Mohnish Prabrai and Guy Spier performance

[Parsad]

Please don't post copyrighted material from letters.  Cheers!

[Jurgis]

Please don't post copyrighted material from letters.  Cheers!

 

Summary of copyrighted material from letters: Performance sucks. Nothing to see there there.

 

 

 

I find it ridiculous that performance numbers are copyrighted material, but hey whatever floats their boats...  ::)

[stahleyp]

Please don't post copyrighted material from letters.  Cheers!

 

Summary of copyrighted material from letters: Performance sucks. Nothing to see there there.

 

Amazing how he talks so much but when the letters gets published he gets all upset.  ::)

 

Einhorn still lets his letter out (I'm assuming since it's very easy to get) and he isn't such a self-promoter and his performance has also sucked.

[shamelesscloner]

I already ran the numbers and compared it against SPY (total return)

 

https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/mohnish-pabrai-blog/?action=dlattach;attach=8616

 

 

Am I correct in interpreting that this means I would have performed better investing in the S&P 500 than investing with Pabrai at any point after 2003?

[Arski]

Interesting that nobody mentions the fact that Buffett paid his investors, when he started his first partnership, a 6% return out of his own pocket if he didn't exceed that 6% some period (I don't know exactly for how long but I think it was something like two years). That's quite a nice clawback which gives the investor a lot of security. Something you don't see anywhere else and I haven't heard Pabrai or Spier talk about it once.

 

 

[AzCactus]

Am I the only one who thinks its pretty strange that Pabrai doesn't show 5/10 year numbers versus relevant indices and instead just the cumulative number.  I feel like this does a disservice to those who have been with Pabrai for 11/12 years but not since day 1. 

[Parsad]

You guys are picking on Pabrai and Spiers, whose performance fees only get paid when they overcome a specific hurdle.  Yet there are tons of other investment managers, including many of you who are critiquing them, who take 1% off the top every year...regardless of your performance. 

 

So yes, while they have underperformed significantly...like many value investors, including Prem and Buffett...and myself included...their investors putting in new capital, and any new investors coming in, get a free ride until they recoup the cumulative amount since the high watermark, plus their hurdle rate annualized.

 

There is nothing wrong with you guys bashing people, but really...you guys are going to bash the few guys who actually don't have a management fee and have always actually been forthright with their investors or people who just want to chat with them and pick their brain?!  Cheers!

[Parsad]

Am I the only one who thinks its pretty strange that Pabrai doesn't show 5/10 year numbers versus relevant indices and instead just the cumulative number.  I feel like this does a disservice to those who have been with Pabrai for 11/12 years but not since day 1.

 

Are you incapable of reading the annualized numbers and calculating the return?  Or simply going to Standard and Poor's and comparing his annualized returns to the S&P? 

 

What colors should he use on the website so my eyes don't hurt as much from the bluelight...can't he think of these things?  What type of moron doesn't take into consideration how blue light hurts people's eyes.  That blaring white website is so disruptive to when I read how badly Pabrai has performed.  What a lunk head he is!  Cheers!

[Parsad]

Please don't post copyrighted material from letters.  Cheers!

 

Summary of copyrighted material from letters: Performance sucks. Nothing to see there there.

 

Amazing how he talks so much but when the letters gets published he gets all upset.  ::)

 

Einhorn still lets his letter out (I'm assuming since it's very easy to get) and he isn't such a self-promoter and his performance has also sucked.

 

Haha!  You're correct that Einhorn isn't a self-promoter...he just promotes his stock selections instead!  Cheers!

[buffetteer1984]

Pabrai has been a horrible investor there's no way around it. Despite ALL his homeruns he talks about, his numbers have underperformed.  Free ride or not doesn't really add up to much if it's a ride to nowhere.  You can get a free ride in the s&p.  Berkowitz, who alot would say has had a terrible run with a near zero on a massive position in sears and almost more than half in st joe and gses is actually beating him around a 10 year period and even more so within the last few years.  Pretty much tells you how bad of a run pabrai had.

[AzCactus]

Am I the only one who thinks its pretty strange that Pabrai doesn't show 5/10 year numbers versus relevant indices and instead just the cumulative number.  I feel like this does a disservice to those who have been with Pabrai for 11/12 years but not since day 1.

 

Are you incapable of reading the annualized numbers and calculating the return?  Or simply going to Standard and Poor's and comparing his annualized returns to the S&P? 

 

What colors should he use on the website so my eyes don't hurt as much from the bluelight...can't he think of these things?  What type of moron doesn't take into consideration how blue light hurts people's eyes.  That blaring white website is so disruptive to when I read how badly Pabrai has performed.  What a lunk head he is!  Cheers!

 

This isn't about whether or not I am capable of categorizing the annualized returns/returns over 5/10 year period.  This is 100% about Mohnish (he's the only one I have seen not show 5/10 year numbers) in a transparent way.  Sure investors should do their own dd prior to investing, but someone who follows Warren/Charlie should know that being honest and forthright is super important.

 

In terms of saying new investors are getting a free ride--that's totally untrue.  The might not be paying Pabrai a fee but they are effectively losing by investing with him.  If you are going to be managing money for other people and leveraging Warren/Charlie's name the way Pabrai does you should act the way they would act.  And underperforming for the length of time Pabrai has (~15 years by my best count) should warrant him calling it quits

 

 

 

[Parsad]

Pabrai has been a horrible investor there's no way around it. Despite ALL his homeruns he talks about, his numbers have underperformed.  Free ride or not doesn't really add up to much if it's a ride to nowhere.  You can get a free ride in the s&p.  Berkowitz, who alot would say has had a terrible run with a near zero on a massive position in sears and almost more than half in st joe and gses is actually beating him around a 10 year period and even more so within the last few years.  Pretty much tells you how bad of a run pabrai had.

 

Am I the only one who thinks its pretty strange that Pabrai doesn't show 5/10 year numbers versus relevant indices and instead just the cumulative number.  I feel like this does a disservice to those who have been with Pabrai for 11/12 years but not since day 1.

 

Are you incapable of reading the annualized numbers and calculating the return?  Or simply going to Standard and Poor's and comparing his annualized returns to the S&P? 

 

What colors should he use on the website so my eyes don't hurt as much from the bluelight...can't he think of these things?  What type of moron doesn't take into consideration how blue light hurts people's eyes.  That blaring white website is so disruptive to when I read how badly Pabrai has performed.  What a lunk head he is!  Cheers!

 

This isn't about whether or not I am capable of categorizing the annualized returns/returns over 5/10 year period.  This is 100% about Mohnish (he's the only one I have seen not show 5/10 year numbers) in a transparent way.  Sure investors should do their own dd prior to investing, but someone who follows Warren/Charlie should know that being honest and forthright is super important.

 

In terms of saying new investors are getting a free ride--that's totally untrue.  The might not be paying Pabrai a fee but they are effectively losing by investing with him.  If you are going to be managing money for other people and leveraging Warren/Charlie's name the way Pabrai does you should act the way they would act.  And underperforming for the length of time Pabrai has (~15 years by my best count) should warrant him calling it quits

 

 

 

 

I'm not saying you should or should not invest with Pabrai or Spiers.  The question is whether active management is necessary or passive investing is better.  We know that at least 80% of the time, passive investing is superior to active investing.

 

My point was that you should be criticizing active management altogether...not picking on the managers that actually have a fair model that incentivizes the correct behavior. 

 

Cheers!

[Vito72]

Well, there's reason why Munger hasn't given a single dollar to Mohnish Pabrai.

 

[Vish_ram]

The investing world is a strange one. Look at thousands of mutual funds who still charge 12b-1 fees and other fees and continually underperform their benchmarks. People still invest in them. There is a steady migration away from them though.

 

Pabrai’s biz model depends on exploiting this blind spot. More power to him. You can call it knowledge/information arb. You’ll be surprised how very otherwise intelligent human beings who do well in business and make tens of millions can be so poor in understanding basic concepts like annualized returns and comparing it against benchmarks.

 

Humans fall in love with good story tellers. Pabrai is one of the greatest of them all. You can just listen to him talk for an hour about peeling a banana. You will come out feeling enlightened. There will be full of anecdotes about Warren & Charlie. An equivalent in spiritual world is this indian guru Sadhguru. Most of his talks are mesmerizing and in reality you wouldn’t have learnt anything.

 

His streak can continue for another 20-30 years. His reports & annual presentations are master pieces. Fast paced, mental gymnastics to highlight good and downplay bads.

 

Will he have made $ for his clients in the long run? Most likely yes, he would cross the hurdle. Will he have outperformed S&P for majority of the clients in the long run? Most likely not. The lack of returns is more than compensated by great story telling, the ride....

 

The naive investors are just fair game.

 

Is this behavior something Buffett/Munger would approve of? Absolutely not!

[Rod]

Nowhere in his talks does Mohnish admit that his performance has been lacklustre for a very long time. I would guess that his audience believes incorrectly that he has made enormous gains all along. I would prefer if he admitted that he's gone a long time underperforming. Talking about WHY that might be and what mistakes he may have made and how hard it is to outperform indexes would be more useful to his audience I think than repeating Buffett and Munger all day.

[Gregmal]

As someone who manages money, I can confirm 3 things.

 

1) If you are any good at it, you dont need outside money for very long.

2) Its a product, what you offer as a manager is a brand, and like any other business, you look to make money. Stop whining about fees.

3) When you've been bad for so long, especially in a really good market, and that stretch dwarfs previous stretches, there's probably a good argument that you may not be all that good of an investor, that you just got lucky. Thing is, there's nothing wrong with getting lucky...you only need to get rich once.

[stahleyp]

Anyone that has a license plate that says "CMLB 26" or whatever and then tells people what it means and then....has far less than half of that performance is doing shady stuff. I believe if you take away his for 2 or 3 years he actually trails the S&P 500 by a fair amount (it's been a while since I looked at that though so my memory is fuzzy).

 

There are certainly things I like about Pabrai (I think his fee structure is better than most and his charitable activities) but his marketing is concerning.

[ukvalueinvestment]

Nowhere in his talks does Mohnish admit that his performance has been lacklustre for a very long time. I would guess that his audience believes incorrectly that he has made enormous gains all along. I would prefer if he admitted that he's gone a long time underperforming. Talking about WHY that might be and what mistakes he may have made and how hard it is to outperform indexes would be more useful to his audience I think than repeating Buffett and Munger all day.

 

I agree - he does an awful lot of name and photo dropping to get that halo effect.  He should make more of his lacklustre returns.

[Vish_ram]

Fat chance admitting to poor returns.

 

If you analyze it closely, you'll see that an extraordinary amount of thought and action has been put to this. For existing investors who have seen tons of losses and suffering from loss aversion, there is this psychological support (don't look here, look there effect - quarterly/annual reports talk about how NAV is fraction of intrinsic value, wait for 5 bagger, a 10 bagger that I'm about to enter etc etc), for new investors there is talk about free ride (you don't pay anything until everyone's losses are recouped), carefully cultivated image with pics of famous investors that people hold in high esteem (gives legitimacy), probably paid coterie of twitter followers who post his investing wisdom frequently (I once found two such same posts with same wordings & pics from two different people around exact same time , not the retweets), philanthropy funded from the scheme (generate good will amongst rich Indian diaspora), books rehashing Buffett/Munger principles (prices artificially inflated to gain attention), umpteen college talking circuits (putting oratorial skills to full use and be in the news adding more legitimacy), periodic puff pieces in forbes magazine (probably paid).....

 

The explanation in annual meeting to account for variance of perf to indices is truly a masterpiece. You've to see to believe it. 

 

The audacity is breathtaking.

[AzCactus]

Fat chance admitting to poor returns.

 

If you analyze it closely, you'll see that an extraordinary amount of thought and action has been put to this. For existing investors who have seen tons of losses and suffering from loss aversion, there is this psychological support (don't look here, look there effect - quarterly/annual reports talk about how NAV is fraction of intrinsic value, wait for 5 bagger, a 10 bagger that I'm about to enter etc etc), for new investors there is talk about free ride (you don't pay anything until everyone's losses are recouped), carefully cultivated image with pics of famous investors that people hold in high esteem (gives legitimacy), probably paid coterie of twitter followers who post his investing wisdom frequently (I once found two such same posts with same wordings & pics from two different people around exact same time , not the retweets), philanthropy funded from the scheme (generate good will amongst rich Indian diaspora), books rehashing Buffett/Munger principles (prices artificially inflated to gain attention), umpteen college talking circuits (putting oratorial skills to full use and be in the news adding more legitimacy), periodic puff pieces in forbes magazine (probably paid).....

 

The explanation in annual meeting to account for variance of perf to indices is truly a masterpiece. You've to see to believe it. 

 

The audacity is breathtaking.

 

+1.  Mohnish seems like a really nice guy.  He's just a nice guy who shouldn't be in the money management business (insofar as good returns are the primary objective of the investor).

 

 

 

[thowed]

I agree with much of what's being said here.

 

However... there is this thing called 'caveat emptor'.

 

 

[shamelesscloner]

Pabrai no longer recommends CoBF as a resource for investors like he used to. Must be all you whistleblowers ;)

[Gregmal]

At this point I'd question his "resources" given the.......degree to which they seem to translate to results.

[AzCactus]

Hi Aurokuror,

 

No idea what source or where you pulled those numbers from---the numbers I used are posted on his website and I show him significantly underperforming over the last 10 years (didn't check the last 5 but looks like 2018 was a very bad year from him. 

 

For last 10 years I show:

 

Value of $100 invested over 10 years:

PIF3=$243.37

DJ=$351.33

SP=$356.54

 

If the numbers you had were indeed correct I would agree however, what the numbers tend to show is that every 3/4 years Mohnish will have a year where he basically implodes.  (See 2018 referenced above)

[Munger_Disciple]

I calculated the 5 and 10 year results (up to 2019 but not 2020).

 

Why did you choose to ignore 2020? Seems pretty important to me.