Mohnish Pabrai’s Free Lunch Portfolio (Updated 2019)
The 15 Stocks In Pabrai’s ‘Free lunch’ Portfolio
2019
Here’s the Stocks you will be buying if you are going to follow the rules of the ‘Free Lunch’ Portfolio. Remember to hold each stock according to the Rules, as stated by Mohnish Pabrai. (If you don’t know them, read this first.).
To invest using the ‘Free Lunch’ Portfolio, you buy all 15 stocks on this list, with an equal dollar amount. If you like one of the individual strategies better, you can pick your favorite or a combination of two. I’ll include all the links you’ll need below, and I’ll update this list as soon as the new picks are available. The list includes the company name and the ticker symbol shown in brackets.
Free Lunch Portfolio 2019
Shameless Cloning Portfolio
Alphabet (GOOGL)
Berkshire Hathaway (BRK.B)
Charter Communications (CHTR)
Citi Group (C)
Micron Technology (MU)
Sidenote: This is the second year for MU in the shameless portfolio. This means that you leave that original purchase amount untouched.
Spinoffs Portfolio
Delphi Technologies (DLPH)
DXC Technology (DXC)
Hamilton Beach Brands Holding (HBB)
Hilton Grand Vacations (HGV)
Varex Imaging Corp. (VREX)
The Uber Cannibals Portfolio (Updated April 2019)
Sleep Number Corp. (SNBR)
Corning Inc. (GLW)
Asbury Automotive Group Inc. (ABG)
Quanta Services Inc. (PWR)
Allison Transmission Holdings Inc. (ALSN)
Here’s what you need to know before investing in any of these portfolio’s
What Mohnish Pabrai’s ‘Free Lunch’ portfolio consists of.
Comparing The ‘Free Lunch’ Portfolio to the S&P 500 over a 17 year period. (Spoilers, the Pabrai’s portfolio trounces the S&P 500).
The power of a 17.1% strategy can have on a $6,000 and $12,000 account (you won’t believe it).
The Rules you need to know to follow the ‘Free Lunch’ Portfolio.
Summary of each of Pabrai’s Portfolios
Each portfolio consists of a specific theory regarding investing. Each portfolio has its own set of rules and guidelines you should understand before making any investment.
The Uber Cannibals: This portfolio follows the idea that companies that ‘eat themselves’ through the purchase of their own stock, at a staggering rate will greatly outperform the market over any long-term period. The portfolio defines an Uber Cannibal as a business that is;
Cash rich
Undervalued &
Consistently buying back shares
Pabrai believes that because of these factors, the portfolio is likely to outperform the market by a large margin. Backtesting agrees with his sentiment. The Uber Cannibals have beaten the market handily over the 17+ year period by more than 14% on average per year!
Shameless Cloning: Ever had the desire to invest with the some of the best value investors in the world? Well, this is exactly the theory behind Pabrai’s shameless Cloning portfolio. In fact, this portfolio consist of five separate stock picks from some of the best fund managers in the world, randomly selecting from a curated list created by Mohnish Pabrai himself. This portfolio has vastly outperformed the market benchmark over the backtested period by more than 10% on average per year over the last 17+ years. (This is my personal Favorite)
The Spinoffs: This one originally comes from the mind of the now famous value investor, Joel Greenblatt. In his amazing book; ‘You Can Be a Stock Market Genius’ he explains (and proves) why spinoffs, as a group, trounce the stock market. Essentially, when a business is spun-off, it can better focus on whatever it does best, allowing it to outperform over time. Greenblatt showed that spinoffs beat the market by an average of 10% per year (through the period of 1964 to 1988). Thirty years later and the Spinoffs still come out on top, beating the S&P 500 by 8% per year on average over the last 17+ years.
The ‘Free Lunch’: Now that you better understand the three portfolio’s above, this one is much easier to understand; It’s the combination of all three portfolio’s into a single Fifteen Stock Portfolio. This portfolio has an amazing return of 17.1% on average, per year compared to the S&P 500’s 5.4%. Not only that, but it tends to greatly reduce the overall volatility of the portfolio compared to that of the S&P 500. Pretty sweet right!?
Bonus Before you go
Don’t forget to grab your Free Next Level Investing Checklist. Avoid some of the mistakes I made and follow the checklist before making your purchase. See if it truly is a Next Level Investment...
A Bonus for you Math Nerds...
