Pabrai started his company with $1 million and quickly grew it to $500 million in assets under management with an investing style that is a pastiche of the philosophies of Warren Buffett and other noted value investors.
Chesapeake Energy Corp (CHK)
Chesapeake grew to a 20.6% weighting in Pabrai’s portfolio after he bought an additional 1,978,817 shares for $19 each on average in the third quarter. Pabrai opened the position with 1,005,000 shares, which he purchased for $18 each on average, in the second quarter of 2012. His total shareholding at quarter-end was 2,983,817.
Chesapeake is the natural gas and oil company whose stock declined almost 21% year to date on corporate scandal and net losses. In the third quarter, the company reported a net loss of $2.01 billion, or $3.19 per fully diluted common share, due to the write down of the value of some assets as a result of low natural gas prices.
The company’s daily production in the quarter increased 24% year over year and 9% sequentially. It consisted of 79% natural gas, 14% of oil and 7% of NGL.
General Motors (GM)
Pabrai bought 46,650 shares of General Motors for $21 each on average, making the stock 19% of his portfolio. He initiated the position in the previous quarter with 2,283,650 shares he purchased for $22.50 each on average. Now his total holding stands at 2,283,650 shares.
General Motor’s stock gained 23% year to date after a dip in the third quarter when Pabrai purchased. On Oct. 31 the company reported third quarter net income of $1.5 billion, or $0.89 per fully diluted share, close to the $1.7 billion, or $1.03 per fully diluted share reported in the third quarter of 2012. Revenue was $37.6 billion compared with $36.7 billion a year ago.
GM’s chairman and CEO, Dan Akerson, attributed the solid results to the good reception of its new vehicles and progress in its most pressing concerns such as complexity reduction, pensions and Europe. The company expects next quarter’s results to be the same or slightly better than the same quarter last year.
Pabrai has a concentrated portfolio with only four other stocks: Horsehead Holding Corporation (ZINC), Bank of America Corp. (BAC), Citigroup Inc. (C) and Goldman Sachs Group (GS). Of those, he reduced Citigroup by 0.03% and Goldman Sachs by 60.71%.
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