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Mohnish Pabrai - Good, Bad, Ugly Side

Mohnish Pabrai is a value investor known for his concentrated portfolio approach. Over five-year periods, his funds have consistently outperformed major indexes. Some stocks in his portfolio like Stewart Enterprises and Tesoro Petroleum performed very well in his early years. However, in Q2 of 2011 his portfolio performed poorly, down 13.9%, largely due to losses in Goldman Sachs and Wells Fargo. Additionally, in 2008 his fund lost 60% of its value due to its highly concentrated small-cap positions and bets on leveraged financial companies that went bankrupt.

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Arkayan Bagchi
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880 views

Mohnish Pabrai - Good, Bad, Ugly Side

Mohnish Pabrai is a value investor known for his concentrated portfolio approach. Over five-year periods, his funds have consistently outperformed major indexes. Some stocks in his portfolio like Stewart Enterprises and Tesoro Petroleum performed very well in his early years. However, in Q2 of 2011 his portfolio performed poorly, down 13.9%, largely due to losses in Goldman Sachs and Wells Fargo. Additionally, in 2008 his fund lost 60% of its value due to its highly concentrated small-cap positions and bets on leveraged financial companies that went bankrupt.

Uploaded by

Arkayan Bagchi
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Mohnish Pabrai Good side

Over a term of five years or more, his funds have consistently surpassed the major indexes by a handsome margin. This out-performance was huge during the early years (1999 to 2004) Pabrai is among the minority managers that run concentrated portfolios making large bets on a small number of stocks - many investors consider his selections as good hunting-ground, when looking to add to their own portfolios special situations investing decisions, idea of concentrated bets, expertise in valuing businesses

Mohnish Pabrai Good side


Highlights of his portfolio: Stewart Enterprises (STEI), Level 3 Convertible Bonds, Frontline, Tesoro Petroleum , Fremont General, Ternium, Sears, Fairfax Financial, Teck Cominco, Pinnacle Airlines are some of the stocks in his portfolio that performed exceedingly well during his initial years The positions in Air Transport Services, Horsehead Holding, Pinnacle Airlines Corp, and Teck Cominco returned well over 200% each for the time period 2008 end to 2009 completion

Mohnish Pabrai Bad side


Mohnish s assets have performed really poorly in Q2 2011 making him second in the 10 worst performing star hedge fund managers of the world Mohnish Pabrai had three securities in two S&P 500 stocks: Wells Fargo (WFC) and Goldman Sachs (GS). During the quarter: Goldman Sachs lost 15.9% WFC lost 11.1% As a result Pabrai s value weighted return was -13.9%

Mohnish Pabrai Ugly side


Mohnish Pabrai s Investment Fund had a free fall in 2008 when it disgracefully lost 60% of its value. Some of the factors that led to these losses: The 10x10 portfolio allocation resulted in a small number of huge concentrated bets. This lack of diversification is naturally more volatile than the overall market. Pabrai s portfolio sported a small-cap bias that sent his picks downhill faster in a bear market or uphill sooner in a bull market than the overall market. Pabrai had huge bets on a couple of highly leveraged small-cap financial companies that went bankrupt.

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