Guru In Focus: What's Mohnish Pabrai Buying?
Charles Sizemore | Jul 08, 2013 01:04PM ET
Warren Buffet is known for keeping the investment process simple. He avoids complex models and once joked that if calculus were required, he’d have to give up the money business and go back to his childhood job of delivering papers.
Pabrai's Philosophy
But not even Warren Buffett can match Mohnish Pabrai when it comes to having a Spartan investment philosophy. Pabrai has effectively boiled the entire process down to the logic of a coin flip: “Heads, I win. Tails, I don’t lose too much.”
I love it. Short, simple and yet profound.
For anyone not familiar with Pabrai, he is the principal of Pabrai Funds and the author of The Dhando Investor, a book on value investing I strongly recommend.
Pabrai is a Warren Buffett disciple who takes Buffett’s comments on diversification seriously: “Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.”
Pabrai's Filings
According to his latest SEC filings, Pabrai has GM ) via long-term warrants.
Otherwise, Pabrai is essentially just long financials in a big way. Buying Citi or Bank of America at substantially below book value should be a fairly low-risk investment. Bank stocks will continue to get knocked around with every Fed announcement, but if you are content to “buy and forget” for a few years, it’s hard to see losing a lot of money on that trade. And the upside could easily be 100% or more over the course of the next two-to-three years.
Or, as Pabrai likes to say, this is a case of heads, you win. Tails, you’re not likely to lose too much.
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