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Rupert Hargreaves
Rupert Hargreaves
Articles (1078)  | Author's Website |

Searching for Mohnish Pabrai's Favorite Turkish Stock

What could the value investor's newest undervalued international holding be?

February 13, 2020

In June of last year, renowned value investor Mohnish Pabrai (Trades, Portfolio) sent a tweet out to his followers on Twitter telling the world that he was "Bargain hunting in Istanbul."

His decision to go bargain hunting in Turkey was notable because the value investor only invests in the opportunities that he thinks are the most obvious and cheapest.

The fact that he has chosen Turkey over any other market in the world suggests that he thinks this is where the most bargains are to be found (except for India - at the end of the 2019 calendar year, around 40% of Pabrai Funds' assets under management were invested in Indian securities).

Investing in Turkey

Pabrai has not gone public with his Turkish investments yet. Thus, we don't really know what sort of companies he was buying and the valuation he paid to buy the shares. However, he did offer some insight into his trade in his 2019 year-end letter to investors.

The value investor declared that he was "aggressively" buying every share of this Turkish business that he could at the valuation he thought was attractive. Unfortunately, he could only buy $7 million of what he calls the "deeply undervalued nano-cap" in the market before other investors started buying into the opportunity.

The letter goes on to report that while the value investor was not able to acquire as much stock in the business as he ultimately wanted to, the position surged in value through the end of 2019. In just six months, the $7 million investment increased in value to $33 million.

Despite this performance, Pabrai and his small team believe that the business has much further to go. "We're not done yet," he declared in his letter. He went on to add that "amazingly," the business is still "undervalued." What's more, Pabrai declared that he loved the company and its managers.

Quoting the Oracle of Omaha, Warren Buffett (Trades, Portfolio), Parbai declared in his letter that the business is a "very nice castle with a decent moat and a couple of good Knights in charge of the place."

Looking for Pabrai's investment

As I mentioned above, Pabrai did not disclose the name of this holding in his letter, and it is not clear if he still owns the position in his portfolio. Although, from the tone of the wording above, it seems that he is a long-term holder of the stock, so it might still feature in the portfolio.

A quick screen of Turkish stocks throws up a handful of companies that have produced returns of more than 300% over the past 12 months. Throwing out any companies that do not qualify as being micro caps, I have refined this list.

Before you read the names of the companies, I should caution that this is not a recommendation, and should only be interpreted as a starting point for further research. I have conducted no significant research on any of the companies below, apart from screening for their performance over the past 12 months.

Here's the list of micro-cap Turkish stocks that appear on my radar and could possibly be Pabrai's new holding (though this is all just educated guesswork):

  1. Mazhar Zorlu Holding AS
  2. Osmanli Menkul Degerler AS
  3. Escort Teknoloji Yatirim AS
  4. Oylum Sinai Yatirimlar AS
  5. Marmaris Altinyunus Turistik Tesisleri AS
  6. Dardanel Onentas Gida Sanayi AS
  7. Fonet Bilgi Teknolojileri AS

One thing to note about Turkey is the significant political and economic risks of investing in the country. Nevertheless, it would appear that Pabrai believes that the value on offer more than compensates for the macro risks associated with investing in the region.

Hopefully, he will give us some additional insider information soon into the companies he has been buying and their qualities.

Disclosure: The author owns no share mentioned.

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About the author:

Rupert Hargreaves
Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors.

Rupert holds qualifications from the Chartered Institute for Securities & Investment and the CFA Society of the UK. He covers everything value investing for ValueWalk and other sites on a freelance basis.

Visit Rupert Hargreaves's Website


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Comments

jigar_saraiya
Jigar_saraiya - 4 days ago    Report SPAM

Thank you for this information. Big fan of your Article . Mohnish Also mentioned that he is also investing in south korea market. can you also write article on that ?

In one lecture Mohnis mention that he want to clone one value investor from Turky portfoloio as he is also admiral of Warren buffet. The Tweet that you have mention "Bargain hunting in Istanbul", with Mohnish one value investor is also seated with him - "Haydar Acun". He is CEO of Marmara Capital. please find the link of his website with his current holding. I hope it helps

http://www.marmaracapital.com.tr/en/funds/

QQ- Where can I found Mohnish pabrai's letter ?

Thank you

matt_p
Matt_p - 3 days ago    Report SPAM

I recall digging into this earlier. Share trading notifications indicate the companies are Reysas Logistics and Resysa Gayrimenkul. Here is the link. Need to use a translator.

https://www.kap.org.tr/tr/ara/dalal%20street/1

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