A Strong Start To 2019 For Pabrai’s Spinoff Portfolio – Q1 Update

Mohnish Pabrai may be best known to the world for his hedge fund or for his books such as The Dhando Investor, but on this site it’s for his relatively new Spinoff Portfolio. Unfortunately, despite strong backtested results, 2018 was a rough year for the portfolio. Four of out five names finished in negative territory for the year, but Adient (ADNT) was the big loser. 2019 brought fresh hope with an entirely new roster of five spinoffs, all from the year 2017 and the early results are looking good.

Here is the Spinoff Portfolio’s Q1 performance:

Hamilton Beach Brands	HBB	-9.7%
DXC Technology Company	DXC	23.0%
Varex Imaging Corporation	VREX	45.0%
Hilton Grand Vacations	HGV	18.0%
Delphi Technologies	DLPH	37.5%
	AVERAGE:	22.8%

(Source: CapIQ, simple return, no dividends etc.)

That is a strong quarter and compares rather favorably to the S&P’s ~13% return. Four out of five names delivered above market returns with two almost tripling the broad market index! It can’t all be beta right? I wouldn’t read too much into short term results and it’s worth remembering that last year started off strong as well. A concentrated portfolio is going to be volatile and the underlying idea of this portfolio is to set it and forget it for the entire calendar year.

For those that don’t remember, another rule is that each name is equally weighted. For additional details on the rules and criteria, check out Mr. Pabrai’s blog Chai With Pabrai or our original post on the portfolio.

We will keep tracking this for the rest of the year and keep you updated. Do we have any readers following along?

Disclosure: Author holds no position in any stock mentioned. We get a small commission if you buy linked Amazon products