One of our favorite investors at The Acquirer’s Multiple is Mohnish Pabrai.
Earlier this year he wrote a great article called, Beyond Buffett: How To Build Wealth Copying 9 Other Value Investors. The article illustrates how you can build a successful portfolio by cloning other successful value investors.
Here's an excerpt from that article:
Amid the turmoil in the public markets and the staggering macroeconomic environment, it should come as no surprise that the private markets are also struggling. In fact, there are some important links between private equity and the current economic environment. A closer look at PE reveals that the industry often serves as a leading indicator Read More
I co-wrote this article in Forbes on an investment strategy called the “Shamelessly Cloned Portfolio.”
The shameless portfolio comprises of five of the highest conviction ideas of 9 value managers whom we shamelessly clone. Like the Small Dogs of the Dow and Uber Cannibals, we set it and forget it. I will publish the list of the top Shameless Cloned Ideas for a particular year on my blog on January 1 each year.
For 2017, even though it’ll be a partial year, one can buy the 2017 picks anytime. After that, rebalancing should occur right after January 1.
The Shameless Portfolio for 2017 contains:
- Oracle (ORCL)
- Berkshire Hathaway (BRK-B)
- Apple (AAPL)
- Microsoft (MSFT)
- Charter Communications (CHTR)
We’ve laid out all our algorithm rules below.
One can begin testing this strategy with a small portion of one’s networth and do it through a great broker like Interactive Brokers with commissions under $3/trade for small quantities. We hope you’ll join our merry band of shameless cloners.
You can view the article here:
I co-wrote the article with Fei Li, a talented quant at Dhandho Funds.
Note, anyone who invests in any strategy needs to do their own research/due diligence and are themselves fully responsible for the outcome.
Appendix: Shameless Cloning Portfolio Rules
- No utilities, no REITs, no oil and gas exploration, no metals and mining and no multiline retailers.
- Positive trailing-12-month net income
- Rebalance on Dec 31st of each year.
- The old companies that are not in the new portfolio are sold. The “sell money” is accumulated and distributed equally among all new entrants.
- If the same company is present in our portfolio for another year, then we leave it unchanged i.e. no rebalancing trades.
- Dividends are reinvested into the same company that paid it.
- If there is an involuntary removal through acquisition/delisting/bankruptcy then the cash is distributed equally among the remaining cloners.
- If there are any spin-offs, the shares are sold and reinvested in the parent.?
This article was originally posted at The Acquirer's Multiple.