This article is part of a series that provides an ongoing analysis of the changes made to Mohnish Pabrai's U.S. stock portfolio on a quarterly basis. It is based on Pabrai's regulatory 13F Form filed on 11/13/2012. See our Tracking Stocks In Mohnish Pabrai's Investment Funds series for an idea on how his holdings have progressed over the years and our previous update highlighting the fund's moves during Q2 2012.
This quarter, Pabrai's U.S. long portfolio increased by ~14% in size from over $240M to just over $273M. The number of holdings in the portfolio remained steady at six this quarter after it had been brought down from eight to six in the last quarter. At the beginning of 2012, Pabrai's portfolio had 13 stocks and so it is a significant shift in concentration. The top three holdings continue to represent two-thirds of the assets. The largest holding is Bank of America (BAC) and that accounts for close to a quarter of the total 13F assets.
Chesapeake Energy Corp (CHK): CHK was 7.5% of the U.S. long portfolio stake established last quarter when the price-per-share varied between $13.55 and $23.31. It was increased substantially this quarter, when the price-per-share varied between $16.82 and $20.52. The stock currently trades at around $17.40, near the low-point of the price-range Pabrai could have purchased the new stake at. CHK is a good opportunity for investors attempting to follow Pabrai. It is a major player in the natural gas exploration and production areas in the U.S. Warren Buffett made some positive comments about the price of natural gas relative to oil during a CNBC interview in late February 2012. Pabrai started purchasing CHK soon after - he is known to follow Buffett's trades and this appears to be such a position.
General Motors (GM): GM was an 18% of the U.S. long portfolio stake established last quarter when the price-per-share varied between $19.66 and $26.76. It was increased marginally this quarter to a 19% stake at prices between $18.80 and $24.80. The stock currently trades just outside that range at $24.82. Investors attempting to follow Pabrai should wait for a better entry point.
Goldman Sachs (GS): GS was a ~20% of the portfolio that was reduced by over 60% to an 8.27% stake this quarter when the price-per-share varied between $93.16 and $121.36. GS stake was first established in 2008 at much higher prices. In Q2 2012, the stake was increased by over 150% when the price-per-share varied between $90.43 and $117.39. The position was held steady last quarter. The large stake reduction this quarter indicates a clear bearish bias.
The other three large positions were held steady during the quarter:
Bank of America : BAC is by far Pabrai's largest position at just under 25% of the U.S. long portfolio. Pabrai established the position in Q3 2011 with the purchase of seven million shares for a 17% portfolio-stake at prices between $6.06 and $11.09. There was a quick about-turn the following quarter, as the position was trimmed to a 5% portfolio allocation at prices between $4.98 and $7.35. In Q1 2012, ~5.4M additional shares were purchased at prices between $5.56 and $9.93. Since then, the stake has been held steady. The stock currently trades at around $9.33. The very large position indicates a clear bullish bias.
Horsehead Holding (ZINC): The ZINC position was established in Q4 2008 when the price-per-share varied between $2.47 and $6. The stock currently trades at around $8.56. Pabrai is bullish on ZINC but investors attempting to follow Pabrai should wait for a better entry-point.
Citigroup (C): Citigroup is another large position accounting for over 21% of the U.S. long portfolio. The stake was established in Q4 2011 when the price-per-share varied between $23.11 and $34.16. In Q1 2012, the position was tripled at prices between $26.31 and $38.08 and has since been held steady. The large position indicates a bullish bias. The stock currently trades at $36.16, near the high-point of the price range Pabrai traded the stock at.
The spreadsheet below highlights changes to Pabrai's U.S. stock holdings in Q3 2012: