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James Li
James Li
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Mohnish Pabrai Trims Fiat Chrysler, Buys More GrafTech and Micron in 3rd Quarter

Value investor discloses trades in US stocks

November 15, 2019 | About:

Mohnish Pabrai (Trades, Portfolio), managing partner of Pabrai Funds, disclosed this week that during the third quarter, he trimmed his holding of Fiat Chrysler Automobiles NV (NYSE:FCAU) and boosted his positions in GrafTech International Ltd. (NYSE:EAF) and Micron Technology Inc. (NASDAQ:MU).

The fund manager seeks out-of-favor companies with market caps around $500 million. Pabrai tends to run a concentrated portfolio with no more than 20 holdings.

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Pabrai said in a March GuruFocus interview that he moved the majority of his equity investments from the U.S. to global markets like India, Turkey and South Korea. The U.S.-based portfolio, which represents a small fraction of Pabrai Funds’ assets under management, contains just three companies as of quarter-end with a turnover rate of 7%.

Reduce: Fiat Chrysler

Pabrai sold 4,108,584 shares of Fiat Chrysler, trimming the position 31.93% and the U.S. equity portfolio 19.30%. Shares averaged $13.39 during the quarter.

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Fiat Chrysler manufactures passenger vehicles through brands like Fiat, Chrysler, Dodge, Alfa Romeo, Lancia, Abarth, Fiat Commercial and Maserati. GuruFocus ranks the company’s financial strength 5 out of 10: Although it has cash-to-debt and debt-to-Ebitda ratios that outperform over 68% of global competitors, Fiat Chrysler’s interest coverage ratio is below Benjamin Graham’s safe threshold of five and underperforms 63.10% of global auto manufacturers.

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Gurus with large holdings in Fiat Chrysler include Bill Nygren (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Chase Coleman (Trades, Portfolio)’s Tiger Global Management.

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Add: GrafTech

Pabrai added 1,423,563 shares of GrafTech, increasing the stake 34.52% and the equity portfolio 6.97%. Shares averaged $11.88 during the quarter.

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The Ohio-based company manufactures high-quality graphite electrodes, products essential to the production of electric arc furnace steel and various other ferrous and nonferrous metals. According to GuruFocus, GrafTech has a solid Piotroski F-score of 6 and a strong Altman Z-score of 3.27. Despite this, GrafTech’s cash-to-debt ratio of 0.19 underperforms 89.55% of global competitors.

Add: Micron Technology

Pabrai added 8,190 shares of Micron Technology, increasing the holding 0.46% and the equity portfolio 0.13%. Shares averaged $45.13 during the quarter.

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The Boise, Idaho-based company provides dynamic random-access memory chips for personal computers and servers. GuruFocus ranks Micron’s financial strength 8 out of 10 and profitability 9 out of 10 on several positive investing signs, which include a strong Altman Z-score of 4.66, expanding profit margins and a return on assets that outperforms 89.8% of global competitors.

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Pabrai said in the interview that he seeks companies with low price-earnings ratios. Micron’s price-earnings ratio of 8.73 outperforms 88.93% of global semiconductor companies.

Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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