Mohnish Pabrai blog

[Jurgis]

And again, it is illegal. 

 

It is not illegal. Tons of hedgies do that one way or the other: either just post letters on websites without specifically promoting their fund or allow mailing lists without checking investor qualifications, etc.

 

Pabrai just chooses not to disseminate his letter. If he wanted to disseminate it, he easily could.

[racemize]

And again, it is illegal. 

 

It is not illegal. Tons of hedgies do that one way or the other: either just post letters on websites without specifically promoting their fund or allow mailing lists without checking investor qualifications, etc.

 

Pabrai just chooses not to disseminate his letter. If he wanted to disseminate it, he easily could.

 

He cannot purposefully disseminate his letter, and neither can anyone else unless they are willingly violating securities laws.  You should not assert something is "not illegal" unless you know what you are talking about.

 

Moreover, it clearly is getting disseminated at value walk, but he cannot cause it to happen legally.  There must always be a pretense that you are trying to stop it.

[Jurgis]

And again, it is illegal. 

 

It is not illegal. Tons of hedgies do that one way or the other: either just post letters on websites without specifically promoting their fund or allow mailing lists without checking investor qualifications, etc.

 

Pabrai just chooses not to disseminate his letter. If he wanted to disseminate it, he easily could.

 

He cannot purposefully disseminate his letter, and neither can anyone else unless they are willingly violating securities laws.  You should not assert something is "not illegal" unless you know what you are talking about.

 

Moreover, it clearly is getting disseminated at value walk, but he cannot cause it to happen legally.  There must always be a pretense that you are trying to stop it.

 

You are possibly right with your last paragraph.

 

But what is exactly the "illegal" line? You can post a blog. You can give talks posted on Youtube. You can mention your performance in these talks. You can mention specific trades. So why can't you post the whole shareholder letter on the blog? Or let's say the shareholder letter with performance data removed (although as above you have already mentioned it in your talks)? Or shareholder letter with mentions to your funds removed?

 

Anyway, I think we agree that there's fuzzy line to walk and some people choose to walk closer to it or farther from it depending on situation.

 

I don't believe Pabrai does not make his letters public because of legal considerations, but I can't prove it.  8)

 

Have fun.

[racemize]

Look, you are not doing anyone on this website any favors with this line of reasoning.  You are speculating, and it could impact people's understanding on this topic, which is just not helpful.  I wouldn't talk to you at all other than I'm hoping the people reading this will get some information that is actually informed.

 

In any event, I've passed the series 65, I actually run a fund, and I've talked this issue over with our regulators and lawyers.  This should not be messed with.  Just having more than a single page webpage is up for debate.  Even describing our investment philosophy on our website was an item of contention.  It was made absolutely clear that we should not post our letters publicly, and I know of no hedge fund that posts their letters publicly for exactly that same reason. 

 

I won't bother to talk about this any more as I've now attempted to inform those who might be reading.

 

 

[stahleyp]

I think you both are right.

 

race is right that hedge funds cannot legally publish their letters for the public. Look at all the RIAs that have letters vs hedge funds. RIAs usually have their letters easily found on their site.

 

With that being said, like jurgis said, plenty of funds don't prosecute people once the letters are out. So I think there are possibly others things going on as to why Pabrai doesn't want it out.

[investmd]

I've analyzed and posted about Pabrai's returns year or so back.

 

He is an A+ marketer and B- investor. As others have posted above, he made good money when is AUM was < 1/100the current size. The issue with looking at 15 years returns is that 99% of his investors wont be enjoying it. When the AUM ballooned, the returns went negative. Ignore the outliers of first two years, you get 12+ years of underperforming S&P.

 

I'm not a critic of his performance. I'm a critic of Pabrai as a person. He may be great to interact with, but I think he is a phony.

 

1) He associates himself with Buffett to create an impression with potential clients in every single opportunity. He spent 1/2mill to have lunch with Buffett, but knows that is worth 100 times in terms of marketing. He writes about how he made 10X returns in his personal portfolio by saying Thanks to Buffett. A majority of his investments have nothing to do with Buffett;s methodology, or his value approach. Just go through his 13F and you'll know what I mean. A gambler who utters Buffett's sayings is still a gambler.

 

2) When something doesn't work out, he comes up with a new approach. When he got smacked hard in 09, he came up with his diversified approach. That quickly fell by the way side with his huge concentrations in auto companies. Then came the checklist manifesto.

 

3) His letters are full of offering a glimpse of the promised land, in a way that is not honest. You don't own a stock and tell clients that it is worth X times. No one knows the future, a good recession will kill a cyclical stock.

 

4) You don't focus so much on the returns of $1 that walked in the firm when it was setup. What about the millions that followed the first $1 and got whacked.

 

As an Indian, I just feel so sad. The $ value he has lost is much more than the $ he made in the market. The big returns came when his AUM was < 5MM

 

This is dead-on.  Money weighted returns are very poor.

 

I could vent on Pabrai as well, I have some anecdotal stories that have left sour tastes, but instead of doing that I want to do something different.  I want to talk about two positives.  I've learned two things from him that I appreciate:

 

1) How to market/sell.  The guy could sell snow to eskemos and make them rave about how great it was.  He recommended a few sales and marketing books that were A+.  He's mentioned strategies to hook clients that are worthwhile as well.  The guy is a sales machine.  Forget investing.  He could be selling vacuum cleaners, learn from his sales and marketing.  Forget that he's even an investor.  Look at how he targets clients, look at how he sells to them in each letter.  Look at how he keeps them satisfied with an inferior product.  It's fascinating.

2) His Japanese net-nets.  He lost a ton of money on them, but I and others did not.  He didn't have any patience, but others did, and those who did made money.  His idea was sound, he couldn't execute.  The Japanese net-nets helped pay for the house I'm living in now.  A big thanks on that.

 

I'll level one criticism.  The whole discussion of how he only works an hour or two a week and how he's only really worked hard once during the crisis was in poor taste.  Regardless of whether he does that or not it's not the thing you tell your clients in your letter.  To me it's the height of hubris.  He needs to learn from Klarman in this sense.  Klarman's letters gush about how they never leave the office and never stop thinking about new ideas.  What he's saying is "we never stop working for you."  Pabrai has said "I barely work for you, and I only worked once during the crisis.  But I'm so smart it doesn't matter, I can focus on other things."

 

I don't understand how the marketer and salesman tag applies to Pabrai. Sure, he is always positive, upbeat, makes videos and now has a blog. However, what is he selling? His funds are currently closed to new and existing investors. Even more so, they have been closed to new money for the majority of the past 5 years. So please help me understand why he is a "fraud".

[DooDiligence]

I think they "publicly" don't want their letters out but from a marketing standpoint, why wouldn't they want letters "leaked" out?

 

Scarcity & the desire of less sophisticated investors to peek behind the curtain should create a virtuous cycle.

 

"I suck at investing & they suck a lot less but they don't want me to know how they go about sucking less."

 

then

 

"Bingo! I got a copy & now that I've read it I feel compelled to give these guys my $$$"

 

D.R.M.

[Jurgis]

Look, you are not doing anyone on this website any favors with this line of reasoning.  You are speculating, and it could impact people's understanding on this topic, which is just not helpful.  I wouldn't talk to you at all other than I'm hoping the people reading this will get some information that is actually informed.

 

In any event, I've passed the series 65, I actually run a fund, and I've talked this issue over with our regulators and lawyers.  This should not be messed with.  Just having more than a single page webpage is up for debate.  Even describing our investment philosophy on our website was an item of contention.  It was made absolutely clear that we should not post our letters publicly, and I know of no hedge fund that posts their letters publicly for exactly that same reason. 

 

I won't bother to talk about this any more as I've now attempted to inform those who might be reading.

 

Time to talk to your lawyers again?

Quote:

 

On the operational side, I am excited to make a subtle legal change that will allow Curreen Capital to have

more flexibility in reaching potential new partners. We are going to start using the JOBS Act, specifically

rule 506©, to allow me to be less restrained in communicating about the fund.

I attended an investing conference in Switzerland last month, where Scott Miller of Greenhaven Road gave

a great presentation that included his experiences with the JOBS Act. Among other things, the JOBS Act

instructed the SEC to permit investment managers to talk more about their funds, so long as they follow

rigorous procedures in verifying that they are only accepting accredited investors. The SEC finalized its

rules in September 2013, a few months after we launched Curreen Capital. The final rules were up in the air

while we were creating Curreen Capital, so I had only a vague understanding of what changes it might bring.

Like many fund managers who remain unaware of this change, I continued with that vague understanding

– until I listened to Scott. Afterward, my thought was “why aren’t we doing this?”

The short version of what 506© means is: I will be able to talk more about Curreen Capital (investor letters

and fund terms publicly visible on our website, and advertising to potential partners, for example), and we

will verify that new partners are accredited. Existing partners in the fund will not have to do anything until

you add money to the fund – then you will simply need to affirm in writing that you are still an accredited

investor.

 

Shamelessly stolen from Curreen Capital Q2 letter. I hope Christian Ryther won't mind.

[hardincap]

pabrai has listed harvard mba on his linkedin profile. did he really go through the 2 year hbs program and get an mba?

[hardincap]

pabrai is being pretty shady here imo, if he didnt actually get a regular mba. ive heard him use/talk about "outer scorecard" metrics before and it made me a bit suspicious of him, but this makes it clear. so much for being a buffet disciple

[oddballstocks]

pabrai is being pretty shady here imo, if he didnt actually get a regular mba. ive heard him use/talk about "outer scorecard" metrics before and it made me a bit suspicious of him, but this makes it clear. so much for being a buffet disciple

 

Looks like in 2012 he went and got an MBA from Harvard.  He has it listed everywhere and it comes up in interviews.  No idea why he decided to do it, but he must have felt there might be some enriching quality to it.

[oscarazocar]

Where has he ever mentioned in an interview or anywhere else that he got an MBA from Harvard?

 

In his 2014 report while discussing a Goldman Sachs investment he wrote the following: "Since 1999, I have spent a week nearly every year on the Harvard Business School campus in Boston attending the YPO Harvard Presidents' Seminar.  It has been a wonderful, life-altering experience.  The seed of the idea for Pabrai Funds was planted at HBS in 1999.  Over the years, I have had plenty of interaction with HBS students and alums - and the average HBS grad is not a slouch.  Goldman ends up with a disproportionate number of the very, very top performing HBS grads..."

 

This experience does not support a "Harvard MBA" listing.

[LR1400]

pabrai is being pretty shady here imo, if he didnt actually get a regular mba. ive heard him use/talk about "outer scorecard" metrics before and it made me a bit suspicious of him, but this makes it clear. so much for being a buffet disciple

 

Looks like in 2012 he went and got an MBA from Harvard.  He has it listed everywhere and it comes up in interviews.  No idea why he decided to do it, but he must have felt there might be some enriching quality to it.

 

Connections are great from potential investors and employees.

 

Doubt he got anything else from it that studying Warren and Charlie didn't give. Serious about that. I learned more in one year studying them than in any year of undergrad, part of graduate business that I stopped when I started studying them and from operating businesses and business units.

 

The one thing I learned that I haven't gotten from Warren and Charlie is the day to day management/personnel aspect. That is strictly experienced based. The most insight I got on managing people outside of just doing it, was Jack Welch and

 

The fact that I realized my business is in a shitty and cyclical market that is mostly out of my control came from Warren and Charlie.

[violet_contamination]

 

On Dalal Street, LLC (the front for his fund) ADV Part 2A, last updated on March 24, 2017, Page 24--he mentions his B.S. from Clemson, but no HBS MBA, and you cannot lie on your ADV.

[investmd]

pabrai is being pretty shady here imo, if he didnt actually get a regular mba. ive heard him use/talk about "outer scorecard" metrics before and it made me a bit suspicious of him, but this makes it clear. so much for being a buffet disciple

 

Thread around veracity of Pabrai's Harvard MBA appears to be a misalignment of interest from writers on this thread. Pabrai's duty is to his investors. Our duty is to decide if we'd like to invest with him or not. If his Harvard MBA "equivalent" degree as listed on LinkedIn, affects ones decision not to invest with him, that's appropriate. No need to flog the guy. Not sure the discreditors on this Board were looking to invest.

 

From what I understand his Fund is closed to new investors, the Fund has returned >60% this year and 2x over 5 years, he doesn't charge any management fees if the Fund doesn't return >6% annualized and his own entire net worth is in the Fund.  It is the Buffett partnership structure and is similar to Sanjeev Prasad's MPIC. (Aside: I'd be interested to hear Board members recommendations about other interesting funds with this structure.)

 

Maybe I'm naive, but to me I don't see the "I'm going to advertise my Harvard MBA, so that I can steal money from common folk" sentiment that some are advocating.

[oscarazocar]

It didn't say "equivalent" a week ago.  He changed it, probably because of questions from this post.  Attached is the Linkedin page from October 23.  It  just says "Harvard Business School MBA, Business/Commerce, General".  It has since been changed to "MBA Equivalent".

[racemize]

I already posted on the main thread for this, but since this (or a similar one) was one of the threads that started all this analysis for me, I thought I'd link it here:

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/new-essay-evaluating-performance/

[hardincap]

pabrai is being pretty shady here imo, if he didnt actually get a regular mba. ive heard him use/talk about "outer scorecard" metrics before and it made me a bit suspicious of him, but this makes it clear. so much for being a buffet disciple

 

Thread around veracity of Pabrai's Harvard MBA appears to be a misalignment of interest from writers on this thread. Pabrai's duty is to his investors. Our duty is to decide if we'd like to invest with him or not. If his Harvard MBA "equivalent" degree as listed on LinkedIn, affects ones decision not to invest with him, that's appropriate. No need to flog the guy. Not sure the discreditors on this Board were looking to invest.

 

From what I understand his Fund is closed to new investors, the Fund has returned >60% this year and 2x over 5 years, he doesn't charge any management fees if the Fund doesn't return >6% annualized and his own entire net worth is in the Fund.  It is the Buffett partnership structure and is similar to Sanjeev Prasad's MPIC. (Aside: I'd be interested to hear Board members recommendations about other interesting funds with this structure.)

 

Maybe I'm naive, but to me I don't see the "I'm going to advertise my Harvard MBA, so that I can steal money from common folk" sentiment that some are advocating.

 

Re: Harvard MBA "equivalent". Who puts such a thing on their resume? Could you imagine Buffett ever doing something like this? Public co ceos get fired for falsely claiming degrees

[ukvalueinvestment]

So he's been lying or deliberately misleading, which is exactly the opposite of what his stated hero Buffett would advocate and, regardless, makes him plummet in my estimation.

 

SAD!

[stahleyp]

It went from 2012 to 2010 for his "Harvard MBA"?

 

Also how is 9 annual sessions of YPO Harvard Presidents' Seminar equivalent to an MBA program? Who decides that? Maybe it is the equivalent but I don't know. I'm confused.

[nkp007]

https://www.exed.hbs.edu/programs/opm/Pages/alumni.aspx

 

I think Pabrai is well within his rights to call himself a HBS alum. It's HBS' fault for making this as murky as heck, but I'm sure they do that to continue collecting $40K+ for 3 week courses.

 

Pabrai is correct that he is a HBS alum (via the OPM program?), as are the graduates of many other programs including the renowned full-time 2-year MBA program. See below for the full list of programs whose alumni can be "HBS grads".

 

Also - can we talk about what an amazing money-making-scheme HBS is. How do I buy shares of it? I bet their incremental margin is absurd. Also, if I were an actual Harvard MBA, I would be PISSED.

 

https://www.exed.hbs.edu/faqs/Pages/default.aspx

 

–What constitutes alumni status?

A Harvard Business School alumnus/a is defined as any person receiving either a degree or a certificate of completion from Harvard Business School in a qualifying program.

 

Current HBS programs that grant alumni status include:

 

Advanced Management Program (AMP)

Doctor of Business Administration (DBA)

General Management Program (GMP)

Joint Program with Harvard Kennedy School (MPP/MBA and MBA-MPA/ID)

Joint Program with Harvard Law School /Master of Business Administration (JD/MBA)

Joint Program with Harvard Medical School /Master of Business Administration (MD/MBA)

Master of Business Administration (MBA)

Owner/President Management (OPM)

PhD in Business Economics (PhDBE or PhDBusEc)

PhD in Information, Technology, and Management (PhDITM)

PhD in Organizational Behavior (PhDOB)

PhD in Science, Technology, and Management (PhDSTM)

President's Program in Leadership (PPL)

Program for Leadership Development and completion of either PLD Module 5 or 10 days/two credit weeks of HBS Executive Education open-enrollment/custom programs (PLDA)

Senior Executive Leadership Program—India (SELPI)

Senior Executive Leadership Program—Middle East (SELPME)

 

Retired HBS programs that granted alumni status (all attendees are members of the current HBS alumni community)

 

Individuals prior to 2008 having completed one year of an HBS MBA program

Advanced Management Program/International Senior Management Program (AMP/ISMP)

Central and Eastern European Teachers' Program (ETP)

Doctor of Commercial Science (DCS)

The General Manager Program™ (TGMP)

Harvard-Radcliffe Program in Business Administration (HRPBA)

Industrial Administrator (IA)

International Senior Management Program (ISMP)

International Teachers' Program (ITP)

Middle-Management Program (MMP)

Mid-Officer Certificate (MOC)

PhD in Decision Sciences (PhDDS)

Program for Global Leadership™ (PGL)

Program for Management Development (PMD)

Programs for Health System Management (PHSM)

Senior Executive Programme for Africa (SEPSA)

Veterans' Certificate (VC)

Visitor for Individual Studies (VIS)

 

[Parsad]

https://www.exed.hbs.edu/programs/opm/Pages/alumni.aspx

 

I think Pabrai is well within his rights to call himself a HBS alum. It's HBS' fault for making this as murky as heck, but I'm sure they do that to continue collecting $40K+ for 3 week courses.

 

Pabrai is correct that he is a HBS alum (via the OPM program?), as are the graduates of many other programs including the renowned full-time 2-year MBA program. See below for the full list of programs whose alumni can be "HBS grads".

 

Also - can we talk about what an amazing money-making-scheme HBS is. How do I buy shares of it? I bet their incremental margin is absurd. Also, if I were an actual Harvard MBA, I would be PISSED.

 

https://www.exed.hbs.edu/faqs/Pages/default.aspx

 

–What constitutes alumni status?

A Harvard Business School alumnus/a is defined as any person receiving either a degree or a certificate of completion from Harvard Business School in a qualifying program.

 

Current HBS programs that grant alumni status include:

 

Advanced Management Program (AMP)

Doctor of Business Administration (DBA)

General Management Program (GMP)

Joint Program with Harvard Kennedy School (MPP/MBA and MBA-MPA/ID)

Joint Program with Harvard Law School /Master of Business Administration (JD/MBA)

Joint Program with Harvard Medical School /Master of Business Administration (MD/MBA)

Master of Business Administration (MBA)

Owner/President Management (OPM)

PhD in Business Economics (PhDBE or PhDBusEc)

PhD in Information, Technology, and Management (PhDITM)

PhD in Organizational Behavior (PhDOB)

PhD in Science, Technology, and Management (PhDSTM)

President's Program in Leadership (PPL)

Program for Leadership Development and completion of either PLD Module 5 or 10 days/two credit weeks of HBS Executive Education open-enrollment/custom programs (PLDA)

Senior Executive Leadership Program—India (SELPI)

Senior Executive Leadership Program—Middle East (SELPME)

 

Retired HBS programs that granted alumni status (all attendees are members of the current HBS alumni community)

 

Individuals prior to 2008 having completed one year of an HBS MBA program

Advanced Management Program/International Senior Management Program (AMP/ISMP)

Central and Eastern European Teachers' Program (ETP)

Doctor of Commercial Science (DCS)

The General Manager Program™ (TGMP)

Harvard-Radcliffe Program in Business Administration (HRPBA)

Industrial Administrator (IA)

International Senior Management Program (ISMP)

International Teachers' Program (ITP)

Middle-Management Program (MMP)

Mid-Officer Certificate (MOC)

PhD in Decision Sciences (PhDDS)

Program for Global Leadership™ (PGL)

Program for Management Development (PMD)

Programs for Health System Management (PHSM)

Senior Executive Programme for Africa (SEPSA)

Veterans' Certificate (VC)

Visitor for Individual Studies (VIS)

 

 

+1! 

 

Maybe you guys owe him an apology. 

 

Many of you are students of Munger and his belief on incentives.  Ask yourself what incentive there is for a man who is worth $80M, spends only about $250-300K a year, whose hedge fund is not open to new investors and is already asked to speak and attend all sorts of prestigious conferences?  What incentive does he have to lie about a Harvard MBA and risk all of that?

 

This reminds me of when he bought the lunch with Buffett, but paid for it through the foundation he set up.  I remember people skewering him over that.  He gave the f**king money away...does it matter if he got a lunch out of it?

 

You guys really need to spend more time on your investments and less time worrying about other people!  Cheers!

 

 

[rogermunibond]

Now that's some brand dilution.

[Grenville]

You guys really need to spend more time on your investments and less time worrying about other people!  Cheers!

 

Fair enough. Thank you for your perspective on this. I will delete my post.

[Tim Eriksen]

Clarifying question?  Did he state he had an MBA or was an Alumnus of HBS?  If I understand the list, it would allow him to say he was an alumnus of HBS but it would not allow him to say he had an MBA from HBS.  Or am I missing something?

 

BTW, the argument that he couldn't have lied because he had nothing to gain from it, is not very strong (i.e., proof). Just because someone has nothing to gain doesn't mean they wouldn't lie.