Pabrai Is Out! But This Unknown Superstar Is All In (Alibaba Stock)

Mohnish Pabrai Is Exiting His Alibaba Position! But An Unknown Superstar Is All In (Alibaba Stock Analysis)

It’s that time of the year again, it’s 13-F season and you’ve probably already seen the most noteworthy headlines. Guy Spier bought Tencent via Prosus, Li Lu is bullish on Buffett’s Berkshire Hathaway, Charlie Munger filed his 13-F early and he almost doubled his Alibaba position / BABA, Pat Dorsey believes in the long-term prospects of Wix, but the biggest headline was probably the fact that Mohnish Pabrai significantly reduced his Alibaba position.

This probably caught many Alibaba investors off guard and I am pretty sure that no one expected him to sell Alibaba's stock (Ticker: BABA) so soon – Mohnish Pabrai only started building his Alibaba position earlier this year (2021). But another superstar investor that often flies under the radar and that you might not have heard of significantly increased his stake in BABA in Q3 of 2021.

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OTHER LINKS:
○ Rowan Street Capital Q3 letter: https://www.rowanstreet.com/post/rowan-street-q3-2021-letter
○ Pabrai interview: https://youtu.be/uRhDZwX23Y4
○ Investopedia: https://www.investopedia.com/terms/f/fund-flow.asp
○ Pabrai's 50 billion dollar rule video: https://youtu.be/rWF0eIrTT1o
○ Rowan Street Capital: https://www.rowanstreet.com/
○ Q3 Letter Rowan Street: https://www.rowanstreet.com/post/rowan-street-q3-2021-letter
○ Conifer Asset Management: https://www.conifercap.com/
○ CNBC media headlines: https://www.cnbc.com/2021/11/18/alibaba-earnings-fiscal-q2-revenue-misses-earnings-plunge.html

To everyone’s surprise, Mohnish Pabrai has started selling his holding in Alibaba in Q3 2021. And he has not just trimmed his stake a little bit, no he has slashed it by almost 80%, and who knows, by now he might have completely exited his bet on Alibaba. And this caught many investors around the world off-guard as Pabrai, according to his 13Fs, only started buying Alibaba in Q1 2021. Pabrai basically started buying Alibaba around the same time as Charlie Munger who also began purchasing Alibaba’s stock for his Daily Journal portfolio in Q1 2021, and people speculated whether Pabrai, who is close friends with Charlie Munger, copied him or at least was introduced to the idea by Charlie Munger.

Why exactly Pabrai started selling Alibaba is unclear. He most certainly is not copying Munger, because Charlie Munger seems to be more bullish than ever on Alibaba / BABA's stock. He almost doubled his Alibaba / BABA position in Q3 2021 and significantly reduced his cost basis, which is a fancy way of saying that he lowered the average price he paid per Alibaba share. Munger originally started buying Alibaba in Q1 2021.

We can only speculate why Pabrai reduced his stake in Alibaba. There is no way we can know why Pabrai changed his mind on Alibaba. Does he think his initial investment thesis was proven wrong? I doubt it. Not much has materially changed for BABA’s business, even though China’s crackdown on big tech continued.

MUSIC:
○ https://www.epidemicsound.com/track/Au7huVdnSA/

Chapters:
0:00 Intro
1:02 What happened?
1:55 Why did Pabrai Sell Alibaba?
3:13 Mohnish Pabrai
4:12 Opportunity Cost
5:31 Common Prosperity
6:08 Rowan Street Q3 Letter
9:16 Noteworthy developments
11:43 Alibaba Q2 Earnings

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