Chai  with  Pabrai
  • Home
  • Transcripts
  • Videos
  • Articles
  • Podcasts
  • Bookshelf
  • Contact

2022 Free Lunch Portfolio

12/23/2021

42 Comments

 
In December 2017, I co-authored an article in Forbes about The "Free Lunch" Portfolio, a strategy to invest in 15 stocks across Uber Cannibals, Shamelessly Cloned Ideas and Spin-Offs. We later replaced the Spin-Offs bucket with Spawners, which I detailed in the 2021 Free Lunch Portfolio post. The portfolio rebalances its Cannibals in April and Cloned Ideas and Spawners in December. I have been publishing updates to the portfolio here on Chai With Pabrai.

The Free Lunch portfolio was up 25% in 2021, vs. 28% for the S&P 500. The portfolio has managed to keep up with S&P 500 despite significant drops in holdings like Alibaba. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up 7% while the S&P is up 17%. While 7% annualized return isn’t so bad, the S&P 500 has trounced the Free Lunch portfolio so far. The Free Lunch does not have much exposure to high-flyers at nosebleed valuations, and quite a few of its names are businesses we know well and are exceptional. Keep the faith. We’re just getting warmed up.

New 2022 Free Lunch Portfolio

Our goal with the Free Lunch is to buy and hold 15 compounders for long stretches of time, giving them plenty of room to ride. It’s a 'set it and forget it' type of portfolio. We’ll make small tweaks only if we come across a business that we love and just need to have in the portfolio. This year we came across one such gem: Tencent Holdings. I’ve given some color on Tencent in a few of my recent talks, including my lecture to Boston College (beginning at 24:08).

To bring in Tencent, we make the tough decision to sell Seritage Growth Properties. Seritage was in the portfolio as a Pabrai Fund pick, even though it wasn’t the top Pabrai Funds holding, which is Micron. We will shift the Pabrai Cloned Idea to Micron. This will leave an open slot. Tencent will fill that slot as a top pick of Value Partners, one of our select value managers based in Hong Kong.  

Here are the constituents for the upcoming year:

Spawners
  • Berkshire Hathaway (BRK.B)
  • Restaurant Brands (QSR)
  • Starbucks (SBUX)
  • Microsoft (MSFT)
  • Brookfield Asset Management (BAM)

Shameless Cloning 
  • Alphabet (GOOGL), from The Children’s Investment Fund
  • Chipotle Mexican Grill (CMG), from Pershing Square
  • Micron (Mu), from Pabrai Funds
  • Alibaba (BABA), from Appaloosa Management
  • Tencent (TCEHY), from Value Partners

​Uber Cannibals
  • Assured Guaranty (AGO)
  • Primerica (PRI)
  • Navient (NAVI)
  • Discover Financial Services (DFS)
  • Jack in the Box (JACK)

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) between now and early January 2022.

If you are already invested in the Free Lunch Portfolio, and you rebalanced the Uber Cannibals in April 2021 with the New Uber Cannibals, then sell Seritage and invest the proceeds in Tencent. You can do this in early January 2022.

If you’re investing in a taxable account, you may try to sell Seritage in December 2021 to capture short-term losses.

These are the stocks to sell, along with their full-year 2021 returns: 
​
Stock
2021 Return
Seritage Growth Properties
-9%

​As a reminder, the new Uber Cannibals get published every April, while the new Spawners and Shameless Cloning businesses are released in January. When we publish the new Uber Cannibals in April 2022, 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 2023, you’ll rebalance the Spawners 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.
Picture
42 Comments

Q&A session with students at the University of Georgia - November 2021

12/23/2021

1 Comment

 
I had a fun Q&A with students at the University of Georgia. We talked about my relationship with Warren and Charlie, sources for investment ideas and identifying moats.

Enjoy!


https://www.youtube.com/watch?v=wT1m8J4hdpA&t=852s

​
Here is the link to the podcast:
  • Google Podcasts
  • Apple Podcasts
  • Spotify

If you prefer reading over listening, here is the transcript.

Picture
1 Comment

Q&A session with students at William & Mary College - October 26, 2021

12/3/2021

1 Comment

 
I very much enjoyed my Q&A session with the Students at William & Mary College. I discussed my learnings from Charlie Munger, learning from my mistakes and my adventures with Tech Cominco.
​
Enjoy!


https://www.youtube.com/watch?v=-etUrauRHgE&t=957s​

Picture
1 Comment

Q&A session with students at the University of Oxford - October 19, 2021

12/3/2021

39 Comments

 
I very much enjoyed my Q&A session with the University of Oxford. I talked about my Dhandho Investor book, investments in Turkey and about shorting stocks.

Enjoy!
​
https://www.youtube.com/watch?v=PN3f668IKO0&t=1s​
​
Picture
39 Comments

​My Annual Talk at Boston College - October 14, 2021

12/3/2021

2 Comments

 
I very much enjoyed my discussion with Prof. Arvind Navaratnam’s class on Fundamental Analysis & Value Investing at the Carroll School of Management (Boston College). This was my 10th year of speaking to the students. We discussed a few investing frameworks, Tencent business model, and evolution of my investing style.

Enjoy!

​
https://www.youtube.com/watch?v=_7UfqjD3IEg&t=2s

​
Here is the link to the podcast:
  • Google Podcasts
  • Apple Podcasts
  • Spotify

If you prefer reading over listening, here is the transcript.
​​
Picture
2 Comments

    Mohnish Pabrai

    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. 

    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    June 2022
    May 2022
    March 2022
    December 2021
    October 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    October 2020
    June 2020
    May 2020
    April 2020
    March 2020
    December 2019
    November 2019
    October 2019
    September 2019
    June 2019
    May 2019
    March 2019
    December 2018
    November 2018
    October 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    July 2017
    June 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016

    Categories

    All

    RSS Feed

Contact

Copyright by Mohnish Pabrai. © 2022. All Rights Reserved.
  • Home
  • Transcripts
  • Videos
  • Articles
  • Podcasts
  • Bookshelf
  • Contact