Mohnish Pabrai's Dalal Street: three stocks, two industries and a very simple idea
A tiny portfolio of unloved cyclical companies, managed in the spirit of 'heads I win, tails I don't lose much'. Five quarters of the most concentrated book we cover.
Who he is and why people copy him
Mohnish Pabrai is an engineer who built a technology business, sold it and set up the Pabrai Investment Funds in 1999. He is best known for his book The Dhandho Investor, for his public admiration of Warren Buffett and Charlie Munger, and for openly calling himself a cloner: he says that copying good ideas from great investors is better than inventing new ones.
His filings are a favourite among people who follow value investors, because the portfolio is so small that every holding is visible and every change matters.
The ideas behind the portfolio
Dhandho is a Gujarati word for endeavours that create wealth with minimal risk. Pabrai's version of the idea is 'heads I win, tails I don't lose much': look for businesses where the downside is limited and the upside is large, even when the situation looks uncertain. He argues that risk and uncertainty are different things: a stock can be uncertain and still cheap enough that the risk of permanent loss is low. He likes simple, existing businesses in boring industries, a few big bets instead of many small ones, and waiting for the price.
The result is a portfolio of a handful of positions. He accepts large swings in the short term in return for a very concentrated exposure to his best ideas.
What a Form 13F does and does not show
The filing lists the US-listed shares held at quarter-end. Dalal Street's reported book is small, $0.27 to $0.42 billion, and the picture can be incomplete: shares outside the US, other funds and private positions are not included. So we can say what is in the report, not that this is everything Pabrai owns.
As with every filing, it is up to 45 days old when published, and with so few positions one sale changes the whole shape.
The portfolio over the last five quarters
From June 2025 to June 2026 the reported portfolio changed from $0.27 billion to $0.33 billion, and from five positions to four (three real positions and one token holding). In June 2025 it was divided among Warrior Met Coal (30.4%), Valaris (29.2%), Alpha Metallurgical Resources (19.1%), Noble (16.9%) and AutoNation (4.5%): two producers of steelmaking coal, two offshore drillers and a car dealer.
A year later the three real positions are Warrior Met Coal (43.3%), Transocean (30.5%) and Alpha Metallurgical Resources (26.1%), plus a token position in Kaspi, a Kazakh payments company. The book contains nothing but two industries, steelmaking coal and offshore oil drilling, and the coal producers are 69% of it.
Ten largest positions at the end of the latest quarter (2026-06-30) and the same names at the start of the period (2025-06-30), as a share of the US-listed stocks in the report (4 positions, $0.3 billion in total).
| Position | 2026-06-30 | 2025-06-30 |
|---|---|---|
| Warrior Met Coal | 43.3% | 30.4% |
| Transocean | 30.5% | — |
| Alpha Metallurgical Resources | 26.1% | 19.1% |
| Kaspi KZ JSC | 0.0% | — |
| Ten largest together | 100.0% | 100.0% |
What changed quarter by quarter
In the quarter to September 2025 AutoNation (4.5%) was closed and Transocean opened at 22.6%, while Noble was cut by 14.9 percentage points and Valaris by 13.8. In the quarter to December Noble was closed completely (it was 2.0%) and Valaris was cut again, from 15.4% to 5.8%. In the quarter to March 2026 Valaris was closed, leaving three positions. In the quarter to June 2026 the portfolio value fell from $423 million to $327 million, with the proportions of the three names about unchanged, and a small stake in Kaspi appeared.
Look at what this means: in a year, Pabrai sold both drillers he held, Noble and Valaris, and bought a different one, Transocean, becoming a single bet on the sector. At the same time he kept raising the share of the coal producers.
Changes between consecutive filings. A share is measured as a part of the reported stock portfolio; it can move because of price changes too, so read it together with the text.
| Quarter end | Positions | Opened | Closed | Biggest rise in share | Biggest fall in share |
|---|---|---|---|---|---|
| 2025-09-30 | 5 → 5 | Transocean (22.6%) | AutoNation (4.5%) | Alpha Metallurgical Resources (+6.9 pp) | Noble (−14.9 pp) |
| 2025-12-31 | 5 → 4 | — | Noble (2.0%) | Warrior Met Coal (+5.5 pp) | Valaris (−9.7 pp) |
| 2026-03-31 | 4 → 3 | — | Valaris (5.8%) | Transocean (+4.2 pp) | Warrior Met Coal (+0.4 pp) |
| 2026-06-30 | 3 → 4 | Kaspi KZ JSC (0.0%) | — | Warrior Met Coal (+3.4 pp) | Alpha Metallurgical Resources (−2.0 pp) |
What to take away, and what to doubt
The lesson is an extreme version of concentration: three positions, and the largest more than 40%. If the idea is right, the result is spectacular; if it is wrong, the loss is large. The reported value fell by about 23% in the last quarter, which shows how this feels. The method also asks for a rare strength: to hold a cyclical stock while its industry is out of favour.
The doubts are plain. It is a portfolio of commodity-linked, cyclical companies, whose profits depend on prices set by the world market, and it is a small sample of a few names. We also know little about what is not in the report. For most people, copying a three-stock book is simply a very large risk.
Where it meets our bots
Our reference bot, a one-time purchase of the whole US market, is the opposite of this approach: it holds about five hundred companies and makes no judgement on any of them. The nearest thing to Pabrai's cyclical focus is our commodity trend bot, which holds a basket of commodity funds only while their prices are above their long-term average, a rule instead of an opinion about a single company.
Both accounts are virtual and public. The guides below explain the rules.
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