Value Investing with Mohnish Pabrai

Concentrating my portfolio

It is nearly 3 years since I am actively investing in stocks and managing my portfolio. Recently, ICICI Direct launched several reporting tools which includes the Equity Portfolio Drilldown and the Portfolio X-Ray Report. I was observing a strange pattern in the data reported in the equity portfolio drilldown. See image below. Time and again, it appears that my tail portfolio where holdings are <2% are delivering excellent gains and the core portfolio, i.e., stocks with holding >2% are delivering poorly. It was evident from these reports that if I could eliminate the poor stocks from my portfolio and enhance my holding in the core stocks, my overall portfolio gains could be much better. This was an insight which was very useful in helping me change my strategy from having a highly diversified portfolio containing approximately 60 stocks down to a target of roughly 25-30 stocks. The initial trims have been easy. Some of these had been languishing and hogging a large portio...

Evolution of my stock picking approach

Why this article? In the random event that some youngster at the beginning of his/her career reads this, I want it to be of some use for him/her. Its also a personal reflection on how I have evolved in my approach to equities in the last one decade. It isn't meant to evaluate my performance or say that my approach is right. But rather to record how each person evolves a unique investing style over time. There are lot of nuances of stock picking - have tried to highlight the key changes in my approach rather than my entire approach. (I tried to jot that down here some months earlier - http://anandhariharan.blogspot.in/2017/10/my-stock-picking-method.html) In the beginning I started out as an equity investor after a casual hallway chat at EY in 2007 thereabouts with a fellow Senior Consultant who at that time used to work in financial services risk advisory. I knew nothing about finance those days though on paper I had a PGDM from what is ranked as one of India's top 10 b-s...

How to think about share buybacks

With the markets at new highs, among IPOs, there are also a handful of buybacks happening. Buybacks pose an interesting challenge for the intelligent investor. At the basic level, it appears to be attractive for a long term investor. Lesser the number of shares, better the per share metrics should you hold on to them. But 2 interesting points one needs to ponder upon carefully: a. If the buyback price is greater than the 'intrinsic value', the management is committing the Holy Sin of Capital Management which is to buy high & sell low. So think twice when a great IT/FMCG major offers you a buyback at 20% more than current market price - is management paying a high price or a low price for the shares? A smart management always buys back shares when its share price is languishing and they feel the tide is turning. A bad management buys back shares when its share prices are hitting 52-week highs and the biz environment is not likely to turn for the better. b....

Notes on value investing

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