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Sydnee Gatewood
Sydnee Gatewood
Articles (2491) 

Mohnish Pabrai Takes Stake in GrafTech International

Guru releases 2nd-quarter portfolio

August 14, 2019 | About:

Renowned investor Mohnish Pabrai (Trades, Portfolio), the managing partner of Pabrai Funds, disclosed one new holding in his second-quarter portfolio, which was released earlier this week.

After he began having trouble finding good opportunities in the U.S. market, the guru, who oversees an extremely concentrated portfolio of discounted, U.S.-listed value stocks, told GuruFocus in an interview in March he moved the vast majority of his portfolio into India, Turkey and South Korea.

GrafTech International

Pabrai invested in 4.12 million shares of Ohio-based GrafTech International Ltd. (NYSE:EAF) during the quarter, allocating 16.12% of the equity portfolio to the stake. The stock traded for an average price of $11.73 per share during the quarter.

The company, which manufactures graphite electrodes and petroleum coke for the production of electric arc furnace steel and other metals, has a $3.20 billion market cap; its shares were trading around $10.99 on Wednesday with a price-earnings ratio of 3.92 and a price-sales ratio of 1.66, which GuruFocus noted are near two-year lows.

The Peter Lynch chart shows the stock is trading significantly below its fair value, suggesting it is undervalued.


The company released its second-quarter financial results on July 31. GrafTech International posted earnings of 68 cents per share on $480 million in revenue, falling short of Zacks Investment Researchs consensus estimates.

GuruFocus rated GrafTechs financial strength 4.2 out of 10. Supported by adequate interest coverage, the Altman Z-Score of 3.11 indicates the company is in good financial standing.

The companys profitability and growth scored a 5 out of 10 rating, driven by strong margins and returns that outperform a majority of competitors. GrafTech also has a high Piotroski F-Score of 8, which implies a healthy operating environment, as well as a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 1.1% per annum over a 10-year period.

With his purchase of a 1.42% stake, Pabrai is now GrafTechs largest guru shareholder. Jim Simons (Trades, Portfolio) Renaissance Technologies and Chuck Royce (Trades, Portfolio) also established positions during the quarter. Yacktman Asset Management (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Steven Cohen (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also hold the stock.

Additional trades

During the quarter, the guru also boosted his Micron Technology Inc. (NASDAQ:MU) holding by 5.09% and trimmed his Fiat Chrysler Automobiles NV (NYSE:FCAU) position by 1.82%

Pabrai manages roughly $1 billion across all of his funds. Unlike other well-known investors, U.S.-listed stocks make up a tiny fraction of his overall holdings, with international stocks making up the majority.

Disclosure: No positions.

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About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

Rating: 4.3/5 (4 votes)



Bbatts - 1 year ago    Report SPAM

It is interesting that Joel Greenblat is also adding more shares over the past year or so. Hmm, I wonder what insights they have beyond the PE of 4, which is most likely due to the electrode pricing of >9K, versus the normal 4.5K (for the past 20 years).

Cbourbs premium member - 1 year ago

average contract length 3-5 years will give them an average of $9500 per metric ton for their electrodes through till 2023 i believe. They no longer sell their electrodes on spot prices.

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