| Pabrai Strategy Shift Leads to Remarkable Turnaround | 11/4/09 |
|
It’s been a redemptive year for highly regarded hedge fund manager Mohnish Pabrai. After a disastrous 2008 that saw his funds slide by as much as -60%, Pabrai was boasting returns of 120% in 2009 through September, according to an October letter to investors. The rebound has come on the heels of a change in strategy and a portfolio shake up. Both were initiated around the start of 2009. According to a recent letter to investors, as redemptions accelerated at the end of 2008, Pabrai sold the worst performing names in his portfolio to free up funds. According to Pabrai, the “portfolio ended up stronger as a result.” Pabrai made 10 new investments in Q4 2008 and followed those up with another four through the first part of 2009. For Pabrai’s typically highly concentrated portfolio, the moves represented a big change. So far these moves have paid off. Looking at Pabrai’s holdings as of the end of Q2, one can see that several of his holdings have enjoyed massive gains since then. Regional carrier Pinnacle Airlines (PNCL), diversified miner Teck Cominco (TCK), steelmaker Ternium (TX), and heavy equipment maker Terex (TEX) are up over 40% during the period. The primary laggards, meanwhile, have been shares of Pabrai’s top holding Berkshire Hathaway (NYSE: BRK-A, BRK-B), run by Warren Buffett, whose value-oriented strategies have been a model for Pabrai, air cargo services provider Air Transport Services Group (ATSG), and fertilizer producer Potash (POT). Pabrai’s hedge fund is clearly on the move, but investors won’t be sure of where he stands now until later this month, when the deadline for end-of-Q3 filings hits. At tickerspy.com, members can track Pabrai’s latest holdings, see a graph of their combined performance, and be notified when new holdings are made public. Pro portfolio performance is based on institutions’ top-15 holdings as disclosed in quarter-end filings with the SEC. Pro performance does not take into account additional holdings beyond the top 15 nor does it include positions that are not required to be disclosed by the SEC. As such, Pro portfolio performance should be considered an approximation and not a precise record of how an institution has performed over time. |
