Bill Ackman & Sequoia are not the only successful investors who are being caught with their pants down.
If you haven’t heard of mohnish pabrai, you should look him up. He’s a fantastic value investor who (I think through 2014) had outperformed the S&P handily, with a >510% cumulative return since 2000 versus the S&P’s ~45% cumulative return over the same period.
However, he’s recently had a misstep with what used to be his largest holding, horsehead holding corp (ticker ZINC). Back in 2013 & 2014, this was as much as 30% of his portfolio. The stock was at $20 then. Today, it trades for 13……cents.
this thread has 2 purposes:
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I'm curious from other monkeys who manage money. is it too early to tell if this will wreck his returns? I'm a big fan of pabrai and spier (who also owns ZINC), but I would have to believe that a 90+% loss on 1/3 of your portfolio would be devastating.
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let this be a lesson to you younger guys out there, no matter how smart you are, your thesis can turn against you. maybe this doesn't mean you equal weight (personally, I do), but be ready for losses like this.
I hope for his sake this doesn't make him another bill miller, but we'll have to wait and see.
Thoughts?
PS: @AndyLouis" do not frontpage this, I don't want to end up on business insider.
Interesting anecdote: I went to Pabrai's meeting years back and asked him about his thoughts on management team. He basically said he doesn't care about them whatsoever, and that he's mostly concentrated on businesses that a monkey can run. I don't know if I was just young at the time, but that really rubbed me the wrong way.
I remember Guy Spier saying on a podcast that he doesn't charge a management fee, and he makes money only through performance. If that's the case for Pabrai, he's probably going to have a tough time overcoming the watermark, no? I think a decent amount of money in the fund is his own $ though.
pabrai's works the same way, it's the Buffett partnership way, 0% management, high performance fee. and yes, a lot of the money is his family's I would guess, as is spier's.
and he's not concentrated on businesses a monkey can run, I'd love to see a chimp run google, fiat, gm, and berkshire. I know he talks about that in his book, but I think it's more marketing schtick than actual practice.
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