Tracking Mohnish Pabrai's Pabrai Funds Portfolio: Q1 2012 Update

Below is a spreadsheet that highlights Mohnish Pabrai's moves this quarter. Please check-out our SeekingAlpha column for an analysis of the moves:

Carnival of road to financial independence #43

Welcome to the May 25, 2012 edition of carnival of financial independence.

Frugal Living

Jailan Marie presents Letting go posted at Innovative Solutions For Positive Change, saying, "Letting go of the negative behaviors has been an energizing and positive life changing experience."

Dr. Dean presents 100 Words On How To Become “Well To Do!” posted at Dr. Dean's TheMillionaireNurse.com Blog, saying, "Want to be financially successful? Check out this short mantra, and repeat it daily."

Tim presents Personal Finance: How to Retire Rich on Latte’s posted at BrilliantFinances.com, saying, "If you were to invest $2 a day into your retirement instead of buying latte's you would be suprised at the result."

Passive Income

Jeremy Biberdorf presents Importance Of Diversifying Online Business posted at Modest Money, saying, "In the blink of an eye, your online business can get turned on its head. It is incredibly important that you diversify both your traffic sources and income streams."

Daniel Rosenstein presents Don’t Fall into the Student Loan Debt Trap | Miss Money Bee posted at Miss Money Bee, saying, "Student loans can be a double-edged sword. On one side, they may allow you to build a successful career, buy a beautiful house and form a family. On the other side, they can become a nightmare if you are unemployed or if your salary is too low to cover all your bills."
 

That concludes this edition. Submit your blog article to the next edition of carnival of financial independence using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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Stock Portfolio & Watch List Updates for May 2012

Following are the activity from the previous month:

a)      Closed the following longs: Sold our Kraft (KFT) position at $38.57 for a 46% return and impact to the portfolio of 0.77%.

b)      Increased/Added the following longs: Bought Southern Copper (SCCO) at $33.27 with ~1.5% of portfolio on 05/03/2012.

c)      Long Calls: None.

d)     Long Puts: None.

e)      Shorts: Bought to cover GMCR short at $47.67 for a 5% gain and marginal impact to the portfolio.

f)       Short Calls: Our DBD covered calls were called away at 30 on 05/10/2012 for a slight loss. The net impact to the portfolio was (0.10%). Opened new covered calls on half our position in MSFT (Aug 2012 31 @ 1.02), half our position in INTC (Oct 2012 27 @ 1.67), and our entire position in CLWR (Jan 2013 1.5 @ 0.35). The trades generated cash worth roughly 0.6% of portfolio.

g)      Short Puts: 1. Wrote ABB Ltd (ABB Dec 2012 15) puts at $0.65 on 04/30/2012 with a cash-coverage requirement of ~2% of portfolio, 2. Wrote Quality Systems (QSII Sep 2012 30) puts at $2.15 on 05/08/2012 with a cash-coverage requirement of ~1.5% of portfolio, and 3. Click Software puts that we wrote (CKSW May 2012 7.5 @ 1.3) on 09/21/2011 expired worthless netting cash worth roughly 0.3% of portfolio.

The cash position in our portfolio is at 35.19%.

Long/Short Portfolio Update:

The overall portfolio is 1.84% down compared to our cost-basis.

2012 Transactions Summary:

 Excluding dividends, we have a realized gain of 8.8% in the portfolio YTD.

Option Position Updates:

Short Puts: ABB Ltd (ABB Dec 2012 15 @ 0.65) and Quality Systems (QSII Dec 2012 30 @ 2.15). The short puts together have a cash coverage requirement of about 12.8% of our cash position.

Short Calls: Nucor (NUE July 2012 43 at $2.90), Itron (ITRI Aug 2012 40 at $4.20), Quality Systems (QSII Sep 2012 45 at $2.70), Alcoa (AA Jan 2013 12.5 at $0.64), Market Vectors Gold Miners ETF (GDX Jan 2013 59 at $6), Dryships (DRYS Jan 2013 2.5 at $0.65), Microsoft (MSFT Aug 2012 31 at 31), Intel (INTC Oct 2012 27 at 1.67), and Clearwire (CLWR Jan 2013 1.5 at 0.35). The short calls account for ~17.85% of the portfolio.

Watch List: Automatic Data Processing (ADP), Air Products & Chemicals (APD), Bank of America (BAC), Beam Inc (BEAM), Bemis Company (BMS), Citigroup (C), Canon (CAJ), Dell Inc (DELL), Emerson Electric (EMR), Forest Laboratories (FRX), J. C. Penney (JCP), Jefferies Group (JEF), Kaman Corporation (KAMN), Coca Cola (KO), McGraw Hill (MHP), 3M Company (MMM), PepsiCo (PEP), State Auto Financial (STFC), Teva Pharmaceuticals (TEVA), and Whirlpool (WHR).

Tracking Bill Ackman's Pershing Square Portfolio: Q1 2012 Update

Below is a spreadsheet that highlights Bill Ackman's moves this quarter. Please check-out our SeekingAlpha column for an analysis of the moves:

Tracking Bruce Berkowitz's Fairholme Portfolio: Q1 2012 Update

Below is a spreadsheet that highlights Bruce Berkowitz's moves this quarter. Please check-out our SeekingAlpha column for an analysis of the moves:

Tracking Warren Buffett'S Berkshire Hathaway Portfolio - Q1 2012 Update

Below is a spreadsheet that highlights Warren Buffett's moves this quarter. Please check-out our SeekingAlpha column for an analysis of the moves:

Tracking Wilbur Ross’s Holdings – Q1 2012 Update

This article is the first of a series that provides ongoing analysis of the changes made to Wilbur Ross’s US stock portfolio on a quarterly basis. The WL Ross & Co unit of Invesco is a specialized outfit that looks to invest in and turnaround financially distressed companies. WL Ross & Co was established in 2000 and in the mid-2000s bought several bankrupt steel companies to form International Steel Group. After executing a turnaround, ISG was sold to Arcelor Mittal in 2005 for a $2.5B profit. More recently, Wilbur Ross along with Fairfax Financial Holdings took a large stake in Bank of Ireland, thereby “saving” the company from nationalization.

The spreadsheet below highlights changes to Ross's US stock holdings in Q1 2012:

The portfolio remained largely unchanged with a few minor adjustments. Also, new stakes were established on Bioscrip Inc (BIOS), Delta Air Lines (DAL), and Key Energy Resources (KEG). However, the stakes do not indicate a bullish bias – combined, they accounted for only around 0.5% of the portfolio and so the stakes are insignificant.

Bullish: The big 20% stakes in Assured Guaranty (AGO) and Bankunited Inc (BKU) along with the huge 30% stake in Bank of Ireland returned well into the double-digits. They were held steady indicating a clear bullish bias. Exco Resources (XCO) was a large ~21% stake as of Q4 2011. The stake was increased marginally during the quarter in the face of a sharp correction. The increase in stake indicates a clear bullish bias. Wilbur Ross is on record saying natural gas is a good intermediate step for the United States between dirty fossil fuels (coal and oil) and renewable energy – it should help with the balance of payment and reduce the dependency on Arab nations for fuel.

Bearish: The 0.5% stake in United Airlines (UAL) was reduced by over 35% during the quarter indicating a mild bearish bias.

Tracking David Swensen’s Yale Endowment Holdings – Q1 2012 Update

This article is the first of a series that provides ongoing analysis of the changes made to Yale Endowment’s US stock portfolio on a quarterly basis. Yale Endowment had 6.7% of its assets allocated to US equities as of 06/30/2011. The total value of the endowment is just shy of $20B, about 15% below the all-time high of $23B reached in 2008. It’s ten-year performance of over 10% places it in the top one percent of large institutional investors. As of Q4 2011, the US long portfolio had $198.83M invested and that has come down over 35% to $128.39M as of Q1 2012. The relatively large shift in allocation indicates a bearish bias towards US equities as an asset class. The portfolio is very concentrated with just ten issues and the number of equities did not change this quarter – the fund sold out of three positions but added three others.

The spreadsheet below highlights changes to Swensen's US stock holdings in Q1 2012:

Below is a summary of his new stakes:

 

Linkedin Corporation (LNKD): LNKD is a 2.25% stake that was established this quarter when the price-per-share varied between $61 and $104. LNKD had the biggest internet IPO since Google (2004) on May 19, 2011 and its stock promptly doubled from its IPO price of $45. The stock saw a sell-off following lockup expiration on November 19, 2011 and it traded in the $59 range in late November. Since then, the stock has produced a stunning return of over 85% in the last six months – the stock trades around $110 currently.

Pandora Media (P): P is a very small 0.7% stake that was established this quarter when the price-per-share varied between $10 and $15. P is another internet stock that IPOed mid-last-year (June 15, 2011). The stock fell below $10 following lockup expiration in December and it currently trades around the same price-range. Following a weak Q4 report and anemic forecast on March 7, 2012, the stock fell 25% but has since recovered a little.

Hallador Energy (HNRG): HNRG is a very small 0.3% stake that was established this quarter when the price-per-share varied between $8.7 and $10.83. The stock currently trades at around $7.8. HNRG is a small-cap stock engaged in the production of steam coal from a single mine in Western Indiana. The allocation is very small to indicate a bullish bias.

Tracking Seth Klarman's Baupost Group Holdings: Q1 2012 Update

Below is a spreadsheet that highlights Seth Klarman's moves this quarter. Please check-out our SeekingAlpha column for an analysis of the moves:

Trip Report to Pattaya

We had planned on using to our advantage the proximity to South Asian countries and the Middle East after our R2I. Our maiden venture was the Holyland trip during the summer of last year (Israel, Jordan, Palestine, and Egypt). For the Onam holidays, we considered either a Dubai-Muscat jaunt or a two-country outing from Malaysia, Thailand, and Indonesia.

• Dubai alone was quoted at $2.5K for the four of us for 4 nights at Ritz Carlton through Expedia including air-fare. Adding Muscat (3-nights each in Dubai and Muscat) brought it to around $3.6K - comparable three-star hotels in Muscat are almost thrice as expensive as in Dubai. For Dubai the travel agent quoted $360 for 3 nights, daily breakfast, transfers, and half day Dubai city tour while the same sans the half day city tour for Muscat came to $1120 (air-fare extra).
• Malaysia was quoted at $589 for the four of us - two nights in KL, one night in Genting, daily breakfast, all transfers, full day indoor and outdoor theme park ticket in Genting, half day city tour of KL, and one way cable car ride and enroute Batu Cave photo stop tour. Thailand, was cited at $403 for the four of us, included two nights in Bangkok, one night in Pattaya, daily breakfast, all transfers, Coral Island tour with lunch in Pattaya, and a half day temple and city tour in Bangkok. Indonesia, which came in at $946 included three nights in Jakarta, daily breakfast, all transfers, and a half day Jakarta city tour.

We decided on Malaysia and Thailand. Air Asia was our preferred carrier for South Asia as few other options existed for direct flights from Kochi (Nedumbassery) International Airport. Moreover, Kaula Lumpur is the hub for Air Asia.

 

Our Air Asia flight into Bangkok had very limited food options (in quantity too) – it is best to prepay for meals when booking. The transfers and tour within Thailand was arranged via DS Travel, whose services were generally good although English was not their strength. The representative who greeted us at the airport came equipped to exchange dollars for competitive rates and also had on offer certain calling cards. The vehicle for our transfer to Pattaya arrived in 30 minutes – just the four of us in an eleven-seater for the 1.5 hour ride (90KM).
The Royal Palace hotel in Pattaya is a nice older hotel with a beautiful pool across from Marriot. It does not have an ocean view as it is a couple of blocks away from the beach. There is a 1000 Bhat deposit requirement during check-in. Internet is chargeable and the rates are high. The hotel staff left a lot to be desired especially the older lady at the reception counter who was just plain rude. Women in Thailand, in general can be quite impolite – we experienced boorish behavior from women at the checkout counters and realized quickly to only deal with men even for directions. There is also blatant white-worshiping which while good for that segment of the tourists does not bode well for others

 After exchanging money right outside the hotel (best exchange rate we got) we strolled to the beach area and opted for lunch at an ocean view restaurant – relatively expensive at 920 Bhats - food and service was just OK. Street vendors line the approach roads to the beach. Sandals are a must and we bargained to snag them at 50 Bhats only to find the same sandals at the hotel lobby shop for 50 Bhats! The breakfast at the hotel was good with plenty of choices but the coffee was simply average. The DS Tours rep stopped by our hotel room and tried to upsell some tour programs – a ploy we did not succumb to.

Our main item in the itinerary was the Coral Island half-day tour with lunch. That proved to be a wonderful outing that went like clock work. DS Travel picked us right on time around 8AM. Sandals, sunvisors, and sunglasses are a must. At the beach, the boat was waiting – kids will find walking the few yards to the boat in knee-deep water easier barefoot. First stop was at the location for para-gliding: these are huge wooden platforms built in the middle of the sea. Paragliding was 350 Bhats each – cheapest we have seen the same offered anywhere. We enjoyed it thoroughly – the escort for the kids position themselves a level above them on the parachute. Motor boats tug’em chutes around and after circling the platform once helps them drift down by controlling the speed and direction. The entire experience lasts 10 minutes unless you get lucky – i.e., they fail to “land you” on their first attempt.They also gave the option for an under sea exploration (1040 Bhats) which involves diving down to explore the corals for half an hour. The alternative is to go on a glass bottomed boat to see the corals – visibility is poor in spite of the clear glass bottom. Almost all in our boat opted to give the under sea exploration option a miss. By around 10AM we were dropped off at the Coral Island - an excellent very well maintained white sandy beach. Beach chairs are available for free (part of the package) and the use of beach is also free. Everything else is an extra – options include water scootering, banana boating, massages, etc., that are priced very economically. Street vendors served large sized excellent guavas (30 Bhats) – the cut pieces are tossed in spices – indeed yummy! Lunch was at an Indian restaurant right at the beach – very basic fare. Charge for shower is 40 Bhats and bathrooms 10 Bhats. After lunch, a speed-boat dropped us back at the beach and DS promptly transferred us back to the hotel by around 2PM. For folks prone to motion sickness, the speed-boat rides may be a problem and so it is best to take adequate precautions.

Related Posts:

1. Trip Report to Pattaya. 
2. Trip Report to Bangkok. 
3. Thai-Malaysia Trip - Gotchas to Avoid. 

Last Updated: 10/2012.


 

Kalyan Silks return experience

It is easy to get used to how the wonderful return process work in the USA. In most of the stores that we frequented in the USA such as Costco and Kohl’s, the return policy was very lenient. Costco pretty much took everything back no questions asked while Kohl’s allowed returning as long as you had the receipt. In fact, even online shopping options such as Amazon.com have fairly lenient return policies. The only place we hesitated to return stuff in the USA was Walmart where although the returns itself usually went smooth, one had to deal with a long line.

Returns are still very much a foreign concept in India. Although retail store staff generally claim items can be returned if not used, in a practical sense, they make it very hard to do it. In some cases, retail stores even attempt to misguide you in such a way that you loose your return privileges. This is what we experienced with our first and last shopping experience at Kalyan Silks: We shopped for a silk sari at Kalyan Silks, Ernakulam and mentioned clearly upfront that we were shopping for a sari that is going to be a gift. I checked the ‘what-if’ scenario – should the selection fail to please the receiver. Kalyan Silks informed me that the return policy is very generous (exchange to another item of like value) as customer satisfaction is a high priority with Kalyan Silks. The staff checked our price range and helped us arrive at a decision without hurrying us. We even enjoyed complimentary coffee while waiting for the bill. So far, so good…

 The ‘what-if’ scenario proved true and we went to exchange the item with the receipt and the promotional gift intact to facilitate an easy exchange. The staff confirmed the exchange policy again. Imagine my dismay when the Showroom Manager informed me that Kalyan Silks policy does not allow return of a sari if the blouse piece is detached. I protested for I had neither detached anything nor had asked anybody to detach anything. The Showroom Manager pointed out the following:

1. The staff is trained to obtain customer permission prior to detaching a blouse piece.
2. There is no resale value for such an item from Kalyan Silks point of view.

In this time and era, when a customer is spoilt for choices, if the above response is the best a Manager can muster as response to appease a customer, they have quite a long way to go to reach anywhere near US standards. We left after seeking input on how to give feedback online. They provided a couple of email addresses reluctantly. We gathered a few other email addresses by searching online and sent out an email elaborating on our experience. Surprise, surprise – every single one of these emails bounced saying “mailbox quota exceeded” or some such message – oh, well…