, the zero fee structure and moats in the investment business.
Enjoy!
https://www.youtube.com/watch?v=_1aGen3q2_g&feature=youtu.be
The talk covers the magic of compounding, cloning Buffett, the zero fee structure and moats in the investment business.
Enjoy!
https://www.youtube.com/watch?v=_1aGen3q2_g&feature=youtu.be
The ‘Free Lunch’ Portfolio
12/15/2017
I co-authored an article in Forbes about The “Free Lunch” Portfolio, which combines the power of Uber Cannibals, Shameless Cloning and Spinoffs. The Free Lunch Portfolio is a 15-stock, 12-month “set it and forget it” approach that beats the pants off the S&P 500 with lower volatility than its individual 5-stock sub-strategies.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/12/15/the-free-lunch-15-stock-portfolio/#1706edc76b38
Here are the 2018 constituents for The Free Lunch Portfolio:
Uber Cannibals
Shameless Cloning
Spinoffs
Investing in The Free Lunch Portfolio is simple. Invest equally across the 15 companies. When we publish the new Uber Cannibals in April, sell the Ubers that are no longer on the new list and invest the proceeds equally across the new Uber Cannibal picks. In January, 2019, when we publish the updated Shameless Cloning and Spinoffs, sell the companies that do not make the New Year’s picks and invest the proceeds equally in the new kids on the block across the two strategies combined.
I co-wrote the article with Fahad Missmar, CFO of Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/12/15/the-free-lunch-15-stock-portfolio/#1706edc76b38
Here are the 2018 constituents for The Free Lunch Portfolio:
Uber Cannibals
- Lowe’s Companies (LOW)
- NVR (NVR)
- Sleep Number (SNBR)
- The Hackett Group (HCKT)
- Willis Lease Finance (WLFC)
Shameless Cloning
- Alibaba Group Holding (BABA)
- British American Tobacco (BTI)
- Fiat Chrysler Automobiles (FCAU)
- General Motors (GM)
- Micron Technology (MU)
Spinoffs
- Adient (ADNT)
- CSRA (CSRA)
- GCP Applied Technologies (GCP)
- Lamb Weston Holdings (LW)
- Synchrony Financial (SYF)
Investing in The Free Lunch Portfolio is simple. Invest equally across the 15 companies. When we publish the new Uber Cannibals in April, sell the Ubers that are no longer on the new list and invest the proceeds equally across the new Uber Cannibal picks. In January, 2019, when we publish the updated Shameless Cloning and Spinoffs, sell the companies that do not make the New Year’s picks and invest the proceeds equally in the new kids on the block across the two strategies combined.
I co-wrote the article with Fahad Missmar, CFO of Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Spin Gold From Spinoffs: A Portfolio Of 5 Castoffs Trounces The S&P 500
11/21/2017
I co-wrote an article in Forbes on a 5-stock investment strategy focused on spin-offs, or companies that have recently spun off from their parents. The Spinoff Portfolio is a “set it and forget it for a year” strategy that selects five young spinoffs on January 1st of each year. The full strategy rules are laid out at the end of the Forbes article.
For 2018, our algorithm has selected these 5 spinoffs:
Investing in The Spinoff Portfolio is simple. Just buy the 2018 constituents in early January, putting 20% of the pie in each of the five names. I’d suggest not putting more than 10%-20% of your net worth in this strategy. Like the Uber Cannibals and Shameless Cloning Portfolio, we set it and forget it (for a year). I will publish The Spinoff Portfolio for a particular year on my blog by January 1st each year. This strategy only makes sense if you intend to follow it for at least a decade or longer. The ideal home for this strategy is your IRA. That way, there are no realized gains to worry about.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/11/21/spin-gold-from-spinoffs-a-portfolio-of-5-castoffs-trounces-the-sp-500/#25e3db5b3e44
I co-wrote the article with Jaya Bharath Velicherla, a talented quant at Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
For 2018, our algorithm has selected these 5 spinoffs:
- CSRA
- Synchrony Financial
- GCP Applied Technologies
- Adient Plc
- Lamb Weston Holdings
Investing in The Spinoff Portfolio is simple. Just buy the 2018 constituents in early January, putting 20% of the pie in each of the five names. I’d suggest not putting more than 10%-20% of your net worth in this strategy. Like the Uber Cannibals and Shameless Cloning Portfolio, we set it and forget it (for a year). I will publish The Spinoff Portfolio for a particular year on my blog by January 1st each year. This strategy only makes sense if you intend to follow it for at least a decade or longer. The ideal home for this strategy is your IRA. That way, there are no realized gains to worry about.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/11/21/spin-gold-from-spinoffs-a-portfolio-of-5-castoffs-trounces-the-sp-500/#25e3db5b3e44
I co-wrote the article with Jaya Bharath Velicherla, a talented quant at Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
ET NOW Interview on Compounding
10/18/2017
I celebrated Diwali this year with the viewers of ET Now discussing my favorite topics: compounding and the Rule of 72. We also discussed my thoughts on a few investment ideas in India, as well as my aversion to IPOs.
Here are the links to the interview:
Part 1: https://www.youtube.com/watch?v=VEWKHbuRPCo&feature=youtu.be
Part 2: https://www.youtube.com/watch?v=rZQSXX8vrhM
You may also enjoy an article ET Now published about the interview here:
https://economictimes.indiatimes.com/markets/expert-view/of-margin-of-safety-compounding-and-why-investors-can-avoid-ipos-mohnish-pabrai/articleshow/61148962.cms
https://economictimes.indiatimes.com/markets/expert-view/follow-this-mantra-never-ever-invest-in-any-ipo-mohnish-pabrai/articleshow/61064733.cms
And this article by Financial Express Online that covered the interview here:
http://www.financialexpress.com/market/not-investing-at-all-is-still-better-than-investing-in-ipos-mohnish-pabrai/893304/
Enjoy!
Here are the links to the interview:
Part 1: https://www.youtube.com/watch?v=VEWKHbuRPCo&feature=youtu.be
Part 2: https://www.youtube.com/watch?v=rZQSXX8vrhM
You may also enjoy an article ET Now published about the interview here:
https://economictimes.indiatimes.com/markets/expert-view/of-margin-of-safety-compounding-and-why-investors-can-avoid-ipos-mohnish-pabrai/articleshow/61148962.cms
https://economictimes.indiatimes.com/markets/expert-view/follow-this-mantra-never-ever-invest-in-any-ipo-mohnish-pabrai/articleshow/61064733.cms
And this article by Financial Express Online that covered the interview here:
http://www.financialexpress.com/market/not-investing-at-all-is-still-better-than-investing-in-ipos-mohnish-pabrai/893304/
Enjoy!
Few Bets. Big Bets. Infrequent Bets
07/13/2017
I thoroughly enjoyed going back to the University of California, Irvine to give my 2nd annual UCI lecture entitled, “Few Bets. Big Bets. Infrequent Bets.”
I discussed five decisions by Warren Buffett and Charlie Munger made over a 20-year period (1968 – 1988) that moved the needle for Berkshire. I also delved into the intense difficulties that Charlie Munger faced along the way. No pain, no gain.
The presentation was followed by a rich Q&A on a diverse range of topics. Enjoy!
https://www.youtube.com/watch?v=bLjoL5zhBxA
I discussed five decisions by Warren Buffett and Charlie Munger made over a 20-year period (1968 – 1988) that moved the needle for Berkshire. I also delved into the intense difficulties that Charlie Munger faced along the way. No pain, no gain.
The presentation was followed by a rich Q&A on a diverse range of topics. Enjoy!
https://www.youtube.com/watch?v=bLjoL5zhBxA
Intensive Stock Research Can Be Injurious to Your Financial Health
06/23/2017
I very much enjoyed being back in the Googleplex to give my talk "Intensive Stock Research Can Be Injurious to Your Financial Health." My talk covered the impact of commitment and consistency biases on one’s ability to pick stocks. People tend to love the stocks they spend the most time on, and that can be quite harmful to their financial health. There are a few hacks that I’ve found useful to overcome the powerful effects of these biases, and I covered them in the talk as well.
Here is the link to the video:
https://www.youtube.com/watch?v=kNAuELYN5X4
Enjoy!
Here is the link to the video:
https://www.youtube.com/watch?v=kNAuELYN5X4
Enjoy!
Great Investors Podcast series – The Steve Pomeranz Show
06/17/2017
I very much enjoyed speaking again with Steve Pomeranz for his “Great Investors” podcast series.
The talk discusses the fundamental traits of a value investor and why it is important to focus on individual companies and not the whole market. I also talk about the investing environment today and how it is similar to the period I started Pabrai funds in 1999. We also discuss Warren Buffett’s comments on Amazon and Google during the Berkshire shareholders’ meeting and if the large-cap tech stocks are overpriced.
It is a two-part podcast. The podcast and the transcript can be accessed at:
Part1: http://www.stevepomeranz.com/mohnish-pabrai/
Part2: http://www.stevepomeranz.com/mohnish-pabrai-2/
Enjoy!
The talk discusses the fundamental traits of a value investor and why it is important to focus on individual companies and not the whole market. I also talk about the investing environment today and how it is similar to the period I started Pabrai funds in 1999. We also discuss Warren Buffett’s comments on Amazon and Google during the Berkshire shareholders’ meeting and if the large-cap tech stocks are overpriced.
It is a two-part podcast. The podcast and the transcript can be accessed at:
Part1: http://www.stevepomeranz.com/mohnish-pabrai/
Part2: http://www.stevepomeranz.com/mohnish-pabrai-2/
Enjoy!
My two cents on Seritage Growth Properties – Barron’s
04/22/2017
David Englander wrote an interesting piece in Barron’s about Seritage Growth Properties this past week.
Seritage has been part of Warren Buffett’s portfolio since 2015. I was interviewed for the article and I shared some comments on the future of Seritage and the potential impact of a Sears bankruptcy on Seritage.
http://www.barrons.com/articles/lamperts-seritage-strategy-could-lead-to-long-term-gains-1492836691
If the above link asks you to log in and if you’re not a Barron’s subscriber, search for the title on google and click on the Barron’s link from there, that should give you access to the full article.
Enjoy!
Seritage has been part of Warren Buffett’s portfolio since 2015. I was interviewed for the article and I shared some comments on the future of Seritage and the potential impact of a Sears bankruptcy on Seritage.
http://www.barrons.com/articles/lamperts-seritage-strategy-could-lead-to-long-term-gains-1492836691
If the above link asks you to log in and if you’re not a Barron’s subscriber, search for the title on google and click on the Barron’s link from there, that should give you access to the full article.
Enjoy!
New Stock Picks For The Uber Cannibals Investing Strategy
04/06/2017
On December 22, 2016, I co-wrote an article in Forbes, "Move Over Small Dogs of The Dow, Here Come The Uber Cannibals" about an investment strategy called "The Uber Cannibals." with quant analyst Yingzhuo Zhao.
The progress report for 2017 and the updated Uber Cannibals portfolio for 2017-2018 is now on Forbes.com : https://www.forbes.com/sites/janetnovack/2017/04/06/new-stock-picks-for-the-uber-cannibals-investing-strategy/#60abf57542a6
Enjoy!
The progress report for 2017 and the updated Uber Cannibals portfolio for 2017-2018 is now on Forbes.com : https://www.forbes.com/sites/janetnovack/2017/04/06/new-stock-picks-for-the-uber-cannibals-investing-strategy/#60abf57542a6
Enjoy!
The New 2017–2018 Uber Cannibals
3/31/2017
Pay close attention to the cannibals – the businesses that are eating themselves by buying back their stock. - Charlie Munger |
I co-wrote an article with quant analyst Yingzhuo Zhao that ran in Forbes.com (December 22, 2016), entitled “Move Over Small Dogs of The Dow, Here Come The Uber Cannibals.” In it, we discussed the “Uber Cannibals” five stock portfolio, which selects five Uber Cannibal stocks in March/April of every year. We are now ready for the March/April 2017 picks.
As a recap, our algorithms selected these five cannibals for 2016-2017:
To keep it simple, I’m assuming that folks bought these stocks at the beginning of 2017. Thus, the Uber Cannibals track record starts from 1/3/2017. Let’s assume that on 1/3/2017, an investor, Ms. Sonia Patel, invested $100,000 from her IRA account at Interactive Brokers in the Uber Cannibals strategy, and equally weighted the five stocks. Her portfolio would have looked like the portfolio in the table below assuming that she bought all stocks at the highest prices they traded at that day (we ain’t givin’ Sonia no breaks!). She would have paid $5.90 in commissions assuming she’s chosen the “Fixed Pricing Structure” at Interactive Brokers.
As a recap, our algorithms selected these five cannibals for 2016-2017:
- AutoZone (AZO)
- Magellan Health (MGLN)
- Lowe’s Companies (LOW)
- NVR (NVR)
- Marriott International (MAR)
To keep it simple, I’m assuming that folks bought these stocks at the beginning of 2017. Thus, the Uber Cannibals track record starts from 1/3/2017. Let’s assume that on 1/3/2017, an investor, Ms. Sonia Patel, invested $100,000 from her IRA account at Interactive Brokers in the Uber Cannibals strategy, and equally weighted the five stocks. Her portfolio would have looked like the portfolio in the table below assuming that she bought all stocks at the highest prices they traded at that day (we ain’t givin’ Sonia no breaks!). She would have paid $5.90 in commissions assuming she’s chosen the “Fixed Pricing Structure” at Interactive Brokers.
|
# of shares |
1/3/17 Qty |
|
AutoZone |
25 |
|
Magellan Health |
262 |
|
Lowe's |
279 |
|
NVR |
12 |
|
Marriott Int’l |
238 |
|
Cash |
$0.17 |
Lowe’s and Marriott paid dividends totaling to about $169 in Q1 2017. Per our rules, Sonia reinvested these dividends back into the same businesses. The performance of the Uber Cannibals strategy compared with the Small Dogs of the Dow and the S&P 500 is shown below.
|
Q1 2017
|
||
|
|
Performance |
Value of the original $100K |
|
The Uber Cannibals |
7.0% |
$106,979 |
|
S&P 500 |
6.1% |
$106,066 |
|
Small Dogs of the Dow |
4.7% |
$104,692 |
There is not much to say about the above numbers. Three months is too short a period to draw any conclusions, but we are doing well so far. As a reminder, in our backtests, between 1992 and 2016, the strategy returned an annualized 15.5% versus the S&P 500’s annualized return of 9.2%.
The Uber Cannibals have a quirk. We use year-end financials to pick the next set of Ubers for the coming years. And those aren’t available till late-March from our data providers. So, if one follows the Uber Cannibals strategy, one needs to tweak the portfolio annually during early April.
The New Kids on the Block
For the 2017-2018 period, our algorithms selected the following five Uber Cannibals:
Two of the original Uber Cannibals, Lowe’s and NVR will continue to be in Sonia’s portfolio for another year. And we have three new kids on the block.
The Forbes article discussed how NVR had bought back 75% of shares outstanding in the last two decades. Lowe’s is following in NVR and AutoZone’s footprints. Over the last thirteen years, Lowe’s has reduced its share count by a stunning 45%. Lowe’s share count has dropped by 30% in just the last five years. Like Home Depot, Lowe’s has an entrenched position in the home improvement superstore category. Not a business that’s easy for Amazon to disrupt. As home building gets back to historical norms of over a million new homes being built every year, Lowe’s has natural tailwinds as far out as the eye can see.
If you are a new investor to the Uber Cannibals, you can just equal weight these five stocks (i.e., invest the same amount of money in each of these five) and keep that portfolio until April 2018, when I’ll provide the 2018-19 portfolio on www.ChaiWithPabrai.com. If you invested in the Uber Cannibals at the beginning of the year like Sonia, then you would leave Lowe’s and NVR untouched, sell the other three and invest the proceeds equally among the three new kids. Then just set it and forget it for another year. Happy Cannibal Investing!
The Uber Cannibals have a quirk. We use year-end financials to pick the next set of Ubers for the coming years. And those aren’t available till late-March from our data providers. So, if one follows the Uber Cannibals strategy, one needs to tweak the portfolio annually during early April.
The New Kids on the Block
For the 2017-2018 period, our algorithms selected the following five Uber Cannibals:
- Lowe’s (LOW)
- NVR (NVR)
- The Hackett Group (HCKT)
- Select Comfort (SCSS)
- Willis Lease Finance (WLFC)
Two of the original Uber Cannibals, Lowe’s and NVR will continue to be in Sonia’s portfolio for another year. And we have three new kids on the block.
The Forbes article discussed how NVR had bought back 75% of shares outstanding in the last two decades. Lowe’s is following in NVR and AutoZone’s footprints. Over the last thirteen years, Lowe’s has reduced its share count by a stunning 45%. Lowe’s share count has dropped by 30% in just the last five years. Like Home Depot, Lowe’s has an entrenched position in the home improvement superstore category. Not a business that’s easy for Amazon to disrupt. As home building gets back to historical norms of over a million new homes being built every year, Lowe’s has natural tailwinds as far out as the eye can see.
If you are a new investor to the Uber Cannibals, you can just equal weight these five stocks (i.e., invest the same amount of money in each of these five) and keep that portfolio until April 2018, when I’ll provide the 2018-19 portfolio on www.ChaiWithPabrai.com. If you invested in the Uber Cannibals at the beginning of the year like Sonia, then you would leave Lowe’s and NVR untouched, sell the other three and invest the proceeds equally among the three new kids. Then just set it and forget it for another year. Happy Cannibal Investing!
Interview with The Industry Show
03/20/2017
I very much enjoyed my fun conversation with Nitin Bajaj for The Industry Show. The interview was streamed live on Facebook, so it was great to answer some of the viewers’ questions live.
We discussed my childhood in India and the journey that led to my starting Pabrai Funds. We also reviewed the first investment I made for Pabrai Funds and some more recent investments, like Southwest Airlines.
Enjoy!
https://www.youtube.com/watch?v=i0uQmqm6vEo
We discussed my childhood in India and the journey that led to my starting Pabrai Funds. We also reviewed the first investment I made for Pabrai Funds and some more recent investments, like Southwest Airlines.
Enjoy!
https://www.youtube.com/watch?v=i0uQmqm6vEo
5 questions from Benzinga interview
03/04/2017
Spencer Israel did a great job of putting together a few salient points from my conversation with Benzinga’s founder and CEO, Jason Raznick in this quick read:
https://www.benzinga.com/general/hedge-funds/17/03/9115480/5-questions-with-legendary-investor-mohnish-pabrai
Enjoy!
https://www.benzinga.com/general/hedge-funds/17/03/9115480/5-questions-with-legendary-investor-mohnish-pabrai
Enjoy!
Interview with Benzinga about the Auto Industry
03/03/2017
I very much enjoyed my conversation on Benzinga’s PreMarket Prep show with Benzinga’s founder and CEO, Jason Raznick, and editor and producer, Spencer Israel.
We discussed my views on auto stocks and the favorable dynamics of the American auto industry today. We also chatted about the potential impact of self-driving vehicles on the industry in general.
Here is the link to the recording:
https://soundcloud.com/bztv/a-conversation-with-legendary-investor-mohnish-pabrai
If you prefer to read, feel free to have a look at these two articles which summarize our conversation:
https://www.benzinga.com/general/hedge-funds/17/03/9114261/why-this-buffett-disciple-put-more-than-half-his-portfolio-in-stoc
https://www.benzinga.com/general/hedge-funds/17/03/9114779/when-will-we-see-fully-autonomous-vehicles-this-famous-hedge-fund-
Enjoy!
We discussed my views on auto stocks and the favorable dynamics of the American auto industry today. We also chatted about the potential impact of self-driving vehicles on the industry in general.
Here is the link to the recording:
https://soundcloud.com/bztv/a-conversation-with-legendary-investor-mohnish-pabrai
If you prefer to read, feel free to have a look at these two articles which summarize our conversation:
https://www.benzinga.com/general/hedge-funds/17/03/9114261/why-this-buffett-disciple-put-more-than-half-his-portfolio-in-stoc
https://www.benzinga.com/general/hedge-funds/17/03/9114779/when-will-we-see-fully-autonomous-vehicles-this-famous-hedge-fund-
Enjoy!
Beyond Buffett: How To Build Wealth Copying 9 Other Value Stock Pickers
02/22/2017
I co-wrote this article in Forbes on an investment strategy called the “Shamelessly Cloned Portfolio.”
The shameless portfolio comprises of five of the highest conviction ideas of 9 value managers whom we shamelessly clone. Like the Small Dogs of the Dow and Uber Cannibals, we set it and forget it. I will publish the list of the top Shameless Cloned Ideas for a particular year on my blog on January 1 each year.
For 2017, even though it’ll be a partial year, one can buy the 2017 picks anytime. After that, rebalancing should occur right after January 1.
The Shameless Portfolio for 2017 contains:
We’ve laid out all our algorithm rules below.
One can begin testing this strategy with a small portion of one’s networth and do it through a great broker like Interactive Brokers with commissions under $3/trade for small quantities. We hope you’ll join our merry band of shameless cloners.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/02/22/beyond-buffett-how-to-build-wealth-copying-9-other-value-stock-pickers/#7645cf00eaf9
I co-wrote the article with Fei Li, a talented quant at Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Appendix: Shameless Cloning Portfolio Rules
Selection Criteria:
Rebalance Methodology:
The shameless portfolio comprises of five of the highest conviction ideas of 9 value managers whom we shamelessly clone. Like the Small Dogs of the Dow and Uber Cannibals, we set it and forget it. I will publish the list of the top Shameless Cloned Ideas for a particular year on my blog on January 1 each year.
For 2017, even though it’ll be a partial year, one can buy the 2017 picks anytime. After that, rebalancing should occur right after January 1.
The Shameless Portfolio for 2017 contains:
- Oracle (ORCL)
- Berkshire Hathaway (BRK-B)
- Apple (AAPL)
- Microsoft (MSFT)
- Charter Communications (CHTR)
We’ve laid out all our algorithm rules below.
One can begin testing this strategy with a small portion of one’s networth and do it through a great broker like Interactive Brokers with commissions under $3/trade for small quantities. We hope you’ll join our merry band of shameless cloners.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/02/22/beyond-buffett-how-to-build-wealth-copying-9-other-value-stock-pickers/#7645cf00eaf9
I co-wrote the article with Fei Li, a talented quant at Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Appendix: Shameless Cloning Portfolio Rules
Selection Criteria:
- No utilities, no REITs, no oil and gas exploration, no metals and mining and no multiline retailers.
- Positive trailing-12-month net income
Rebalance Methodology:
- Rebalance on Dec 31st of each year.
- The old companies that are not in the new portfolio are sold. The “sell money” is accumulated and distributed equally among all new entrants.
- If the same company is present in our portfolio for another year, then we leave it unchanged i.e. no rebalancing trades.
- Dividends are reinvested into the same company that paid it.
- If there is an involuntary removal through acquisition/delisting/bankruptcy then the cash is distributed equally among the remaining cloners.
- If there are any spin-offs, the shares are sold and reinvested in the parent.
Vacuum up those pennies – and let Warren Buffett invest them for you!
2/9/2017
Saving the first dollar you earn, versus saving what is left after you spend, is always a smart way to go. And making it automated is key. Set it and forget it!
A new smartphone app, Stash allows you to automatically save as little as $5/month and then immediately invest the same in Berkshire Hathaway Class B shares. They’ll even buy fractional shares with no trading costs. The B shares are changing hands these days at about $164/share. If you send Stash $5, then they’ll buy you 5/164th of a B share. Stash does charge $1/month or 0.25% annually, whichever is higher.
Another one, Acorns, rounds up your credit card purchases to the nearest dollar and saves the difference. You can have the pennies that Acorns vacuums up go into a savings account. And you can have Stash periodically move those savings into Berkshire.
My friend, Jason Zweig, wrote an interesting piece on Stash, Acorns and a third one, Digit in his column “The Intelligent Investor” in the Wall Street Journal past weekend:
http://jasonzweig.com/inching-your-way-toward-wealth-with-your-phone/
When you buy that latte at Starbucks for $4.27 every day, it adds up. Taking those 73 cents every day and automatically investing them is such a no-brainer.
A new smartphone app, Stash allows you to automatically save as little as $5/month and then immediately invest the same in Berkshire Hathaway Class B shares. They’ll even buy fractional shares with no trading costs. The B shares are changing hands these days at about $164/share. If you send Stash $5, then they’ll buy you 5/164th of a B share. Stash does charge $1/month or 0.25% annually, whichever is higher.
Another one, Acorns, rounds up your credit card purchases to the nearest dollar and saves the difference. You can have the pennies that Acorns vacuums up go into a savings account. And you can have Stash periodically move those savings into Berkshire.
My friend, Jason Zweig, wrote an interesting piece on Stash, Acorns and a third one, Digit in his column “The Intelligent Investor” in the Wall Street Journal past weekend:
http://jasonzweig.com/inching-your-way-toward-wealth-with-your-phone/
When you buy that latte at Starbucks for $4.27 every day, it adds up. Taking those 73 cents every day and automatically investing them is such a no-brainer.
Lecture to Univ. of Puerto Rico MBA Class on mental models on Sept. 26, 2016
1/26/2017
I thoroughly enjoyed my talk to the University of Puerto Rico MBA students in San Juan, Puerto Rico on Sept. 26,2016 where I discussed three mental models in the spirit of Charlie Munger’s latticework of mental models.
The three models include
Enjoy!
https://www.youtube.com/watch?v=FO5V7jcBNMM
The three models include
- The Power of Truth: Commit to candor, however painful or uncomfortable it may be. Being relentlessly truthful (and avoiding “white lies”) will strengthen your relationships with those around you in the long run.
- Compounding is the 8th Wonder of the World: Resist the temptation to pull money out of compounding accounts like 401(k)s; instead, leave them and let them compound over the longest runways possible.
- Dhandho Entrepreneurship: Take advantage of extracurricular time at your full-time job to first test your start-up ideas before quitting your day job to become the next Elon Musk. If you fail, you’ll still have a job. Heads you win, tails you don’t lose much!
Enjoy!
https://www.youtube.com/watch?v=FO5V7jcBNMM
The Investors Podcast - Transcript
1/16/2017
Preston Pysh recaps Stig Brodersen and his discussion with me in this article. If you prefer to read versus listen, feel free to check out the transcript of the recent podcast here:
http://www.forbes.com/sites/prestonpysh/2017/01/16/mohnish-pabrai/#4ec2d4642b49
Enjoy!
http://www.forbes.com/sites/prestonpysh/2017/01/16/mohnish-pabrai/#4ec2d4642b49
Enjoy!
The Investors Podcast - Part 2
1/15/2017
I very much enjoyed doing this podcast with Preston Pysh and Stig Brodersen. Both are great guys who do a great service to the Value Investing Community. Thanks guys!
In this second part interview, Preston and Stig discuss some of the finer details of my investing approach. Recently, the airline industry has had enormous amounts of market consolidation and a few stocks seem to have favorable valuations. We had discussions on these potential opportunities and what are the long term prospects of these opportunities.
In this episode, we talked about:
Enjoy!
In this second part interview, Preston and Stig discuss some of the finer details of my investing approach. Recently, the airline industry has had enormous amounts of market consolidation and a few stocks seem to have favorable valuations. We had discussions on these potential opportunities and what are the long term prospects of these opportunities.
In this episode, we talked about:
- My recent investment in Southwest Airlines.
- My biggest investment mistake, and how I made more than $100 million because of it.
- If Warren Buffett and Charlie Munger consider any macro decisions in their investment approach.
- Why the airline industry is a terrible sector, but might still be a great investment at the moment.
Enjoy!
The Investors Podcast - Part 1
1/8/2017
I very much enjoyed doing this podcast with Preston Pysh and Stig Brodersen. Both are great guys who do a great service to the Value Investing Community. Thanks guys!
In this episode, we talked about:
https://www.theinvestorspodcast.com/the-dhandho-investor-mohnish-pabrai/
Enjoy!
In this episode, we talked about:
- How I accumulated business knowledge from the age of 11
- What special advantages people like Bill Gates and Warren Buffett had to become so successful
- How I had set up and ran a business like Warren Buffett and Charlie Munger
- Why investing is not a team sport
https://www.theinvestorspodcast.com/the-dhandho-investor-mohnish-pabrai/
Enjoy!
Interview with BTVi about markets and commodities
12/30/2016
I very much enjoyed my chat with Samina Hirani of BTVi, about markets and commodities.
http://www.btvi.in/m/videos/watch/20599/exclusive---mohnish-pabrai-s-call-on-markets
Enjoy!
http://www.btvi.in/m/videos/watch/20599/exclusive---mohnish-pabrai-s-call-on-markets
Enjoy!
Interview with CNBC-TV 18 on Trump and Outlook for 2017
12/27/2016
I very much enjoyed my chat with Latha Venkatesh at The Charles T. Munger Hall in Bengaluru for CNBC – TV18.
It covers Buffett, Trump, Dakshana Foundation, Demonetization, Investing in India and what to look forward in 2017.
https://m.youtube.com/watch?v=6fkDLax_RmM
https://m.youtube.com/watch?v=IfzgWbyAE4Q
Enjoy!
Here is the transcript of the interview:
http://www.moneycontrol.com/news/market-outlook/see-trump-making-deals-that-benefitworld-mohnish-pabrai_8170961.html
It covers Buffett, Trump, Dakshana Foundation, Demonetization, Investing in India and what to look forward in 2017.
https://m.youtube.com/watch?v=6fkDLax_RmM
https://m.youtube.com/watch?v=IfzgWbyAE4Q
Enjoy!
Here is the transcript of the interview:
http://www.moneycontrol.com/news/market-outlook/see-trump-making-deals-that-benefitworld-mohnish-pabrai_8170961.html
Here Come the Uber Cannibals!
12/22/2016
I co-wrote an article in Forbes on an investment strategy called "The Uber Cannibals."
Uber Cannibals are companies that aggressively buy back their own stock. I will publish the list of the top Uber Cannibals for a particular year on my blog on March 18 each year.
If you choose to pursue the strategy of investing in Uber Cannibals, you can either start with these 2016 Uber Cannibals now and then rebalance at March 20, 2017, or wait until March 20, 2017 to start investing in the new list of 2017 Uber Cannibals then.
The Uber Cannibals for 2016 are:
This is a "set it and forget it" strategy. I'd suggest not putting more than 10% to 20% of your nest egg in this strategy. It only makes sense if you intend to follow it for at least a decade or two or longer. The ideal straetgy is in your IRA. That way, there are no realized gains to worry about.
You can view the article here:
http://www.forbes.com/sites/janetnovack/2016/12/22/move-over-small-dogs-of-the-dow-here-come-the-uber-cannibals/#2c38ff233dea
I co-wrote the article with Yingzhuo Zhao, a talented quant at Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Uber Cannibals are companies that aggressively buy back their own stock. I will publish the list of the top Uber Cannibals for a particular year on my blog on March 18 each year.
If you choose to pursue the strategy of investing in Uber Cannibals, you can either start with these 2016 Uber Cannibals now and then rebalance at March 20, 2017, or wait until March 20, 2017 to start investing in the new list of 2017 Uber Cannibals then.
The Uber Cannibals for 2016 are:
- AutoZone (AZO)
- Magellan Health (MGLN)
- Marriott International (MAR)
- NVR (NVR)
- Lowe’s (LOW)
This is a "set it and forget it" strategy. I'd suggest not putting more than 10% to 20% of your nest egg in this strategy. It only makes sense if you intend to follow it for at least a decade or two or longer. The ideal straetgy is in your IRA. That way, there are no realized gains to worry about.
You can view the article here:
http://www.forbes.com/sites/janetnovack/2016/12/22/move-over-small-dogs-of-the-dow-here-come-the-uber-cannibals/#2c38ff233dea
I co-wrote the article with Yingzhuo Zhao, a talented quant at Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
My Chat with Barron's on US Auto manufacturers and Airlines
12/10/2016
I thought you would be interested in the following story from Barron's.
Mohnish Pabrai Thinks GM, Fiat, Southwest Air Look Like Bargains
http://www.barrons.com/articles/why-mohnish-pabrai-likes-gm-fiat-and-southwest-air
Enjoy!
Mohnish Pabrai Thinks GM, Fiat, Southwest Air Look Like Bargains
http://www.barrons.com/articles/why-mohnish-pabrai-likes-gm-fiat-and-southwest-air
Enjoy!
