Mohnish Pabrai blog

[stahleyp]

 

I apologize I don't know where it is as I watched it a month or so ago. Someone else had posted a link.

 

"The Quest for 10-100 Baggers"

 

Has he ever had a 100x?

[Picasso]

I listened through the beginning, sounds like he said about 26% up to 2014, down a third through 2016 but thinks he'll make it up over the next few years.

[CorpRaider]

Yeah you guys are being a little ridiculous with the haterade.

[AzCactus]

I listened through the beginning, sounds like he said about 26% up to 2014, down a third through 2016 but thinks he'll make it up over the next few years.

 

Does anyone know if the 26% is gross or net ?

[Picasso]

He talks about his 100 bagger Indian stocks which are basically personal account trades.  Plus some other investments that turned $1 million into $11 million, so sounds like gross?  I'm not as familiar with his whole backstory as others might be. 

[flesh]

I listened through the beginning, sounds like he said about 26% up to 2014, down a third through 2016 but thinks he'll make it up over the next few years.

 

You are correct, I was mistaken. I should certainly be more critical of my observations when I'm speaking ill of someone, for that I was off base.

 

That said, if your returns are 26% through 2014 and you lose a third, that could lower returns to say something like 15%, there is still a large discrepancy there. If he wasn't talking about his returns and was speaking of something less important we should let it slide but it's disingenuous to speak of your returns in this way. It would certainly be less than straightforward considering his audience and the fact that most people don't speak cagr. These videos are a large part of why he attracts AUM. I made my money in marketing, I intentionally used this type of language to make people money for years. I find it difficult to believe that a fund manager talking about his returns could let something like this slip unintentionally.

 

 

[Picasso]

I agree with you flesh.  There's really no room in picking certain time frames when describing your investment results.  By saying "pretty close" people will assume 25% instead of 26%, and the down a third requires some extra math to figure out maybe it's now 20%.  Then throwing in "we'll make it up over the next few years so no biggie" is off-putting too.  It's subtle but I think you're right it kind of frames a marketing ploy.  Maybe he's not doing it on purpose but it comes across that way.

 

Also the statue of Munger in the back is creepy.  It's back to that framing of Buffett/Munger which is also a subtle marketing thing.  I think when taken together it can rub people aware of these things the wrong way (anyone who works in sales/marketing).  i.e., I have a tremendous amount of respect for Buffett/Munger and would never dream of using their names or likeness to earn money off them.  They did well because they were their own people with their own minds and anyone aspiring to be like them should not milk their likeness to build a career.  There's a limitation to doing that imo.

 

But I've been trying to give Mohnish an easier time even though he blocked me on twitter... So I'll go back into my hole.

[constructive]

I listened through the beginning, sounds like he said about 26% up to 2014, down a third through 2016 but thinks he'll make it up over the next few years.

 

Does anyone know if the 26% is gross or net ?

 

https://www.docdroid.net/Zr9AWq6/pabrai-funds-2015-annual-letter.pdf.html

 

Net annualized returns are:

PIF2 (2000-2015) 12.9%

PIF3 (2001-2015) 10.7%

PIF4 (2003-2015) 7.3%

[AzCactus]

I listened through the beginning, sounds like he said about 26% up to 2014, down a third through 2016 but thinks he'll make it up over the next few years.

 

Does anyone know if the 26% is gross or net ?

 

https://www.docdroid.net/Zr9AWq6/pabrai-funds-2015-annual-letter.pdf.html

 

Net annualized returns are:

PIF2 (2000-2015) 12.9%

PIF3 (2001-2015) 10.7%

PIF4 (2003-2015) 7.3%

 

Perhaps I am being a bit of an a**hole, but none of these numbers look very close to 26%.  I only saw a bit of the interview, but I recall the 26% figure as well. 

[augustabound]

Perhaps I am being a bit of an a**hole, but none of these numbers look very close to 26%.  I only saw a bit of the interview, but I recall the 26% figure as well.

Maybe he was referring to his vanity plate? COMLB26. His goal of compounding at a 26% average.

[stahleyp]

Perhaps I am being a bit of an a**hole, but none of these numbers look very close to 26%.  I only saw a bit of the interview, but I recall the 26% figure as well.

Maybe he was referring to his vanity plate? COMLB26. His goal of compounding at a 26% average.

 

I'd say his 26% is a "goal." Though...one he really hasn't come close to since inception.

 

To be fair, he has beaten the market since inception, which is rare for most money managers (though, I think his fund was opened in 1999 so value investor tailwinds are huge).

[flesh]

Guys, listen to the video, it's in the first five minutes. He says his return are 26%ish through 2014 and then down a third explicitly. No question about it. There's no way to misinterpret this specifically.

[AzCactus]

Guys, listen to the video, it's in the first five minutes. He says his return are 26%ish through 2014 and then down a third explicitly. No question about it. There's no way to misinterpret this specifically.

 

This is akin to asking someone what their cumulative GPA was during college and they say something like it was a 3.8, but as a senior it s a 2.7.  It doesn't actually answer the question.  My only thing here is that if you are going to talk about returns there's no logical reason you wouldn't talk about the most current data.  Clearly someone posted that his return was 12.9% through 2015 that sounds more honest and straightforward than what he said IMO.

[Jurgis]

I promised Sanjeev never to criticize Pabrai, since it raises Sanjeev's blood pressure and we really don't want that.  8)

 

I thought the talk was interesting.

 

Here are ways to get 10-100 baggers:

 

1. Buy soso (or even fraudulent) company that goes 100x in a bubble. Notice that it went 100x up near the top of the bubble. Sell. ... Profit. Don't look at it before then, since you gonna sell it at 2x or something.

 

2. Buy a future KO/V/GS/GOOGL/FB before it is KO/V/GS/GOOGL/FB. Maybe buy a future Indian KO/V/GS/GOOGL/FB. Don't look at stock price for 10 years, or you gonna sell it for 2x or something. ... Profit.

 

3. Buy a cyclical, preferably levered at some kind of "maximum" negativity. Wait until it doesn't blow up. ... Profit

 

Here are ways not to get 10-100 baggers:

 

1. Buy soso (or even fraudulent) company that goes 100x in a bubble. Continue holding.

 

2. Buy KO/V/GS/GOOGL/FB when everyone and their friend know they are KO/V/GS/GOOGL/FB.

 

3. Buy a cyclical, preferably levered. Wait until it blows up.

 

 

[InspireByReason]

I promised Sanjeev never to criticize Pabrai, since it raises Sanjeev's blood pressure and we really don't want that.  8)

 

I thought the talk was interesting.

 

Here are ways to get 10-100 baggers:

 

1. Buy soso (or even fraudulent) company that goes 100x in a bubble. Notice that it went 100x up near the top of the bubble. Sell. ... Profit. Don't look at it before then, since you gonna sell it at 2x or something.

 

2. Buy a future KO/V/GS/GOOGL/FB before it is KO/V/GS/GOOGL/FB. Maybe buy a future Indian KO/V/GS/GOOGL/FB. Don't look at stock price for 10 years, or you gonna sell it for 2x or something. ... Profit.

 

3. Buy a cyclical, preferably levered at some kind of "maximum" negativity. Wait until it doesn't blow up. ... Profit

 

Here are ways not to get 10-100 baggers:

 

1. Buy soso (or even fraudulent) company that goes 100x in a bubble. Continue holding.

 

2. Buy KO/V/GS/GOOGL/FB when everyone and their friend know they are KO/V/GS/GOOGL/FB.

 

3. Buy a cyclical, preferably levered. Wait until it blows up.

 

 

 

I'm currently trying out this third strategy in the Drybulk and Oil Services industries. I guess we will see where they go! Hahaha. I do wish Mohnish would go more in detail about how he analyzes companies. I found his Dhando Investor DCF modelling to be in-congruent with how he describes how he thinks about valuation.

[Parsad]

You guys should probably go to one of his meetings or at least see the presentation he provides attendees.  He makes it perfectly clear in his letters and presentations what his annualized return is.  At the same time, he indicates how he had years of outperformance, then a few years of immense underperformance, followed by years of outperformance again...and he suggests that the current period of underperformance should turn again if his methodology and history is accurate.

 

Mohnish is a marketing machine...he knows that...others know that...and he milks it for all it's worth.  But at the same time, he's probably one of the most transparent managers around in terms of his actions, performance and thought process.  You don't have to buy or subscribe to everything he says...I don't.  But I do know that he's honest and he goes way out of his way for many people.

 

In terms of the whole Munger statue thing, etc.  It's not any weirder than someone starting a website called "Corner of Berkshire & Fairfax", or the nutjobs who wear 10 gallon yellow stetsons around Omaha during Berkshire's AGM.  Buffett & Munger have changed alot of lives, otherwise most of you wouldn't be on here.  He's as big a fanboy as anyone...admits that he tries to copy them...and has done very well for himself, his investors (long-term) and those non-profits that he contributes to because of them.  When someone changes your life in ways you could not have imagined, you tend to hold them on a pedestal...he's no different than anyone else.

 

Finally, if you don't like the way he describes his methodology, then don't subscribe to his methodology...pretty simple.  I've read Dhandho and Mosaic, but I don't relate to Dhandho and Mosaic...that's ok.  I also don't relate to some of the methodology that Hamblin Watsa or Baupost use.  I still don't understand why Berkshire bought airline stocks...that's ok.  I only need to invest in things that make sense to me and I don't really care what others are doing.  But that doesn't mean they are wrong. 

 

Ericopoly, who many of you regard as one of the shrewdest investors on here, as do I, used enormous leverage to build his wealth.  That doesn't mean it was right or wrong, or that everyone should do it or understand it...I can't fathom that level of risk!  But it worked for him, regardless of how much Pepto-Bismol he may have consumed.  Another well respected investor is Allan Mecham at Arlington Value...he put 50% of his fund into Berkshire and then leveraged the hell out of it as well.  Again, neither right, nor wrong...it worked for him.

 

So if Mohnish is not your cup of tea...that's ok.  Or Whitney Tilson...no worries.  Or me...f**k off, if it's me!  ;D  Cheers!

[Picasso]

We're just nit picking one part a presentation.  Maybe the big issue is expectations.  When you put yourself out there in a way where people have high expectations, it's easy to point out the flaws in a person.  Donald Trump seemingly gets away with a lot because no one really expects much from the guy.  But we expect a lot from Pabrai so in some sense there's a reason why some on here expect a lot from him.  And he doesn't owe us anything so it doesn't matter.

 

I still think the Munger statue is a bit weird but hey the resemblance is uncanny and it made me crack up so no big deal :)

 

Back to my hole.

[Jurgis]

I promised Sanjeev never to criticize Pabrai, since it raises Sanjeev's blood pressure and we really don't want that.  8)

 

I thought the talk was interesting.

 

Here are ways to get 10-100 baggers:

 

1. Buy soso (or even fraudulent) company that goes 100x in a bubble. Notice that it went 100x up near the top of the bubble. Sell. ... Profit. Don't look at it before then, since you gonna sell it at 2x or something.

 

2. Buy a future KO/V/GS/GOOGL/FB before it is KO/V/GS/GOOGL/FB. Maybe buy a future Indian KO/V/GS/GOOGL/FB. Don't look at stock price for 10 years, or you gonna sell it for 2x or something. ... Profit.

 

3. Buy a cyclical, preferably levered at some kind of "maximum" negativity. Wait until it doesn't blow up. ... Profit

 

Here are ways not to get 10-100 baggers:

 

1. Buy soso (or even fraudulent) company that goes 100x in a bubble. Continue holding.

 

2. Buy KO/V/GS/GOOGL/FB when everyone and their friend know they are KO/V/GS/GOOGL/FB.

 

3. Buy a cyclical, preferably levered. Wait until it blows up.

 

 

 

I'm currently trying out this third strategy in the Drybulk and Oil Services industries. I guess we will see where they go! Hahaha. I do wish Mohnish would go more in detail about how he analyzes companies. I found his Dhando Investor DCF modelling to be in-congruent with how he describes how he thinks about valuation.

 

Yeah, strategy 3 is where I got one or two ten baggers. Also one or two zeros. Probably no more for me. It can work great. Picasso did some of that with deep DD. Some other oil people here perhaps.

[DooDiligence]

View a thing with apathy, disdain or equanimity (I do all depending on my agenda but prefer equanimity when I'm feeling rational...)

[bonkers]

For those of you who have to communicate to external clients/partners, I want to share my perspective on reporting returns:

 

If you run a (super-)concentrated fund like Pabrai, the stocks are very volatile (but you are sure of their IV), and you have not run the fund for many decades (as few people have)...the stock quotations of the last year or two can have a big impact on your total returns since inception.

 

Of course you always have to state clearly also the latest number, i.e. fact. And this is heavy evidence.

 

However, I also think it is fully acceptable and even beneficial to state your opinion of your expectations, like "I'm pretty sure I'll get it back" vs. "I'm not sure at all if I'll get it back". This is because external observers typically only look at returns, and cannot know what is behind them (i.e. the investments, and maybe a process) that only the fund manager knows (or at least hopefully knows).

 

Furthermore, over time a good investor can develop a correct self-image of his/her skills. After observing market for a long time (and making investments) you can say that "I know I can make 10 %, 15 %, 20 % (or whatever) if you just give me a few years". No matter what the latest numbers show, I know better.

 

Buffett said he could make 50 % a year with small sums. He knew he would. He could promise it. Is that really so much different from Pabrai having a certain expectation?

[AzCactus]

For those of you who have to communicate to external clients/partners, I want to share my perspective on reporting returns:

 

If you run a (super-)concentrated fund like Pabrai, the stocks are very volatile (but you are sure of their IV), and you have not run the fund for many decades (as few people have)...the stock quotations of the last year or two can have a big impact on your total returns since inception.

 

Of course you always have to state clearly also the latest number, i.e. fact. And this is heavy evidence.

 

However, I also think it is fully acceptable and even beneficial to state your opinion of your expectations, like "I'm pretty sure I'll get it back" vs. "I'm not sure at all if I'll get it back". This is because external observers typically only look at returns, and cannot know what is behind them (i.e. the investments, and maybe a process) that only the fund manager knows (or at least hopefully knows).

 

Furthermore, over time a good investor can develop a correct self-image of his/her skills. After observing market for a long time (and making investments) you can say that "I know I can make 10 %, 15 %, 20 % (or whatever) if you just give me a few years". No matter what the latest numbers show, I know better.

 

Buffett said he could make 50 % a year with small sums. He knew he would. He could promise it. Is that really so much different from Pabrai having a certain expectation?

 

Above.  When you mention 26% and are at 13% roughly that's much different than creating an expectation at 15% and being at 13%.  Nothing is worth with being promotional---but having a number twice as high as the real numbers is tough to explain.

[gfp]

Mohnish wrote an article for Forbes -

http://www.forbes.com/sites/janetnovack/2016/12/22/move-over-small-dogs-of-the-dow-here-come-the-uber-cannibals/#350b272a3dea

[cubsfan]

All you Pabrai bashers might find this interview enlightening. Maybe you can gain some sense of proportion.

 

https://www.theinvestorspodcast.com/the-dhandho-investor-mohnish-pabrai/

 

 

[flesh]

This is the description used of his fund in the first paragraph:

 

"In this episode, Preston and Stig talk to one of the most respected investors implementing the Buffett-Graham approach.  Mohnish Pabrai has been running his Pabrai Funds since 2000 and since that time (between 2000 and 2013), his fund outperformed the S&P 500 by 474%.  The market was up 43% and Pabrai was up 517%."

 

Seems like he's missing a few years.

[rogermunibond]

Those recent years aren't the ones you're looking for.