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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/ 
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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  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!  Update: The video inadvertently uses a wrong Nikkei chart at 18:46. Below is the correct chart:  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!   
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/  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  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  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 
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.
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:
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. 
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.  |
Mohnish PabraiMohnish Pabrai is the founder and Managing Partner of the Archives
September 2019
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