Buffett-Disciple Pabrai on a Roll with Value-Oriented Picks

After an extremely challenging 2008, hedge fund manager Mohnish Pabrai put up huge numbers in 2009 that will once again have many keeping an eye on the moves of this unique, value-oriented investor who has strived to walk in the footsteps of Warren Buffett.

A disastrous 2008 saw Pabrai’s funds slide by as much as -60%, but the California-based fund manager boasted returns of between 118% and 125% in 2009, according to a January 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. Perhaps most notably, Pabrai took steps to diversify what had been a highly concentrated portfolio of just 10 holdings. As of a January 10th letter to investors, Pabrai wrote that he was holding 26 distinct positions.

Pabrai added, “I’ve had a little over a year’s worth of experience running a more diversified portfolio – and am more convinced than ever that this is the right balance.”

Looking at Pabrai’s holdings as of the end of Q3, one can see that several of his positions have enjoyed solid gains since then. Regional carrier Pinnacle Airlines (PNCL) and diversified miner Teck Cominco (TCK) are both up over 20% for the period. Steelmaker Ternium (TX) and fertilizer giant Potash (POT) aren’t far behind.

Also faring well 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.

The primary laggards, meanwhile, have been shares of air cargo services provider Air Transport Services Group (ATSG), Horsehead Holding (ZINC), and automated electronic broker Interactive Brokers Group (IBKR).

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-2009 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.

Tags: ATSG, IBKR, PNCL, POT, TCK, TX, ZINC