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 02/12/2013. Please visit 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 Q3 2012.
This quarter Pabrai's U.S. long portfolio increased by ~16% in size from just over $273M to just over $317M. The increase is primarily attributable to the performance of the holdings as most of them had good percentage appreciation during the quarter. The number of holdings in the portfolio has remained steady at six for the last two quarters - it was brought down from eight to six in Q2 2012. The top-3 holdings continue to represent two-thirds of the assets. The largest holding is Bank of America (BAC) and that accounts for over a quarter of the total 13F assets.
Chesapeake Energy Corp (CHK): CHK was a 7.5% of the U.S. long portfolio stake established in Q2 2012 when the price-per-share varied between $13.55 and $23.31. It was increased substantially last quarter, when the price-per-share varied between $16.82 and $20.52 and marginally this quarter at prices between $16.39 and $21.58. The stock currently trades at around $20, within the price-range Pabrai could have purchased the new stake at. 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. Also, Carl Icahn started a huge ~$1B position in CHK during Q2 2012. The stock price spiked 10% recently following the announcement that its co-founder and CEO Aubrey K. McClendon will retire on 04/01/2013.
Horsehead Holding (ZINC): The ZINC position was established in Q4 2008 when the price-per-share varied between $2.47 and $6. It was increased this quarter by around 14% at prices between $8.36 and $10.16. The stock currently trades at around $10.65. Pabrai is very bullish on ZINC but investors attempting to follow Pabrai should wait for a better entry-point.
Goldman Sachs (GS): GS was a ~20% of the portfolio stake that was reduced by over 60% to an 8.27% stake last quarter when the price-per-share varied between $93.16 and $121.36. The 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 stake was reduced marginally this quarter at prices between $113 and $130. It currently accounts for just under 8% of the portfolio. In hindsight, the timing of the stock sales in Q3 2012 was not ideal as the stock has spiked since then and it currently trades at around $155.
General Motors (GM): GM was 18% of the U.S. long portfolio stake established in Q2 2012 when the price-per-share varied between $19.66 and $26.76. It was increased marginally last quarter to a 19% stake at prices between $18.80 and $24.80. This quarter, the position was trimmed by 10% at prices between $23 and $29. The stock currently trades at the high-point of that range at $28.55. Investors attempting to follow Pabrai should wait for a better entry point.
The other two large positions have been held steady since Q2 2012:
Bank of America : BAC is by far Pabrai's largest position at over 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 over $12. The very large position indicates a clear bullish bias. But it is trading well outside the price-range of Pabrai's stake acquisition and so investors attempting to follow Pabrai should wait for a better entry point.
Citigroup (C): Citigroup is another large position accounting for 22.5% 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 over $44, outside the price range Pabrai traded the stock at.
The spreadsheet below highlights changes to Pabrai's U.S. stock holdings in Q4 2012: