Pabrai Investment Funds Annual Meeting Notes – 2014

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Pabrai Investment Funds Annual Meeting Notes – 2014
  • Mohnish Pabrai is the principle investor and is a classic value investor in the tradition of Warren Buffett and Charlie Munger
  • Pabari Funds ( PF1 through 4 ) have a combined capital of $690 Million under management
  • Inception : 2000

Value Proposition : 

  • No Leverage / No Margin / No Short Positions
  • No management fees, only performance fees. ( typical expense ratio of Pabrai funds are between 0.04% to 0.08% )
  • Pabrai family is the second largest investor.

Dhandho Holdings : 

dandho

  • Founded in Q4 2013
  • Raised $152.4 Million
  • Setup as a SPAC ( Special purpose acquisition vehicle )
    • Flexible vehicle – Ability to buy and hold fully owned subsidiaries for long term and portfolio of stocks
    • Time limit (sunset) to invest funds raised from investors in proposed investment (Stone Trust Insurance )
  • Headquartered in Porte Rico – for tax benefits
  • First acquisition : Stone Trust Insurance
  • Proposed date for IPO : 2015

Stone Trust Insurance – quick facts : 

  • Mutual insurance company with 5000+ policy holders
    • Primarily into workers comp insurance
    • Serving five starts in U.S in 2014 ( expected to expand to ten or fifteen stats in ten years )
  • Earned $70 million in annual premium ( compared to $20 million in premiums in 2009 and $10 million in premiums 2004 )
  • Expect combined ratio of 95 or lower over long term
  • Dandho Holdings will infuse a capital of $30 million after acquiring Stone Trust Insurance for $35 million

Dhandho + Stone Trust Advantage : 

  • Dhandho’s cash surplus and backing will allow Stone Trust Insurance to grow without capital constraints.
  • Boost’s Stone Trust’s credit rating from B+ to A- post acquisition
  • Single investor ( Mohnish Pabrai himself ) managing investments for Stone Trust ( Clone of Buffet’s model for Berkshire )
  • Environment where the focus is on under writing discipline and not growth
  • Dhandho will provide a non-institutional environment, which is important for success in insurance business

Full article here http://bitsbusiness.com/investing-2/pabrai-investment-funds-annual-meeting-notes-2014/

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