(GuruFocus, January 15, 2010) Investment Guru Mohnish Pabrai has published his 4Q09 quarterly letter to investors. GuruFocus has obtained a copy. The letter is available to qualifies investors and their clients only. If you are trying to request acopy through website http://www.pabraifunds.com/, the firm may have to qualify and approve you first before grant you access to their website.
2009 Performance
Pabrai manages his portfolios under three hedge different funds catered for investors under different needs. But the underlining strategies are the same. During 2009, the funds rebounded dramatically, yielding between 118 to 125%.
A Buffett Admirer
Pabrai is a big admirer of Warren Buffett. He conducts his business in the same fashion as Warren Buffett conducted his Buffett Associates partnership. He invests most of his personal money into his hedge funds, aligning his interest along with that of his clients. And he charges his clients a quarter of the gains beyond 6% annual return, just as Buffett did when he first started.
He considers he learned everything about investing from Warren Buffett, so in order to pay back, he bid $650,000 to have a lunch with Buffett in June of 2008.
Fine Tuning A Concentrated Portfolio
Yet one more aspect Pabrai learnt from Buffett is to concentrate one’s bet, but apparently he has been learning from the past experience and fine-tuning the strategy.
Early in the last decade, he typically concentrate 80% on top 10 so stocks at any given time ( so called “10x10”). After many missteps in 2008, he adjusted the strategy to something called “2-5-10”: typically making bet at 5% of assets; sometimes making 2% bets; and once in a while, venturing as high as 10% on a stock.
Pabrai thinks the more diversified portfolio is the right balance.
Another thing he is doing differently is to run a written checklist on the stock ideas. Inspired by Dr. Atul Gawande, author ofThe Checklist Manifesto
, Pabrai developed a checklist of 70+ questions. He expects the checklist will reduce the error-rate dramatically.
Top Purchases in 3Q09
Mohnish did not talk about his holdings and trading activities in the letter. According to GuruFocus data, these were stocks he bought during the quarter that ended on September 30, 2009. We will provide an update as soon as the latest data becomes available:
No. 1: Brookfield Properties Corp. (BPO, Financial), Add: 0.82% of the portfolio - Total: 2,360,767 Shares
Brookfield Properties Corporation is focused on the ownership, management and development of premier office properties located in the downtown core of select North American markets, including: New York, Boston, Toronto, Calgary, Denver,and Minneapolis. Brookfield Properties Corp. has a market cap of $6.22 billion; its shares were traded at around $12.42 with a P/E ratio of 13.2 and P/S ratio of 2.1. The dividend yield of Brookfield Properties Corp. stocks is 4.5%. Brookfield Properties Corp. had an annual average earning growth of 12.7% over the past 5 years.
Interactive Brokers Group Inc. is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments on more than 70 electronic exchanges and trading venues around the world. Interactive Brokers Group Inc. has a market cap of $691.6 million; its shares were traded at around $16.78 with a P/E ratio of 12.9 and P/S ratio of 0.3.
No. 3: Brookfield Properties Corp. (BPO), Interactive Brokers Group Inc. (IBKR, Financial), Potash Corp. of Saskatchewan Inc. (POT, Financial), Add: 4.76% of the portfolio - Total: 324,058 Shares
Potash Corporation of Saskatchewan Inc. is the world's largest potash company, the third largest phoshate producer and the second largest nitrogen producer in the world. Potash Corp. Of Saskatchewan Inc. has a market cap of $34.12 billion; its shares were traded at around $115.31 with a P/E ratio of 22.9 and P/S ratio of 3.6. The dividend yield of Potash Corp. Of Saskatchewan Inc. stocks is 0.3%. Potash Corp. Of Saskatchewan Inc. had an annual average earning growth of 12.6% over the past 10 years.
Terex Corp. is a global manufacturer of a broad range of construction and mining related capital equipment.. Terex Corp. has a market cap of $2.51 billion; its shares were traded at around $23.2 with and P/S ratio of 0.3. Terex Corp. had an annual average earning growth of 11.3% over the past 10 years.
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2009 Performance
Pabrai manages his portfolios under three hedge different funds catered for investors under different needs. But the underlining strategies are the same. During 2009, the funds rebounded dramatically, yielding between 118 to 125%.
A Buffett Admirer
Pabrai is a big admirer of Warren Buffett. He conducts his business in the same fashion as Warren Buffett conducted his Buffett Associates partnership. He invests most of his personal money into his hedge funds, aligning his interest along with that of his clients. And he charges his clients a quarter of the gains beyond 6% annual return, just as Buffett did when he first started.
He considers he learned everything about investing from Warren Buffett, so in order to pay back, he bid $650,000 to have a lunch with Buffett in June of 2008.
Fine Tuning A Concentrated Portfolio
Yet one more aspect Pabrai learnt from Buffett is to concentrate one’s bet, but apparently he has been learning from the past experience and fine-tuning the strategy.
Early in the last decade, he typically concentrate 80% on top 10 so stocks at any given time ( so called “10x10”). After many missteps in 2008, he adjusted the strategy to something called “2-5-10”: typically making bet at 5% of assets; sometimes making 2% bets; and once in a while, venturing as high as 10% on a stock.
Pabrai thinks the more diversified portfolio is the right balance.
Another thing he is doing differently is to run a written checklist on the stock ideas. Inspired by Dr. Atul Gawande, author ofThe Checklist Manifesto
, Pabrai developed a checklist of 70+ questions. He expects the checklist will reduce the error-rate dramatically.Top Purchases in 3Q09
Mohnish did not talk about his holdings and trading activities in the letter. According to GuruFocus data, these were stocks he bought during the quarter that ended on September 30, 2009. We will provide an update as soon as the latest data becomes available:
No. 1: Brookfield Properties Corp. (BPO, Financial), Add: 0.82% of the portfolio - Total: 2,360,767 Shares
Brookfield Properties Corporation is focused on the ownership, management and development of premier office properties located in the downtown core of select North American markets, including: New York, Boston, Toronto, Calgary, Denver,and Minneapolis. Brookfield Properties Corp. has a market cap of $6.22 billion; its shares were traded at around $12.42 with a P/E ratio of 13.2 and P/S ratio of 2.1. The dividend yield of Brookfield Properties Corp. stocks is 4.5%. Brookfield Properties Corp. had an annual average earning growth of 12.7% over the past 5 years.
Interactive Brokers Group Inc. is an automated global electronic market maker and broker specializing in routing orders and executing and processing trades in securities, futures and foreign exchange instruments on more than 70 electronic exchanges and trading venues around the world. Interactive Brokers Group Inc. has a market cap of $691.6 million; its shares were traded at around $16.78 with a P/E ratio of 12.9 and P/S ratio of 0.3.
No. 3: Brookfield Properties Corp. (BPO), Interactive Brokers Group Inc. (IBKR, Financial), Potash Corp. of Saskatchewan Inc. (POT, Financial), Add: 4.76% of the portfolio - Total: 324,058 Shares
Potash Corporation of Saskatchewan Inc. is the world's largest potash company, the third largest phoshate producer and the second largest nitrogen producer in the world. Potash Corp. Of Saskatchewan Inc. has a market cap of $34.12 billion; its shares were traded at around $115.31 with a P/E ratio of 22.9 and P/S ratio of 3.6. The dividend yield of Potash Corp. Of Saskatchewan Inc. stocks is 0.3%. Potash Corp. Of Saskatchewan Inc. had an annual average earning growth of 12.6% over the past 10 years.
Terex Corp. is a global manufacturer of a broad range of construction and mining related capital equipment.. Terex Corp. has a market cap of $2.51 billion; its shares were traded at around $23.2 with and P/S ratio of 0.3. Terex Corp. had an annual average earning growth of 11.3% over the past 10 years.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Mohnish Pabrai for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
