Monish Pabrai's US Portfolio: An In-Depth Analysis
Let's examine the US investment portfolio of renowned investor Monish Pabrai, focusing on his Q4 2024 activity, current holdings, and historical investment patterns. The goal is to understand Pabrai's investing approach through his actions, rather than solely relying on his stated strategies. It's worth noting that Pabrai is a highly concentrated investor, with a limited number of holdings.
Pabrai's Overall Investment Strategy
Pabrai maintains a concentrated portfolio and is known to have significant investments outside the US, particularly in India and Turkey. Due to disclosure limitations, detailed information about these international holdings is not readily available. However, we know one key holding is RAS, a Turkish logistics and transportation company.
RAS: A Significant International Holding
RAS is a family-run, Turkey-based logistics and transportation company specializing in warehousing, distribution, and supply chain solutions. Pabrai holds approximately 30% of the company, making it his largest known investment. In Q4 2024, he sold roughly 1.7% of his RAS stake.
Analysis of Pabrai's US Portfolio
His US portfolio, worth $253 million, generated $285,000 in dividends last quarter. Despite selling shares, the portfolio value increased by $6.5 million. Currently, he holds only three investments in the US.
Sold Positions in Q4 2024
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Dana Corporation: A container ship leasing company. Pabrai closed this position for just over $4 million after a short investment period. While he may have experienced a small loss, he also received over $37,000 in dividends.
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Arch Resources: A coal producer that merged with Consol Energy to form Core Natural Resources. Pabrai sold his entire Arch Resources position for almost $4.3 million. He bought his first shares of Arch in Q3 2023 for around $170. Although he received $435,000 in dividends in Q2 2024, it appears this was not a majorly profitable investment. The reason for selling Arch and keeping Consol shares is speculated to be a portfolio balancing decision following the merger.
Current US Holdings
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Core Natural Resources: The company formed by the merger of Arch Resources and Consol Energy. It represents 25% of Pabrai's portfolio, valued at just under $63.5 million. He sold 22.8% of his position last quarter, even after receiving $148,000 in dividends. Pabrai's first purchase of shares (when the company was called Consol Energy) occurred in Q2 2023 for around $70.
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Warrior Met Coal: A producer of high-quality metallurgical coal used in steelmaking. This position comprises 36.5% of his portfolio, valued at approximately $92 million. Last quarter, he received $136,000 in dividends and significantly increased his stake by 144% due to a price drop. This points to a significant conviction in the future of metallurgical coal.
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Alpha Metallurgical Resources: Another producer of high-quality metallurgical coal, representing 38.5% of his portfolio, valued at $97.5 million. Despite adding to this position by 1.6% last quarter, the investment value decreased by $15.7 million. The company stopped paying dividends in 2023. He bought his first shares in Q2 2023 for around $164.
Key Observations and Implications
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Concentration: Pabrai's US portfolio is extremely concentrated, not only in terms of the number of holdings (three) but also within a single industry (coal).
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Sector Bet: This represents a substantial bet on the coal industry, echoing Warren Buffett's principle of investing heavily when a great opportunity arises.
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Cyclical Investing: Pabrai's approach differs from the "buy and hold forever" strategy. He appears to be timing the market within the cyclical coal industry, suggesting a willingness to sell when he anticipates a market peak.
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Diversification through International Holdings: Pabrai's concentrated US portfolio is complemented by more stable, long-term international investments like his stake in RAS, mitigating some of the risks associated with the cyclical nature of the coal industry.
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