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:
- Oracle (ORCL)
- Berkshire Hathaway (BRK-B)
- Apple (AAPL)
- Microsoft (MSFT)
- 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:
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:
- No utilities, no REITs, no oil and gas exploration, no metals and mining and no multiline retailers.
- 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.
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