Value Investing

Value Superinvestors: Profile Of Loeb, Pabrai, Klarman And Marks

Becoming a successful investor requires education and what better way to educate ourselves than to learn from the best. Learn from their mistakes, read what they think and even steal their ideas. Here are 4 value superinvestors, accompanied by brief details about their investment styles, performance and biography. You won’t find Buffett, Munger or Graham since everyone knows plenty about them by now. Also, this list is by no means exhaustive; there’s only so much that we can cover in a single writing. We will leave the rest for another time.

Value superinvestors

Mohnish Pabrai

Biography: Born 12 June 1964, Pabrai is managing partner of Pabrai Investment Funds. Prior to that, he founded and sold his IT consulting company for USD20m.

Fund: Pabrai Investment Funds

Investment style: Similar to Buffett – solid management, competitive moat. Looks for 50% discount to intrinsic value

Performance: According to Bloomberg, his fund has returned a cumulative 517% net to investors versus 43% for the S&P 500 Index since its inception in 2000. On a compounded basis, this corresponds to 13.4% annual returns.

Related materials: The Dhandho Investor: The Low – Risk Value Method to High Returns; Mosaic: Perspectives on Investing;The Education of a Value Investor

Daniel Loeb

Biography: Loeb graduated from Columbia University with an economics degree. Relevant working experience include being a risk arbitrage analyst at Lafer Equity Investors and then senior vice-president in distressed debt at Jefferies. He founded Third Point Management in 1995 with USD3.3m.

Fund: Third Point Management

Investment style: Distressed activist, event driven

Performance: 17.3% since inception, net of fees

Related materials: Quarterly letters

Howard Marks

Biography: Marks graduated cum laude from Wharton School at the University of Pennsylvania with a major in Finance. He then earned an MBA in Accounting and Marketing from the Booth School of Business at the University of Chicago. Between 1969 and 1978, Marks worked at Citibank in Research and then as a senior portfolio manager, overlooking convertible and high yield securities. In 1985, he joined TCW Group and organized one of the first distressed debt funds with Bruce Karsh. In 1995, Marks and give other partners left TCW and found Oaktree Capital Management where he remains as Chairman until today.

Fund: Oaktree Capital

Investment style: Distressed debt, high-yield bonds with an emphasis on risk-control

Performance: Since inception, their closed-end funds have produced an aggregate gross IRR of 19.9%

Related materials: Oaktree memos; Howard Marks Memo To Oaktree Clients: “Liquidity”

Seth Klarman

Biography: Klarman is a graduate of Cornell University and Harvard Business School. Before founding Boston-based Baupost, Klarman worked for the Mutual Shares fund. He founded Baupost Group in 1982. Klarman typically keeps a low profile, rarely speaking in public or granting interviews.

Fund: Baupost Group

Investment style: Contrarian, concentrated positions, conservative (sometimes holding in excess of 50% cash)

Performance: 19% (average of 3 private partnerships)

Related materials: Margin of Safety

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Value Superinvestors: Profile Of Loeb, Pabrai, Klarman And Marks
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