Author Topic: Dhandho Holdings!  (Read 65007 times)

Vish_ram

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Re: Dhandho Holdings!
« Reply #130 on: July 17, 2017, 04:33:40 AM »
It is not just Zinc, it is CRYP, HNR, Delta financial ... the list goes on and on. If I spend 10 minutes, I can come up with dozen stocks that he touched and went to literally 0.

What irks me is that, he is like the mouse that has learnt to roar like a lion (Buffett) and has no killing to show for it. He constantly cites Buffett, quotes compounding. He has a Madoff like Chutzpah given his track record.

He is exploiting the flaw in which compounding is measured. You setup few funds with small amounts, and take infinite risks in first two years. Some will collapse. Some will return triple digits. You close the collapsed funds. Then highlight the early triple digit returning funds to investors and start gathering funds. You underperform major indices when you add new $. But with the way compounding is shown (the growth of $1 since inception), you still show admirable returns. You then go out and keep marketing showing the incredible returns of the first $1 that walked in.

No one remembers the closed funds. You can underperform major indices for 30 years, but still the first $1 compounding will show outperformance. Foolish investors are too dumb to realize that. Then you go out and give talks about compounding of that first $1.


abyli

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Re: Dhandho Holdings!
« Reply #131 on: July 17, 2017, 06:20:41 AM »
It is not just Zinc, it is CRYP, HNR, Delta financial ... the list goes on and on. If I spend 10 minutes, I can come up with dozen stocks that he touched and went to literally 0.

What irks me is that, he is like the mouse that has learnt to roar like a lion (Buffett) and has no killing to show for it. He constantly cites Buffett, quotes compounding. He has a Madoff like Chutzpah given his track record.

He is exploiting the flaw in which compounding is measured. You setup few funds with small amounts, and take infinite risks in first two years. Some will collapse. Some will return triple digits. You close the collapsed funds. Then highlight the early triple digit returning funds to investors and start gathering funds. You underperform major indices when you add new $. But with the way compounding is shown (the growth of $1 since inception), you still show admirable returns. You then go out and keep marketing showing the incredible returns of the first $1 that walked in.

No one remembers the closed funds. You can underperform major indices for 30 years, but still the first $1 compounding will show outperformance. Foolish investors are too dumb to realize that. Then you go out and give talks about compounding of that first $1.

Nice summary!

tylerdurden

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Re: Dhandho Holdings!
« Reply #132 on: July 17, 2017, 06:34:47 AM »
I just watched his latest Google talk last week. It seems he now admits he might not be able to get the desired returns from GM investment. A couple of months ago he was the biggest promoter of auto stocks on Barron's. Of course anyone can change his mind but if you are constantly in "marketing" mode when you change views suddenly, it looks a little bit insincere to me. Also investing in warrants is not an easy path. What if China slows significantly next year because of this deleveraging thing going on there? What happens to GM warrants? Well, he was promoting investing into warrants big time in that article too :-)

I am not a big fan of Guy Spier either but at the least he seems to have more consistency. He sticks with investments much longer like SRG and banks etc. Mohnish had one strike with ZINC recently so of course he will go nuts about another strike because of a potential Sears bankruptcy... Being a fund manager and a salesman at the same time is tough business...

longinvestor

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Re: Dhandho Holdings!
« Reply #133 on: July 17, 2017, 06:34:56 AM »
It is not just Zinc, it is CRYP, HNR, Delta financial ... the list goes on and on. If I spend 10 minutes, I can come up with dozen stocks that he touched and went to literally 0.

What irks me is that, he is like the mouse that has learnt to roar like a lion (Buffett) and has no killing to show for it. He constantly cites Buffett, quotes compounding. He has a Madoff like Chutzpah given his track record.

He is exploiting the flaw in which compounding is measured. You setup few funds with small amounts, and take infinite risks in first two years. Some will collapse. Some will return triple digits. You close the collapsed funds. Then highlight the early triple digit returning funds to investors and start gathering funds. You underperform major indices when you add new $. But with the way compounding is shown (the growth of $1 since inception), you still show admirable returns. You then go out and keep marketing showing the incredible returns of the first $1 that walked in.

No one remembers the closed funds. You can underperform major indices for 30 years, but still the first $1 compounding will show outperformance. Foolish investors are too dumb to realize that. Then you go out and give talks about compounding of that first $1.

Nice summary!

+1.  No particular bone to pick with Pabrai but he's the archetype of the helpers Buffett talks about. More marketing versus investing skills. Also this idea of "what's wrong with having very high goals?". Yeah right, try telling your potential investors that you aim to beat the index by modest amounts. Even they are eating crow. I remember distinctly Longleaf stating their goal of index+10%.

So, my money saving tip I've developed is not put any money with those who state a large outperformance goal.
« Last Edit: July 17, 2017, 06:40:04 AM by longinvestor »

racemize

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Re: Dhandho Holdings!
« Reply #134 on: July 17, 2017, 06:44:01 AM »
This is actually not a nice summary.  I'd like to see the dozen stocks.  I think you missed Budget bonds, which he didn't invest in, but got most of the ones and then claimed it was just the beginning.

Also, he's never closed a fund, so it is rather disingenuous to solely describe him and then mentioning closed funds.

I also refer to my previous post on this topic, which does not seem to be recognized:
Quote
Ok, so the theme seems to currently be that Pabrai's returns aren't any good since he got a lot of money.  Let's examine that a little bit.

In 2003 he had 50 million AUM.
In 2004 he had 145 million AUM. 

I'd say at least one of those years starts counting as "a lot of money".

Here are the rolling 5 year statistics for Pif2 from that point on:
60% of rolling 5 year returns are greater than the S&P 500 from 2003
55.6% of rolling 5 year returns are greater than the S&P 500 from 2004

Interestingly, there are only 4 rolling 5 year periods that are negative, and 3 of them are in the last 3 years.  So, I think it is pretty clear that this underperformance that everyone is referring to is just from the last few years, just like most other value funds out there.

The Pif3 returns are fairly similar.  Pif4, for some reason, just kind of sucks.  It has performed worse than the other funds in the same periods fairly consistently.

As I mentioned earlier, all the big value guys are sucking right now.  Why single him out so hard?

Also, he's not the same as the "helpers" Buffett is talking about--Buffett singles out 2/20 and fund of funds.  Pabrai is 25% over 6%, just like Buffett was, and has not paid himself for years at a time.

I sincerely hope you guys never screw up and have someone judge you as harshly as you are doing Pabrai right now...

skanjete

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Re: Dhandho Holdings!
« Reply #135 on: July 17, 2017, 07:59:32 AM »
Apparently sentiment about other investors is as volatile as general market sentiment...

Maybe it's time to look a little closer at Pabrai's investments?

Vish_ram

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Re: Dhandho Holdings!
« Reply #136 on: July 17, 2017, 08:03:35 AM »
This is actually not a nice summary.  I'd like to see the dozen stocks.  I think you missed Budget bonds, which he didn't invest in, but got most of the ones and then claimed it was just the beginning.

Also, he's never closed a fund, so it is rather disingenuous to solely describe him and then mentioning closed funds.

I also refer to my previous post on this topic, which does not seem to be recognized:
Quote
Ok, so the theme seems to currently be that Pabrai's returns aren't any good since he got a lot of money.  Let's examine that a little bit.

In 2003 he had 50 million AUM.
In 2004 he had 145 million AUM. 

I'd say at least one of those years starts counting as "a lot of money".

Here are the rolling 5 year statistics for Pif2 from that point on:
60% of rolling 5 year returns are greater than the S&P 500 from 2003
55.6% of rolling 5 year returns are greater than the S&P 500 from 2004

Interestingly, there are only 4 rolling 5 year periods that are negative, and 3 of them are in the last 3 years.  So, I think it is pretty clear that this underperformance that everyone is referring to is just from the last few years, just like most other value funds out there.

The Pif3 returns are fairly similar.  Pif4, for some reason, just kind of sucks.  It has performed worse than the other funds in the same periods fairly consistently.

As I mentioned earlier, all the big value guys are sucking right now.  Why single him out so hard?

Also, he's not the same as the "helpers" Buffett is talking about--Buffett singles out 2/20 and fund of funds.  Pabrai is 25% over 6%, just like Buffett was, and has not paid himself for years at a time.

I sincerely hope you guys never screw up and have someone judge you as harshly as you are doing Pabrai right now...


The dozen:

Delta financial
HNR
CRYP
Pinnacle airlines
Horsehead (zinc)
Compucredit
Universal alloy
Lear
International coal
Big drops - bioscript (chronimed), Sears holdings, Cresud

shalab

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Re: Dhandho Holdings!
« Reply #137 on: July 17, 2017, 08:12:59 AM »
That includes folks like Watsa also - he still says in his annual letters that the goal is to get 15 percent annualized return. This hasn't been the case since 2010. No one seems to question that - if Buffett did it, there would have been many critical articles about him in this board and the general press.


It is not just Zinc, it is CRYP, HNR, Delta financial ... the list goes on and on. If I spend 10 minutes, I can come up with dozen stocks that he touched and went to literally 0.

What irks me is that, he is like the mouse that has learnt to roar like a lion (Buffett) and has no killing to show for it. He constantly cites Buffett, quotes compounding. He has a Madoff like Chutzpah given his track record.

He is exploiting the flaw in which compounding is measured. You setup few funds with small amounts, and take infinite risks in first two years. Some will collapse. Some will return triple digits. You close the collapsed funds. Then highlight the early triple digit returning funds to investors and start gathering funds. You underperform major indices when you add new $. But with the way compounding is shown (the growth of $1 since inception), you still show admirable returns. You then go out and keep marketing showing the incredible returns of the first $1 that walked in.

No one remembers the closed funds. You can underperform major indices for 30 years, but still the first $1 compounding will show outperformance. Foolish investors are too dumb to realize that. Then you go out and give talks about compounding of that first $1.

Nice summary!

+1.  No particular bone to pick with Pabrai but he's the archetype of the helpers Buffett talks about. More marketing versus investing skills. Also this idea of "what's wrong with having very high goals?". Yeah right, try telling your potential investors that you aim to beat the index by modest amounts. Even they are eating crow. I remember distinctly Longleaf stating their goal of index+10%.

So, my money saving tip I've developed is not put any money with those who state a large outperformance goal.

Vish_ram

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Re: Dhandho Holdings!
« Reply #138 on: July 17, 2017, 08:21:32 AM »
Having an aspirational goal is not a bad idea. You send a message that you are striving to do better.

No one wakes up aspiring to be a mediocre student. You aim for A+, work hard. It is a slippery slope when that goal becomes a subtle marketing message to lure in people. It becomes downright unethical when long term record is your retuns on first $1 that walked in.

racemize

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Re: Dhandho Holdings!
« Reply #139 on: July 17, 2017, 08:30:04 AM »
Ok, so let's look at those.

Companies that actually went bust while he held it:
1) Delta financial - yes went bust
2) Pinnacle airlines - yes went bust
3) Horsehead (zinc) - yes went bust

Companies that had big drops while he held it:
4) Compucredit - 70% loss during GFC
5) Sears holdings - 60% loss during GFC
6) bioscript (chronimed) - 50% loss
7) CRYP - it appears that he exited this at $20 after buying at $30, and it got bought out later

Companies that he actually made money on:
8) HNR - he exited with a gain
9) Universal alloy - he had a 132% gain on this stock
10) Lear - described as a "home run" in his letters
11) International coal - 138% gain
12) Cresud - made 118% over 3 years


So, is your criteria any stock he's ever owned that ever had a big drop?  In that case, you've missed a ton, which isn't that surprising since he has a predilection for leveraged cyclical companies.