Mohnish Pabrai: How To Build Wealth Copying 9 Other Value Investors

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:

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:

1. Oracle (ORCL)
2. Berkshire Hathaway (BRK-B)
3. Apple (AAPL)
4. Microsoft (MSFT)
5. 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:

https://www.forbes.com/sites/janetnovack/2017/02/22/beyond-buffett-how-to-build-wealth-copying-9-other-value-stock-pickers/#7645cf00eaf9

I co-wrote the article with Fei Li, a talented quant at Dhandho Funds.

Enjoy!

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

Selection Criteria:

1. No utilities, no REITs, no oil and gas exploration, no metals and mining and no multiline retailers.
2. Positive trailing-12-month net income

Rebalance Methodology:

• 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.