Mohnish Pobrai for a long time has been beloved by the value investing community. As a Buffett disciple, he has been mentioned for years in value communities for his simple “cloning” style and his nice sound bites and quotes.
However, what he has NOT been known for, is outperformance. I will caveat this with the fact that we can only truly know for sure the performance of his US investments as that is what is required to be reported in 13-F filings.
According to TipRanks, which tracks investors 13-F filings, Mohnish has returned -58% over the last 10 years and ranks 403 of 462 funds that they track. That’s right, in 10 years since 2012 the S&P gained 212% and Mohnish’s fund is down 58%. For those that will say “he’s a long term investor”, 10 years with over 300% underperformance is plenty of runway, but I have more proof that he is in fact not a long term investor.
Beyond just his poor performance, let’s look at his track record.
-
BABA – As we know Mohnish is a “cloner”, and followed Charlie Munger into BABA in early 2021. He talked about it in interviews how amazing the business was and how misunderstood Chinese tech companies are. He then rode the stock down over 50% until Q3 2021, when he sold entirely for “tax loss harvesting” and because he claims he likes Tencent better. Taking a 50% haircut in 6 months then selling for tax reasons doesn’t sound like things many “long term investors” I know do.
-
SRG – Mohnish has been proudly pushing Seritage Growth Properties for awhile now saying how deeply undervalued it is. He first bought in Q1 2016, then sold all in Q2 2017…another loss and another short holding period. He then doubled down on SRG again in Q2 2020, again touting how it’s a long term hold…only to sell it again in Q1 2022, this time for a gain but still off from its 2021 highs. He sold claiming that the businesses debt and time it would take the restructure its properties became too complicated, again something I feel a value investor takes into account before buying.
-
EAF – Mohnish made a huge splash buying the little known Graftech (EAF) in Q2 2019. He claimed the small business had a monopoly on its specific process of electric arc furnaces and has the type of competitive advantage he looks for in businesses. Apparently he changed his mind, because only 9 months and 30% down later, he sold his entire position.
GOOG – Bought and owned GOOG for a few years from 2015-2018, but sold in 2018 and missed a 200%+ run up in the stock
Mohnish now has been touting his idea that he likes to invest in “spawners”, businesses like Amazon or Google that are massive FCF machines and use that FCF to “spawn” new businesses within them. Interesting that he is currently 100% invested in MU, a business that is clearly not a spawner, and one that he is only up around 30% on over 3 years.
I’m not the only one who feels this way, his investors do too. His fund has dramatically reduced in size, from $540M AUM in 2013 all the way down to $100M AUM in 2022. Massive reduction caused by both outflows and fund performance.
I feel that Mohnish says many of the right things and gives value investors a lot of nice simple sound bites about investing, but that in reality he is a fake guru that is great in interviews but not so great at investing.
Leave a Reply