Mohnish Pabrai is a noted value investor, author and self-professed Warren Buffett disciple, going so far as to win an auctioned lunch date with the Oracle of Omaha. Like most investors, Pabrai suffered big losses in the crisis of 2008-2009 but seems to be bouncing back, though this quarter's filing shows pretty big losses with more than half of his listed stocks registering 20+% drops. Two things stood out upon examining his filing.
Pabrai has gone long on Bank of America (NYSE:BAC) in a huge way -- BAC comprises nearly 20% of Pabrai's listed equity holding value! Much like fellow value guru Bruce Berkowitz, Pabrai has staked a large part of his funds' future on this troubled financial company. Unlike Berkowitz, Pabrai got in much later and has not suffered the massive losses Fairholme has accrued on its BAC investment.
Both investors idolize Warren Buffett, but it is instructive to note that Buffett's Bank of America investment is a different beast: preferred stock paying 6% and warrants. Despite Buffett's pronouncements to the contrary, it's probably safe to assume that too-big-to-fail as a policy is still in play and BAC is one of the biggest of them all. Time will tell if BAC will need to fall back on TBTF.
The other thing that struck me in Pabrai's filings was his positions in various Brookfield Asset Management (NYSE:BAM) subsidiaries: Brookfield Residential Properties (NYSE:BRP), Brookfield Properties (NYSE:BPO) and Brookfield Infrastructure LP (NYSE:BIP). Combined, this investment in all things Brookfield made up 30% of his portfolio, even bigger than Pabrai's BAC holding.
Apparently, Pabrai recently auctioned a lunch date with himself for charity. Being long BAM, if I had been the winning bidder, my biggest question to him would be why he's chosen to eschew an investment in Brookfield's parent company and opt instead for the various subsidiary investments. At one point, I had considered going long BIP when it was trading around $15, but the stock price ran away from me. BRP seems an interesting choice as well, but it pays no dividend -- and with the sorry state of the housing market, seems to lack a catalyst to boost shares.
Other notable Pabrai moves during the quarter include re-upping bets on Wells Fargo (NYSE:WFC) and Goldman Sachs (NYSE:GS). On the selling side, Pabrai completely exited Posco (NYSE:PX) and seems to have given up his bet on Air Transport Services Group (NASDAQ:ATSG). He also sold 20% of his shares in Cresud (CRUSY) and Potash (NYSE:POT).
View all of Mohnish Pabrai's Q3 moves in reader-friendly spreadsheet format here.
Disclosure: I am long BAM.