Wednesday, May 16, 2012

Mohnish Pabrai Bets Big

Mohnish Pabrai, one of my favourite investors, released his Q1 13F filing (it now seems to be released under Dalal Street in SEC filings). I was very curious about his BofA stake. In his 2011 Q4, 13F Mohnish reduced his BofA holdings by 70%, which seemed very strange to me. However, his Q1 filing showed that he purchased loads of BofA increasing his stake from 2.1m shares to 7.5m. His BofA stake is now a massive 22% of his US holdings. 

Mohnish manages about $600m, so his actual allocation is likely about half or around 11% of his total portfolio (including assets outside of the US) but BofA is now his number one US position.  

It's also extremely interesting to note that Mohnish appears to have clearly switched back to a very concentrated investment style. In 2010 in a Forbes interview Pabrai stated "The typical allocation now at Pabrai Funds is 5%... And once in a blue moon, we'll go up to 10%." 

Now, 3 US stocks are at 10% of his overall portfolio and he holds only 8 US stocks in total. Overall, I love the concentrated approach and I hope it works out well (for both of us). 

It's also interesting to note how Mohnish is trending to the 'riskier US banks' Bank of America and Citigroup while giving up a Buffett favourite, Wells Fargo. (My approach as well.)

Other Q1 Additions: 
Citigroup was significantly increased to 20% of his US holdings.
Goldman Sachs was increased to 19% of his US holdings. 

Q1 Reductions. 
Terex, Potash, Horsehead Holding, Capital Source and Pinnacle were reduced. 

Q1 Sells: 
Wells Fargo
Berkshire Hathaway
Brookfield Residential Properties

To summarize: Mohnish has bet big on US financials. 

Clearly BofA is out of favour, just check out the price to book over the past 10 years (including intangibles)

Bank of America

Disclosure: Long brk.b, bac, hhc, aapl, jnj
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