Mohnish Pabrai, the IT entrepreneur turned hedge fund manager had his up years (October, 2000- June, 2007) and down years (July 2007 to December 2008). His Pabrai Investment Fund 2 open to accredited US investors dropped 32.4% from July 1, 2007 to June 30, 2008, then it dropped another 50% from July 1 to December 31, 2009. Such a dramatic decline invites question whether the money manager has what it takes to navigate the boom and bust economic cycles that has become more frequent and violent. Just before you count him out, Monish Pabrai’s portfolio made a major comeback. His equity portfolio is up almost 60% since March 31, 2009, the last time he reported his holdings:
No. 1: Harvest Natural Resources Inc. (HNR), Weightings: 14.18% - 5,694,701 Shares
Harvest Natural Resources Inc. is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia. Harvest Natural Resources Inc. has a market cap of $170.6 million; its shares were traded at around $5.17 with a P/E ratio of 129.3 and P/S ratio of 15.2.
Mohnish started to own HNR back in 2004 with a 1.0 million shares stack. He accumulated 5.7 million share from 4Q04 to 4Q07 and stayed there until 1Q09 when he sold just a tiny bit of his stake (8,000 shares). HNR price has dropped from over $17 dollars back in 4Q04 to around $5 nowadays. Mohnish has lost good money on this one.
No. 2: Berkshire Hathaway Inc. (BRK-B), Weightings: 12.2% - 5,888 Shares
This must be Monish’s flight to safety move. He has been known for using BRK-B as a sort of money market fund. Records shows he has been trading in and out in the Warren Buffett’s own stock. He has been almost out of this stock three times during the past three years, but every time he came back and rebuilt his stake. The last time he was out was in 4Q08 when he owned only 254 shares, now (1Q09) he owned 5, 888 shares, accounting for 12.2% of his portfolio.
No. 3: Potash Corp. of Saskatchewan Inc. (POT), Weightings: 9.15% - 154,140 Shares
Potash Corporation of Saskatchewan Inc. is the world's largest potash company, the third largest phoshate producer, and the second largest nitrogen producer. Potash Corp. of Saskatchewan Inc. has a market cap of $34.13 billion; its shares were traded at around $115.54 with a P/E ratio of 11.1 and P/S ratio of 3.6. The dividend yield of Potash Corp. of Saskatchewan Inc. stocks is 0.4%. Potash Corp. of Saskatchewan Inc. had an annual average earning growth of 12.6% over the past 10 years.
This is a new position for Monish in 4Q08 when he bought 157,110 shares. He is seen to have sold about 3,000 shares during 1Q09. Of course, POT stock has risen and Monish has made good money on this stock.
No. 4: Ternium S.A. (TX), Weightings: 8.98% - 1,783,944 Shares
Ternium is the leading producer of flat and long steel products of Latin America and consolidates the operations of the steel companies Hylsa in Mexico, Siderar in Argentina and Sidor in Venezuela. Ternium S.A. has a market cap of $3.65 billion; its shares were traded at around $18.23 with a P/E ratio of 18 and P/S ratio of 0.4. The dividend yield of Ternium S.A. stocks is 2.8%.
Monish seems to have built a circle of competence in Latin America over the years, except he may have to wait for his investment in those countries to turn a profit. He bought 1.64 million shares in TX in 2Q07 when the stock was around $30. Now he owns 1.78 million shares and the stock price is around $18.
No. 5: Fairfax Financial Holdings Ltd. (FFH), Weightings: 8.81% - 46,032 Shares
Fairfax Financial Holdings Limited is the company headed by Investment Guru Prem Watsa. It is a financial services holding company which through its subsidiaries is engaged in property, casualty and life insurance and reinsurance investment management and insurance claims management. Fairfax Financial Holdings Ltd. has a market cap of $4.33 billion; its shares were traded at around $256.91 with a P/E ratio of 4.4 and P/S ratio of 0.5. The dividend yield of Fairfax Financial Holdings Ltd. stocks is 3.1%.
It appears that Monish has made good money on FFH. In 4Q05, he acquired a position of 179, 716 shares and mounted to a total of 316,089 shares through 3Q07. He sold most of the shares in 4Q08 when the stock peaked at above $300 per share. He reduced his stocks further to 46,032 shares in 1Q09.
No. 6: Goldman Sachs Group Inc. The (GS), Weightings: 8.63% - 110,864 Shares
Goldman Sachs is a global investment banking and securities firm providing a full range of investing advisory and financing services worldwide to a substantial and diversified client base which includes corporations, financial institutions, governments and high net worth individuals. Goldman Sachs Group Inc. The has a market cap of $75.17 billion; its shares were traded at around $149.31 with a P/E ratio of 31 and P/S ratio of 1.4. The dividend yield of Goldman Sachs Group Inc. The stocks is 0.9%. Goldman Sachs Group Inc. The had an annual average earning growth of 24.5% over the past 10 years.
Monish owns 110,864 shares of GS and it accounts for 8.63% of his portfolio.
Mohnish Pabrai’s top six positions represents solid value players such as BRK-B, FFH, and GS, and basic material and commodity player beyond the board of U.S. such as POT, TX and HNR.