Mohnish Pabrai (Trades, Portfolio), managing partner of Pabrai Investment Funds, disclosed on Monday that he divested three positions during the first quarter: Alphabet Inc. (GOOGL, Financial)(GOOG, Financial), AerCap Holdings NV (AER, Financial) and Southwest Airlines Co. (LUV, Financial). These trades leave Pabrai with just two stock positions: Fiat Chrysler Automobiles NV (FCAU, Financial) and Ferrari NV (RACE, Financial).
Alphabet
Pabrai sold 45,828 shares of Alphabet, the parent company of Google, for an average price of $1,103.99 per share. With this transaction, the guru pared 12.43% of his portfolio.
Alphabet said on April 23 that the company had strong momentum during the quarter, highlighted by a 26% year-over-year increase in revenues. The Mountain View, California-based online media company’s three-year revenue growth rate of 17.90% outperforms 64% of global competitors, which include Facebook Inc. (FB, Financial), Tencent Holdings Ltd. (TCEHY)(HKSE:00700) and Baidu Inc. (BIDU, Financial).
Although the company has strong growth potential, Alphabet is trading near a 10-year high of $1111.94, approximately 1.05 times its median price-sales valuation.
AerCap
Pabrai sold 807,721 shares of AerCap for an average price of $51.86. With this transaction, the guru trimmed 11.01% off his portfolio.
AerCap provides aircraft leasing and aviation finance services to various countries, including China, Hong Kong, Macau, the U.S. and the Netherlands. AerCap’s profitability ranks 9 out of 10 as the company’s operating margin, three-year revenue growth rate and three-year earnings before interest, taxes, depreciation and amortization growth rate outperform over 90% of global competitors. Additionally, AerCap’s Piotroski F-score is an excellent 8 out of 9.
Although the company has robust profitability, GuruFocus still lists two red flags for AerCap: a five-year average operating margin decline rate of 1.1% and an asset growth rate that exceeds the revenue growth rate. Additionally, AerCap’s share price is near a 10-year high while its price-sales ratio is near a two-year high.
Southwest
Pabrai sold 300,975 shares of Southwest for an average price of $60.05. With this transaction, the guru trimmed 5.11% off his portfolio.
Southwest, one of Warren Buffett (Trades, Portfolio)’s largest airline holdings, said on April 26 the company had a “solid start to the year” with margins “near the top of the industry.” GuruFocus lists five positive investing signs for Southwest, including expanding operating margins, consistent revenue growth and a dividend yield near a 10-year high.
See also
Pabrai’s remaining two positions, Ferrari and Chrysler, operate in the auto manufacturing industry. Other key auto companies include Ford Motor Co. (F, Financial), General Motors Co. (GM, Financial) and Elon Musk’s Tesla Inc. (TSLA, Financial).
Disclosure: No positions.
