I Shamelessly Cloned India’s Top Investors to Make 41% Returns | Mohnish Pabrai | Copycat Investing

okay so the concept of Shameless cloning was introduced to all of us by Mish bab I even explained it in a video on how he copied MrBuffett's partnership structure and often rides on the high conviction ideas of others to make money for himself and for his clients now there's a very old MAV a proverb in Hindi that says which crudely translates to even cheating requires intelligence I know it sounds a lot better in Hindi but the point is even with all this information around us and with hundreds of investing experts giving us dozens of ideas every month what we still don't have is a system of putting it together a system that's understandable something that's replicable and definitely something that's profitable now for all his generosity in sharing ideas MrPAB has never shared with us a method for cloning and that's where this video comes in wherein I've tried to put together a system a framework for identifying investable ideas of others and packaging it together as our very own shamelessly cloned portfolio we'll examine the process I'll also share the stocks in this video and as I always do this data has been back tested over the last eight quarters and pleasantly this copycat portfolio would have delivered an annualized return of 41. 4% which firmly puts it in the top 1% of all Equity mutual funds let's begin in today's day and age and with so much information available whom to trust and which source to prioritize is a question itself we have thousands of so-called investors across news channels YouTube Twitter LinkedIn WhatsApp Instagram telegram ramram I mean it's a circus out there with maybe 20% of these investors telling the truth 30% of them doing lies and the remaining 50% merely stating a very fluid opinion so logically speaking we want to work with those investors who are genuine who are telling the truth and in my opinion there is only One Source that can get us this authentic information you see in the year 2016 the Securities and Exchange Board of India the sebbi came up with this rule that all publicly listed companies would have to compulsorily disclose the names of those shareholders who held more than 1% in that company this is good at least for us because even if MrVijay kadia comes on TV and says I love Patel engineering I for one the skeptic in me will find it very difficult to believe him this connects with what I have said time and again that is trust but verify and as a part of my verification I would have accessed the BC India website I'll then go to Patel engineering limited click on the shareholding pattern then click the link that shows the shareholding pattern of public shareholders I scroll down a bit and only when I see Kia Securities private limited the skeptic in me will be satisfied and I know that MrKia was not bluffing on TV and that he truly invested in the stock to the tune of 1. 3 CR equity shares which as for today's price comes to 89 CR rupees my point is the semi mandated 1% plus shareholding pattern not only acts as a verifiable anchor but is also a very strong indicator of investing intent consequently for a cloning study I'll be using this very information that I've extracted absolutely free of cost on Trend line.

com in fact the platform features 80 Superstar shareholder portfolios but because we don't need so many I pick 10 Mari investors who have a sizable coppus and they also hope a decent count of stocks where as of December 2023 the respective shareholding is upwards of 1% I'm sure you would have recognize many of them from this list and just as an Aggregate and FYI their total holding from just 1% Plus stocks comes to over 77,000 crores and this money is spread across 370 OD stocks which means our first objective is to prune down this list to something more manageable let's say somewhere around 50 stocks and although there are dozens of variables and parameters that can be tried I chose to go with those stocks where these 10 Mari investors had their highest conviction in how do we measure conviction well I didn't go with the amount of coppers but instead I defined conviction on the basis of the percentage of shareholding that the investor held on a per company basis for example this table here shows the Holdings of raak junjala and Associates now if I had defined conviction per the coppus amount then the top three stocks would have been tightened with some 7 ,000 cres in value followed by Tata Motors at about 5,000 cror and thirdly star Health which is also about 5,000 cror however because I'm seeking the highest percentage of shareholdings so instead of Titan tataa Motors and star health for this study my topics will instead be apptech limited where Mrjunjun Wala holds a little over 43% in equity shareholding Concord biotech where he has 24% star Health with 17% Metro brands with 9. 6% which was over 14% a few quarters back and NCC limited where MrJun janala has a 133% shareholding as I said earlier I could have used any other variable so things like the size of the cus the age of the investment momentum percentage of change Etc but I settled for this percentage shareholding approach as I felt it was very authentic it was not very complicated and was an adequate parameter to test out my thesis and while we are on the subject of uncomplicating matters and testing things out tell me when when was the last time you checked on your term insurance cover the reason I asked this is because 75 80% of the people I talk to are still underinsured in spite of having 50 lakhs or even a COR of term cover as many of you know I've spent more than 10 years in the insurance industry and under inssurance is something I've seen time and again with people in their 30s so typically someone who's been working for 5 years plus earns a decent salary is married has a home loan to pay off and has just recently started building his or or her investment CPUs this is generally the period when a big gap starts emerging between where one is and where he or she needs to be in terms of financial protection so if you are someone that's at that life stage or if you're Keen to know where you stand then do take a minute to try out clarify life's under inssurance Checker tool that will help you understand if you are underinsured how much term insurance cover you should be having and you'll also receive many useful tips that will help you balance your term insurance coverage with your life goals this tool is quick it's easy and it's absolutely free so do try it out and get yourself term insurance clarified as always the link to this tool is available in this video's description all right so now that we clear on where to Source the information from the following are the exact steps I took to create and simulate our shamelessly cloned portfolio so for step one I started by extracting the 1% plus shareholding information from trend line for the last eight quarters and I pasted it on a Google spreadsheet secondly I use chat GPT and here's the prompt I use to receive the BSE and NSE codes against each of the stocks although some manual work will need to be done as not everything came out accurately then I used Google Finance and the synex here to extract the share price of some 386 stocks across eight quarters step four was the identification of the top three4 stocks per investor and this was done using the percentage shareholding method that I've already discussed the next step is more of a cleanup and this was done manually with a little bit of subjectivity to understand when the investment was originally made and when did the investor exit or lose conviction in that stock and the last step step six is to simulate an investment of 10,000 rupees at every entry point and to sell off that investment at market price which would have resulted in a profit or loss believe me this exercise is a lot more complicated than how I make it sound and so for your benefit I have appended the worksheet as a link in this video's description so have a look I'm sure there'll be some errors you'll definitely find Improvement areas but this little simulation exercise I did at least from a numbers perspective required me to invest 10,000 rupees in a total of 57 stocks so that's 570,000 rupees assuming I exited all 57 stocks I would have gained a profit of 387,000 rupees in the last 2 years and this on an analized basis comes to a delicious return of 41. 4% yes that's right 41.

4% and if the nifty50 was a person then I'm sure it would be a bit ashamed with the 12. 5% return it managed during the same time period however in all fairness the nifty50 is not the right comparison Benchmark because most of the stocks in our Shameless portfolio were small caps and even micro caps but pleasantly even the best performing actively managed small Cap Fund in recent times the Quant small Cap Fund came up short with a return of just 29.