The man who paid $650,000 for lunch with Berkshire’s Warren Buffett (BRK.A) spoke to the conference.
Here is Mohnish’s Book:
Talked about Joel Greenblatt and his assertion that spinoff’s:
– Outperform market by 10% a year for 1st three years
– Largest gain is in second year
Used Marriott (MAR) / Host Marriott International (HST) as a Case Study
– Abandoned by institutions
– Too small
– Made 4x money on deal
Sonae Group (SON.LS)
– Portugal’s largest employer
– Head, Belmiro (country’s second richest person)is very highly regarded.
– Spun out Sonae Capital (SONC.LS)
– Belmiro moved from larger company to the spin company.
Sonae Capital
– 250m share outstanding
– Belmiro owns 55%
– Pabria own 7%
– 100+ real estate portfolio. Includes fitness centers, wind farms, marina, apartments etc.
Bought Troia Resort in 1997 in bankruptcy from government for nothing but the promise to develop.
– Has 1110 acres, Top 100 in World golf course, 18km beach, Roman Ruins, nature reserve and cleanest swimming water in Portugal.
– 170m Euros invested in it and now worth 500m to 1b Euros.
– One of a kind asset
Palacia Hotel
– 35m Euro investment
– Member if “Leading Hotels in the World”
– Valued at 100m Euros
Aqulaz Hotal
– 4 Star hotel
– Worth 50m Euros
Other Real Estate worth 412m Euros
Other businesses worth 250m Euros.
Total value of 1.2 to 1.8b Euros. Intrinsic value after debt subtracted equals 955m to 1.5b Euros.
Per share equals 3.82 to 6.20 value vs .69 markets price (all in Euros). In other words, you can buy a dollar bill here for 12-20 cents.
Responding to a question on FreightCar America (RAIL) that he sold. Talked about relevance of clean coal and that coal use will increase. There is a 30-40 year bulge in railcar demand. Negative is that the business it is unionized and narrow. Sold because he had a small profit and had a better opportunity and he thought the 40 year bulge may be off by 2 or 3 year. Turns out it was and the stock has dropped.
Harvest (HST) question. Has owned for 7 years, “so obviously I like it”. Owns 1/6 of company. Said right now “if you threw darts at energy companies you could probably make money”.
Disclosure (“none” means no position):None
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3 replies on “@VIC Mohnish Pabrai: The Dhandho Investor, Interesting Times Interesting Opportunities”
The most shocking thing heard during Pabrai's talk was during the Q&A when asked about Pinnacle Air. He basically said it was a bad decision but won't sell until he gets his cheese back and ends at break even. This is a terrible way of thinking and makes you question how good a capital allocator Pabrai is. After all he did say he had tons of compelling investment opportunities in this environment. It seems he may have a problem realizing losses.
Pinnacle Air may have been a wrong decision at $15 or $16, but right now it’s trading at 1x earnings. They (I believe) are good on liquidity issues right now until 2/2010 when they have to call the convertables. The legacy carriers (NorthWest/Delta/Continental) are in better shape now that jet fuel prices have fallen so much and they cut capacity. So in 2009 Pinnacle stands to have a pretty decent year and if they can get any relief on their ARS issues, they will be even better off. Colgan as well will surprise to the upside given the relief in jet fuel prices and the tie in they have to that.
The CEO of RAIL, Ragot, needs to go. His vision and strategy have been poor and there seems to be nothing to suggest its improving. I am currently a shareholder and would love for an activist to try and make some headway.