Cloning as an investment technique?

[junming82]

Monish Pabrai, a successful value investor, has advocated on cloning as an investment technique to get above market returns. For Pabrai, investing is not an originality contest. He shamelessly appropriates the ideas of others. He looks to 13F SEC filings from other value managers he admires: Berkshire, Longleaf, Baupost, Greenlight, Pershing Square, Third Avenue for his primary source of investment ideas.

Has anyone used the cloning technique to achieve good returns? In USA, they have 13Fs for reference as a source of investment ideas. Does Singapore or Hong Kong has such a source where we can leverage on investment gurus's ideas to achieve a good return?

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Disclaimer: This is not a buy or sell stock tip. Please do your own research. 
Value investing blog: http://valuestocksinvesting.blogspot.sg/

[scottleey]

It was actually what Charlie Munger told Monish. What he told him exactly is to buy Cannibals, Spinoffs and Coattails.

Cannibals - Companies that do buybacks. Preferably smart ones that buy at low prices.
Spinoff - Price discrepancies that came with spurn companies and parents.
Coattails - As you mentioned.

I have coattailed the great investors for the past 5 years. 24% per annum cumulative returns. 80% their ideas/ 20% mine, so you can say it works. But it isnt blindly buying. You still have to read the 10Ks yourself and figure the accounting and understand the business and competitive advantages. I have seen investments by these well known investors blow up, just that its not well publicised. So its more of a filtering system. You learn at the same time their thinking and pick the flaws on some of the investments. There is still alot of work to be done but you earn boat loads while at it. So you are right.

Singapore and HK have information on these positions. But how many smart investors are there for you to coattail? I can only count a handful including Li Lu. And surprisingly everytime I looked into the investments, there were no clear signs of value. I may be wrong but disclosures in Sg and HK are much much limited and therefore restricts your understanding of the businesses. Moreover, accounting becomes very very suspicious at this point if you dont know the CEO well to based it first on character than investments (which usually is the inverse in US).

[junming82]

Thanks, scottleey for your comment! 24% per annum is quite a good return. I agree with you that 10Ks still need to be read to know about the company. Which well known investors do you normally look to for ideas?

________________________________________________________________________________​__________________________________
Disclaimer: This is not a buy or sell stock tip. Please do your own research. 
Value investing blog: http://valuestocksinvesting.blogspot.sg/

[scottleey]

http://www.dataroma.com/m/home.php has pretty up to date info on all many great investors. The Manual of Ideas has a more completed list.

I tend to look for the more value minded instead of the popular ones that are not on this website.
They are Bares Capital (small cap), Steelhead, Sandy Gottesman's (Buffett's friend), Scott Moore, Permian (The lady Buffett met that has a management driven strategy), Mick Mcguire (Ackman's analyst during GGP and MBIA days), Thomas Bancroft (Lou Simpson's manager at Geico), Cove Street, Cracker Barrel, Clemen Scholls (nuclear physicist turned investor), Shai Dardashti (I corresponded with him before and his thinking is good, results for past 5 years arent. His is more activist.) Many more I cant churn out.

Look for the ones that are not so popular. Their ideas are better, way better.

But anyway the good ideas arent the popular names, look for the very small positions if you are looking at some of the more well known investors. I cant tell you the names because I am still hoping prices to drop but thats where the money is.

Buffett said in the 1999 Annual Meeting,

“I get together with about 60 people every couple years and get their expectations of returns. Of those investors, I think there’s a half dozen who could get those kinds of returns (he's referring to 50% returns)– but they’re only going to find those returns in small places.

I stumble onto those things occasionally but I’m not looking for them. I’m looking for things that Berkshire Hathaway can do.”

So really its about the small companies at small places.

[yeokiwi]

Singapore and HK have information on these positions. But how many smart investors are there for you to coattail?

There are quite a few in Singapore but generally, they are low profile but if you somehow know them or track their selections, the returns are pretty good.

[touzi]

One of the things I always examine is the list of top shareholders and substantial shareholders. When I see names like Aberdeen, Third Avenue and Fidelity, I tend to get more interested. However if they keep their holding below 5%, I will never know.

[junming82]

Thanks scottleey! You really introduced me to a few value investors that are not popular or prominent and the value might really be in those small cap areas. I personally like Francis Chou and his picks. I will look into those investors that you mentioned as well as the very small names of the popular value investors! Thanks for sharing your knowledge

[scottleey]

Yeokiwi, don't mind my ignorance, but who are the few good investors you are referring to?

Np, junming. Yes I missed him out as well. In fact, I have a position that is coattailed on his idea. He has some concentration on several forest products companies so yeah its one of em. He and Prem Watsa are great digs too. Again only their small positions.

[yeokiwi]

Yeokiwi, don't mind my ignorance, but who are the few good investors you are referring to?

Np, junming. Yes I missed him out as well. In fact, I have a position that is coattailed on his idea. He has some concentration on several forest products companies so yeah its one of em. He and Prem Watsa are great digs too. Again only their small positions.

These are some low/high profile private fund/investors that are active in Singapore/Asia

Morph Investments
Yeo Seng Chong/Yeoman capital management
Teh Hooi Long used to give a long list of undervalued stocks in BT but she is now in Aggregate asset Management
Aberdeen Asset management
Sebastian Chong of shareowl.com
Lighthouse Advisors(for accredited investors, it is probably worth to plonk $$$ in to get into his fund.)

Last but not least, the members of this forum is quite outstanding in stock selection.

[Bibi]

How about Sam Goi and Alan Wang (Ausgroup, Hankore)?