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MUSINGS BY MOHNISH PABRAI...
Blog
Subscribe
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 .
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 AT THE YPO WATERLOO AUSTIN ON OCTOBER 17, 2023
11/28/2023
I very much enjoyed my session with members of YPO at Waterloo, Austin. I talked
about the deal of Manhattan islands in the US by the native American Indians in
1626, the magic of compounding and Index investing.
Enjoy!
https://www.youtube.com/watch?v=EzMWPRx9-CY
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
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
11/14/2023
I very much enjoyed my Q&A session with students at the Mendoza College,
University of Notre Dame. I talked about how to identify compounders and when to
sell a stock, Charlie Munger's mental models and how they give an edge, and how
Bridge is related to investing.
Enjoy!
https://www.youtube.com/watch?v=kfgbTNWLMJE
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION AT THE HARVARD BUSINESS SCHOOL ON SEPTEMBER 15, 2023
10/24/2023
I very much enjoyed my Q&A session with students at the Harvard Business School.
I talked about non-venture backed start-ups, the Buffett Partnership and my
investment in Turkiye.
Enjoy!
https://www.youtube.com/watch?v=MDuPszGThmE
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
INTERVIEW AT THE MEB FABER SHOW ON JULY 28, 2023
9/26/2023
I very much enjoyed my interview with Meb at the Meb Faber Show. I talked about
my introduction to Warren Buffett and playing Bridge, the importance of
compounding and why it should be introduced in school and holding on to your
highest conviction bet.
Enjoy!
https://www.youtube.com/watch?v=HhA8WfnEw9I
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
PRESENTATION AND Q&A AT MDI, GURGAON ON DECEMBER 26, 2014
9/14/2023
I enjoyed my Presentation and Q&A session with students at MDI, Gurgaon on
December 26, 2014. I also talked about cloning, the opportunity costs involved
if cash is not invested and how insurance is different from investing.
https://www.youtube.com/watch?v=JSHVXBBb9bI
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
INTERVIEW WITH WEEKLY ON STOCKS ON JUNE 28, 2023
8/16/2023
I enjoyed the Interview with Weekly on Stocks, Barron's of China, on learnings
from Warren Buffett and Charlie Munger. I also talked about opportunities in
China, the natural entrepreneurial traits of its people and some great
investments in China.
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
8/9/2023
I enjoyed the Presentation and Q&A with students at the Indian Business School
on Compounding and the journey of value investing. I talked about the magic of
compounding, how cloning helps and importance of eliminating envy and ego.
Enjoy!
https://www.youtube.com/watch?v=PpBPzNoltbs
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
PRESENTATION AND Q&A AT MDI, GURGAON ON DECEMBER 22, 2015
7/12/2023
I enjoyed my Presentation and Q&A session with students at MDI, Gurgaon on
December 22, 2015. I talked about stock market bubbles, the magic of compounding
and determining portfolio concentration.
https://www.youtube.com/watch?v=OFkApI6zZtY
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
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
7/4/2023
I very much enjoyed my Q&A session with members of the Finance and Investment
Cell at Shri Ram College of Commerce, Delhi. I talked about developing investing
skills and focusing on micro factors more than macro in investing.
Enjoy!
https://www.youtube.com/watch?v=tYtG7ZvMSjM
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH THE FINANCE CLUB OF IIT PATNA ON MAY 10, 2023
6/21/2023
I very much enjoyed my Q&A session with Finance Club of IIT Patna. I talked
about the value investing model at Amazon, identifying multi-baggers and great
businesses, and selecting our circle of friends.
Enjoy!
https://www.youtube.com/watch?v=Qgtb7LnvP6Y
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
INTERVIEW AT THE INVESTOR'S PODCAST ON APRIL 25, 2023
6/5/2023
I very much enjoyed my interview with Stig Brodersen at The Investor's Podcast.
I talked about the concept of circling the wagons in investing, anomalies in the
stock market and the importance of truth in all aspects of life.
Enjoy!
https://www.youtube.com/watch?v=DtQVYvyO4Qg
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT THE JNV LUCKNOW ON DECEMBER 27, 2022
5/26/2023
I enjoyed my Q&A session with students at JNV Lucknow on December 27, 2022. I
talked about Jamaica's passion about sprinting, education system and that
specializing begins at early stages in life.
https://www.youtube.com/watch?v=hDCt342Izag
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
PRESENTATION AND Q&A AT THE UNIVERSITY OF NEBRASKA, OMAHA ON MAY 5, 2023
5/23/2023
I very much enjoyed my presentation and Q&A session at the University of
Nebraska, Omaha on Berkshire's investment decisions. I talked about the
anomalies in the stock market, key lessons on investing and investing in global
markets.
Enjoy!
https://www.youtube.com/watch?v=SP6kKi2nMz4
with the Presentation slides here.
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT THE JNV PUNE ON DECEMBER 25, 2022
5/15/2023
I enjoyed my Q&A session with students at JNV Pune on December 25, 2022. I
talked about Dakshana's inspiration, preparing for entrepreneurship and being a
continuous learning machine.
https://www.youtube.com/watch?v=Skh3U9YNgYo
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT THE DAKSHANA VALLEY, PUNE ON DECEMBER 26, 2022
5/3/2023
I really enjoyed my Q&A session with students at the Dakshana Valley, Pune on
December 26, 2022. I talked about the real essence of life, Charlie Munger's
mental models and about handling adversities.
https://www.youtube.com/watch?v=WyGEPA1imZg
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
INTERVIEW AT THE MINT-EQUITYMASTER INVESTOR HOUR ON APRIL 11, 2023
4/28/2023
I really enjoyed my Interview with Rahul Goel at mint-Equitymaster Investor Hour
on April 11, 2023. I talked about my journey towards investing, my initial
investments, and about anomaly-based investing.
https://www.youtube.com/watch?v=ibsxgKdJNpA
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT JNV BUNDI ON DECEMBER 24, 2022
4/27/2023
I enjoyed my Q&A session with students of JNV Bundi on December 24, 2022. I
talked about Enterprise Rent-A-Car's hiring model, Dakshana's model and its
objectives, and my journey from being a below average student to becoming a
topper.
https://www.youtube.com/watch?v=7yr76gcodKQ
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT THE UNIVERSITY OF TEXAS ON FEBRUARY 28, 2023
4/14/2023
I very much enjoyed my session with students at the University of Texas on
Warren Buffett's 2022 Shareholder letter. I also talked about my investing
journey, some great businesses in Turkey, and Berkshire's investment decisions.
Enjoy!
https://www.youtube.com/watch?v=UcJB1m3cXKw
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT JNV BENGALURU (URBAN) ON DECEMBER 23, 2022
4/13/2023
I enjoyed my Q&A session with students of JNV Bangalore (Urban) on December 23,
2022. I talked about the Dakshana Foundation model, Charlie Munger and his
mental models, and my journey from a below average to a topper student.
https://www.youtube.com/watch?v=sjb4Tv_X0xg
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
CHAT WITH STUDENTS AT THE ROTMAN SCHOOL OF MANAGEMENT ON MARCH 3, 2023
4/9/2023
I very much enjoyed my session with students at the Rotman School of Management
and the Rotman Student Investment Fund on Warren Buffett's 2022 Shareholder
letter. I also talked about the "Circle the wagons" investing approach, finding
great businesses and circle of competence.
Enjoy!
https://www.youtube.com/watch?v=miqfRmUDwFQ
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
THE 2023 UBER CANNIBALS
4/3/2023
In late December 2016, I co-wrote an article on Forbes.com that introduced the
"Uber Cannibals," a 5-stock investing strategy that invests in businesses
aggressively buying back their own stock. This is a "set it and forget it for
one year" strategy that rebalances every April when 5 companies are selected for
the portfolio for the upcoming year. The Uber Cannibals is also part of the
broader 15-stock Free Lunch Portfolio, which also invests in Shamelessly Cloned
ideas and Spawners that are updated annually in December.
We are now ready for the April 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:
1. Assured Guaranty (AGO)
1. Primerica (PRI)
2. Jack in the Box (JACK)
3. Navient (NAVI)
4. 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
-12.3%
24.7%
$124,703
3.6%
All five Uber Cannibals paid dividends. As per our rules, Sonia reinvested those
dividends back into the same businesses.
Please note, the Uber Cannibals performance assumes that stocks are bought at
the high price of the day and sold at low price of the day, whereas 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:
1. Assured Guaranty (AGO)
2. Primerica (PRI)
3. Jack in the Box (JACK)
4. eBay (EBAY)
5. 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
3/7/2023
I enjoyed my session at the SumZero Top Stocks Virtual Summit 2023 on Turkey. I
also talked about investing in global markets including Turkey, my decision to
sell Ferrari, Charlie Munger's Belridge Oil deal and about some spawners.
Enjoy!
https://www.youtube.com/watch?v=ncYdcZEnH7E
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A WITH LONDON SCHOOL OF ECONOMICS ON JANUARY 18, 2023
02/21/2023
I enjoyed my talk with the students at London School of Economics on sustainable
moats. I talked about emerging markets, evaluating investments, and Charlie
Munger's mental models.
Enjoy!
https://www.youtube.com/watch?v=c7Oyv-Echa0
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT JNV BANGALORE (RURAL) ON DECEMBER 23, 2022
02/21/2023
I enjoyed my Q&A session with students of JNV Bangalore (Rural) on December 23,
2022. I talked about the Dakshana Foundation model, the fear of failure and how
failures can be a blessing, and the importance of truth to build up trust.
https://www.youtube.com/watch?v=kCTdgDQUoWw
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
SESSION WITH EO GURGAON ON JANUARY 10, 2023
01/31/2023
I very much enjoyed my session with the EO Gurgaon, India on entrepreneurship. I
talked about the reinvestment framework, how spawning can be useful and the
advantages entrepreneurs can have in investing.
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
2023 FREE LUNCH PORTFOLIO
12/29/22
In December 2017, I co-authored an article in Forbes about The "Free Lunch"
Portfolio, a strategy to invest in 15 stocks across Uber Cannibals, Shamelessly
Cloned Ideas and Spin-Offs. The Spin-Offs bucket was later replaced with
Spawners, which I detailed in the 2021 Free Lunch Portfolio post. Each of the
portfolio buckets is reassessed for changes once a year: the Cannibals in April,
and Cloned Ideas and Spawners in December. I publish updates to the portfolio
here on Chai With Pabrai.
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
12/27/2022
I very much enjoyed my talk with the UNC Kenan-Flagler Business School's
Investment Management Club about some aspects of the checklists. I talked about
active and passive investing, alternative investments and investing in emerging
markets.
Enjoy!
https://www.youtube.com/watch?v=W--321tO12M
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
SPEAKER EVENT WITH HELVETIAN INVESTMENT CLUB ON NOVEMBER 29, 2022
12/16/2022
I enjoyed my talk with the Helvetian Investment Club at St. Gallen University of
Switzerland on the asymmetry mental model. I talked about different aspects of
value investing, the power of truth and analyzing the portfolio for maximizing
returns.
Enjoy!
https://www.youtube.com/watch?v=m606MaKujq4
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION AT NAIROBI WITH EO KENYA ON OCTOBER 8, 2022
12/14/2022
I enjoyed my discussion with the members of EO Kenya on compounding being the
eighth wonder of the world with an example of the Manhattan deal by Native
Americans. I talked about Munger's investing decision on Belridge Oil in 1974,
the circle of competence and active investing model.
Enjoy!
If you prefer reading over listening, here is the transcript.
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Q&A SESSION WITH YPO GOLD NAIROBI IN KENYA ON OCTOBER 11, 2022
12/13/2022
I enjoyed my discussion with the members of YPO Gold at Nairobi, Kenya on
compounding being the eighth wonder of the world, especially with an example of
the Manhattan deal by Native Americans. I talked about intrinsic value of
stocks, my investments in Turkiye, and other global opportunities.
Enjoy!
https://www.youtube.com/watch?v=QJNB_CC-PDk
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT WILLIAM & MARY COLLEGE ON NOVEMBER 8, 2022
11/25/2022
I enjoyed my discussion with the students at the William & Mary College on
investing in oligopolies especially with an example of Micron Technologies. I
talked about destination analysis with long-term view on stocks and a good model
for running a charity organization.
Enjoy!
https://www.youtube.com/watch?v=j3U0tb-1zSU
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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PRESENTATION AND Q&A AT BOSTON COLLEGE AND HARVARD BUSINESS SCHOOL ON OCT 27,
2022
11/11/2022
I enjoyed my discussion with Professor Arvind Navaratnam's class at the Boston
College (Carroll School of Management) and Harvard Business School on Uber
Cannibals Investing Framework. I talked about intrinsic values, stock buybacks
and my approach towards investing in global markets.
Enjoy!
https://www.youtube.com/watch?v=_h10aNEQK50
with the Presentation slides here.
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH IRONHOLD CAPITAL ON SEPTEMBER 16, 2022
10/05/2022
I enjoyed my interview on value investing with Siddharth Singhai at Ironhold
Capital. I talked about intrinsic values, Phillip Fisher's Scuttlebutt method of
investing and my approach to moats.
Enjoy!
https://www.youtube.com/watch?v=rzXG8pUg4sM
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH MIS PROPIAS FINANZAS ON SEPTEMBER 20, 2022
10/05/2022
I enjoyed my interview on value investing with Mis Propias Finanzas. I talked
about my lunch with Warren Buffett, analyzing an investment and my favorite
book.
Enjoy!
https://www.youtube.com/watch?v=rzXG8pUg4sM
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SES SION WITH THE ASIAN INSTITUTE OF TECHNOLOGY, BANGKOK - AUGUST 30, 2022
9/13/2022
I very much enjoyed this recent Q&A session with the students at the Asian
Institute of Technology in Bangkok. We talked about Rakesh Jhunjhunwala's
investing career, Uber Cannibals and investing in China.
Enjoy!
https://www.youtube.com/watch?v=wz8N5CkTA2w
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
TALK WITH CFA SOCIETY OF MEXICO - AUGUST 17, 2022
9/12/2022
I enjoyed my talk with CFA Society of Mexico on Multibaggers. We discussed
different styles of investing, active fund management industry and the future of
value investing.
Enjoy!
https://www.youtube.com/watch?v=MYR0tWgstMI
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
CONVERSATION WITH LAUREN TEMPLETON ON ZENVESTING PODCAST - JULY 25, 2022
9/7/2022
I enjoyed my conversation with Lauren Templeton on Zenvesting podcast on Women
Investors and Global Investing. We also discussed my relationship with Charlie
Munger and investing in international markets.
Enjoy!
https://www.youtube.com/watch?v=E0_K-eFC8bQ
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
LECTURE AT THE TIE AUSTIN SPEAKER SERIES - INVESTMENT & ENTREPRENEUR -AUGUST 12,
2022
8/29/22
I enjoyed this talk and Q&A with TiE Austin Speaker Series - Investment &
Entrepreneurs in downtown Austin on getting traction for your startup without
outside funding. We also discussed my investing journey and Dakshana.
Enjoy!
https://www.youtube.com/watch?v=gE48QKFGEhI
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
LECTURE ON APPROACHES TO VALUE INVESTING - JUNE 16, 2022
7/14/22
I very much enjoyed my Q&A session on Value Investing with Narsee Monjee
Institute of Management Studies, Mumbai. I discussed value investing, McDonald’s
60+ years of compounding and Global Multibaggers.
Enjoy!
https://www.youtube.com/watch?v=qBdieWfouZM&t=7s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
FINSEC DIALOG CONVERSATION - JUNE 1, 2022
6/14/2022
I enjoyed my Q&A with Sandeep Parekh about Dakshana, Dot Com Bubble, shameless
cloning and the power of compounding.
Enjoy!
https://www.youtube.com/watch?v=Y2zu_8w_2H0
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
VALUE INVESTING, GREAT COMPOUNDERS, AND LESSONS FROM BUFFETT AND MUNGER -
JANUARY 5, 2022
6/14/2022
I enjoyed my interview on value investing for The Wall Street Lab Podcast. I
talked about Dhandho investing, compounders and learning from mistakes.
Enjoy!
https://www.youtube.com/watch?v=b9ioA0J-p2M&t=34s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A AT HARVARD BUSINESS SCHOOL INVESTMENT CONFERENCE - APRIL 2022
5/6/2022
I had a fun fireside chat at the HBS Investment Conference. The Investment
Conference is one of the biggest conferences arranged by HBS students each year.
It is attended by 400+ students across MBA programs who have a background or
interest in the investment management industry. We talked about Ben Graham,
micro vs marco investing and investment checklist.
Enjoy!
https://www.youtube.com/watch?v=hQsP8ogUp8k
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH DOCTORS INVESTING GROUP - FEBRUARY 2022
5/6/2022
I very much enjoyed my Q&A session with Tom Dittrich for the Doctors Investing
Group. I discussed value investing, diversified vs. concentrated portfolio and
shameless cloning.
Enjoy!
https://www.youtube.com/watch?v=0SbspUlZW8A&t=389s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
THE 2022 UBER CANNIBALS
3/31/2022
In late December 2016, I co-wrote an article on Forbes.com that introduced
the "Uber Cannibals," a 5-stock investing strategy that invests in businesses
aggressively buying back their own stock. This is a "set it and forget it for
one year" strategy that rebalances every April when 5 companies are selected for
the portfolio for the upcoming year. The Uber Cannibals is also part of the
broader 15-stock Free Lunch Portfolio, which also invests in Shamelessly Cloned
ideas and Spawners that are updated annually in December.
We are now ready for the April 2022 Uber Cannibals picks.
Recap of 2021 Uber Cannibals:
As a recap, in my 3/31/17 blog post exactly 5 years ago, we met Ms. Sonia Patel,
who had embarked on her Uber Cannibals compounding journey with $100,000 from
her IRA account at Interactive Brokers. Sonia invested in the first 5 Uber
Cannibals on 1/3/17, and then rebalanced her portfolio every year in April. The
2021 Uber Cannibals were:
1. Assured Guaranty (AGO)
2. Primerica (PRI)
3. Jack in the Box (JACK)
4. Navient (NAVI)
5. 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%
All five Uber Cannibals paid dividends. As per our rules, Sonia reinvested those
dividends back into the same businesses.
Please note, the Uber Cannibals performance assumes that stocks are bought at
the high price of the day and sold at low price of the day, whereas S&P 500 and
Small Dogs of the Dow performance assumes that stocks are bought at last close.
Below is the 12-month return of the 2021 Uber Cannibals:
Company
1 year return
Assured Guaranty
53.2%
Primerica
-6.2%
Jack in the Box
-13.3%
Navient
23.1%
Discover Financial
17.9%
The New 2022 Uber Cannibals:
In the 2021 Uber Cannibals post, I talked about importance of holding on to
great compounders and cannibals unless they get egregiously overvalued. In 2022,
the algorithms did not serve up any cannibals that would improve the overall
quality of the portfolio, and it does not seem that any of our five holdings are
egregiously overvalued. So, we do nothing; there are no changes to the 2022 Uber
Cannibals. Here are the 2022 Uber Cannibals:
1. Assured Guaranty (AGO)
2. Primerica (PRI)
3. Jack in the Box (JACK)
4. Navient (NAVI)
5. 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
2/4/2022
I very much enjoyed my Q&A session with the NUS MBA students at NUS Business
School. I discussed some of my past investments, the power of compounding and
value investing.
Enjoy!
https://www.youtube.com/watch?v=dzfjw0ZXVm4
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
2022 FREE LUNCH PORTFOLIO
12/23/21
In December 2017, I co-authored an article in Forbes about The "Free Lunch"
Portfolio, a strategy to invest in 15 stocks across Uber Cannibals, Shamelessly
Cloned Ideas and Spin-Offs. We later replaced the Spin-Offs bucket with
Spawners, which I detailed in the 2021 Free Lunch Portfolio post. The portfolio
rebalances its Cannibals in April and Cloned Ideas and Spawners in December. I
have been publishing updates to the portfolio here on Chai With Pabrai.
The Free Lunch portfolio was up 25% in 2021, vs. 28% for the S&P 500. The
portfolio has managed to keep up with S&P 500 despite significant drops in
holdings like Alibaba. Since inception on January 1, 2018, on an annualized
basis, the Free Lunch portfolio is up 7% while the S&P is up 17%. While 7%
annualized return isn’t so bad, the S&P 500 has trounced the Free Lunch
portfolio so far. The Free Lunch does not have much exposure to high-flyers at
nosebleed valuations, and quite a few of its names are businesses we know well
and are exceptional. Keep the faith. We’re just getting warmed up.
New 2022 Free Lunch Portfolio
Our goal with the Free Lunch is to buy and hold 15 compounders for long
stretches of time, giving them plenty of room to ride. It’s a 'set it and forget
it' type of portfolio. We’ll make small tweaks only if we come across a business
that we love and just need to have in the portfolio. This year we came across
one such gem: Tencent Holdings. I’ve given some color on Tencent in a few of my
recent talks, including my lecture to Boston College (beginning at 24:08).
To bring in Tencent, we make the tough decision to sell Seritage Growth
Properties. Seritage was in the portfolio as a Pabrai Fund pick, even though it
wasn’t the top Pabrai Funds holding, which is Micron. We will shift the Pabrai
Cloned Idea to Micron. This will leave an open slot. Tencent will fill that slot
as a top pick of Value Partners, one of our select value managers based in Hong
Kong.
Here are the constituents for the upcoming year:
Spawners
* Berkshire Hathaway (BRK.B)
* Restaurant Brands (QSR)
* Starbucks (SBUX)
* Microsoft (MSFT)
* Brookfield Asset Management (BAM)
Shameless Cloning
* Alphabet (GOOGL), from The Children’s Investment Fund
* Chipotle Mexican Grill (CMG), from Pershing Square
* Micron (Mu), from Pabrai Funds
* Alibaba (BABA), from Appaloosa Management
* Tencent (TCEHY), from Value Partners
Uber Cannibals
* Assured Guaranty (AGO)
* Primerica (PRI)
* Navient (NAVI)
* Discover Financial Services (DFS)
* Jack in the Box (JACK)
If you are a new investor to the Free Lunch Portfolio, you can just equal weight
these 15 stocks (i.e., invest the same amount of money in each of these 15)
between now and early January 2022.
If you are already invested in the Free Lunch Portfolio, and you rebalanced the
Uber Cannibals in April 2021 with the New Uber Cannibals, then sell Seritage and
invest the proceeds in Tencent. You can do this in early January 2022.
If you’re investing in a taxable account, you may try to sell Seritage in
December 2021 to capture short-term losses.
These are the stocks to sell, along with their full-year 2021 returns:
Stock
2021 Return
Seritage Growth Properties
-9%
As a reminder, the new Uber Cannibals get published every April, while the new
Spawners and Shameless Cloning businesses are released in January. When we
publish the new Uber Cannibals in April 2022, sell the Ubers that are no longer
on the new list and invest the proceeds equally across the new Uber Cannibal
picks. Then in January 2023, you’ll rebalance the Spawners and Shameless Cloning
ideas.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due
diligence and are themselves fully responsible for the outcome.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT THE UNIVERSITY OF GEORGIA - NOVEMBER 2021
12/6/21
I had a fun Q&A with students at the University of Georgia. We talked about my
relationship with Warren and Charlie, sources for investment ideas and
identifying moats.
Enjoy!
https://www.youtube.com/watch?v=wT1m8J4hdpA&t=852s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT WILLIAM & MARY COLLEGE - OCTOBER 26, 2021
12/3/2021
I very much enjoyed my Q&A session with the Students at William & Mary College.
I discussed my learnings from Charlie Munger, learning from my mistakes and my
adventures with Tech Cominco.
Enjoy!
https://www.youtube.com/watch?v=-etUrauRHgE&t=957s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH STUDENTS AT THE UNIVERSITY OF OXFORD - OCTOBER 19, 2021
11/3/2021
I very much enjoyed my Q&A session with the University of Oxford. I talked about
my Dhandho Investor book, investments in Turkey and about shorting stocks.
Enjoy!
https://www.youtube.com/watch?v=PN3f668IKO0&t=1s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
MY ANNUAL TALK AT BOSTON COLLEGE - OCTOBER 14, 2021
11/3/2021
I very much enjoyed my discussion with Prof. Arvind Navaratnam’s class on
Fundamental Analysis & Value Investing at the Carroll School of Management
(Boston College). This was my 10th year of speaking to the students. We
discussed a few investing frameworks, Tencent business model, and evolution of
my investing style.
Enjoy!
https://www.youtube.com/watch?v=_7UfqjD3IEg&t=2s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A WITH BROWN UNIVERSITY VALUE INVESTING SPEAKER SERIES - AUGUST 2, 2021
10/5/2021
I very much enjoyed my Q&A session with Itai Parnes for Brown University Value
Investing Speaker Series. Itai did his homework and asked wonderful questions. I
talked about Spawners, Chinese Big Tech Regulation and how to raise capital when
you start a Fund.
Enjoy!
https://www.youtube.com/watch?v=p5xt09gAi-U&t=404s
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A WITH VALUE SCHOOL (MADRID, SPAIN) - JULY 9, 2021
8/5/2021
I had a fun Q&A with students at Value Scholl (Madrid, Spain) for their Summer
Summit 2021. They did an amazing Spanish translation of The Dhandho Investor a
few years ago - https://t.co/Saw4z4lK9V?amp=1
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:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH VISHAL KHANDELWAL
7/30/21
I very much enjoyed speaking to Vishal Khandelwal for the One Percent Show. We
talked about the biggest lessons I learned from the people who have been closest
in my life - my father, Warren Buffett, Charlie Munger, Nick Sleep and Guy
Spier. Enjoy!
https://www.youtube.com/watch?v=NfcGzvXAw6M
The One Percent Podcast - Mohnish Pabrai - TranscriptFile Size: 2230 kbFile
Type: pdf
Download File
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--------------------------------------------------------------------------------
IN CONVERSATION WITH AJAY ANTONY, FOUNDER & TEACHER, THE PHYSICS CHAMBER
6/11/2021
I enjoyed my banter with my good friend Ajay Antony. I talked about my love of
shamelessly cloning and the power of compounding.
Enjoy!
https://www.youtube.com/watch?v=YSAtJd7iJV8
--------------------------------------------------------------------------------
Q&A SESSION WITH LONDON BUSINESS SCHOOL MBA STUDENTS - MAY 19, 2021
6/7/2021
I very much enjoyed my Q&A session with the LBS (London Business School)
Investment Management Club. I talked about cloning Buffett and Munger, investing
in India and the advantage to investors to think like entrepreneurs.
Enjoy!
https://www.youtube.com/watch?app=desktop&v=K4mggdrMHVo
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH THE KOLKATA VALUE HUNTERS CLUB - MAY 12, 2021
6/7/2021
I enjoyed my banter with The Kolkata Value Hunters Club for the Knowledge
Speakers Series. We talked about book 'Richer, Wiser, Happier' and how my
investment philosophy changed over the years. We also discussed Dakshana
Foundation and approaching philanthropy with an investor’s mindset.
Enjoy!
https://www.youtube.com/watch?app=desktop&v=9JYXICM3RSo&t=2804s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
Q&A SESSION WITH OMAHA - MAY 20, 2021
6/7/2021
I very much enjoyed my Q&A session with Dante Albertini and YPO members in Peru.
We discussed my investing approach, dealing with failure and key lessons from
Charlie Munger.
Enjoy!
https://www.youtube.com/watch?v=V9T3dEeWiVE
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THE INVESTORS PODCAST - MAY 1, 2021
5/13/2021
I very much enjoyed returning to the Investor’s Podcast with Preston Pysh and
Stig Brodersen.
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
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2021 VIRTUAL VALUE INVESTING CONFERENCE
5/13/2021
I very much enjoyed being a panelist at the Ivey Business School Value Investing
Conference. I talked about the book 'Richer, Wiser, Happier' and how my
investment philosophy changed over the years.
Enjoy!
https://www.youtube.com/watch?app=desktop&v=OmrVUxTGENw
--------------------------------------------------------------------------------
Q&A SESSION WITH MBA STUDENTS AT COLUMBIA BUSINESS SCHOOL – MARCH 18, 2021
5/4/2021
I very much enjoyed my Q&A session with the Students of Value Investing MBA
Class of Columbia Business School at Columbia University. I discussed my journey
as a value investor and the need for investors to think like entrepreneurs.
Enjoy!
https://www.youtube.com/watch?v=NEB2RfRgBSQ
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
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
4/23/2021
I very much enjoyed my banter with the students of The Kelley School of Business
at Indiana University. We discussed the importance of the importance of staying
within one’s circle of competence. We also talked about how my investment
philosophy changed over the years. It also has references to the Seinfeld show!
Enjoy!
https://www.youtube.com/watch?v=XNtWcAag9as
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
THE 2021 UBER CANNIBALS
3/30/2021
In late December 2016, I co-wrote an article on Forbes.com that introduced
the "Uber Cannibals," a 5-stock investing strategy that invests in businesses
aggressively buying back their own stock. This is a "set it and forget it for
one year" strategy that rebalances every April when 5 companies are selected for
the portfolio for the upcoming year. The Uber Cannibals is also part of the
broader 15-stock Free Lunch Portfolio, which also invests in Shamelessly Cloned
ideas and Spawners that are updated annually in December.
We are now ready for the April 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:
1. Assured Guaranty (AGO)
2. Primerica (PRI)
3. Globe Life (GL)
4. Navient (NAVI)
5. 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
All five Uber Cannibals paid dividends. As per our rules, Sonia reinvested those
dividends back into the same businesses.
Please note, the Uber Cannibals performance 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%
The New 2021 Uber Cannibals:
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:
1. Assured Guaranty (AGO)
2. Primerica (PRI)
3. Navient (NAVI)
4. Discover Financial Services (DFS)
5. 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
3/4/21
I very much enjoyed my Q&A session with with MBA Students at Georgetown
University. I discussed my journey that led to my starting Pabrai Funds,
importance of holding onto a compounder, and the art of selling.
Enjoy!
https://www.youtube.com/watch?v=V_djW_RGPGA&t=400s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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Q&A WITH MEMBERS OF THE BABSON COLLEGE FUND (BABSON COLLEGE STUDENTS)– FEB 9,
2021
2/9/21
I very much enjoyed my Q&A session with the members of The Babson College Fund
(Babson College Students). We discussed the importance of temperamental
control in investing and finding long-term compounders.
Enjoy!
https://www.youtube.com/watch?v=NXxIQfVIzVU
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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Q&A WITH STUDENTS OF PEKING UNIV. (GUANGHUA SCHOOL OF MGMT.)–DEC. 3, 2020
2/19/21
I very much enjoyed giving my lecture “Compounding with the Spawners” to the
students of Peking University's Guanghua School of Management. We talked about
Spawners and how to identify one.
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:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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Q&A SESSION WITH STUDENTS AT CLEMSON UNIVERSITY - JAN 27, 2021
2/12/2021
I very much enjoyed my discussion with the Members of Wall Street South
Investment Club at the Wilbur O. And Ann Powers College of Business (Clemson
University). We talked about the advantages and disadvantages of auction-driven
stock market investing, and my learnings in 2020.
Enjoy!
https://www.youtube.com/watch?v=QIUH0IzoV6E
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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VALUE INVESTING WITH LEGENDS PODCAST - THE VALUE OF CONTINUOUS LEARNING
1/15/2021
I very much enjoyed talking to Professor Tano Santos of Columbia Business School
for the Value Investing with Legends Podcast. We discussed my learnings from
my father’s entrepreneurial ventures and the need for investors to think like
entrepreneurs. We also talked about compounders, spawners and the future of
value investing.
Enjoy!
Apple Podcasts: shorturl.at/vyWY8
Spotify: https://open.spotify.com/episode/30t6eKvL47rARxwhHUJmCY
Google Podcasts: shorturl.at/iF689
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2021 FREE LUNCH PORTFOLIO
12/23/2020
In December 2017, I co-authored an article in Forbes about The "Free Lunch"
Portfolio, a strategy to invest in 15 stocks across Uber Cannibals, Shamelessly
Cloned Ideas and Spin-Offs. The portfolio rebalances its Cannibals in April and
Cloned Ideas and Spin-Offs in December. I have been publishing updates to the
portfolio here on Chai With Pabrai.
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%
As a reminder, the new Uber Cannibals get published every April, while the new
Spawners and Shameless Cloning businesses are released in December. When we
publish the new Uber Cannibals in April 2021, 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 2022, 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.
--------------------------------------------------------------------------------
MOHNISH PABRAI PRESENTATION AND Q&A WITH UCLA STUDENT INVESTMENT FUND - NOVEMBER
5, 2020
12/9/2020
I very much enjoyed my discussion with members of the UCLA Student Investment
Fund at the UCLA Anderson School of Management. I discussed my journey that led
to my starting Pabrai Funds, importance of holding onto a compounder, and about
aligning your outer map with your inner map.
Enjoy!
https://www.youtube.com/watch?v=iJII3_CyUvo
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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MOHNISH PABRAI LECTURE AT BOSTON COLLEGE (CARROLL SCHOOL OF MGMT) - OCTOBER 8,
2020
10/30/2020
I very much enjoyed my discussion with Prof. Arvind Navaratnam’s class on
Fundamental Analysis & Value Investing at the Carroll School of Management
(Boston College). We discussed a few investing frameworks, circle of competence,
and the power of compounding.
Enjoy!
https://www.youtube.com/watch?v=ANn907GgLPs&feature=youtu.be
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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Q&A SESSION WITH EDELWEISS ASSET MANAGEMENT - MAY 29, 2020
6/15/2020
I very much enjoyed my Q&A session with Radhika Gupta, CEO of Edelweiss Asset
Management. We discussed bridge, Dhandho investing, my lunch with Warren
Buffett, the importance of patience in investing and the current investment
landscape.
https://www.youtube.com/watch?v=nogBvLWB6cU&feature=youtu.be
If you prefer reading over listening, here is the transcript.
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Q&A SESSION WITH MILLENNIUM MAMS' - MAY 8, 2020
6/12/2020
I very much enjoyed my joint Q&A session with Ramesh Damani (Chairman of Avenue
Supermarts) with Millennium Mams'. Millennium Mams' is a Kolkata-based
non-profit organization dedicated to empowering women through financial
literacy. We talked about our heroes in life, US-China trade war and how it
affects India.
https://www.youtube.com/watch?v=_2aFw40NqP8
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
FIRESIDE CHAT WITH JEFF PINTAR - MAY 21, 2020
6/2/2020
I very much enjoyed my fireside chat with Jeff Pintar, CEO of Pintar Investment
Company. We discussed what the world may look like post-Covid 19 and the current
investment landscape. We also talked about a lifetime ban I recently received
from a Las Vegas casino.
https://www.youtube.com/watch?v=w2hnOllfpwI
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
THE INVESTORS PODCAST - MAY 2, 2020
5/4/2020
I very much enjoyed returning to the Investor’s Podcast with Preston Pysh and
Stig Brodersen.
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
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CNBC INDIA INTERVIEW, APRIL 27, 2020
4/29/2020
I very much enjoyed my chat with Ramesh Damani on CNBC – TV18 for the “Wizards
of Dalal Street” program. We discussed lessons from the '08/'09 Global Financial
Crisis and how to apply them to markets within the context of the Coronavirus
pandemic. We also discussed the mental models I use to identify hidden moats, as
well as the Dakshana Foundation.
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
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Q&A SESSION WITH FRANCIS CHOU AT HARVARD – APRIL 7, 2020
4/16/2020
I very much enjoyed my Q&A session with Francis Chou for Professor Andrew
Sandoe’s class on Business Analysis and Valuation at Harvard University. We
discussed the importance of trust in business transactions, being a harsh grader
of people and the pitfalls of writing a good contract with a bad person. We also
discussed the power of compounding and the importance of starting early.
Here is the video: https://youtu.be/iW0Mv9zVt0o
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
* If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
MOHNISH PABRAI: A BULL’S VIEW IN A VIRUS SHOP
4/14/2020
I very much enjoyed my recent chat with SumZero CEO Divya Narendra. I discussed
my thoughts on humanity’s impressive response to COVID-19, and the mental models
I use to approach investing in the context of the pandemic.
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
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THE NEW 2020–2021 UBER CANNIBALS
3/30/2020
In late December 2016, I co-wrote an article on Forbes.com that introduced
the "Uber Cannibals," a 5-stock investing strategy that invests in businesses
aggressively buying back their own stock. This is a "set it and forget it for
one year" strategy that rebalances every April when 5 companies are selected for
the portfolio for the upcoming year.
We are now ready for the April 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:
1. Sleep Number (SNBR)
2. Corning (GLW)
3. Asbury Automotive Group (ABG)
4. Quanta Services (PWR)
5. 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%
Corning, Quanta and Allison Transmission paid dividends totaling $1,177. Per our
rules, Sonia reinvested those dividends back into the same businesses.
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%
The New Uber Cannibals:
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:
1. Assured Guaranty (AGO)
2. Primerica (PRI)
3. Globe Life (GL)
4. Navient (NAVI)
5. Discover Financial Services (DFS)
Sell all the
2019 Uber Cannibals and invest the proceeds equally among the new kids. 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 2021, when I'll provide the 2020 - 2021 portfolio
on www.ChaiWithPabrai.com. Happy Cannibal Investing!If you invested in the Uber
Cannibals in April 2019 in a taxable account, try to sell after no more than 364
days, to realize short term losses.
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.
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2020 FREE LUNCH PORTFOLIO
12/23/2019
In December 2017, I co-authored an article in Forbes about The "Free Lunch"
Portfolio, which combines the power of Uber Cannibals, Shameless Cloning and
Spinoffs. An updated portfolio was published on the blog in December 2018. As a
recap, our algorithms selected these 15 companies for 2019:
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.
Spinoffs:
* 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%
As a reminder, the new Uber Cannibals get published every April, while new the
Spinoffs and Shameless Cloning businesses are released in January. When we
publish the new Uber Cannibals in April 2020, 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 2021, 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.
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MY ANNUAL TALK AT BOSTON COLLEGE
11/26/2019
I very much enjoyed my discussion with Prof. Arvind Navaratnam’s class on
Fundamental Analysis & Value Investing at the Carroll School of Management
(Boston College). We discussed a few investing frameworks, the importance of
investment mistakes, and how to look for businesses that transcend geography and
currency.
Enjoy!
https://www.youtube.com/watch?v=kdGltV0eomU&feature=youtu.be
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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INTERVIEW FOR GRAHAM & DODDSVILLE NEWSLETTER, COLUMBIA BUSINESS SCHOOL
10/16/2019
I enjoyed being interviewed for the Graham & Doddsville newsletter from the
students of Columbia Business School. I discussed my journey that led to my
starting Pabrai Funds, mistakes and learnings from the 2008 financial crisis and
the importance of staying within one’s circle of competence.
The interview starts on Page 22:
https://www8.gsb.columbia.edu/valueinvesting/sites/valueinvesting/files/files/Graham%26Doddsville_Issue37.pdf
Enjoy!
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MOI GLOBAL’S MEET-THE-AUTHOR SUMMER FORUM 2019 INTERVIEW
9/12/2019
I very much enjoyed talking to John Mihaljevic for MOI Global’s Meet-the-Author
Summer Forum 2019 about my book, The Dhandho Investor. We discussed the Patels
and applying their low cost operating business model to investing. We also
discussed arbitrage, taking advantage of “offering gaps,” risk-free bets, the
art of selling, diversification and the changes I would make to The Dhandho
Investor now.
Enjoy.
https://www.youtube.com/watch?time_continue=106&v=OgsKhFzyX2U
If you prefer reading over listening, here is the transcript:
https://moiglobal.com/mohnish-pabrai-the-dhandho-investor-201907/
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LECTURE AND Q&A WITH STUDENTS OF PEKING UNIV. (GUANGHUA SCHOOL OF MGMT.) – MAY
1, 2019
6/14/2019
I very much enjoyed giving my lecture “Great Businesses vs. Great Investments”
to the students of Peking University's Guanghua School of Management in Irvine.
We discussed my stock picking games with Guy Spier and other investors, my love
of shamelessly cloning, and the ten commandments of investment management.
The presentation included a rich Q&A session on a diverse set of topics. Enjoy!
https://www.youtube.com/watch?v=Kax8XnBU1ik
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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TRINITY COLLEGE DUBLIN TALK - FEBRUARY 21, 2019
5/24/19
I very much enjoyed being back in Ireland to give a talk to the Trinity Student
Managed Fund at Trinity Business School, Trinity College in Dublin. We took a
historical look at the performance of various global markets over time. We also
had a wonderful Q&A during which I reflected on key lessons I've taken from
Warren Buffett and Charlie Munger.
https://www.youtube.com/watch?v=_0XPurSI9cQ
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
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:
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AN ODE TO THE TEN COMMANDMENTS OF INVESTMENT MANAGEMENT
5/9/2019
I received a wonderful note from an investor named Johnny Bonner who translated
my Ten Commandments of Investment Management into verses that rhyme. I am
sharing Johnny’s note here. Thank you Johnny!
Enjoy!
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THE INVESTOR’S PODCAST
5/9/2019
I very much enjoyed returning to the Investor’s Podcast with Preston Pysh and
Stig Brodersen. We dove into cloning, the difficulty of beating a broad-based
index like the S&P 500, and my lessons from owning a property and casualty
insurance company.
Enjoy!
https://www.theinvestorspodcast.com/episodes/tip241-value-investing-w-mohnish-pabrai/
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GURUFOCUS PODCAST INTERVIEW
5/9/2019
I enjoyed speaking with Holly LaFon for the GuruFocus podcast. We discussed the
market conditions in 1999 when I started my investment funds and investment
opportunities in the U.S., India and other markets. I also answered a few
questions from GuruFocus readers.
Enjoy!
https://www.gurufocus.com/podcast.php (Episode 12)
If you prefer reading over listening, here is the transcript:
https://www.gurufocus.com/news/837804/transcript-mohnish-pabrai-interview-with-gurufocus--finding-value-in-india-and-the-us
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Q&A SESSION WITH DAKSHANA SCHOLARS AT DAKSHANA VALLEY, DEC. 26, 2018
5/9/2019
I very much enjoyed my Q&A session with the class of 2019 Dakshana scholars at
Dakshana Valley on Dec. 26, 2018. I discussed my past failures (like
Gandhigiri.org) before Dakshana Foundation, how to fight corruption and how Adam
Smith’s ‘invisible hand’ works.
Enjoy!
https://www.youtube.com/watch?v=BUolYZTqiiI&feature=youtu.be
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Q&A SESSION WITH DAKSHANA SCHOLARS AT JNV KOTTAYAM, DEC. 24, 2018
5/9/2019
It was a pleasure to have my annual Christmas Eve Q&A session with the class of
2019 Dakshana scholars at JNV Kottayam, Kerala on Dec. 24, 2018. I talked about
how to start a business and why Dakshana Foundation chose IIT-JEE preparation
over primary education.
Enjoy!
https://www.youtube.com/watch?v=jRcLBGHsBpw
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THE NEW 2019–2020 UBER CANNIBALS
3/29/2019
In late December 2016, I co-wrote an article on Forbes.com that introduced
the "Uber Cannibals," a 5-stock investing strategy that invests in businesses
aggressively buying back their own stock. This is a "set it and forget it for
one year" strategy that rebalances every April when 5 companies are selected for
the portfolio for the upcoming year.
We are now ready for the April 2019 picks.
Recap of 2018 Uber Cannibals:
As a recap, in my 3/31/17 blog post, we met Ms. Sonia Patel, who had embarked on
her Uber Cannibals investing journey with $100,000 from her IRA account at
Interactive Brokers. Sonia invested in the first 5 Uber Cannibals on 1/3/17, and
then rebalanced her portfolio annually in April. The 2018 - 2019 Uber Cannibals
were:
1. Sleep Number Corp. (SNBR)
2. Corning Inc. (GLW)
3. PulteGroup (PHM)
4. Discover Financial Services (DFS)
5. Lear Corp. (LEA)
As of 3/29/19, Sonia's $100k was worth $136,656 (after trading costs), up 36.7%.
If Sonia had instead invested in the S&P 500 over that period, she would be up
32.4% and her portfolio would be worth approx. $4k less, or $132,389.
Please note, Uber Cannibals performance includes trading costs and also assumes
that stocks are bought at the high price of the day and sold at low price of the
day, whereas S&P 500 and Small Dogs of the Dow performance does not include
trading costs and assumes that stocks are bought at last close.
Last 12 Months
Since 1/3/17
Value of $100K invested on 1/3/17
Uber Cannibals
4.1%
36.7%
$136,656
S&P 500
9.5%
32.4%
$132,389
Small Dogs of the Dow
19.4%
28.3%
$128,288
Corning, PulteGroup, Discover and Lear paid dividends totaling $1,950. Per our
rules, Sonia reinvested those dividends back into the same businesses.
Below is the 1 year return of the 2018-2019 Uber Cannibals:
Company
1 year return
Sleep Number Corp.
33.7%
Corning Inc.
21.6%
PulteGroup
-3.8%
Discover Financial Services
1.0%
Lear Corp.
-25.8%
The Uber Cannibals strategy makes sense if you intend to follow it for at least
a decade or two (or longer). So we shouldn't fixate too much on short term
performance. But the Ubers are doing quite well! I am happy to see that Sonia is
doing quite well so far.
The New Uber Cannibals:
For 2019 - 2020, our algorithms selected the following five Uber Cannibals:
1. Sleep Number Corp. (SNBR)
2. Corning Inc. (GLW)
3. Asbury Automotive Group Inc. (ABG)
4. Quanta Services Inc. (PWR)
5. 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.
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2019 FREE LUNCH PORTFOLIO
12/19/2018
In December 2017, I co-authored an article in Forbes about The “Free Lunch”
Portfolio, which combines the power of Uber Cannibals, Shameless Cloning and
Spinoffs. As a recap, our algorithms selected these 15 companies for 2018:
Uber Cannibals
* 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.
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ET NOW INTERVIEW WITH GUY SPIER OVER CHAI AND VADA PAV
11/21/2018
I enjoyed being interviewed by ET Now at their office in Mumbai with Guy Spier.
We discussed the recent decline in the Indian stock market and housing finance
companies, and the problems associated with investing in levered financial
institutions. We also discussed why it is important to concentrate on the value
of the business and not its stock price. And we did this over some delicious
Chai and Vada Pav!
Enjoy!
https://www.youtube.com/watch?time_continue=17&v=OTvzQR9KKT8
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Q&A SESSION WITH DAKSHANA SCHOLARS AT DAKSHANA VALLEY, OCT. 21, 2018
11/13/2018
I very much enjoyed this joint Q&A session that Kamal Khetan, Managing Director
of Sunteck Realty Ltd., and I had with Dakshana Scholars at Dakshana Valley on
Oct. 21, 2018. We discussed the motivations behind establishing the Dakshana
Foundation and the importance of learning from your failures in life.
The Q&A session is in Hindi. Enjoy!
https://www.youtube.com/watch?v=NrDLcZHkf3I&t=6s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
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KEYNOTE SPEECH AT ANNUAL MORNINGSTAR INDIA CONFERENCE - OCT. 24, 2018
11/13/2018
I enjoyed giving this talk on “The Ten Commandments of Investment Management” at
the 8th Morningstar Investment Conference in Mumbai. The talk is followed by a
Q&A session where we discussed my takeaways from lunch with Warren Buffett, a
fair management fee structure and the Dakshana foundation.
https://www.youtube.com/watch?v=5XJ88nRtF0I
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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INTERVIEW WITH CNBC – TV18 ON INVESTING OPPORTUNITIES IN INDIA
10/26/2018
I very much enjoyed my chat with Nigel D’Souza on CNBC – TV18. We discussed why
it’s important for an investor to simply focus on the businesses and drown out
other noise in the market. We also covered my approach to investing in Mumbai
real estate and other opportunities in India. Enjoy!
It is a two-part interview:
Part1: https://www.youtube.com/watch?v=rP5Wow-Xpgw
Part2: https://www.youtube.com/watch?v=Ke6GCMixqMc
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THE TEN COMMANDMENTS OF INVESTMENT MANAGEMENT
10/12/2018
I very much enjoyed giving my talk on “The Ten Commandments of Investment
Management” to Prof. Arvind Navaratnam’s class on Value Investing at the Carroll
School of Management (Boston College). It was my 8th year in a row! The talk is
followed by a Q&A session where we discussed investing in India, a fair
management fee structure, 2008 financial crisis and Sergio Marchionne.
https://youtu.be/9tGjXPhnp-s
Enjoy!
Here is an Economic Times article on the talk:
https://economictimes.indiatimes.com/markets/stocks/news/pabrais-10-commandments-for-becoming-a-successful-investor/articleshow/67123851.cms
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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ECONOMIC TIMES INTERVIEW: VOLATILITY IS THE FRIEND OF A LONG-TERM INVESTOR
8/28/2018
I very much enjoyed being interviewed by The Economic Times on the sidelines of
the Motilal Oswal Annual Global Investor Conference in Mumbai. We discussed a
range of topics including P/E of 1 stocks, cloning and my investment checklist.
Enjoy!
https://economictimes.indiatimes.com/markets/expert-view/volatility-is-the-friend-of-a-long-term-investor-mohnish-pabrai/articleshow/65570377.cms
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THE TRUST VS. TRUTH TALK AT JNV BUNDI (RAJASTHAN) ON JUNE 2, 2018
7/24/2018
I recently gave the “Trust vs. Truth” talk to the Class of 2019 Dakshana
Scholars at JNV Bundi (Rajasthan, India) on June 2, 2018. These scholars will
take the IIT entrance exams in 2019. The majority are likely to be accepted by
the IITs.
We explored the variables Buffett believes are key to success in life
(integrity, intelligence, and energy), Marcus Aurelius’ Stoicism and the
importance of adversity, and the motivations behind establishing the Dakshana
Foundation.
Enjoy!
https://www.youtube.com/watch?v=j72nRsSPIi0&feature=youtu.be
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INTERVIEW FOR THE LEADERSHIP SHOW
6/27/2018
I very much enjoyed speaking to Rohilesh Singh, founder and CEO of Populis, for
the Leadership Show. We talked about the importance of giving back (in time and
resources), the Dakshana Foundation, how to invest in profitable businesses and
the importance of checklists in investing. Enjoy!
http://www.populis.com.au/single-post/2018/06/21/CLEVER-INVESTOR-AND-GIVER-Rohilesh-X-Mohnish-Pabrai
https://www.youtube.com/watch?v=m53ukJMuO78
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MOHNISH PABRAI LECTURE AT UNIV. OF CALIFORNIA, IRVINE (UCI), JUNE 7, 2017
I enjoyed my session at the University of California at Irvine's Paul Merage
School of Business. I talked about five decisions by Warren Buffett and Charlie
Munger over a 20-year period (1968 - 1988) that moved the needle for Berkshire.
I also talked about some of the intense difficulties that Warren Buffett and
Charlie Munger faced along the way.
Enjoy!
https://www.youtube.com/watch?v=bLjoL5zhBxA
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
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INTERVIEW WITH SUMZERO IN FORBES – ADVICE FOR VALUE INVESTORS
6/26/2018
I very much enjoyed my chat with Kevin Harris from SumZero published on
Forbes.com. We covered a range of topics including checklists, a fair management
fee structure, and the importance of doing your own investment research.
Enjoy!
https://www.forbes.com/sites/kevinharris/2018/06/25/mohnish-pabrais-advice-for-value-investors/#60ce25d122ed
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YOUR DEEPEST DESIRE IS YOUR DESTINY (THE UPANISHADS)
6/14/2018
I very much enjoyed my Q&A session with the Class of 2019 Dakshana Scholars at
JNV Silvassa (Union territory of Dadra & Nagar Haveli, India) on February 25,
2018. This all-female batch of Dakshana scholars will take their medical
entrance exams in 2019. The majority are likely to be accepted by the best
medical schools. Their questions covered a broad range of topics related to my
childhood, compounding, lessons from my failures and motivation behind our
establishing the Dakshana Foundation.
Enjoy!
https://www.youtube.com/watch?v=jjjI5O_uZUA
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CHAI WITH PABRAI: ET NOW INTERVIEW
6/4/2018
I very much enjoyed being interviewed by ET Now for a "Chai With Pabrai"
segment. We discussed a wide range of topics including my views on stocks in
India, circle of competence and Dhandho investing (low risk high uncertainty) in
India.
Enjoy!
https://www.youtube.com/watch?v=T7Qr1Ze8vNA
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LECTURE AT COLUMBIA BUSINESS SCHOOL: “WHERE HAVE WE BEEN AND WHERE ARE WE
HEADED?”
5/11/2018
I recently gave a talk to Prof. Bruce Greenwald’s "Legends of Value Investing"
class at Columbia Business School entitled “Where have we been and where are we
headed?” We discussed historical performance periods in the capital markets and
lessons we can glean for our future.
Enjoy!
It is best to watch the video using the Firefox browser. It may take a few
minutes to load. You may want to turn up the volume for better audio. You can
toggle between the slides and the video by clicking on the box in the bottom
right of your screen:
https://echo360.org/media/80cb039a-ded1-4395-a673-6b548ab27ea4/public
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ET NOW INTERVIEW AT BERKSHIRE HATHAWAY ANNUAL MEETING
5/8/2017
I very much enjoyed being interviewed by ET Now at the Berkshire Hathaway Annual
Meeting with Guy Spier and Raamdeo Agrawal. We discussed our experiences
attending Berkshire meetings over the years (it was my 21st meeting!) and the
lessons that are reinforced every year on our annual pilgrimage to Omaha.
Enjoy!
https://www.youtube.com/watch?v=7FspBQlgu88&app=desktop
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TALK WITH CLASS OF 2019 DAKSHANA SCHOLARS – DEC. 24, 2017
4/30/2018
. I very much enjoyed my Q&A session with the class of 2019 Dakshana scholars at
JNV Kottayam, Kerala, India on Dec. 24, 2017. These scholars will take the IIT
entrance exams in 2019. The majority are likely to be accepted by the IITs.
Their questions covered a broad range of topics related to compounding, as well
as the reasons behind our establishing the Dakshana Foundation.
Enjoy!
https://www.youtube.com/watch?v=jqX9AgwgwTY&feature=youtu.be
I suggest the following books to start one's journey into finance and investing:
1) 1958-1970 Buffett Partnership Letters (these are available at various
places on the web,
including http://pragcap.com/warren-buffett-partnership-letters). Cost: Zero
2) The Warren Buffett letters to Berkshire Hathaway Shareholder. These are
posted at www.berkshirehathaway.com. Cost: Zero
3) 1995 published biography called “Buffett: The Making of an American
Capitalist” by Roger Lowenstein.
4) 2009 published book “Snowball: Warren Buffett and the Business of Life” by
Alice Schroeder.
5) “Poor Charlie’s Almanack” by Peter Kaufman.
6) “The Dhandho Investor” by Mohnish Pabrai.
7) Berkshire Hathaway Letters to Shareholders - 1965-2014
8) Berkshire Hathaway Letters to Shareholders - 1965-2017. Only available on
Kindle but cost is just $2.99.
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PATEL'S BUSINESS SECRETS - VIDEO ON THE DHANDHO INVESTOR
3/30/2018
I enjoyed this video that summarized the Patels’ business practices from "The
Dhandho Investor." The video explores how the Patels got into the motel business
in the U.S, their low cost operating model and high return on equity. Heads I
win, tails I don't lose much! (Note: the video is in hindi).
https://www.youtube.com/watch?v=INSuLnQJvuY&feature=youtu.be&a
Enjoy!
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THE NEW 2018–2019 UBER CANNIBALS
3/29/2018
In late December 2016, I co-wrote an article on Forbes.com that introduced the
"Uber Cannibals," a five-stock investing strategy that invests in businesses
aggressively buying back their own stock. This is a "set it and forget it for
one year" strategy that rebalances every April when 5 companies are selected for
the portfolio for the upcoming year.
The Uber Cannibals draft season is now upon us, and it's time to pick our 2018 -
2019 team.
As a recap, in my 3/31/17 blog post, we met Ms. Sonia Patel, who had embarked on
her Uber Cannibals investing journey with $100,000 from her IRA account at
Interactive Brokers. Sonia invested in the first 5 Uber Cannibals on 1/3/17, and
then rebalanced her portfolio in April 2017 with the 2017 - 2018 Uber Cannibals,
which were:
1. Lowe's (LOW)
2. NVR (NVR)
3. The Hackett Group (HCKT)
4. Select Comfort (SCSS)
5. 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:
1. Sleep Number Corp. (SNBR)
2. Corning Inc. (GLW)
3. PulteGroup (PHM)
4. Discover Financial Services (DFS)
5. Lear Corp. (LEA)
Sleep Number Corp. (which recently changed its name from Select Comfort) will
continue to be in the portfolio for another year. But we have four new kids on
the block.
If you invested in the Uber Cannibals in April 2017, then leave Sleep Number
Corp untouched, and sell Lowe's, NVR, Hackett, and Willis Lease. Then invest the
proceeds equally among the four new kids: Corning, PulteGroup, Discover
Financial Services, and Lear.
Below is the 1 year return of the 2017-2018 Uber Cannibals through 3/29/18:
Company
1 year return
Lowe's Companies
6.7%
NVR
32.9%
The Hackett Group
-17.6%
Sleep Number Corp
41.8%
Willis Lease Finance
53.4%
If you invested in the Uber Cannibals in April 2017 in a taxable account, try to
sell the winners (currently Lowe's, NVR and Willis Lease) after holding them for
at least 366 days and the losers (Hackett) after no more than 364 days.
If you are a new investor to the Uber Cannibals, you can just equal weight the
five stocks (i.e., invest the same amount of money in each of these five) and
keep that portfolio until April 2019, when I'll provide the 2019 - 2020
portfolio on www.ChaiWithPabrai.com. Happy Cannibal Investing!
Note, anyone who invests in any strategy needs to do their own research/due
diligence and are themselves fully responsible for the outcome.
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“COMPOUNDING IS THE 8TH WONDER OF THE WORLD” – LECTURE & Q&A AT PEKING
UNIVERSITY – DEC. 22, 2017
3/27/2018
I very much enjoyed visiting the campus of Peking University's Guanghua School
of Management with Guy Spier and Monsoon Pabrai to give my second lecture
entitled “Compounding is the 8th Wonder of the World.”
The presentation was followed by a rich Q&A session on a diverse range of
topics. The lecture covered my favorite subjects – compounding, Rule of 72 and
Warren Buffett. Enjoy!
https://www.youtube.com/watch?v=z74NaYRyMJo&t=6564s
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
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
2/16/2018
I very much enjoyed my lecture and Q&A entitled “Compounding is the 8th Wonder
of the World” with Dakshana Scholars at the Dakshana Valley Campus on Dec. 26,
2017. The questions covered a broad range of topics related to compounding,
including philanthropy, patient investing and choosing equities over other asset
classes.
https://www.youtube.com/watch?v=VvpfjxLiO9g&feature=youtu.be
Enjoy!
--------------------------------------------------------------------------------
SHOUT-OUT BY CHARLIE MUNGER AT DAILY JOURNAL ANNUAL MEETING – FEB 14, 2018
2/15/2018
It was truly an honor to receive a shout-out by Charlie Munger during the Daily
Journal Annual meeting in Los Angeles on February 14, 2018. Charlie was
discussing the fair investment management fee structure of the Buffett
Partnerships of the 1950s, which I have enthusiastically cloned for 19 years.
https://www.youtube.com/watch?v=lfRWWxo3Y4Y
Enjoy!
--------------------------------------------------------------------------------
Q&A SESSION WITH DAKSHANA SCHOLARS AT JNV BENGALURU URBAN, OCT. 26, 2017
1/18/2018
I very much enjoyed this joint Q&A session that Motilal Oswal founder Raamdeo
Agrawal and I had with Dakshana Scholars at JNV Bengaluru Urban on Oct. 26,
2017. We discussed compounding, being a learning machine and the importance of
learning from your failures in investing.
Enjoy!
https://www.youtube.com/watch?v=_4WRC5W92k8
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
--------------------------------------------------------------------------------
INTERVIEW WITH BLOOMBERG QUINT ON INVESTING IN INDIA
1/4/2018
I very much enjoyed my chat with Niraj Shah of Bloomberg Quint for Alpha Moguls.
We discussed the importance of sticking to one’s circle of competence, the
advantage of auction-driven stock market investing and the prospects of
investing in the real estate sector in Mumbai.
Enjoy!
https://www.youtube.com/watch?v=XBY6aLezago&app=desktop
--------------------------------------------------------------------------------
INTERVIEW WITH MOI GLOBAL ON PHILANTHROPY
12/19/2017
I very much enjoyed speaking with Shai Dardashti of MOI Global for their Best
Ideas 2018 session. We discussed philanthropy, the Dakshana Foundation and the
influence that Buffett had on my founding Dakshana.
Here is the link to the recording:
https://www.youtube.com/watch?v=S6fUDLa1Dq0
If you prefer to read, here is the transcript of the interview:
https://moiglobal.com/mohnish-pabrai-philanthropy/
Enjoy!
--------------------------------------------------------------------------------
MY 7TH ANNUAL TALK AT BOSTON COLLEGE
I very much enjoyed my discussion with Prof. Arvind Navaratnam’s class on Value
Investing at the Carroll School of Management (Boston College). It was my
seventh year in a row!
The talk covers the magic of compounding, cloning Buffett, the zero fee
structure and moats in the investment business.
Enjoy!
https://www.youtube.com/watch?v=_1aGen3q2_g&feature=youtu.be
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
THE ‘FREE LUNCH’ PORTFOLIO
12/15/2017
I co-authored an article in Forbes about The “Free Lunch” Portfolio, which
combines the power of Uber Cannibals, Shameless Cloning and Spinoffs. The Free
Lunch Portfolio is a 15-stock, 12-month “set it and forget it” approach that
beats the pants off the S&P 500 with lower volatility than its individual
5-stock sub-strategies.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/12/15/the-free-lunch-15-stock-portfolio/#1706edc76b38
Here are the 2018 constituents for The Free Lunch Portfolio:
Uber Cannibals
* Lowe’s Companies (LOW)
* NVR (NVR)
* Sleep Number (SNBR)
* The Hackett Group (HCKT)
* Willis Lease Finance (WLFC)
Shameless Cloning
* Alibaba Group Holding (BABA)
* British American Tobacco (BTI)
* Fiat Chrysler Automobiles (FCAU)
* General Motors (GM)
* Micron Technology (MU)
Spinoffs
* Adient (ADNT)
* CSRA (CSRA)
* GCP Applied Technologies (GCP)
* Lamb Weston Holdings (LW)
* Synchrony Financial (SYF)
Investing in The Free Lunch Portfolio is simple. Invest equally across the 15
companies. When we publish the new Uber Cannibals in April, sell the Ubers that
are no longer on the new list and invest the proceeds equally across the new
Uber Cannibal picks. In January, 2019, when we publish the updated Shameless
Cloning and Spinoffs, sell the companies that do not make the New Year’s picks
and invest the proceeds equally in the new kids on the block across the two
strategies combined.
I co-wrote the article with Fahad Missmar, CFO of Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due
diligence and are themselves fully responsible for the outcome.
--------------------------------------------------------------------------------
SPIN GOLD FROM SPINOFFS: A PORTFOLIO OF 5 CASTOFFS TROUNCES THE S&P 500
11/21/2017
I co-wrote an article in Forbes on a 5-stock investment strategy focused on
spin-offs, or companies that have recently spun off from their parents. The
Spinoff Portfolio is a “set it and forget it for a year” strategy that selects
five young spinoffs on January 1st of each year. The full strategy rules are
laid out at the end of the Forbes article.
For 2018, our algorithm has selected these 5 spinoffs:
1. CSRA
2. Synchrony Financial
3. GCP Applied Technologies
4. Adient Plc
5. Lamb Weston Holdings
Investing in The Spinoff Portfolio is simple. Just buy the 2018 constituents in
early January, putting 20% of the pie in each of the five names. I’d suggest not
putting more than 10%-20% of your net worth in this strategy. Like the Uber
Cannibals and Shameless Cloning Portfolio, we set it and forget it (for a year).
I will publish The Spinoff Portfolio for a particular year on my blog by January
1st each year. This strategy only makes sense if you intend to follow it for at
least a decade or longer. The ideal home for this strategy is your IRA. That
way, there are no realized gains to worry about.
You can view the article here:
https://www.forbes.com/sites/janetnovack/2017/11/21/spin-gold-from-spinoffs-a-portfolio-of-5-castoffs-trounces-the-sp-500/#25e3db5b3e44
I co-wrote the article with Jaya Bharath Velicherla, a talented quant at Dhandho
Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due
diligence and are themselves fully responsible for the outcome.
--------------------------------------------------------------------------------
ET NOW INTERVIEW ON COMPOUNDING
10/18/2017
I celebrated Diwali this year with the viewers of ET Now discussing my favorite
topics: compounding and the Rule of 72. We also discussed my thoughts on a few
investment ideas in India, as well as my aversion to IPOs.
Here are the links to the interview:
Part 1: https://www.youtube.com/watch?v=VEWKHbuRPCo&feature=youtu.be
Part 2: https://www.youtube.com/watch?v=rZQSXX8vrhM
You may also enjoy an article ET Now published about the interview here:
https://economictimes.indiatimes.com/markets/expert-view/of-margin-of-safety-compounding-and-why-investors-can-avoid-ipos-mohnish-pabrai/articleshow/61148962.cms
https://economictimes.indiatimes.com/markets/expert-view/follow-this-mantra-never-ever-invest-in-any-ipo-mohnish-pabrai/articleshow/61064733.cms
And this article by Financial Express Online that covered the interview here:
http://www.financialexpress.com/market/not-investing-at-all-is-still-better-than-investing-in-ipos-mohnish-pabrai/893304/
Enjoy!
--------------------------------------------------------------------------------
FEW BETS. BIG BETS. INFREQUENT BETS
07/13/2017
I thoroughly enjoyed going back to the University of California, Irvine to give
my 2nd annual UCI lecture entitled, “Few Bets. Big Bets. Infrequent Bets.”
I discussed five decisions by Warren Buffett and Charlie Munger made over a
20-year period (1968 – 1988) that moved the needle for Berkshire. I also delved
into the intense difficulties that Charlie Munger faced along the way. No pain,
no gain.
The presentation was followed by a rich Q&A on a diverse range of topics. Enjoy!
https://www.youtube.com/watch?v=bLjoL5zhBxA
--------------------------------------------------------------------------------
INTENSIVE STOCK RESEARCH CAN BE INJURIOUS TO YOUR FINANCIAL HEALTH
06/23/2017
I very much enjoyed being back in the Googleplex to give my talk "Intensive
Stock Research Can Be Injurious to Your Financial Health." My talk covered the
impact of commitment and consistency biases on one’s ability to pick stocks.
People tend to love the stocks they spend the most time on, and that can be
quite harmful to their financial health. There are a few hacks that I’ve found
useful to overcome the powerful effects of these biases, and I covered them in
the talk as well.
Here is the link to the video:
https://www.youtube.com/watch?v=kNAuELYN5X4
Enjoy!
--------------------------------------------------------------------------------
GREAT INVESTORS PODCAST SERIES – THE STEVE POMERANZ SHOW
06/17/2017
I very much enjoyed speaking again with Steve Pomeranz for his “Great Investors”
podcast series.
The talk discusses the fundamental traits of a value investor and why it is
important to focus on individual companies and not the whole market. I also talk
about the investing environment today and how it is similar to the period I
started Pabrai funds in 1999. We also discuss Warren Buffett’s comments on
Amazon and Google during the Berkshire shareholders’ meeting and if the
large-cap tech stocks are overpriced.
It is a two-part podcast. The podcast and the transcript can be accessed at:
Part1: http://www.stevepomeranz.com/mohnish-pabrai/
Part2: http://www.stevepomeranz.com/mohnish-pabrai-2/
Enjoy!
--------------------------------------------------------------------------------
MY TWO CENTS ON SERITAGE GROWTH PROPERTIES – BARRON’S
04/22/2017
David Englander wrote an interesting piece in Barron’s about Seritage Growth
Properties this past week.
Seritage has been part of Warren Buffett’s portfolio since 2015. I was
interviewed for the article and I shared some comments on the future of Seritage
and the potential impact of a Sears bankruptcy on Seritage.
http://www.barrons.com/articles/lamperts-seritage-strategy-could-lead-to-long-term-gains-1492836691
If the above link asks you to log in and if you’re not a Barron’s subscriber,
search for the title on google and click on the Barron’s link from there, that
should give you access to the full article.
Enjoy!
--------------------------------------------------------------------------------
NEW STOCK PICKS FOR THE UBER CANNIBALS INVESTING STRATEGY
04/06/2017
On December 22, 2016, I co-wrote an article in Forbes, "Move Over Small Dogs of
The Dow, Here Come The Uber Cannibals" about an investment strategy called "The
Uber Cannibals." with quant analyst Yingzhuo Zhao.
The progress report for 2017 and the updated Uber Cannibals portfolio for
2017-2018 is now
on Forbes.com : https://www.forbes.com/sites/janetnovack/2017/04/06/new-stock-picks-for-the-uber-cannibals-investing-strategy/#60abf57542a6
Enjoy!
--------------------------------------------------------------------------------
THE NEW 2017–2018 UBER CANNIBALS
3/31/2017
Pay close attention to the cannibals – the businesses
that are eating themselves by buying back their stock.
- Charlie Munger
I co-wrote an article with quant analyst Yingzhuo Zhao that ran in Forbes.com
(December 22, 2016), entitled “Move Over Small Dogs of The Dow, Here Come The
Uber Cannibals.” In it, we discussed the “Uber Cannibals” five stock portfolio,
which selects five Uber Cannibal stocks in March/April of every year. We are now
ready for the March/April 2017 picks.
As a recap, our algorithms selected these five cannibals for 2016-2017:
* AutoZone (AZO)
* Magellan Health (MGLN)
* Lowe’s Companies (LOW)
* NVR (NVR)
* Marriott International (MAR)
To keep it simple, I’m assuming that folks bought these stocks at the beginning
of 2017. Thus, the Uber Cannibals track record starts from 1/3/2017. Let’s
assume that on 1/3/2017, an investor, Ms. Sonia Patel, invested $100,000 from
her IRA account at Interactive Brokers in the Uber Cannibals strategy, and
equally weighted the five stocks. Her portfolio would have looked like the
portfolio in the table below assuming that she bought all stocks at the highest
prices they traded at that day (we ain’t givin’ Sonia no breaks!). She would
have paid $5.90 in commissions assuming she’s chosen the “Fixed Pricing
Structure” at Interactive Brokers.
# of shares
1/3/17 Qty
AutoZone
25
Magellan Health
262
Lowe's
279
NVR
12
Marriott Int’l
238
Cash
$0.17
Lowe’s and Marriott paid dividends totaling to about $169 in Q1 2017. Per our
rules, Sonia reinvested these dividends back into the same businesses. The
performance of the Uber Cannibals strategy compared with the Small Dogs of the
Dow and the S&P 500 is shown below.
Q1 2017
Performance
Value of the original $100K
The Uber Cannibals
7.0%
$106,979
S&P 500
6.1%
$106,066
Small Dogs of the Dow
4.7%
$104,692
There is not much to say about the above numbers. Three months is too short a
period to draw any conclusions, but we are doing well so far. As a reminder, in
our backtests, between 1992 and 2016, the strategy returned an annualized 15.5%
versus the S&P 500’s annualized return of 9.2%.
The Uber Cannibals have a quirk. We use year-end financials to pick the next set
of Ubers for the coming years. And those aren’t available till late-March from
our data providers. So, if one follows the Uber Cannibals strategy, one needs to
tweak the portfolio annually during early April.
The New Kids on the Block
For the 2017-2018 period, our algorithms selected the following five Uber
Cannibals:
1. Lowe’s (LOW)
2. NVR (NVR)
3. The Hackett Group (HCKT)
4. Select Comfort (SCSS)
5. Willis Lease Finance (WLFC)
Two of the original Uber Cannibals, Lowe’s and NVR will continue to be in
Sonia’s portfolio for another year. And we have three new kids on the block.
The Forbes article discussed how NVR had bought back 75% of shares outstanding
in the last two decades. Lowe’s is following in NVR and AutoZone’s footprints.
Over the last thirteen years, Lowe’s has reduced its share count by a stunning
45%. Lowe’s share count has dropped by 30% in just the last five years. Like
Home Depot, Lowe’s has an entrenched position in the home improvement superstore
category. Not a business that’s easy for Amazon to disrupt. As home building
gets back to historical norms of over a million new homes being built every
year, Lowe’s has natural tailwinds as far out as the eye can see.
If you are a new investor to the Uber Cannibals, you can just equal weight these
five stocks (i.e., invest the same amount of money in each of these five) and
keep that portfolio until April 2018, when I’ll provide the 2018-19 portfolio
on www.ChaiWithPabrai.com. If you invested in the Uber Cannibals at the
beginning of the year like Sonia, then you would leave Lowe’s and NVR untouched,
sell the other three and invest the proceeds equally among the three new kids.
Then just set it and forget it for another year. Happy Cannibal Investing!
--------------------------------------------------------------------------------
INTERVIEW WITH THE INDUSTRY SHOW
03/20/2017
I very much enjoyed my fun conversation with Nitin Bajaj for The Industry Show.
The interview was streamed live on Facebook, so it was great to answer some of
the viewers’ questions live.
We discussed my childhood in India and the journey that led to my starting
Pabrai Funds. We also reviewed the first investment I made for Pabrai Funds and
some more recent investments, like Southwest Airlines.
Enjoy!
https://www.youtube.com/watch?v=i0uQmqm6vEo
--------------------------------------------------------------------------------
5 QUESTIONS FROM BENZINGA INTERVIEW
03/04/2017
Spencer Israel did a great job of putting together a few salient points from my
conversation with Benzinga’s founder and CEO, Jason Raznick in this quick read:
https://www.benzinga.com/general/hedge-funds/17/03/9115480/5-questions-with-legendary-investor-mohnish-pabrai
Enjoy!
--------------------------------------------------------------------------------
INTERVIEW WITH BENZINGA ABOUT THE AUTO INDUSTRY
03/03/2017
I very much enjoyed my conversation on Benzinga’s PreMarket Prep show with
Benzinga’s founder and CEO, Jason Raznick, and editor and producer, Spencer
Israel.
We discussed my views on auto stocks and the favorable dynamics of the American
auto industry today. We also chatted about the potential impact of self-driving
vehicles on the industry in general.
Here is the link to the recording:
https://soundcloud.com/bztv/a-conversation-with-legendary-investor-mohnish-pabrai
If you prefer to read, feel free to have a look at these two articles which
summarize our conversation:
https://www.benzinga.com/general/hedge-funds/17/03/9114261/why-this-buffett-disciple-put-more-than-half-his-portfolio-in-stoc
https://www.benzinga.com/general/hedge-funds/17/03/9114779/when-will-we-see-fully-autonomous-vehicles-this-famous-hedge-fund-
Enjoy!
--------------------------------------------------------------------------------
BEYOND BUFFETT: HOW TO BUILD WEALTH COPYING 9 OTHER VALUE STOCK PICKERS
02/22/2017
I co-wrote this article in Forbes on an investment strategy called the
“Shamelessly Cloned Portfolio.”
The shameless portfolio comprises of five of the highest conviction ideas of 9
value managers whom we shamelessly clone. Like the Small Dogs of the Dow
and Uber Cannibals, we set it and forget it. I will publish the list of the top
Shameless Cloned Ideas for a particular year on my blog on January 1 each year.
For 2017, even though it’ll be a partial year, one can buy the 2017 picks
anytime. After that, rebalancing should occur right after January 1.
The Shameless Portfolio for 2017 contains:
1. Oracle (ORCL)
2. Berkshire Hathaway (BRK-B)
3. Apple (AAPL)
4. Microsoft (MSFT)
5. 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:
1. No utilities, no REITs, no oil and gas exploration, no metals and mining and
no multiline retailers.
2. Positive trailing-12-month net income
Rebalance Methodology:
* Rebalance on Dec 31st of each year.
* The old companies that are not in the new portfolio are sold. The “sell
money” is accumulated and distributed equally among all new entrants.
* If the same company is present in our portfolio for another year, then we
leave it unchanged i.e. no rebalancing trades.
* Dividends are reinvested into the same company that paid it.
* If there is an involuntary removal through acquisition/delisting/bankruptcy
then the cash is distributed equally among the remaining cloners.
* If there are any spin-offs, the shares are sold and reinvested in the parent.
--------------------------------------------------------------------------------
VACUUM UP THOSE PENNIES – AND LET WARREN BUFFETT INVEST THEM FOR YOU!
2/9/2017
Saving the first dollar you earn, versus saving what is left after you spend, is
always a smart way to go. And making it automated is key. Set it and forget it!
A new smartphone app, Stash allows you to automatically save as little as
$5/month and then immediately invest the same in Berkshire Hathaway Class B
shares. They’ll even buy fractional shares with no trading costs. The B shares
are changing hands these days at about $164/share. If you send Stash $5, then
they’ll buy you 5/164th of a B share. Stash does charge $1/month or 0.25%
annually, whichever is higher.
Another one, Acorns, rounds up your credit card purchases to the nearest dollar
and saves the difference. You can have the pennies that Acorns vacuums up go
into a savings account. And you can have Stash periodically move those savings
into Berkshire.
My friend, Jason Zweig, wrote an interesting piece on Stash, Acorns and a third
one, Digit in his column “The Intelligent Investor” in the Wall Street Journal
past weekend:
http://jasonzweig.com/inching-your-way-toward-wealth-with-your-phone/
When you buy that latte at Starbucks for $4.27 every day, it adds up. Taking
those 73 cents every day and automatically investing them is such a no-brainer.
--------------------------------------------------------------------------------
LECTURE TO UNIV. OF PUERTO RICO MBA CLASS ON MENTAL MODELS ON SEPT. 26, 2016
1/26/2017
I thoroughly enjoyed my talk to the University of Puerto Rico MBA students in
San Juan, Puerto Rico on Sept. 26,2016 where I discussed three mental models in
the spirit of Charlie Munger’s latticework of mental models.
The three models include
* 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:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
THE INVESTORS PODCAST - TRANSCRIPT
1/16/2017
Preston Pysh recaps Stig Brodersen and his discussion with me in this article.
If you prefer to read versus listen, feel free to check out the transcript of
the recent podcast here:
http://www.forbes.com/sites/prestonpysh/2017/01/16/mohnish-pabrai/#4ec2d4642b49
Enjoy!
--------------------------------------------------------------------------------
THE INVESTORS PODCAST - PART 2
1/15/2017
I very much enjoyed doing this podcast with Preston Pysh and Stig Brodersen.
Both are great guys who do a great service to the Value Investing Community.
Thanks guys!
In this second part interview, Preston and Stig discuss some of the finer
details of my investing approach. Recently, the airline industry has had
enormous amounts of market consolidation and a few stocks seem to have favorable
valuations. We had discussions on these potential opportunities and what
are the long term prospects of these opportunities.
In this episode, we talked about:
* 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.
https://www.theinvestorspodcast.com/tip121-pabrai-funds/
Enjoy!
--------------------------------------------------------------------------------
THE INVESTORS PODCAST - PART 1
1/8/2017
I very much enjoyed doing this podcast with Preston Pysh and Stig Brodersen.
Both are great guys who do a great service to the Value Investing Community.
Thanks guys!
In this episode, we talked about:
* How I accumulated business knowledge from the age of 11
* What special advantages people like Bill Gates and Warren Buffett had to
become so successful
* How I had set up and ran a business like Warren Buffett and Charlie Munger
* Why investing is not a team sport
https://www.theinvestorspodcast.com/the-dhandho-investor-mohnish-pabrai/
Enjoy!
--------------------------------------------------------------------------------
INTERVIEW WITH BTVI ABOUT MARKETS AND COMMODITIES
12/30/2016
I very much enjoyed my chat with Samina Hirani of BTVi, about markets and
commodities.
http://www.btvi.in/m/videos/watch/20599/exclusive---mohnish-pabrai-s-call-on-markets
Enjoy!
--------------------------------------------------------------------------------
INTERVIEW WITH CNBC-TV 18 ON TRUMP AND OUTLOOK FOR 2017
12/27/2016
I very much enjoyed my chat with Latha Venkatesh at The Charles T. Munger Hall
in Bengaluru for CNBC – TV18.
It covers Buffett, Trump, Dakshana Foundation, Demonetization, Investing in
India and what to look forward in 2017.
https://m.youtube.com/watch?v=6fkDLax_RmM
https://m.youtube.com/watch?v=IfzgWbyAE4Q
Enjoy!
Here is the transcript of the interview :
http://www.moneycontrol.com/news/market-outlook/see-trump-making-deals-that-benefitworld-mohnish-pabrai_8170961.html
--------------------------------------------------------------------------------
HERE COME THE UBER CANNIBALS!
12/22/2016
I co-wrote an article in Forbes on an investment strategy called "The Uber
Cannibals."
Uber Cannibals are companies that aggressively buy back their own stock. I will
publish the list of the top Uber Cannibals for a particular year on my blog on
March 18 each year.
If you choose to pursue the strategy of investing in Uber Cannibals, you can
either start with these 2016 Uber Cannibals now and then rebalance at March 20,
2017, or wait until March 20, 2017 to start investing in the new list of 2017
Uber Cannibals then.
The Uber Cannibals for 2016 are:
1. AutoZone (AZO)
2. Magellan Health (MGLN)
3. Marriott International (MAR)
4. NVR (NVR)
5. Lowe’s (LOW)
This is a "set it and forget it" strategy. I'd suggest not putting more than 10%
to 20% of your nest egg in this strategy. It only makes sense if you intend to
follow it for at least a decade or two or longer. The ideal straetgy is in your
IRA. That way, there are no realized gains to worry about.
You can view the article here:
http://www.forbes.com/sites/janetnovack/2016/12/22/move-over-small-dogs-of-the-dow-here-come-the-uber-cannibals/#2c38ff233dea
I co-wrote the article with Yingzhuo Zhao, a talented quant at Dhandho Funds.
Enjoy!
Note, anyone who invests in any strategy needs to do their own research/due
diligence and are themselves fully responsible for the outcome.
--------------------------------------------------------------------------------
MY CHAT WITH BARRON'S ON US AUTO MANUFACTURERS AND AIRLINES
12/10/2016
I thought you would be interested in the following story from Barron's.
Mohnish Pabrai Thinks GM, Fiat, Southwest Air Look Like Bargains
http://www.barrons.com/articles/why-mohnish-pabrai-likes-gm-fiat-and-southwest-air
Enjoy!
--------------------------------------------------------------------------------
THAT NEGLECTED OLD 401(K)
12/6/2016
It is given that, over the course of a fifty-plus year career, one may end up
having a dozen or more employers. The law requires all employers to continue to
administer your 401(k) even decades after you’ve left the company – at little to
no cost to you. However, it is a best practice to rollover your ex-employer’s
401(k) into a Rollover IRA soon after you leave. Some reasons why this makes
sense:
1. It’s just easier to have assets in less than 5 bank/brokerage accounts
versus a dozen or more.
2. Your IRA gives you far greater choices (at far lower costs) of mutual funds,
stocks or ETFs to invest than any 401(k) ever will.
3. Your 401(k) may run afoul of regulations if your ex-employer goes bankrupt
or undergoes financial stress. 401(k)s need administrative fees to be paid
annually by the employer to file the Form 5500 and allow the administrator
to do their job. They may not be healthy enough to pay these fees.
4. Many employers focus on providing 401(k) that minimize the cost to the
employer. This usually comes at the expense of higher-fees and limited
investment choices for the employees. With IRAs, there are formidable market
forces at work to get you the low frictional costs coupled with stellar
service. Free-market capitalism works.
5. If your employer’s 401(k) plan is old (which is typical), it may not have
been updated to offer low-cost ETFs and newer offerings that may be in your
best interest.
6. You may move, or your email address may change etc. It may be hard for your
401(k) plan administrator to get you statements etc.
You could choose to roll all your 401(k)s into the same IRA for simplicity. That
way, these all important assets are in one place, fully in your control. Once
your IRA account value is over $100,000, Interactive Brokers may be your
best/cheapest option. Further, you can invest these assets in super low-cost
diversified ETFs.
Let’s consider the real-life examples of a wonderful couple I have known for
over a quarter century. Prakash and Shoba were among the very first employees at
my first business, TransTech. They both joined TransTech in 1991 and left in
1995. I sold the business in 2000. Amazingly, TransTech is still around and
thriving, but has had three different owners over the last 25 years.
Not only did Prakash just leave his 401(k) untouched at TransTech since his
departure over 21 years ago, both of them have left every 401(k) they
participated in with every employer! Between them, they have nine 401(k)
accounts scattered amongst a diverse range of employers. The good news is that
both did participate in 401(k)s at every employer. And even though they did not
maximize what they could have contributed in the early years, the value of these
assets today is seven figures – a meaningful portion of their networth.
I counseled them to take a little time and move all these orphaned 401(k)s into
rollover IRAs. They have promised to do so, which is great. However, they are
not alone. A few days back, The Wall Street Journal ran a great story,
entitled, “What Ever Happened to that Old 401(k) You Had?”
http://www.wsj.com/articles/whatever-happened-to-that-old-401-k-1480302720
The WSJ did a great job of providing resources to getting control over these
all-important assets that you left behind at some employer that no longer exists
decades ago. Participating in 401(k)s and maxing the employer match is
important. Of nearly equal importance is the rollover of these assets when you
say goodbye to your employer.
Finally, KISS (Keep it simple, stupid), is a great way to go – as our mythical
hero Sonia Patel did:
https://www.youtube.com/watch?v=sk2gJ3TCNSQ
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THE STEVE POMERANZ SHOW PODCAST
11/28/2016
I very much enjoyed speaking with Steve Pomeranz for his “Great Investor”
podcast series.
The talk covers Warren Buffett, Poor Charlie’s Almanack and keys to great
investing.
The podcast and the transcript can be accessed at:
http://www.stevepomeranz.com/great-investor-secrets/
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COMPOUNDING IS THE 8TH WONDER OF THE WORLD!
11/24/2016
I hope you enjoy this little tribute to Einstein, Swami Vivekananda, Charlie
Munger, Compounding and the mythical Sonia Patel.
https://www.youtube.com/watch?v=sk2gJ3TCNSQ
--------------------------------------------------------------------------------
MY 6TH ANNUAL TALK AT BOSTON COLLEGE
11/24/2016
I can’t believe it’s been six years since I started doing an annual lecture in
Prof. Arvind Navaratnam’s class on Value Investing at the Carroll School of
Management (Boston College). I love Arvind, his students and Boston College.
While the topic of this talk was the same as the recent Peking U. lecture (The
Quest for 10-100 Baggers), there are enough differences between the two lectures
that make this worth watching even if you have seen the Peking U. lecture.
I repeated the lecture because I want to really etch these important concepts
into my little brain. Once is not enough! So, to be candid, the motivation was
to try to help myself.
Some salient differences between the two lectures is that the Q&As are
completely different. This one went on for 2.5 hours while the Peking U. lecture
is 1 hr. and 40 minutes. Finally, violating MLK’s advice to me, this one used
(gasp!) slides.
Enjoy!
https://www.youtube.com/watch?v=IOoaNYQHaYY&t=2012s
Lecture Date: November 3, 2016
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
INTERVIEW WITH ET NOW ON TRUMP, DEMONETIZATION AND
VALUE INVESTING – NOV. 15, 2016
11/18/2016
I very much enjoyed this interview with Indian business news channel, ET NOW.
https://www.youtube.com/watch?v=VY5ObDlhvio
I didn't realize they'd print it as well!
http://economictimes.indiatimes.com/markets/expert-view/trump-election-may-be-the-very-best-thing-that-happened-to-the-us-and-the-world-mohnish-pabrai-investor-philanthropist/articleshow/55471612.cms
And here is a shorter excerpt from the interview:
http://economictimes.indiatimes.com/et-now/experts/Mohnish-Parbais-long-term-investment-strategy/videoshow/55474553.cms
Enjoy!
--------------------------------------------------------------------------------
COMPOUNDING GOODWILL AND THE INNER SCORECARD
11/16/2016
This is a wonderful interview with author and journalist, William Green. While
we are focused on compounding money here, compounding goodwill is even more
important. Here is the path to compounding goodwill:
http://greatinvestors.tv/video/william-green-on-the-importance-of-personal-authenticity.html
A hat tip to Manual of Ideas for doing this interview. Enjoy!
--------------------------------------------------------------------------------
A BLAST FROM THE PAST - THE MANY WAYS TO COMPOUND WEALTH
11/15/2016
I gave a talk in February 2014 at a TiE SoCal chapter event that focused on
branding and marketing. It is a subject near and dear to my heart, but I am
rarely asked to speak on it.
What is relevant to this blog however, is that towards the end of the session, I
was asked a question on ways to compound wealth. Diehard compounding purists can
start watching the video from 1:04:23.
https://www.youtube.com/watch?v=fkF9Npxfmn8
You might actually enjoy watching the entire video.
--------------------------------------------------------------------------------
THE QUEST FOR 10-100 BAGGERS; PEKING UNIV. TALK
11/9/2016
I very much enjoyed my first ever talk to students in China. Peking University's
Guanghua School of Management is the best of the best. Prof, Jiang Guohua's
Value Investing Course is the first such course ever offered in China. This
talk was sponsored by Himalaya Capital.
Enjoy!
https://www.youtube.com/watch?v=Jo1XgDJCkh4
Update on Nov. 21, 2016
The best things in life are free. A well-wisher (and die-hard fan of this video)
took it upon himself to transcribe the entire video at his cost! This generous
fan sent it to me to share as I saw fit. Please note that this is an “automated
transcript” that has had virtually no editing. So, here it is, typos and all:
Transcript of Mohnish Pabrai Lecture at Peking University (Guanghua School of
Mgmt) - Oct 14 2016
Enjoy!
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading to listening, here is the transcript.
--------------------------------------------------------------------------------
HOW CAN CITIZENS/RESIDENTS OF INDIA INVEST IN U.S. EQUITY MARKETS
11/03/2016
Friends or relatives residing in India periodically ask me about how they can
invest in the US equity markets. How can they invest in things like a ultra-low
cost S&P 500 ETF or Berkshire Hathaway or Google etc. Well, it is not only
possible, but quite streamlined.
Indian citizens residing in India are allowed to invest up to $250,000 every
year overseas as per this notification issued by the Reserve Bank of India
(RBI):
https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10192&Mode=0
This means that a family of 4 can invest up to $1 million overseas in a given
year.
There are a few U.S.-based discount brokerages like Interactive Brokers, TD
Ameritrade, Charles Schwab International Account through which Indian citizens
residing in India can set up an account and trade U.S. stocks, mutual funds and
ETFs. No US mailing address is required. Note that these accounts can be opened
by citizens of most countries.
In fact, Interactive Brokers has a specific account type that allows Indian
Residents to trade overseas. To start an application click here. The application
materials need to be sent via email to this
address: newaccounts.in@interactivebrokers.com. Their customer service number in
India is +91.22.6128.9888. The Director of Sales in India is Ankit Shah. His
phone number is +91.22.6128.9836, and his email address
is ashah@interactivebrokers.com.
Interactive Brokers (IB) is one of my favorites. Not only can one trade US
stocks at super low commissions with them, IB has made the most inroads into
allowing global trading with some of the lowest frictional costs. Through a US
Interactive Brokers account one can buy stocks in most of the major markets
around the world. Thus, opening an account with them opens up far more than the
US markets for Indian investors.
While the Indian markets offer plenty of compounding opportunities, it is not a
bad idea for Indian investors to have atleast a small portion of their assets
allocated to other geographies. US brokers and ETFs have some of the lowest
frictional costs on the planet. And us compounders know all about keeping
frictional costs low.
Note: I am not compensated in any way by any of the brokerages mentioned in this
blog post.
--------------------------------------------------------------------------------
THE RULE OF 72
10/28/2016
"Take a simple idea and take it seriously."
- Charlie Munger
The Rule of 72 is one of those crazy simple ideas that permanently changed my
life for the better. And that is because twenty two years ago, I decided it was
one of those core bedrock hacks! The Rule of 72 is a very quick (and
surprisingly precise) method of figuring out how long it takes to double your
money at various rates of return. I'll let the eloquent Professor Peter
Rodriguez explain:
https://www.youtube.com/watch?v=12FsjiVzTMA
It does pay off (bigtime!) to know the Rule of 72. It is one of the most
important tenets for us diehard compounders . Warren Buffett had probably
mastered this rule before his 10th birthday. He knew he was going to be the
richest person on the planet decades before he got there. He knew his rate of
compounding, knew his life expectancy - and didn't need to know anything else.
"Compounding is the 8th wonder of the world."
- Einstein
We, the compounders, agree with Einstein. It is all about the doubles. How long
does it take to get a double and how many doubles can I get in a lifetime. And
the Rule of 72 lets you do all the doubling math in seconds in your head.
--------------------------------------------------------------------------------
SPENDING LESS THAN YOU EARN - LEARNING FROM MR. MONEY MUSTACHE!
10/27/2016
The key to getting wealthy over a lifetime, even with modest income rests on
three basic tenets:
1. Spending less than you earn.
2. Investing your savings in a low-cost index fund.
3. Starting very early. In you early 20s.
This site does not have much advice for you on how to spend less and save more,
but my twin brother, Mr. Money Mustache does. Check out:
www.mrmoneymustache.com/
Please view this entertaining (and highly educational) video:
https://vimeo.com/183016901
And finally, here are Mr. Money Mustache's real 2013 and 2014 expenses:
www.mrmoneymustache.com/2015/01/16/exposed-the-mmm-familys-2014-spending/
Consistently spending waaaay less than you earn is the most important of the
three tenets. It provides us our critical compounding raw material. After that
it is just a matter of how long the runway is (how many years) and the speed
you're going (rate of compounding). Savings is the most important of the three.
--------------------------------------------------------------------------------
MOHNISH PABRAI LECTURE AT UNIV. OF CALIFORNIA, IRVINE (UCI), MAY 24, 2016
I enjoyed my talk at the University of California, Irvine. I talked about the
Coca-Cola model, mental models and reactions by humans and investing styles.
Enjoy!
https://www.youtube.com/watch?v=jfxOvdiac94
Here is the link to the podcast:
* Google Podcasts
* Apple Podcasts
* Spotify
If you prefer reading over listening, here is the transcript.
--------------------------------------------------------------------------------
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