@VIC: Mohnish Pabrai the Dhandho Investor - Interesting Times, Interesting Opportunities

Todd Sullivan attended this week's Value Investing Congress on behalf of Seeking Alpha.

The man who paid $650,000 for lunch with Berkshire's Warren Buffett (BRK.A) spoke to the conference. Mohnish is the author of The Dhandho Investor: The Low - Risk Value Method to High Returns

 

Talked about Joel Greenblatt and his assertion that spinoffs:

• Outperform market by 10% a year for first three years
• Largest gain is in second year
  
  Used Marriott (MAR) / Host Marriott International (HST) as a Case Study
• Abandoned by institutions
• Too small
• Made 4x money on deal
  
  Sonae Group [SON.LS]
• Portugal's largest employer
• Head, Belmiro (country's second richest person) is very highly regarded.
• Spun out Sonae Capital [SONC.LS]
• Belmiro moved from larger company to the spin company.
  
  Sonae Capital
• 250m share outstanding
• Belmiro owns 55%
• Pabria own 7%
• 100+ real estate portfolio. Includes fitness centers, wind farms, marina, apartments etc. Bought Troia Resort in 1997 in bankruptcy from government for nothing but the promise to develop.
• Has 1110 acres, Top 100 in World golf course, 18km beach, Roman Ruins, nature reserve and cleanest swimming water in Portugal.
• 170m Euros invested in it and now worth 500m to 1b Euros.
• One of a kind asset
  
  Palacia Hotel
• 35m Euro investment
• Member of "Leading Hotels in the World"
• Valued at 100m Euros
  
  Aqulaz Hotal
• 4 Star hotel 
• Worth 50m Euros
  
  Other Real Estate worth 412m Euros
  Other businesses worth 250m Euros.
  
  Total value of 1.2 to 1.8b Euros. Intrinsic value after debt subtracted equals 955m to 1.5b Euros.
  
  Per share equals 3.82 to 6.20 value vs .69 markets price (all in Euros). In other words, you can buy a dollar bill here for 12-20 cents.
  
  Responding to a question on FreightCar America (RAIL) that he sold, he talked about relevance of clean coal and that coal use will increase. There is a 30-40 year bulge in railcar demand. Negative is that the business is unionized and narrow. Sold because he had a small profit and had a better opportunity and he thought the 40 year bulge may be off by 2 or 3 years. Turns out it was and the stock has dropped.
  
  Harvest (HST) question. Has owned for 7 years, "so obviously I like it". Owns 1/6 of company. Said right now "if you threw darts at energy companies you could probably make money".
  
  
  Disclosure: None

Comments

[hownow:]

Todd,

Can't you spot bull market geniuses after all these years?

..and he sells books and speaks knowledgeably..but watch his performance in actually his first ever bear mkt.

2008 Oct 08 10:45 AM

[DaveinHacke...:]

To be fair, Pabrai did well in the 2000-2002 bear market, although he has gotten his head handed to him on a number of stocks over the last year and a half or so.

2008 Oct 08 11:07 AM

[D-D:]

How in the world did Mohnish find these names to begin with?
D
valuestockinvestors.bl...

2008 Oct 08 02:34 PM