Mohnish Pabrai 5 stock market investing tips on how to invest in stocks stock market investing tips discussed are (through 5 quotes):
Q2 hedge fund letters, conference, scoops etc
- Concentrated portfolio at a PE Ratio of 1 or less
- 3 reasons why investments don’t work out (check list)
- Cloning stock investments
- Don’t think about macro
- No interest in the U.S.
- Take a nap
Mohnish Pabrai: 5 Stock Market Investing Tips
Transcript
Good day for investors. When monish part of ice speaks I like to listen and he recently shared one link in an interview he gave for the Indian economic times. We're going to go through the interview and we're going to give five investing tapes. I extracted from the interview that discussed also indeed explain some things from Mark Misch Bonbright. He's one of the greatest value investors out there. So there is a lot to learn from him. The investing tapes discussed are concentrated portfolio free stocks that he owns make more than 50 percent of his total portfolio seven hundred million under management 400 million is invested in free stocks. And he buys those. Listen carefully at the price earnings ratio of one or less. How can there be a price earnings ratio of 1 in this market. Well there can be you just have to wait and you will learn how to do that how to find those stocks by the end of this video. Free reasons why investments don't work out. So a very important checklist before investing in anything. Closing stock investments offer something very important to save a lot of time. Don't think about Makara. He has no interest in theU.S. anymore. That changed five years ago. Before that he was 90 percent invested in theU.S. And then finally take a nap. So let's start with a concentrated portfolio and price earnings ratios of 1. So it has a concentrated portfolio.
Yes but he bought those stocks with Chrysler reining the streets and sock Suntec realty to Indian companies when the price earnings ratios of those companies what he likes to say was below one not that current trailing price earnings ratio. But the future potential price earnings ratio on the price he pays. So he's really waiting for bargains to find something that can earn in one year what he pays for it. To do that you have to really look at unfavorable industries like the car industry in 2012. So he finds there are companies that will not go bust and have a high potential to deliver higher earnings in the future. For example in 2012 he was buying Fiat Chrysler and his average in investing prize is around four and you can see that it was even lower it was four but it was also below free. So he really doesn't care about those short term changes in price because he's looking for the long term. So he paid around for to buy Fiat Chrysler. Now the stock is at 17. And on top of that you should add the Ferrari spinoff which is close to a market cap like Fiat Chrysler. So there is double the return on this investment for Pirbright. The current earnings per share is two point twenty one. If we deduct 40 percent of the 2012 purchase price as the value gotten from Ferrari we get to a price earnings ratio close to 1. Needless to say just look at the chart Fiat Chrysler is now at 17. It was at 25 he's sold a little bit around 25. He lowered his position but he's still way way ahead and a great investment double the gain there.
As for filing such stocks Bonbright tells us how we have to keep our eyes open as such opportunities arise once every few years. To quote What I found over a 19 20 year investing history is that is that these what they call P E of ones tend to show up an idea every two or three years. The less similar opportunity he took advantage of was in India and real estate in Mumbai. He bought 10 percent of the company Suntec Realty and you can see the stock price explo that its five bagger in the last two.
