Collection: Mohnish Pabrai - #76 'How To Use 13F Filings of Great Investors?'

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In this episode, Mohnish Pabrai was asked how he bounds different investors' strategies from 13F Filings because each person is fundamentally a little bit different.

In this episode, you’ll learn:

  • How to use 13F Filings of great investors?

  • Mohnish Pabrai's cloning investment strategy.

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Mohnish, can you talk about how – you said you generate a lot of ideas from Einhorn and you are looking at 13Fs from Berkshire and other investors.

Can you talk about how you bounds different people strategies because each person is fundamentally a little bit different. And how you start generate your own strategy for the investment?


I mean I think important thing is one is you – when you're going to clone someone what you want to do is you want to focus on their biggest bets.

So ideally you want to clone people who are not making, you know, don't have 60 positions in their portfolio or if you have 60 positions than the top 10, maybe make up half or something. And ideally focus on their largest position. So the first rule of cloning is look at where they have really put their money and use that as a starting point to getting a name on your radar.

And then the – you know, then it's a simple exercise, the first question you ask yourself is, is this within my circle of competence? And most of the time, the answer is no. And so then you're done.

And if it is within your circle of competence, then you ask yourself the second question is, if you think something is within your circle of competence then you know what it's worth.

And so then the second question is, if you take what it's worth and divide it by 2, is that above or below the current stock price? And in most cases, the current stock price is not 50% below what we think it may be worth. So then you're done as well. And so then that idea also is rejected.

So then you get to the small sliver where you believe it's in your circle of competence and you believe is at a very significant discount with intrinsic value where it's more than half off. And then, you know, it's time to start reading and educating yourself further on the business.

And sending an email to Guy Spier giving him a heads-up that he can start reading as well, because he's [Inaudible] on his thumbs waiting for me to send an email. And then he goes into action, reading.

And then, you know, we will figure out with our independent reading whether you know, what I think and what he thinks, and what the checklist thinks and so on so forth. And then you know figure out position size and so on. So that's basically how we go about it.

And you know, you're looking for – what you're doing is you're looking for factors which will eliminate things from your desk. So we're not looking for a reason to invest, we're looking for a reason not to invest. And as soon as we find the reason not to invest, we can take that off the radar and move on.

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