Mohnish Pabrai (Trades, Portfolio)'s Pabrai Investments filed its 13F report at the end of last week. Any asset manager with more than $100 million of assets under management has to file these reports detailing their holdings of U.S. securities at the end of each calendar quarter.
Investors should note that these filings only present a snapshot of holdings. They do not detail cash, credit or international holdings. For example, we know Pabrai Investments manages between $600 million to $700 million in assets for clients. Of this, just $262 million is detailed on the 13F. Based on Pabrai's investor letters and public speeches, it would appear the rest is invested in Indian and Turkish stocks, which are not detailed on 13F reports.
Still, despite this limited disclosure, Pabrai's 13F reveals which U.S. equities the value investor owned at the end of March 2021, and one major investment in particular really stood out to me.
Pabrai's US equity holdings
As of the quarter's end, Pabrai's largest U.S. stock was Micron Technology (MU, Financial). With a 52% weight in the U.S. common stock portfolio, this holding has been in the portfolio for some time. However, Pabrai was divesting some of the position in the first quarter. He reduced the size of the holding by 15% to 1.55 million shares.
The second-largest position was Seritage Growth Properties (SRG, Financial). At the end of March, Pabrai Investments owned 4.7 million shares in the real estate company, giving it a 33% portfolio weight. The position as a whole was worth $87 million.
The thing I found most interesting was a new addition to the portfolio: Chinese e-commerce giant Alibaba Group (BABA, Financial). It would appear Pabrai Investments bought 168,842 shares in this company during the first three months of 2021. This holding was worth $38.2 million at the end of the quarter, and it accounted for 14.6% of the U.S. equity portfolio at the firm.
In some respects, this revelation is not all that surprising. At the beginning of April, the Daily Journal Corp (DJCO, Financial), which is managed by none other than Charlie Munger (Trades, Portfolio), posted its 13F, revealing its own stake in Alibaba.
The Daily Journal has an extensive $200 million equity portfolio, the bulk of which is invested in just a handful of securities. Most of these were acquired in the financial crisis when Munger, who had been hoarding the firm's cash in U.S. Treasuries, decided to jump into the market and buy financial stocks at deeply discounted valuations.
Since then, the company did not made any meaningful trades for a long time. It reduced its position in a South Korean steel producer by 85%, or 54,855 shares, in the fourth quarter of 2014, but this was never a prominent position.
The Daily Journal's first quarter 2021 report revealed the first meaningful trade in the portfolio for a decade. The company had acquired 165,320 shares in Alibaba. It is now the third-largest position in the portfolio with a 19% portfolio weight, following after Bank of America (BOA, Financial) and Wells Fargo (WFC, Financial).
When asked to comment on the position, the Daily Journal stated:
"Daily Journal Corporation has and needs securities held as cash equivalents. These cash equivalents would normally be U.S. Treasury Bills. But, with returns on Treasury Bills now so low, the company instead, invests in common stock. And, unless its long term prospects seem good, a common stock is not considered to be a good cash equivalent."
Munger and Pabrai have been good friends for a long time. The duo used to dine together on a weekly basis before the pandemic and still regularly converse. As such, I don't think it's a huge surprise to see Alibaba appear in both portfolios. Munger and Pabrai may share ideas, and Pabrai has been more than happy to follow the ideas of highly successful investors in the past. In fact, he's stated that this has been a core part of his strategy.
Disclosure: The author owns no share mentioned.
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