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I had a fun fireside chat at the HBS Investment Conference. The Investment Conference is one of the biggest conferences arranged by HBS students each year. It is attended by 400+ students across MBA programs who have a background or interest in the investment management industry. We talked about Ben Graham, micro vs marco investing and investment checklist. Enjoy! https://www.youtube.com/watch?v=hQsP8ogUp8k 
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I very much enjoyed my Q&A session with Tom Dittrich for the Doctors Investing Group. I discussed value investing, diversified vs. concentrated portfolio and shameless cloning. Enjoy! https://www.youtube.com/watch?v=0SbspUlZW8A&t=389s  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. The Uber Cannibals is also part of the broader 15-stock Free Lunch Portfolio, which also invests in Shamelessly Cloned ideas and Spawners that are updated annually in December. We are now ready for the April 2022 Uber Cannibals picks. Recap of 2021 Uber Cannibals: As a recap, in my 3/31/17 blog post exactly 5 years ago, we met Ms. Sonia Patel, who had embarked on her Uber Cannibals compounding 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 every year in April. The 2021 Uber Cannibals were:
As of 3/31/22, Sonia's $100k was worth $177,379, up 11.5% annualized since inception. If Sonia had instead invested in the S&P 500 over that period, she would be up 16.5% annualized and her portfolio would be worth $222,674. Uber Cannibals was up 15.7% in the last 12 months, vs. 15.6% for the S&P 500. Uber Cannibals has managed to keep up with the S&P 500 for the last 12 months, despite no exposure to high-flying tech names.
All five Uber Cannibals paid dividends. As per our rules, Sonia reinvested those dividends back into the same businesses. Please note, the Uber Cannibals performance 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 assumes that stocks are bought at last close. Below is the 12-month return of the 2021 Uber Cannibals:
The New 2022 Uber Cannibals:
In the 2021 Uber Cannibals post, I talked about importance of holding on to great compounders and cannibals unless they get egregiously overvalued. In 2022, the algorithms did not serve up any cannibals that would improve the overall quality of the portfolio, and it does not seem that any of our five holdings are egregiously overvalued. So, we do nothing; there are no changes to the 2022 Uber Cannibals. Here are the 2022 Uber Cannibals:
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 2023, when I'll provide the 2023 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. I very much enjoyed my Q&A session with the NUS MBA students at NUS Business School. I discussed some of my past investments, the power of compounding and value investing. Enjoy! https://www.youtube.com/watch?v=dzfjw0ZXVm4  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
Shameless Cloning
Uber Cannibals
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:
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.  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  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  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  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  I very much enjoyed my Q&A session with Itai Parnes for Brown University Value Investing Speaker Series. Itai did his homework and asked wonderful questions. I talked about Spawners, Chinese Big Tech Regulation and how to raise capital when you start a Fund. Enjoy! https://www.youtube.com/watch?v=p5xt09gAi-U&t=404s  |
Mohnish PabraiMohnish Pabrai is the founder and Managing Partner of the Archives
May 2022
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