New Pabrai Interview on Barron's

[oddballstocks]

Wonder how long until we see a post on here from a brand new handle, something like:

 

"SoCalClonerAndBuffettFan1234 - Mohnish?  I've heard he's such a great guy, so nice, so friendly, a guru investor for sure, you guys should really listen to him, even clone him or invest in his fund." 

[innerscorecard]

Wonder how long until we see a post on here from a brand new handle, something like:

 

"SoCalClonerAndBuffettFan1234 - Mohnish?  I've heard he's such a great guy, so nice, so friendly, a guru investor for sure, you guys should really listen to him, even clone him or invest in his fund."

 

I believe Pabrai once told a board member that he reads CoBF from time to time.

[Mephistopheles]

I love Pabrai. He's taught me so much.

 

Y'all a bunch of haters.  8)

 

I don't think anybody is trying to hate on Pabrai.  I have learned a lot from Pabrai as well and he seems like an incredible human being.  However, those things are independent of the performance cited in the article.  I hope he continues to do well and outperform--but hopefully by more than 1.5% over the next ten years.

 

I've learned nothing from him and he seems like a pretty regular human being to me with good points and bad points, just like all of us. Sometimes we all grow a mustache or do something we think looks good until our wife or a friend tells us it's ridiculous.

 

At least it's not a fake mustache, you gotta give him that.

[stahleyp]

Wonder how long until we see a post on here from a brand new handle, something like:

 

"SoCalClonerAndBuffettFan1234 - Mohnish?  I've heard he's such a great guy, so nice, so friendly, a guru investor for sure, you guys should really listen to him, even clone him or invest in his fund."

 

I believe Pabrai once told a board member that he reads CoBF from time to time.

 

He's actually a member here. He also has a few real life friends on here, like our fearless leader. ;)

[cmlber]

Picking one 10 year period (which I'm sure must be the worst ten year period over his 20 year track record given how poorly he performed during the crisis) where he outperformed by about 3% gross and saying he's not a great investor is ridiculous.  Likewise, if you picked the 10 year period before the one Barron's mentioned (which must have been amazing to average 25% if he did around 11% in the last 10 years) and said he's a better investor then Warren Buffett you would be foolish.

 

It's always smarter to use the longest available time frame when evaluating a money manager. 

[Picasso]

Has Pabrai really compounded his original investors at 25% a year for 20 years?  Is there proof of this somewhere?

[cmlber]

Has Pabrai really compounded his original investors at 25% a year for 20 years?  Is there proof of this somewhere?

 

He has said it in public speaking appearances at universities.  I've never seen proof of it anywhere (I doubt you can see proof of it without investing), but if I was considering investing in his fund, the first thing I would ask is "Can you show me the proof that you've done 25% for 20 years", and if he couldn't show it to me, I wouldn't invest.  So I assume since he manages $700m, a lot of smart people have fact checked him. 

 

Also, even if none of his investors were smart enough to ask for audited performance numbers, it would be incredibly risky (and stupid) to lie about it, because even if you don't get fact checked before an investor puts money in, making a material, false statement like that is a recipe for a lawsuit.  Any investor that lost money in the fund could sue him personally for their losses, after the fact, by claiming he made false representations about his previous performance. 

[Tim Eriksen]

Has Pabrai really compounded his original investors at 25% a year for 20 years?  Is there proof of this somewhere?

 

I have read a few of his letters back in 2012.  His net performance was not that high.  It is my understanding that his fund started in July 1999.  Through mid 2008 he was around 25% annual.  Performance since mid 2008 has been average such that his overall net returns since 1999 are more in the mid teens. 

 

The only comment I recall referencing 20 years included some years prior to fund launch (personal or personal and family money) and appears to be gross of fees. 

http://basehitinvesting.com/mohnish-pabrai-lecture-at-columbia-university-my-notes/

 

[randomep]

Has Pabrai really compounded his original investors at 25% a year for 20 years?  Is there proof of this somewhere?

 

He has said it in public speaking appearances at universities.  I've never seen proof of it anywhere (I doubt you can see proof of it without investing), but if I was considering investing in his fund, the first thing I would ask is "Can you show me the proof that you've done 25% for 20 years", and if he couldn't show it to me, I wouldn't invest.  So I assume since he manages $700m, a lot of smart people have fact checked him. 

 

 

 

He has said it in public speaking appearances at universities.  I've never seen proof of it anywhere (I doubt you can see proof of it without investing), but if I was considering investing in his fund, the first thing I would ask is "Can you show me the proof that you've done 25% for 20 years", and if he couldn't show it to me, I wouldn't invest.  So I assume since he manages $700m, a lot of smart people have fact checked him. 

 

 

 

See there he goes again. How can he say he is not allowed to talk about his fund's returns and he advertises himself to a public audience? 

 

BTW, this PF2 from inception 2000 to sept is 15.4%, anything longer than that surely isn't audited.....

 

While that is exceptional and probably higher than any person I know during that period, the massive bulk of that CAGR was achieved prior to 2007. So just when his AUM exploded into the hundreds of millions his performance tanked so for those that jumped on his bandwagon it is never truer " that past results are no guarantee of future performance "

 

[LC]

I still can't wrap my head around how Warren Buffett can go on and on about how a 5-year period is what he wants to be judged on, then when he doesn't hit that benchmark, how can he not apologize profusely to all of us while simultaneously committing seppuku right there on the spot?

 

So sarcasm aside, I don't see where Pabrai himself said that disclosing returns was illegal. That appears to be the journalist's comment. Additionally, this is an edited article. Who knows what was cut out, or placed out of context? Finally, what Pabrai DID say was "There is nothing intelligent that one can say about short periods like 10 months. I never make investments with any thought to what will happen in a few months or even a year". I agree with this statement, I'm sure many here do as well.

 

Finally, on a general note: Pabrai doesn't owe the public anything. Nobody has to watch his videos, read his interviews, or invest with him. I've learned a ton from him. I didn't think the interview was anything odd.

[crastogi]

I still can't wrap my head around how Warren Buffett can go on and on about how a 5-year period is what he wants to be judged on, then when he doesn't hit that benchmark, how can he not apologize profusely to all of us while simultaneously committing seppuku right there on the spot?

 

So sarcasm aside, I don't see where Pabrai himself said that disclosing returns was illegal. That appears to be the journalist's comment. Additionally, this is an edited article. Who knows what was cut out, or placed out of context? Finally, what Pabrai DID say was "There is nothing intelligent that one can say about short periods like 10 months. I never make investments with any thought to what will happen in a few months or even a year". I agree with this statement, I'm sure many here do as well.

 

Finally, on a general note: Pabrai doesn't owe the public anything. Nobody has to watch his videos, read his interviews, or invest with him. I've learned a ton from him. I didn't think the interview was anything odd.

 

+1

 

 

[CorpRaider]

Maybe I'm a schmuck, but I like the guy and enjoy his books, presentations, etc...

[jawn619]

Maybe I'm a schmuck, but I like the guy and enjoy his books, presentations, etc...

 

Me too. have followed him into a couple things too.

[RhubarbXIV]

I know Pabrai, I have seen his performance figures and I also run my own fund so I feel qualified to address some of the speculation.

 

1. His returns are good. He ain't Gotham 1985-1995, but in his longest running fund, his returns are about in line with the market over the past five years or so (seven years if you're careful to lump 2007-2009 together). To put that in context, consider that very few funds are going to have an easy time keeping up in a period of QE and high volatility followed by basically five years of 16% straight up for the S&P. Klarman lagged badly for ten years from 1990-1999, returning 11.8% vs 19% (don't have it in front of me, but pretty sure that's right), and Einhorn hasn't been on fire lately, either. The HFR Fundamental Value index is at about 7.5% ann. for 5 years, and the Magic Formula has been cold since the crisis. With the exception of the HFR index, I have confidence these are all good bets to beat the market over a lifetime-length period.

 

2. Fund marketing is a regulatory landmine. In short, when setting up a fund, you can decide where the burden of proof lies to determine who is accredited and not. I AM NOT A LAWYER SO CUM GRANO SALIS, but as I understand it, if the fund performs DD on each LP to determine qualified status then they can market freely under the JOBS act (very few choose this option). The much safer election is to leave the burden of proof on the investor to state that they in fact are qualified, but only market to those self-identified as qualified. The line between marketing and not-marketing is so blurry it's best just to stay the hell away from it talking about your fund's returns. Not "illegal" per se, but it is a massive headache getting anywhere near that line. Part of the reason I don't post here as much as I'd like.

 

3. Contradiction is the hallmark of a well-developed investor. Buffet warns people about derivatives and sells S&P puts. He bought Gen Re for heaven's sake. I talk freely about stocks I own with friends and colleagues. With the public, less so. Especially if I'm buying/selling/stalking a position. I trade so infrequently I'm usually not worried about it though, but part of being a "Guru" with your interview in Barron's is that you're going to see a lot of pikers crowd you in a trade where you haven't got a full position yet (I'll bet he's got as much GM/WS as he wants, same for Hyundai Prefs).

 

4. Would I invest with him? No. I run my own fund. I can't discuss returns here. I don't see evidence that he does the level of DD on his investments I would like to see for someone so concentrated. I'm very concentrated, but neurotic about understanding as much as I can about everything. And I NEVER rely on someone else owning something as support for an investment thesis. I prospect in 13Fs, yes, but I'll never jump in a position until I've exhausted myself trying to understand it. I (and my LPs) have nobody to blame but myself when something goes wrong. "But Lou Simpson owns it" is not an excuse I can imagine giving.

[stahleyp]

Thanks for the post, Rhubarb. Very insightful. I knew Klaram was lagging during the 90s but I didn't realize it was that much.

[RhubarbXIV]

I'm going out on a limb a bit sharing this, and it's a slightly different interval than I quoted before (which was based on some old notes I did on the back of his 1999 letter), but this is from 10/31/2000:

 

1 Year: Baupost 22.43%, S&P 6.09%

5 Year: Baupost 11.55%, S&P 21.67%

Life of Fund (12/14/1990): Baupost 13.19%, S&P 18.78%

 

How's that for patience and sticking to your guns? I think we could all learn a thing or two from this guy.

 

 

 

[stahleyp]

Rhubarb,

 

Thanks again for the information. Just a bit of clarification the life of fund date and returns.

 

Is the 13.19% from 1990-1999?  Or, as "life of fund" title implies 1982. I believe he started Baupost in 1982. Regardless of the date, he is super, super patient. Wow.

[RhubarbXIV]

Rhubarb,

 

Thanks again for the information. Just a bit of clarification the life of fund date and returns.

 

Is the 13.19% from 1990-1999?  Or, as "life of fund" title implies 1982. I believe he started Baupost in 1982. Regardless of the date, he is super, super patient. Wow.

 

Baupost was indeed founded in 1982, but this is a distinct but similar series of Baupost Funds. The inception of this precise fund is the date stated, and the returns are for that interval. All figures as of 10/31/2000. Taken right from the letter.

 

I should have added earlier that I deeply admire Mohnish as a person. He's basically worked for free for the past seven years and with this year being down shows no sign of slowing down. He saw that his clients were made whole after 2008 and then some and stuck to his original deal. I have the greatest respect for someone who conducts his business that way regardless of what differences of opinion we have over investing methodology. And I'm not just saying that because he bought me dinner and gave me a nice book.

 

I think Wall St. ought to "clone" his ethics and generosity.

[stahleyp]

Rhubarb,

 

Thanks again for the information. Just a bit of clarification the life of fund date and returns.

 

Is the 13.19% from 1990-1999?  Or, as "life of fund" title implies 1982. I believe he started Baupost in 1982. Regardless of the date, he is super, super patient. Wow.

 

I should have added earlier that I deeply admire Mohnish as a person. He's basically worked for free for the past seven years and with this year being down shows no sign of slowing down. He saw that his clients were made whole after 2008 and then some and stuck to his original deal. I have the greatest respect for someone who conducts his business that way regardless of what differences of opinion we have over investing methodology. And I'm not just saying that because he bought me dinner and gave me a nice book.

 

I think Wall St. ought to "clone" his ethics and generosity.

 

Thanks again for the Baupost information. I agree 100% on the above too. I know a lot of funds closed up shop and started a new fund to avoid the headaches and lack of a paycheck after the crisis.

[compoundinglife]

One comment on the discussion. Anytime you read an article or interview you are reading something that is curated by the reporter. Very easy for the interview/article to drift from reality of the actual discussion IMO. Try asking a reporter you are talking to let you see or proof read the piece before they publish it most will never do this. Something to keep in mind.

[yadayada]

What are baupost's returns from inception till now?

 

Seems like he always holds a lot of cash?

[philly value]

What are baupost's returns from inception till now?

 

Seems like he always holds a lot of cash?

 

He mentioned his track record in a recent talk at Wharton, and I believe it was ~19% going back to inception, but I could be remembering that slightly incorrectly.

 

 

 

 

[AzCactus]

What are baupost's returns from inception till now?

 

Seems like he always holds a lot of cash?

 

He mentioned his track record in a recent talk at Wharton, and I believe it was ~19% going back to inception, but I could be remembering that slightly incorrectly.

 

Do you have a link to the video or transcript?

[wisdom]

there is a youtube video - search mohnish pabrai and you will find it - he compares himself to forest gump. it is a 5 minute video.

If you recall his old plate before GM warrants - cmplb26 that would be another clue.

[philly value]

What are baupost's returns from inception till now?

 

Seems like he always holds a lot of cash?

 

He mentioned his track record in a recent talk at Wharton, and I believe it was ~19% going back to inception, but I could be remembering that slightly incorrectly.

 

Do you have a link to the video or transcript?

 

Unfortunately I don't believe the talk was recorded, or at least I haven't found a video online. It was a joint discussion with Klarman & Howard Marks.