Musings by 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: Perspectives on Investing.
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Beware of Scams Using My Name - Mohnish Pabrai
Talk with GreenHaven Road Partners Fund on October 29, 2024
Enjoy!
www.youtube.com/watch?v=sDQD2CQ8MXk
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Guest Lecture at University of Nebraska, Omaha on October 15, 2024
Enjoy!
www.youtube.com/watch?v=m-chs2cmWTs
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Podcast with Kevin (Age 10) and Justin (Age 6) on September 24, 2024
Enjoy!
www.youtube.com/watch?v=Run79mbS0Gs
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Talk at the PAN IIT Conference, Toronto, Canada in June 2014
Enjoy!
www.youtube.com/watch?v=DzOEp7GRwAU
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Keynote address at TiECON Southwest on November 9, 2013
Enjoy!
www.youtube.com/watch?v=QeLk7UTKxoU
Here is the link to the podcast:
- Apple Podcasts
- Spotify
If you prefer reading over listening, here is the transcript.
Session with YPO Delhi on July 9, 2024
Enjoy!
www.youtube.com/watch?v=jZ4f21386Yc
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session with CFA Society, United Kingdom on June 12, 2024
Enjoy!
www.youtube.com/watch?v=yjXKhLO_7jI
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session with Rotary Bangalore DownTown and Fellowship of Wealth Creators on June 19, 2024
Enjoy!
www.youtube.com/watch?v=uzp37XkxWxY
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session at The University of Nebraska, Omaha on May 3, 2024
Enjoy!
www.youtube.com/watch?v=FFxUSADENrc
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with Dakshana Scholars at the JNV Pune on December 25, 2023
Enjoy!
www.youtube.com/watch?v=bUUl4trjNC8
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview at the My First Million Podcast on April 4, 2024
Enjoy!
www.youtube.com/watch?v=TyYRrfY3_zM
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session with Dakshana scholars at the JNV Bangalore Urban on December 24, 2023
Enjoy!
www.youtube.com/watch?v=ktBWoEHl9UU
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session at The Investor’s Podcast on April 1, 2024
Enjoy!
www.youtube.com/watch?v=kTXZO5N_FK4
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session with MIT's Brass Rat Investments on March 12, 2024
Enjoy!
www.youtube.com/watch?v=yHIz0WlMnMc
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with Dakshana scholars at the JNV Kottayam on December 21, 2023
Enjoy!
www.youtube.com/watch?v=R_pnRg24btM
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session with YPO’s Mosaic Chapter on March 20, 2024
Enjoy!
www.youtube.com/watch?v=pu8M0SsqRtg
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript
Q&A session with Dakshana scholars at JNV Bangalore (Rural) on December 24, 2023
Enjoy!
www.youtube.com/watch?v=D1n2qgcQoI4
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
The 2024 Uber Cannibals
The Final Post in the Free Lunch Series
These portfolios were an opportunity to shine light on concentrated strategies in high quality corners of the market. It has been over 7 years since we started presenting our picks. The performance of the portfolios since inception is presented below.
This post will be the final update in this series. My team will no longer be updating the Free Lunch Portfolio and highlighting new businesses. Our efforts have shifted solely to our day job of managing our funds.
Recap of 2023 Uber Cannibals:
As a recap, in my 3/31/17 blog post, 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 2023 Uber Cannibals were:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Jack in the Box (JACK)
- eBay (EBAY)
- Toll Brothers (TOLL)
As of 3/31/24, Sonia's $100k was worth $266,463 up 14.5% annualized since inception. If Sonia had instead invested in the S&P 500 over that period, she would be up 14.5% annualized and her portfolio would be worth $266,860. Uber Cannibals was up 56.0% in the last 12 months, vs. 29.9% for the S&P 500. Uber Cannibals has outperformed the S&P 500 for the last 12 months, despite no exposure to high-flying tech names. The Uber Cannibals 5-stock portfolio is far more concentrated than the indices and will be more volatile.
|
Last 12 Months |
Since 1/3/17 |
Value of $100k invested on 1/3/17 |
Since 1/3/17 (annualized) |
Uber Cannibals |
56.0% |
166.5% |
$266,463 |
14.5% |
S&P 500 |
29.9% |
166.9% |
$266,860 |
14.5% |
Small Dogs of the Dow |
-16.0% |
4.0% |
$104,028 |
0.5% |
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.
The New 2024 Uber Cannibals:
Here are the 2024 Uber Cannibals:
- Alpha Metallurgical Resources (AMR)
- AutoNation (AN)
- Primerica (PRI)
- eBay (EBAY)
- Toll Brothers (TOLL)
Sell Assured Guaranty and Jack in the Box and invest the proceeds equally in AMR and AutoNation. The swaps are no-brainers at present prices (the threshold we need to meet to make a change to the portfolio). AMR and AutoNation operate in out-of-favor industries and generate a significant amount of free cash flow.
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).
As a reminder, in December 2023, we added AMR to the Free Lunch portfolio as a Shamelessly Cloned idea. As of 3/31/24, the weight of AMR in the free lunch portfolio is 3.3% if you had been investing in the free lunch portfolio since 2018 and 6.3% if you started investing in the free lunch in 2024. Considering these low weights for AMR, we don’t see any concentration issues adding it as a cannibal as well.
Free Lunch Portfolio:
We published the 2024 Free Lunch Portfolio in December 2023. The Free Lunch portfolio was up 13.7% in Q1 2024, vs. 10.6% for the S&P 500. The portfolio managed to outperform the high-flying S&P 500 in 2024. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up 7.8% while the S&P is up 13.4%. The S&P 500 has trounced the Free Lunch portfolio so far. In 2021 we decided to ignore the algorithm’s buy and sell decisions and only make portfolio tweaks if they are no-brainers. Since 2021, the Free Lunch portfolio is up 21.2% versus 14.3% for the S&P 500.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Session with Columbia Business School (CSIMA) on February 14, 2024
Enjoy!
www.youtube.com/watch?v=ZrJA8q5Yixg
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session at the SumZero Virtual Investor Summit 2024 on February 8, 2024
Enjoy!
www.youtube.com/watch?v=mi134c5X3ps
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A with Value Investing Society at London School of Economics on January 30, 2024
Enjoy!
https://www.youtube.com/watch?v=1xpY7-uyPqo
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview at Morningstar, The Investor's Mind on December 1, 2023
Enjoy!
https://www.youtube.com/watch?v=gghOEu8u6pE
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Presentation and Q&A at FLAME University on December 25, 2023
Enjoy!
https://www.youtube.com/watch?v=A2vC2skCjCs
You can see the presentation here.
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A at Oxford University - Oxford Alpha Fund on November 21, 2023
Enjoy!
https://www.youtube.com/watch?v=0qxxVBKd8CI
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
You can also read the interview published by Oxford Alpha Fund in The Walton Edge - Volume 1 Series 3.
Q&A at Clemson University - Wall Street South Investment Club on November 13, 2023
Enjoy!
https://www.youtube.com/watch?v=IJwOjG5gwAw
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
2024 Free Lunch Portfolio
The Free Lunch portfolio was up 30.3% in 2023, vs. 26.3% for the S&P 500. The portfolio managed to outperform the high-flying S&P 500. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up 5.8% while the S&P is up 12.1%. The S&P 500 has trounced the Free Lunch portfolio so far. In 2021 we decided to ignore the algorithm’s buy and sell decisions and only make portfolio tweaks if they are no-brainers. This bias towards inaction will avoid disrupting the compounding engine and should help the Free Lunch perform well over time. Since 2021, the Free Lunch portfolio is up 34.2% versus 33.1% for the S&P 500.
Tweaks to the 2024 Free Lunch Portfolio:
From our fund managers list, we replace ValueAct Capital, FPA and Sequoia Fund with Abram’s Capital, Brave Warrior Advisors and Greenlight. This December, we recommend adding Alpha Metallurgical Resources (AMR), Consol Energy, Lithia Motors and Asbury Automotive. We love these businesses. To bring them in, we recommend selling Alibaba (Cloned Idea), Tencent (Cloned Idea), Restaurant Brands (QSR) and Starbucks (Spawner). The swaps are no-brainers at present prices (the threshold we need to meet to make a change to the portfolio). AMR, Consol, Lithia and Asbury all operate in out-of-favor industries and generate a significant amount of free cash flow.
Here are the constituents for the upcoming year:
Spawners
- TAV Airports (TAVHL.IS)
- Alphabet (GOOGL)
- Reysas Logistics (RYSAS.TI)
- Microsoft (MSFT)
- Brookfield Corp. (BN)
- Brookfield Asset Management (BAM) – a spin-off from Brookfield Corp.
Shameless Cloning
- Alpha Metallurgical Resources (AMR), from Pabrai Funds
- Lithia Motors (LAD), from Brave Warrior Advisors
- Chipotle Mexican Grill (CMG), from Pershing Square
- Asbury (ABG), from Abram’s Capital
- Consol Energy (CEIX), from Greenlight
Uber Cannibals
- Assured Guaranty (AGO)
- Primerica (PRI)
- Jack in the Box (JACK)
- eBay (EBAY)
- Toll Brothers (TOL)
If you are a new investor to the Free Lunch Portfolio, you can just equal weight these 16 stocks (i.e., invest the same amount of money in each of these 16) between now and early January 2024.
If you are already invested in the Free Lunch Portfolio, and you rebalanced the Uber Cannibals in April 2023 with the New Uber Cannibals, then sell Alibaba, Tencent, Restaurant Brands and Starbucks and invest the proceeds equally between AMR, Consol, Lithia and Asbury.
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 2024, 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 2025, you’ll rebalance the Spawners and Shameless Cloning ideas.
Enjoy!
It is not easy for US retail investors to buy stocks listed on the Istanbul Stock Exchange, but Fidelity does offer the service to trade Turkish stocks by phone. Once you open an account at Fidelity.com and fund it, you can call Fidelity at +1.800.343.3548, ask for “international trading” and advise the Fidelity representative of your order. Trades are placed in Turkish Lira, so the representative can help you determine the correct number of shares that you can buy with your USD balance, after accounting for possible movements in the Turkish Lira overnight. Trades need to be placed between 5 AM and 7 PM eastern. Limit orders are generally the best way to go. To our knowledge, Fidelity is the only game in town that offers Turkish trading to US retail investors, and it charges a hefty commission (approx. $83 per ticket order). To avoid racking up significant commission charges, you will want limit the number of orders you place and try to maximize the number of shares you buy per ticket order.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome. The contents of this website are for educational and entertainment purposes only, and do not purport to be, and are not intended to be, financial, legal, accounting, tax or investment advice. Investments or strategies that are discussed may not be suitable for you, do not take into account your particular investment objectives, financial situation or needs and are not intended to provide investment advice or recommendations appropriate for you. Before making any investment or trade, consider whether it is suitable for you and consider seeking advice from your own financial or investment adviser.
Conversation at Schroders - The Value Perspective podcast on October 10, 2023
Enjoy!
https://www.youtube.com/watch?v=w9oC1rPV5yQ
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A at Boston College, Carroll School of Management on October 12, 2023
Enjoy!
https://www.youtube.com/watch?v=jZKOk-hlo8I
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Talk at the YPO Waterloo Austin on October 17, 2023
Enjoy!
https://www.youtube.com/watch?v=EzMWPRx9-CY
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A at Mendoza College of Business - University of Notre Dame on September 29, 2023
Enjoy!
https://www.youtube.com/watch?v=kfgbTNWLMJE
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session at the Harvard Business School on September 15, 2023
Enjoy!
https://www.youtube.com/watch?v=MDuPszGThmE
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview at the Meb Faber Show on July 28, 2023
Enjoy!
https://www.youtube.com/watch?v=HhA8WfnEw9I
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Presentation and Q&A at MDI, Gurgaon on December 26, 2014
https://www.youtube.com/watch?v=JSHVXBBb9bI
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview with Weekly on Stocks on June 28, 2023
Enjoy!
https://www.youtube.com/watch?v=Y0K1qVJdJxc
If you prefer reading over listening, here is the transcript.
Presentation and Q&A at Indian School of Business on July 13, 2013
Enjoy!
https://www.youtube.com/watch?v=PpBPzNoltbs
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Presentation and Q&A at MDI, Gurgaon on December 22, 2015
https://www.youtube.com/watch?v=OFkApI6zZtY
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A with members of the Finance and Investment Cell at SRCC, Delhi on June 14, 2023
Enjoy!
https://www.youtube.com/watch?v=tYtG7ZvMSjM
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with the Finance Club of IIT Patna on May 10, 2023
Enjoy!
https://www.youtube.com/watch?v=Qgtb7LnvP6Y
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview at the Investor's Podcast on April 25, 2023
Enjoy!
https://www.youtube.com/watch?v=DtQVYvyO4Qg
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at the JNV Lucknow on December 27, 2022
https://www.youtube.com/watch?v=hDCt342Izag
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Presentation and Q&A at the University of Nebraska, Omaha on May 5, 2023
Enjoy!
https://www.youtube.com/watch?v=SP6kKi2nMz4
with the Presentation slides here.
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at the JNV Pune on December 25, 2022
https://www.youtube.com/watch?v=Skh3U9YNgYo
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at the Dakshana Valley, Pune on December 26, 2022
https://www.youtube.com/watch?v=WyGEPA1imZg
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview at the mint-Equitymaster Investor Hour on April 11, 2023
https://www.youtube.com/watch?v=ibsxgKdJNpA
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at JNV Bundi on December 24, 2022
https://www.youtube.com/watch?v=7yr76gcodKQ
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at the University of Texas on February 28, 2023
Enjoy!
https://www.youtube.com/watch?v=UcJB1m3cXKw
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at JNV Bengaluru (Urban) on December 23, 2022
https://www.youtube.com/watch?v=sjb4Tv_X0xg
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Chat with students at the Rotman School of Management on March 3, 2023
Enjoy!
https://www.youtube.com/watch?v=miqfRmUDwFQ
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
The 2023 Uber Cannibals
We are now ready for the April 2023 Uber Cannibals picks.
Recap of 2022 Uber Cannibals:
As a recap, in my 3/31/17 blog post 6 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 2022 Uber Cannibals were:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Jack in the Box (JACK)
- Navient (NAVI)
- Discover Financial Services (DFS)
As of 3/31/23, Sonia's $100k was worth $170,766, up 8.9% annualized since inception. If Sonia had instead invested in the S&P 500 over that period, she would be up 12.2% annualized and her portfolio would be worth $205,465. The Uber Cannibals portfolio was down 3.7% in the last 12 months, vs. the S&P 500 which was down 7.7%. Over the last three years, Uber Cannibals was up 24.2% annualized vs. 18.6% for the S&P 500. The Uber Cannibals 5-stock portfolio is far more concentrated than the indices and will be more volatile. The strategy makes sense if you intend to follow it for at least a decade or two (or longer). Sonia’s in it for the long run.
Value |
Last 12 Month |
Since 1/3/17 |
Value of $100k invested on 1/3/17 |
Since 1/3/17 (annualized) |
Uber Cannibals |
-3.7% |
70.8% |
$170,766 |
8.9% |
S&P 500 |
-7.7% |
105.5% |
$205,465 |
12.2% |
Small Dogs of the Dow |
-16.0% |
-.3.4% |
$96,617 |
-0.5% |
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 the 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 2022 Uber Cannibals:
Company |
1 year return |
Assured Guaranty |
-19.6% |
Primerica |
28.0% |
Jack in the Box |
-4.0% |
Navient |
-2.4% |
Discover Financial |
-8.3% |
The New 2023 Uber Cannibals:
The Uber Cannibals portfolio has not been touched since March 2021, when we implemented a heavy bias towards inaction. We now make a trade only if it is a no-brainer to add significant firepower to our buyback arsenal. We have two tweaks that meet that threshold this year: Sell Discover Financial Services and Navient, and invest the proceeds equally into eBay and Toll Brothers.
Here is the resulting 2023 Uber Cannibals portfolio:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Jack in the Box (JACK)
- eBay (EBAY)
- Toll Brothers (TOL)
Navient and Discover have been in our portfolio since March 2020. They’ve served us well. Over the last three years, Discover and Navient had an annualized return of 43.7% and 34.3% respectively, vs. the S&P 500 which was up 18.6% annualized.
Ebay and Toll Brothers may be better buyback vehicles from here, however. Ebay has bought back 48% of its shares in the last 5 years and 9% in the last year alone. Toll Brothers has plowed back earnings into share repurchases and bought back 9% of its shares last year.
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 2024, when I'll provide the 2024 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.
Q&A session at the SumZero Top Stocks Investor Summit on February 9, 2023
Enjoy!
https://www.youtube.com/watch?v=ncYdcZEnH7E
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A with London School of Economics on January 18, 2023
Enjoy!
https://www.youtube.com/watch?v=c7Oyv-Echa0
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at JNV Bangalore (Rural) on December 23, 2022
https://www.youtube.com/watch?v=kCTdgDQUoWw
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Session with EO Gurgaon on January 10, 2023
Enjoy!
www.youtube.com/watch?v=5P1c9bhhYPo
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
2023 Free Lunch Portfolio
The Free Lunch portfolio was down 17.7% in 2022, vs. 17.9% for the S&P 500. The portfolio tracked the S&P 500 in the market sell off this year. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up a paltry 1.6% while the S&P is up 9.5%. The S&P 500 has trounced the Free Lunch portfolio so far. In 2021 we decided to ignore the algorithm’s buy and sell decisions and only make portfolio tweaks if they are no-brainers. This bias towards inaction will avoid disrupting the compounding engine and should help the Free Lunch perform well over time. Since 2021, the Free Lunch portfolio is up 3.0% versus 5.7% for the S&P 500.
Tweaks to the 2023 Free Lunch Portfolio:
This December, we recommend adding Reysas Tasimacilik ve Lojistik Ticaret A.S. (Reysas Logistics) and TAV Havalimanlari Holding A.S. (TAV Airports). We love these businesses and just need to have them in the portfolio. To bring them in, we recommend selling Micron (Cloned Idea) and Berkshire Hathaway (Spawner). The swaps are no-brainers at present prices (the threshold we need to meet to make a change to the portfolio).
Reysas and TAV are both based in Turkey and listed on the Istanbul Stock Exchange. Reysas is a logistics business that owns 62% of Reysas REIT, which in turn owns over 12 million sq. ft of Grade A warehouses in Turkey. It is led by a father-son duo who are fantastic capital allocators. Reysas trades at a steep discount to its liquidation value, and an even steeper discount to intrinsic value. TAV operates 15 airports in 8 countries, and has developed world-class competencies in ground handling, catering, and duty free. The gem in TAV’s portfolio is the Almaty International Airport, which is it recently acquired outright (a rare feat). TAV continues to expand its reach of operations to new airports and is markedly cheaper than other publicly listed airport operators. I discussed investing in Turkey, and specifically Reysas and TAV, in my Q&A Session with YPO Gold Nairobi in Kenya.
It is not easy for US retail investors to buy stocks listed on the Istanbul Stock Exchange, but Fidelity does offer the service to trade Turkish stocks by phone. Once you open an account at Fidelity.com and fund it, you can call Fidelity at +1.800.343.3548, ask for “international trading” and advise the Fidelity representative of your order. Trades are placed in Turkish Lira, so the representative can help you determine the correct number of shares that you can buy with your USD balance, after accounting for possible movements in the Turkish Lira overnight. Trades need to be placed between 5 AM and 7 PM eastern. Limit orders are generally the best way to go. To our knowledge, Fidelity is the only game in town that offers Turkish trading to US retail investors, and it charges a hefty commission (approx. $83 per ticket order). To avoid racking up significant commission charges, you will want limit the number of orders you place and try to maximize the number of shares you buy per ticket order.
In another tweak for the Free Lunch, an existing portfolio holding, Brookfield Corporation, spun-out Brookfield Asset Management, its asset management business in December 2022. As a shareholder of the Brookfield parent, the Free Lunch portfolio automatically received shares in the newly spun out entity. We recommend holding on to the spin-off company: the business has exceptional economics and a long runway.
Here are the constituents for the upcoming year:
Spawners
- TAV Airports (TAVHL.IS)
- Restaurant Brands (QSR)
- Starbucks (SBUX)
- Microsoft (MSFT)
- Brookfield Corp. (BN)
- Brookfield Asset Management (BAM) – a spin-off from Brookfield Corp.
Shameless Cloning
- Reysas Logistics (RYSAS.TI), from Pabrai Funds
- Alphabet (GOOGL), from The Children’s Investment Fund
- Chipotle Mexican Grill (CMG), from Pershing Square
- 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 16 stocks (i.e., invest the same amount of money in each of these 16) between now and early January 2023. Reysas recently announced its intention to issue a rights offering, which would likely take place in 2-3 months following regulatory approval. To avoid dilution, one should participate in this offering, which will offer existing shareholders the right to purchase shares at TL 1 per share (the current share price is around TL 23). You can invest 90-95 percent of the amount allocated to Reysas today and keep 5-10 percent for the rights offering. Keep your eye out for information on the rights offering from Fidelity.
If you are already invested in the Free Lunch Portfolio, and you rebalanced the Uber Cannibals in April 2022 with the New Uber Cannibals, then sell Micron and Berkshire and invest the proceeds equally between Reysas and TAV. You can do the same 90-95 percent approach with Reysas to allocate the 5-10 percent to the rights offering.
These are the stocks to sell, along with their full-year 2022 returns:
Company |
2022 Return |
Berkshire Hathaway |
3% |
Micron |
-45% |
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 2023, 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 2024, 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. The contents of this website are for educational and entertainment purposes only, and do not purport to be, and are not intended to be, financial, legal, accounting, tax or investment advice. Investments or strategies that are discussed may not be suitable for you, do not take into account your particular investment objectives, financial situation or needs and are not intended to provide investment advice or recommendations appropriate for you. Before making any investment or trade, consider whether it is suitable for you and consider seeking advice from your own financial or investment adviser.
Talk with UNC Business School's Investment Management Club on December 05, 2022
Enjoy!
https://www.youtube.com/watch?v=W--321tO12M
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Speaker Event with Helvetian Investment Club on November 29, 2022
Enjoy!
https://www.youtube.com/watch?v=m606MaKujq4
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session at Nairobi with EO Kenya on October 8, 2022
Enjoy!
If you prefer reading over listening, here is the transcript.
Q&A Session with YPO Gold Nairobi in Kenya on October 11, 2022
Enjoy!
https://www.youtube.com/watch?v=QJNB_CC-PDk
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session with students at William & Mary College on November 8, 2022
Enjoy!
https://www.youtube.com/watch?v=j3U0tb-1zSU
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Presentation and Q&A at Boston College and Harvard Business School on Oct 27, 2022
Enjoy!
https://www.youtube.com/watch?v=_h10aNEQK50
with the Presentation slides here.
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session with Ironhold Capital on September 16, 2022
Enjoy!
https://www.youtube.com/watch?v=rzXG8pUg4sM
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session with Mis Propias Finanzas on September 20, 2022
Enjoy!
https://www.youtube.com/watch?v=rzXG8pUg4sM
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with the Asian Institute of Technology, Bangkok - August 30, 2022
Enjoy!
https://www.youtube.com/watch?v=wz8N5CkTA2w
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Talk with CFA Society of Mexico - August 17, 2022
Enjoy!
https://www.youtube.com/watch?v=MYR0tWgstMI
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Conversation with Lauren Templeton on Zenvesting podcast - July 25, 2022
Enjoy!
https://www.youtube.com/watch?v=E0_K-eFC8bQ
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Lecture at the TiE Austin Speaker Series - Investment & Entrepreneur -August 12, 2022
Enjoy!
https://www.youtube.com/watch?v=gE48QKFGEhI
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Lecture on Approaches to Value Investing - June 16, 2022
Enjoy!
https://www.youtube.com/watch?v=qBdieWfouZM&t=7s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
FINSEC Dialog Conversation - June 1, 2022
Enjoy!
https://www.youtube.com/watch?v=Y2zu_8w_2H0
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Value Investing, Great Compounders, and Lessons from Buffett and Munger - January 5, 2022
Enjoy!
https://www.youtube.com/watch?v=b9ioA0J-p2M&t=34s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A at Harvard Business School Investment Conference - April 2022
Enjoy!
https://www.youtube.com/watch?v=hQsP8ogUp8k
Here is the link to the podcast: If you prefer reading over listening, here is the transcript.
Q&A session with Doctors Investing Group - February 2022
Enjoy!
https://www.youtube.com/watch?v=0SbspUlZW8A&t=389s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
The 2022 Uber Cannibals
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:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Jack in the Box (JACK)
- Navient (NAVI)
- Discover Financial Services (DFS)
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.
Last 12 Months |
Since 1/3/17 |
Value of $100k invested on 1/3/17 |
Since 1/3/17 (annualized) |
|
Uber Cannibals |
15.7% |
77.4% |
$177,379 |
11.5% |
S&P 500 |
15.6% |
122.7% |
$222,674 |
16.5% |
Small Dogs of the Dow |
1.4% |
15.0% |
$115,015 |
2.7% |
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:
Company |
1 year return |
Assured Guaranty |
53.2% |
Primerica |
-6.2% |
Jack in the Box |
-13.3% |
Navient |
23.1% |
Discover Financial |
17.9% |
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:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Jack in the Box (JACK)
- Navient (NAVI)
- Discover Financial Services (DFS)
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.
Value Investing Masterclass with NUS MBA students at NUS Business School
Enjoy!
https://www.youtube.com/watch?v=dzfjw0ZXVm4
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
2022 Free Lunch Portfolio
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.
Q&A session with students at the University of Georgia - November 2021
Enjoy!
https://www.youtube.com/watch?v=wT1m8J4hdpA&t=852s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at William & Mary College - October 26, 2021
Enjoy!
https://www.youtube.com/watch?v=-etUrauRHgE&t=957s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with students at the University of Oxford - October 19, 2021
Enjoy!
https://www.youtube.com/watch?v=PN3f668IKO0&t=1s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
My Annual Talk at Boston College - October 14, 2021
Enjoy!
https://www.youtube.com/watch?v=_7UfqjD3IEg&t=2s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A with Brown University Value Investing Speaker Series - August 2, 2021
Enjoy!
https://www.youtube.com/watch?v=p5xt09gAi-U&t=404s
If you prefer reading over listening, here is the transcript.
Q&A with Value School (Madrid, Spain) - July 9, 2021
We talked about investing in developing markets and how my investment philosophy changed over the years.
https://www.youtube.com/watch?v=cJGkrSFVnns
Here is the link to the podcast: If you prefer reading over listening, here is the transcript.
Q&A Session with Vishal Khandelwal
https://www.youtube.com/watch?v=NfcGzvXAw6M
The One Percent Podcast - Mohnish Pabrai - Transcript |
In Conversation With Ajay Antony, Founder & Teacher, The Physics Chamber
Enjoy!
https://www.youtube.com/watch?v=YSAtJd7iJV8
Q&A Session with London Business School MBA Students - May 19, 2021
Enjoy!
https://www.youtube.com/watch?app=desktop&v=K4mggdrMHVo
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session with The Kolkata Value Hunters Club - May 12, 2021
Enjoy!
https://www.youtube.com/watch?app=desktop&v=9JYXICM3RSo&t=2804s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A session with OMAHA - May 20, 2021
Enjoy!
https://www.youtube.com/watch?v=V9T3dEeWiVE
The Investors Podcast - May 1, 2021
We talked about a new investment framework and how retail investors can clone it.
Enjoy!
https://podcasts.apple.com/us/podcast/tip347-value-investing-in-2021-w-mohnish-pabrai/id928933489?i=1000519670433
2021 Virtual Value Investing Conference
Enjoy!
https://www.youtube.com/watch?app=desktop&v=OmrVUxTGENw
Q&A Session with MBA Students at Columbia Business School – March 18, 2021
Enjoy!
https://www.youtube.com/watch?v=NEB2RfRgBSQ
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session with Students at Indiana Univ. Kelley School of Business –April 1, 2021
Enjoy!
https://www.youtube.com/watch?v=XNtWcAag9as
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
The 2021 Uber Cannibals
We are now ready for the April 2021 Uber Cannibal picks.
Recap of 2020 Uber Cannibals:
As a recap, in my 3/31/17 blog post, 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 2020 Uber Cannibals were:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Globe Life (GL)
- Navient (NAVI)
- Discover Financial Services (DFS)
As of 3/30/21, Sonia's $100k was worth $154,116 (after trading costs), up 10.7% annualized since inception. If Sonia had instead invested in the S&P 500 over that period, she would be up 16.6% annualized and her portfolio would be worth $191,838.
During the COVID-driven market sell off in the first three months of 2020, Sonia's portfolio was down 40.8%, while the S&P 500 was down 18%. She kept the faith and hung on. From April 1, 2020 through today, Sonia's portfolio is up 73%, vs. 55.8% for the S&P 500. The Uber Cannibals 5-stock portfolio is far more concentrated than the indices and will be more volatile. The Uber Cannibals strategy makes sense if you intend to follow it for at least a decade or two (or longer). Sonia’s in it for the long-run.
|
Last
12 Months |
Since
1/3/17 |
Since
1/3/17 (Annualized) |
Value
of $100k invested on 1/3/17 |
Uber
Cannibals |
73.0% |
54.1% |
10.7% |
$154,116 |
S&P
500 |
55.8% |
91.8% |
16.6% |
$191,838 |
Small Dogs
of the Dow |
41.7% |
35.4% |
7.4% |
$135,395 |
Please note, the Uber Cannibals performance includes trading costs and 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.
Below is the 12-month return of the 2020 Uber Cannibals:
Company |
1 year return |
Assured Guaranty |
47.4% |
Primerica |
64.7% |
Globe Life |
32.5% |
Navient |
76.0% |
Discover Financial Services |
153.4% |
A key lesson I learned in 2020 was to hold on to great compounders and cannibals (unless they get egregiously overvalued). I discussed this in more detail at a Manual of Ideas session earlier this year. Moving forward, at the April rebalance, we will assess the new Uber Cannibal picks that the algorithms recommend we swap into the portfolio. However, we will only make changes if the new businesses improve the overall quality of the portfolio. Otherwise, we will stay long and strong. Here are the 2021 Uber Cannibals:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Navient (NAVI)
- Discover Financial Services (DFS)
- Jack in the Box (JACK)
Sell Globe Life from the 2020 Uber Cannibals and invest the proceeds in Jack in the Box. 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 2022, when I'll provide the 2022 portfolio on www.ChaiWithPabrai.com. Happy Cannibal Investing! If you invested in the Uber Cannibals in April 2020 in a taxable account, try to sell after 366 days, to realize long term gains.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Q&A Session with MBA Students at Georgetown University – March 4, 2021
Enjoy!
https://www.youtube.com/watch?v=V_djW_RGPGA&t=400s
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A with members of The Babson College Fund (Babson College Students)– Feb 9, 2021
Enjoy!
https://www.youtube.com/watch?v=NXxIQfVIzVU
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A with students of Peking Univ. (Guanghua School of Mgmt.)–Dec. 3, 2020
The presentation included a rich Q&A session on a diverse set of topics. Enjoy!
https://www.youtube.com/watch?app=desktop&v=pUiwBs_N5cE
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session with Students at Clemson University - Jan 27, 2021
Enjoy!
https://www.youtube.com/watch?v=QIUH0IzoV6E
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Value Investing with Legends Podcast - The Value of Continuous Learning
Enjoy!
Apple Podcasts: shorturl.at/vyWY8
Spotify: https://open.spotify.com/episode/30t6eKvL47rARxwhHUJmCY
Google Podcasts: shorturl.at/iF689
2021 Free Lunch Portfolio
The Free Lunch portfolio was up just 3% in 2020, vs. 16% for the S&P 500. Although the portfolio fell 37% in the Covid-driven sell-off in Q1 2020, it has since recovered meaningfully. Since April 2020, the Free Lunch is up 64% vs. 45% for the S&P 500. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up a very modest 1% while the S&P is up 13%. The S&P 500 has trounced the Free Lunch portfolio so far. But, three years is also a very short duration. With bubblesque additions like Tesla and overheated valuations, I think the S&P 500 may have a few challenging years ahead.
Holding on to Compounders and Spawners
The Free Lunch’s underlying strategy is a sound one. It biases the portfolio towards businesses that generate (and return) a lot of cash and have wide moats. Over the years, the algorithm has picked up stakes in exceptional businesses, including NVR, Alibaba, Alphabet (Google), Micron Technology, Chipotle and Berkshire Hathaway. The algorithm is a great stock picker. However, it tends to sell businesses that are Compounders, Uber Cannibals, or Spawners way too early. This leaves money on the table and stunts the power of long-term compounding.
Take NVR as an example. NVR is an asset-light U.S. homebuilder that builds pre-sold homes. It has a low-risk business model that generates a ton of cash. At NVR, buying back shares is religion. For 25 years, management has used every penny of excess cash to buy back stock, and they have have bought back a mind-blowing 75%+ of their shares outstanding! Mr. Market has rewarded this Uber Cannibal handsomely as a result. An investment of $1,000 in NVR in 1995 would be worth $413,500 today. In January 2018, the Free Lunch picked NVR, which it promptly (and incorrectly) sold in the April 2018 rebalance.
The Free Lunch strategy is also very good at selecting Spawners, which are businesses that persistently add and incubate related and unrelated businesses. These have the potential to be massive growth engines. The Free Lunch has invested in exceptional Spawners over the years, including Alibaba, Alphabet and Berkshire Hathaway. But it has also sold too early. In January 2018, the Free Lunch picked Alibaba, which it (incorrectly) sold 12 months later.
New 2021 Free Lunch Portfolio
As a result of this introspection, we have made three key changes to the Free Lunch approach. First, although we will continue to leverage the algorithm as a stock picking tool in December and April of every year, we will not automatically follow its buy and sell decisions. We will only make changes if doing so improves the quality of the portfolio. Second, we have replaced the Spin-Offs bucket with Spawners, because they are superior businesses to buy and hold. Third, we will not be required to select 5 businesses from each of the three buckets. The number from each bucket will depend on the businesses that the algorithm offers. We want to invest in compounders, not buckets.
We will continue to evaluate the Spawners and Shamelessly Cloned Ideas in December of every year, and the Uber Cannibals in April.
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 Himalaya Capital
- Alibaba (BABA), from Appaloosa Management
- Seritage Growth Properties (SRG), from Pabrai Funds
Uber Cannibals
- Assured Guaranty (AGO)
- Primerica (PRI)
- Globe Life (GL)
- Navient (NAVI)
- Discover Financial Services (DFS)
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 2021.
If you are already invested in the Free Lunch Portfolio, and you rebalanced the Uber Cannibals in April 2020 with the New Uber Cannibals, then sell all of the 2020 Spinoffs and Shamelessly Cloned businesses except Alphabet, Berkshire Hathaway, and Chipotle, and invest the proceeds equally among the 6 new kids. You can do this in early January 2021.
If you’re investing in a taxable account, you may try to sell the losers (Citigroup, Hilton Grand Vacations, Athene Holdings, RMR Group and Vectrus) in December 2020 to capture short-term losses and sell the winners (Fiat Chrysler and FirstService) in early January 2021 to capture long-term gains.
These are the stocks to sell, along with their full-year 2020 returns:
Company |
2020 Return |
Citigroup |
-21% |
RMR Group |
-12% |
Hilton Grand Vacations |
-11% |
Athene Holding |
-10% |
Vectrus |
-7% |
Fiat Chrysler Automobiles |
21% |
FirstService |
44% |
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 Pabrai Presentation and Q&A with UCLA Student Investment Fund - November 5, 2020
Enjoy!
https://www.youtube.com/watch?v=iJII3_CyUvo
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Mohnish Pabrai Lecture at Boston College (Carroll School of Mgmt) - October 8, 2020
Enjoy!
https://www.youtube.com/watch?v=ANn907GgLPs&feature=youtu.be
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Q&A Session with Edelweiss Asset Management - May 29, 2020
https://www.youtube.com/watch?v=nogBvLWB6cU&feature=youtu.be
If you prefer reading over listening, here is the transcript.
Q&A Session with Millennium Mams' - May 8, 2020
https://www.youtube.com/watch?v=_2aFw40NqP8
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Fireside Chat with Jeff Pintar - May 21, 2020
https://www.youtube.com/watch?v=w2hnOllfpwI
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
The Investors Podcast - May 2, 2020
We talked about biases in life and investing, pre-investment checklists and hidden moat businesses. We also discussed Dakshana Foundation and approaching philanthropy with an investor’s mindset.
Enjoy!
https://link.chtbl.com/WSB295
CNBC India Interview, April 27, 2020
Stay healthy and safe!
https://www.cnbctv18.com/videos/market/wizards-of-dalal-street-eminent-value-investor-mohnish-pabrai-on-covid-19-and-world-economy-5785031.htm
Q&A Session with Francis Chou at Harvard – April 7, 2020
Here is the video: https://youtu.be/iW0Mv9zVt0o
Here is the link to the podcast:
- Apple Podcasts
- Spotify
- If you prefer reading over listening, here is the transcript.
Mohnish Pabrai: A Bull’s View in a Virus Shop
I hope you are staying healthy and safe. The battle against the Coronavirus is extracting a high toll, but humans will prevail. This too shall pass.
https://sumzero.com/headlines/business_services/468-mohnishprabai?fbclid=IwAR3jidhmXadv-Kl-kUKKpHCZ6tLV1EIlj8TeC4aG2pvFz5fYzBX__R-i0BE
The New 2020–2021 Uber Cannibals
We are now ready for the April 2020 picks.
Recap of 2019 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 2019 - 2020 Uber Cannibals were:
- Sleep Number (SNBR)
- Corning (GLW)
- Asbury Automotive Group (ABG)
- Quanta Services (PWR)
- Allison Transmission Holdings (ALSN)
As of 3/30/20, Sonia's $100k was worth $90,609 (after trading costs), down 9.4%. If Sonia had instead invested in the S&P 500 over that period, she would be up 25.1% and her portfolio would be worth $125,142. Uber Cannibals were down 34% over the last 12 months and the S&P was down 6%.
Sonia's portfolio fell considerably in the Coronavirus-driven market sell off in the first few months of 2020. As of 12/31/19, Sonia's portfolio was neck-and-neck with the S&P 500, with her $100k worth $153,400 (after trading costs), up 53.4% since inception, while the same investment in the S&P 500 was worth $153,200, up 53.2%. Since then, Sonia's portfolio has fallen 40.8% year-to-date in 2020, while the S&P 500 has fallen 18%. The Uber Cannibals 5-stock portfolio is far more concentrated than the indices, so our lag here is not surprising. Over time, the Uber Cannibals portfolio should recoup these losses and then some. The Uber Cannibals strategy makes sense if you intend to follow it for at least a decade or two (or longer).
|
Last 12 Months |
Since 1/3/17 |
Value of $100k invested on 1/3/17 |
April 2019 - Dec 2019 |
Inception till Dec 2019 |
YTD 2020 |
Uber Cannibals |
-33.7% |
-9.4% |
$90,609 |
12.3% |
53.4% |
-40.8% |
S&P 500 |
-5.5% |
25.1% |
$125,142 |
15.7% |
53.2% |
-18.3% |
Small Dogs of the Dow |
-25.2% |
-4.1% |
$95,922 |
-2.0% |
25.7% |
-23.7% |
Please note, the 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.
Below is the 12-month return of the 2019-2020 Uber Cannibals:
Company |
1 year return |
Sleep Number Corp. |
-55.8% |
Corning Inc. |
-33.8% |
Asbury Automotive Group |
-20.3% |
Quanta Services |
-18.8% |
Allison Transmission Holdings |
-25.0% |
We made a few tweaks to the Uber Cannibals strategy that will be implemented in this rebalance. The changes are summarized below:
- Insurance companies are allowed to enter the portfolio.
- We no longer have Price to Sales ratio or Share Buyback over the dividend yield ratio as a screening condition.
- We added a new quality condition and now select the top 5 Uber Cannibals with the highest five year average return on invested capital (ROIC).
- Existing Uber Cannibals in the portfolio that have shown a consistent commitment to buybacks over the time get a preference during the selection process.
For 2020 - 2021, our algorithms selected the following five Uber Cannibals:
- Assured Guaranty (AGO)
- Primerica (PRI)
- Globe Life (GL)
- Navient (NAVI)
- Discover Financial Services (DFS)
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 2020 picks for Shameless Cloning and Spinoffs in my post from December 2019.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
2020 Free Lunch Portfolio
Uber Cannibals
- Corning (GLW)
- Discover Financial Services (DFS)
- Lear (LEA)
- PulteGroup (PHM)
- Sleep Number (SNBR)
Shameless Cloning
- Alphabet (GOOGL), from Sequoia Fund
- Berkshire Hathaway (BRK.B), from Markel Insurance
- Charter Communications (CHTR), from TCI Fund Management
- Citigroup (C), from ValueAct Capital
- Micron Technology (MU), from Appaloosa Management
Spinoffs
- Delphi Technologies (DLPH)
- DXC Technology (DXC)
- Hamilton Beach Brands Holding (HBB)
- Hilton Grand Vacations (HGV)
- Varex Imaging (VREX)
The Free Lunch portfolio was up 21.7% in 2019, vs. 31.2% for the S&P 500. Since inception on January 1, 2018, on an annualized basis, the Free Lunch portfolio is up 0.01% while the S&P is up 12.0%.
The Free Lunch is only 2 years old, so we can't draw any meaningful conclusions about its long-term performance yet. These are early days. Keep the faith. 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 2020 Free Lunch Portfolio
We are now ready to rebalance the Free Lunch Portfolio for 2020. We made a few changes to the Shameless Cloning and Spinoffs strategies that we believe can select better companies and improve future performance. The changes are summarized below:
Shameless Cloning:
- We replaced Greenlight Capital with Pershing Square Capital Management on the list of managers whom we shamelessly clone.
- We tightened the Price/ Sales Ratio entry condition from a P/S of less than 3 to a P/S of less than 2.
- We changed the credit rating requirement so that now both the parent company and its spinoff must meet the minimum credit rating threshold at the spinoff’s entry into the portfolio. If the spinoff experiences any credit rating downgrade since IPO, it is removed.
- We added a new quality condition and now select the top 5 spinoffs with the highest trailing 12-month return on invested capital (ROIC).
Here are the constituents for the upcoming year:
Uber Cannibals
- Allison Transmission Holdings (ALSN)
- Asbury Automotive Group (ABG)
- Corning (GLW)
- Quanta Services (PWR)
- Sleep Number (SNBR)
Shameless Cloning
- Alphabet (GOOGL), from Sequoia Fund
- Berkshire Hathaway (BRK.B), from Markel Insurance
- Chipotle Mexican Grill (CMG), from Pershing Square
- Citigroup (C), from ValueAct Capital
- Fiat Chrysler Automobiles (FCAU), from Pabrai Funds
Spinoffs
- Athene Holding (ATH)
- FirstService (FSV)
- Hilton Grand Vacations (HGV)
- RMR Group (RMR)
- Vectrus (VEC)
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 2020.
If you are already invested in the Free Lunch Portfolio, and you rebalanced the Uber Cannibals in April 2019 with the New Uber Cannibals, then sell all of the 2019 Spinoffs and Shamelessly Cloned businesses except Alphabet, Berkshire Hathaway, Citigroup and Hilton Grand Vacations, and invest the proceeds equally among the 6 new kids. You can do this in early January 2020.
If you're investing in a taxable account, you may try to sell the losers (Hamilton Beach Brands Holding, DXC Technology and Delphi Technologies) in December 2019 to capture short-term losses and sell the winners (Charter Communications, Micron Technology and Varex Imaging) in early January 2020 to capture long-term gains.
These are the stocks to sell, along with their full-year 2019 returns:
Bucket |
Stock |
2019 Return |
Shameless
Cloning |
Charter
Communications |
75% |
Shameless
Cloning |
Micron
Technology |
69% |
Spinoffs |
Varex Imaging |
27% |
Spinoffs |
Delphi
Technologies |
-7% |
Spinoffs |
Hamilton
Beach Brands Holding |
-19% |
Spinoffs |
DXC
Technology |
-28% |
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 Annual Talk at Boston College
Enjoy!
https://www.youtube.com/watch?v=kdGltV0eomU&feature=youtu.be
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview for Graham & Doddsville Newsletter, Columbia Business School
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
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
The presentation included a rich Q&A session on a diverse set of topics. Enjoy!
https://www.youtube.com/watch?v=Kax8XnBU1ik
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Trinity College Dublin Talk - February 21, 2019
https://www.youtube.com/watch?v=_0XPurSI9cQ
Enjoy!
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
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
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
Enjoy!
https://www.theinvestorspodcast.com/episodes/tip241-value-investing-w-mohnish-pabrai/
GuruFocus Podcast Interview
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
Enjoy!
https://www.youtube.com/watch?v=BUolYZTqiiI&feature=youtu.be
Q&A session with Dakshana Scholars at JNV Kottayam, Dec. 24, 2018
Enjoy!
https://www.youtube.com/watch?v=jRcLBGHsBpw
The New 2019–2020 Uber Cannibals
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 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
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
Enjoy!
https://www.youtube.com/watch?time_continue=17&v=OTvzQR9KKT8
Q&A session with Dakshana Scholars at Dakshana Valley, Oct. 21, 2018
The Q&A session is in Hindi. Enjoy!
https://www.youtube.com/watch?v=NrDLcZHkf3I&t=6s
Here is the link to the podcast:
Keynote Speech at Annual Morningstar India Conference - Oct. 24, 2018
https://www.youtube.com/watch?v=5XJ88nRtF0I
Here is the link to the podcast: If you prefer reading over listening, here is the transcript.
Interview with CNBC – TV18 on Investing Opportunities in India
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
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
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Economic Times Interview: Volatility is the Friend of a Long-term Investor
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
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
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
Mohnish Pabrai Lecture at Univ. of California, Irvine (UCI), June 7, 2017
Enjoy!
https://www.youtube.com/watch?v=bLjoL5zhBxA
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
Interview with SumZero in Forbes – Advice for Value Investors
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)
Enjoy!
https://www.youtube.com/watch?v=jjjI5O_uZUA
Chai With Pabrai: ET Now Interview
Enjoy!
https://www.youtube.com/watch?v=T7Qr1Ze8vNA
Lecture at Columbia Business School: “Where have we been and where are we headed?”
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
Enjoy!
https://www.youtube.com/watch?v=7FspBQlgu88&app=desktop
Talk With Class of 2019 Dakshana Scholars – Dec. 24, 2017
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
https://www.youtube.com/watch?v=INSuLnQJvuY&feature=youtu.be&a
Enjoy!
The New 2018–2019 Uber Cannibals
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 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
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
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
"Compounding is the 8th Wonder of the World” Lecture & Q&A at Dakshana - Dec. 26, 2017
https://www.youtube.com/watch?v=VvpfjxLiO9g&feature=youtu.be
Enjoy!
Shout-out by Charlie Munger at Daily Journal Annual Meeting – Feb 14, 2018
https://www.youtube.com/watch?v=lfRWWxo3Y4Y
Q&A session with Dakshana Scholars at JNV Bengaluru Urban, Oct. 26, 2017
Enjoy!
https://www.youtube.com/watch?v=_4WRC5W92k8
Here is the link to the podcast:
Interview with Bloomberg Quint on investing in India
Enjoy!
https://www.youtube.com/watch?v=XBY6aLezago&app=desktop
Interview with MOI Global on Philanthropy
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
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
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
The ‘Free Lunch’ Portfolio
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
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
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
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
Here is the link to the video:
https://www.youtube.com/watch?v=kNAuELYN5X4
Enjoy!
Great Investors Podcast series – The Steve Pomeranz Show
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
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
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
Pay close attention to the cannibals – the businesses that are eating themselves by buying back their stock. - Charlie Munger |
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 |
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 |
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
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
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
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
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!
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
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
Here is the link to the podcast:
If you prefer reading over listening, here is the transcript.
The Investors Podcast - Transcript
http://www.forbes.com/sites/prestonpysh/2017/01/16/mohnish-pabrai/#4ec2d4642b49
Enjoy!
The Investors Podcast - Part 2
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
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
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
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!
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
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!