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 (FCAU, Financial) and boosted his positions in GrafTech International Ltd. (EAF, Financial) and Micron Technology Inc. (MU, Financial).
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.
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.
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.
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.
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.
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.
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.
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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