Mohnish Pabrai - Pabrai Investments Portfolio
Mohnish Pabrai - Pabrai Investments Q4 2024 Portfolio
Pabrai Investments, an investment fund managed by Mohnish Pabrai, disclosed 3 security holdings in their SEC 13F filing for the fourth quarter of 2024, with a total portfolio value of $253,439,000
Mohnish Pabrai’s Q4 2024 Portfolio Analysis
Below is an updated overview of Mohnish Pabrai’s portfolio, highlighting three key positions and notable changes from the previous quarter. Pabrai continues to concentrate on resource-based companies, particularly in coal and natural resources, demonstrating a high-conviction strategy focused on industries tied to steel production and broader energy needs.
1. AMR – Alpha Metallurgical Resources Inc.: 38.47%
2. HCC – Warrior Met Coal Inc.: 36.48%
3. CNR – Core Natural Resources Inc.: 25.04%
1. AMR – Alpha Metallurgical Resources Inc.
- Portfolio Allocation: 38.47%
- Recent Activity: Added 1.57%
- Shares Held: 487,251
- Reported Price: $200.12 per share
- Value at Reported Price: $97,509,000
Alpha Metallurgical Resources remains the portfolio’s largest holding. A modest increase in shares signals Pabrai’s ongoing confidence in metallurgical coal’s importance for steelmaking. Despite potential market headwinds facing the coal industry, Pabrai’s bet on Alpha suggests he anticipates continued or growing global demand for steel production inputs.
2. HCC – Warrior Met Coal Inc.
- Portfolio Allocation: 36.48%
- Recent Activity: Added 144.08%
- Shares Held: 1,704,670
- Reported Price: $54.24 per share
- Value at Reported Price: $92,461,000
Warrior Met Coal has seen a substantial increase this quarter, indicating a significant escalation in Pabrai’s conviction. Specializing in high-quality metallurgical coal, Warrior Met’s position reinforces the portfolio’s focus on critical materials used in steel manufacturing. The dramatic boost in shares suggests Pabrai sees strong upside potential or a favorable valuation in Warrior Met relative to broader market conditions.
3. CNR – Core Natural Resources Inc.
- Portfolio Allocation: 25.04%
- Recent Activity: Reduced 22.80%
- Shares Held: 594,950
- Reported Price: $106.68 per share
- Value at Reported Price: $63,469,000
Core Natural Resources, another resource-focused holding, was notably trimmed this quarter. While it still comprises a quarter of the portfolio, the reduction may indicate a strategic reallocation of capital toward the increased stakes in Alpha Metallurgical and Warrior Met. Nonetheless, CNR remains a key component, suggesting Pabrai retains confidence in its potential, even as he adjusts his overall resource-sector balance.
Analysis of Mohnish Pabrai’s Q4 2024 Portfolio Strategy
1. Continued Emphasis on Metallurgical Coal
Alpha Metallurgical and Warrior Met Coal dominate the portfolio, highlighting Pabrai’s strong belief in the steel production supply chain. These positions reflect a contrarian view, assuming that demand for metallurgical coal remains robust despite broader trends toward greener energy sources.
2. Reallocation Among Resource Holdings
The significant addition to Warrior Met and the modest increase in Alpha Metallurgical indicate a shift in capital from Core Natural Resources to higher-conviction bets within the coal sector. This move suggests Pabrai is fine-tuning his resource exposure to optimize potential returns.
3. High-Conviction, Concentrated Portfolio
With just three holdings, Pabrai’s strategy is clearly focused on a few key companies. This concentration underscores his willingness to maintain sizable positions where he sees deep value or underappreciated potential, despite the inherent risk of a narrow portfolio.
Conclusion
Mohnish Pabrai’s Q4 2024 portfolio remains heavily centered on metallurgical coal, illustrating a high-conviction stance on industries essential to steelmaking. The reallocation of capital from Core Natural Resources to larger stakes in Warrior Met Coal and Alpha Metallurgical Resources underscores a belief that these companies are positioned to benefit from sustained demand in steel production. While this strategy carries sector-specific risks, it aligns with Pabrai’s reputation for concentrated, value-oriented investing in out-of-favor industries.
Disclaimer:
This analysis is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investing involves risks, including the potential loss of principal. Past performance is not indicative of future results. Investors should conduct their own research or consult a qualified financial advisor before making investment decisions.
Who is Mohnish Pabrai ?
June 12, 1964:
Mohnish Pabrai was born in Mumbai, India.
1983:
Pabrai studied Computer Science at Clemson University, South Carolina.
1986-1991:
Pabrai works at Tellabs, initially in the high-speed data networking group before moving to the international subsidiary in 1989.
1991:
Pabrai marries Harina Kapoor. In the same year, he starts his IT consulting and systems integration company, TransTech, Inc., with initial capital from his 401(k) and credit card debt.
1999:
Pabrai founds Pabrai Investment Funds, a family of hedge funds inspired by the Buffett Partnerships.
2000:
Pabrai sells TransTech, Inc. to Kurt Salmon Associates for $20 million.
2005:
Mohnish Pabrai and Harina Kapoor start the Dakshana Foundation, aiming to alleviate poverty in India by providing tutoring services to underprivileged members of Indian society.
June 2007:
Pabrai, along with Guy Spier, bids $650,100 for a charity lunch with Warren Buffett, which makes headlines.
2001-2003:
Pabrai authors a series of articles on investing, later compiled in his book “Mosaic: Perspectives on Investing.”
2019:
Pabrai and Harina Kapoor divorce.
Mohnish Pabrai's Investing Principles
Focus on undervalued businesses with strong fundamentals and a competitive advantage.
Mohnish Pabrai
Employ a long-term investment horizon and avoid chasing short-term market trends.
Mohnish Pabrai
Maintain a diversified portfolio but concentrate on a few high-conviction investments.
Mohnish Pabrai
Develop a circle of competence and only invest in businesses you understand well.
Mohnish Pabrai
Be patient and disciplined, waiting for the right opportunities to arise.Embrace a margin of safety by buying stocks significantly below their intrinsic value.
Mohnish Pabrai
Learn from the mistakes of others and the wisdom of successful investors.
Mohnish Pabrai
Mosaic: Perspectives on Investing
Mohnish Pabrai, a renowned value investor and philanthropist, has long been admired for his investment strategies that echo the philosophies of Warren Buffett and Charlie Munger offers valuable insights into the world of value investing in his book “Mosaic: Perspectives on Investing.” Originally a collection of articles, the book delves into Pabrai’s investment philosophy, drawing heavily on the wisdom of Buffett and other legendary investors.
Pabrai emphasizes the importance of understanding the intrinsic value of a business rather than solely focusing on its stock price. He encourages investors to develop a margin of safety by buying stocks at a significant discount to their intrinsic value, offering a buffer against potential market fluctuations.
Unveiling the Mosaic Theory
The mosaic theory, a central theme in Pabrai’s book, suggests that investors can gain a comprehensive understanding of investment opportunities by piecing together disparate bits of publicly available information. Like a mosaic artist arranging fragments to create a complete picture, investors analyze various data points to make informed decisions. Pabrai emphasizes that this approach requires patience, diligence, and a keen analytical mind.
Pabrai’s Top Investing Principles
Value Investing at the Core: Pabrai is a staunch proponent of value investing, a principle rooted in acquiring stocks at prices significantly lower than their intrinsic values. This margin of safety provides a cushion against errors in judgment and market volatility.
Focus on Few Bets, Big Bets, Infrequent Bets: Borrowing from Munger’s philosophy, Pabrai advocates for concentrating investments in a limited number of high-conviction opportunities rather than diversifying extensively. This approach is predicated on the belief that quality trumps quantity in the investment world.
Clone Investment Ideas: Pabrai does not shy away from “cloning” investment ideas from successful investors. He argues that following the footsteps of proven investors can lead to significant gains, as long as one deeply understands the rationale behind the original investment.
Invest with a Business Owner’s Perspective: Pabrai encourages investors to perceive stock purchases not as buying shares but as acquiring portions of businesses. This perspective fosters a deeper understanding of the underlying business and its long-term potential.
Understand the Power of Compound Interest: Pabrai highlights the exponential growth potential of investments through compound interest. He underscores the importance of patience and the long-term horizon in realizing significant returns.
Risk and Uncertainty are not Synonymous: Pabrai distinguishes between risk (the likelihood of permanent loss of capital) and uncertainty (the range of possible outcomes). He suggests that embracing uncertainty can lead to lucrative investment opportunities, provided the risk is minimal.
Be Contrarian: Pabrai believes in going against the crowd when fundamentals strongly support an investment. Contrarian bets, made after thorough analysis, can yield substantial rewards when the market corrects its misjudgments.
Margin of Safety: Echoing Benjamin Graham, Pabrai insists on a significant margin of safety in every investment. This principle acts as a buffer against miscalculations and unforeseen market downturns.
Look for Low-Risk, High-Uncertainty Situations: These situations, according to Pabrai, are fertile grounds for value investors. The market often overreacts to uncertainty, creating opportunities to buy undervalued stocks with minimal risk.
Invest in Simple Businesses: Pabrai advises against investing in businesses that are difficult to understand. Simplicity in business model and operations often translates to predictability and stability in earnings.
Conclusion
“Mosaic: Perspectives on Investing” is not simply a collection of investing formulas; it’s a call to develop a long-term investment mindset based on sound principles and a deep understanding of the businesses you invest in.