This report covers Pabrai Wagons Fund's first quarter (Oct-Dec 2023) holdings and performance. The fund rose about 7.7%, lagging the S&P 500's 11.68%. The manager is optimistic about the portfolio's long-term prospects and aims to hold stocks for a long time. Key holdings: Coca-Cola Icecek AS (Turkish beverage company, 10% of portfolio), Consol Energy Inc (US coal company, 9.2%), and Microsoft Corp (3.3%, which the manager hopes to hold long-term). The fund is tiny, with only $1.4 million in assets.
Pabrai holds an optimistic stance on the portfolio's long-term prospects but acknowledges underperforming the S&P 500 in the first quarter.
In its inaugural quarter (October–December 2023), the fund posted positive returns but underperformed the S&P 500 over the same period. WAGNX rose 7.71%, and WGNIX rose 7.78%, while the S&P 500 gained 11.68% over the same period. The author notes that both are unlikely to sustain such growth rates—the S&P 500 has delivered an annualized return of 11.2% (including dividend reinvestment) over the past 50 years. As of January 12, 2024, since inception on September 29, 2023, WAGNX has accumulated a gain of 7.31%, WGNIX 7.40%, and the S&P 500 11.76%. The fund’s mission is to outperform the S&P 500 over the long term.
As of December 31, 2023, the fund held 20 stocks, with the top three positions all in Turkish and U.S. names. The top ten holdings are as follows:
| Rank | Name | Country | % of Net Assets |
|---|---|---|---|
| 1 | Coca-Cola Icecek AS | Turkey | 10.0% |
| 2 | Anadolu Efes Biracilik Ve Malt Sanayii AS | Turkey | 9.7% |
| 3 | Consol Energy Inc | United States | 9.2% |
| 4 | Alpha Metallurgical Resources Inc | United States | 8.5% |
| 5 | TAV Havalimanlari Holding AS | Turkey | 7.7% |
| 6 | Warrior Met Coal Inc | United States | 4.4% |
| 7 | Arch Resources Inc | United States | 4.1% |
| 8 | Microsoft Corp | United States | 3.3% |
| 9 | Constellation Software Inc | Canada | 3.3% |
| 10 | Spirit Airlines Inc | United States | 3.3% |
Other holdings include Brookfield Corp (Canada, 3.3%), Brembo SpA (Italy, 3.3%), Asbury Automotive Group Inc (United States, 3.3%), Amazon.com Inc (United States, 3.2%), AutoNation Inc (United States, 3.2%), First Citizens BancShares Inc/NC (United States, 3.2%), PayPal Holdings Inc (United States, 3.2%), Topicus.com Inc (Netherlands, 3.2%), Tiny Ltd (Canada, 3.1%), eBay Inc (United States, 0.8%), and 6.8% in cash.
The four core holdings account for 76% of the portfolio:
1. Turkish Core Assets: Coca-Cola Icecek (a global Coca-Cola bottler operating in 11 countries), Anadolu Efes (Turkey’s largest beer brand), and TAV Havalimanlari (a Turkish airport operator managing airports in 8 countries).
2. U.S. Coal: Including both thermal and metallurgical coal names such as Consol Energy, Alpha Metallurgical Resources, Warrior Met Coal, and Arch Resources.
The fund invests in durable growth companies with strong reinvestment engines and high-integrity management, purchasing them at significant discounts to intrinsic value. The author states: "We seek businesses that we would be comfortable owning for a very long time. And we want to acquire these businesses when they are being offered at meaningful discounts to their underlying intrinsic value." In other words: "We look for businesses we would be happy to hold for a very long time, and we want to buy them when they are offered at meaningful discounts to their underlying intrinsic value." Additionally, the fund may participate in special situations such as merger arbitrage, provided the probability of success is clearly favorable.
The North American/European technology sector (including Microsoft, Amazon, Constellation Software, Topicus, and Tiny) collectively accounts for 12.9% of the portfolio, making it the fourth-largest industry allocation. This sector is not a market outcast; unlike the three "neglected" sectors—Turkey, coal, and auto dealerships—Pabrai chooses to allocate here to high-quality franchise businesses and explicitly states a desire for long-term holding.
Holdings Details (as of December 31, 2023):
| Holding | Market Value (USD) | Portfolio Weight | Notes |
|---|---|---|---|
| Constellation Software Inc. (Canada) | 91,741 | ~3.3% | Includes 2,484+36 shares, non-income security |
| Microsoft Corp. (USA) | 92,130 | ~3.3% | Non-income security |
| Topicus.com, Inc. (Netherlands) | 88,832 | ~3.2% | Includes 336+1,314 shares, non-income security |
| Tiny Ltd. (Canada) | 85,368 | ~3.1% | Non-income security |
| Amazon.com, Inc. (USA) | 91,012 | ~3.3% | Classified under Broadline Retail, non-income security |
Pabrai emphasized in the manager's letter that the fund's investment philosophy is rooted in the idea that "outstanding investment performance usually comes from a few great investments held for a long time"; the key is not only to find these investments but also not to sell them. The author's original words: "I hope we are smart enough to hold on to the businesses in our portfolio today for a very long time." This directly echoes the holding logic for the Canadian software cluster in the technology sector, including Constellation Software, Topicus, and Tiny—these businesses possess powerful reinvestment engines and high-integrity management, making them core holdings worth "circling the wagons" in Pabrai's view.
Note: The original text does not separately disclose the sector's interval performance contribution or specific buy/sell actions, only presenting the holding structure. Although Amazon is technology-related, it is classified under the Broadline Retail industry.
As of December 31, 2023, the Pabrai Wagons Fund had net assets of only $1.4 million, with a total return of 7.94% since its inception on September 29, 2023. The fund is a non-diversified series under the Professionally Managed Portfolios trust, offering both retail and institutional share classes, with an investment objective of long-term capital appreciation.
Performance and Fees:
| Metric | Value |
|---|---|
| Period Total Return | 7.94% (not annualized) |
| Ending Net Assets | $1,400,000 |
| Portfolio Turnover Rate | 34% (not annualized) |
| Expense Ratio (before waivers) | 1.23% (annualized) |
| Expense Ratio (after waivers) | 32.14% (annualized) |
| Net Investment Income Rate | 0.35% (annualized) |
Portfolio Valuation Hierarchy: All investments ($2,731,027) are classified as Level 1 (active market quotes), with no Level 2 or Level 3 assets. The largest industry exposures are Beverages ($553,717), Metals & Mining ($478,311), Software ($358,071), Oil, Gas & Consumable Fuels ($259,569), and Transportation Infrastructure ($216,917).
The Pabrai Wagons Fund's annual management fee is 0.90% of average daily net assets, and the advisor has voluntarily capped the total expense ratio at 1.14%. This cap is in effect indefinitely but may be terminated by the board with 60 days' written notice. The advisor has the right to recoup previously waived fees within the following three years, provided that the fund's actual operating expenses after recoupment do not exceed the applicable expense cap at that time.
The fund has elected to be taxed as a "regulated investment company" and is not required to accrue federal income taxes. To avoid an excise tax, the fund must distribute at least 98.0% of net investment income and at least 98.2% of realized capital gains in each calendar year. As of December 31, 2023, the fund had no tax positions that did not meet the "more likely than not" standard, and its primary tax jurisdictions are the U.S. federal and Massachusetts state levels.
The fund's NAV per share is calculated as (market value of securities + cash + other assets - liabilities) / shares outstanding, with a redemption fee of 1.00% for holdings under 90 days. This fee is credited to paid-in capital and participates in daily NAV calculations. The fund is priced only on days when the New York Stock Exchange is open for trading.
The fund has implemented a liquidity risk management program, limiting illiquid assets to no more than 15% of net assets. An illiquid investment is defined as an asset that cannot be sold or disposed of within 7 calendar days under current market conditions without significantly changing the market price.
The fund is evaluating the financial impact of FASB Update 2022-03 (fair value measurement of equity securities with contractual sale restrictions) and the SEC's new streamlined shareholder reporting rules. The new rules require funds to provide concise and visually friendly shareholder reports, with in-depth information available online, subject to an 18-month transition period (starting January 24, 2023).
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Coca-Cola Icecek AS | Hold & Watch | Core Turkish asset, global Coca-Cola bottler, 10% of portfolio | 10.0% of net assets |
| Anadolu Efes Biracilik Ve Malt Sanayii AS | Hold & Watch | Largest beer brand in Turkey, 9.7% of portfolio | 9.7% of net assets |
| Consol Energy Inc | Hold & Watch | Core U.S. coal holding, thermal coal name | 9.2% of net assets |
| Alpha Metallurgical Resources Inc | Hold & Watch | Core U.S. metallurgical coal holding | 8.5% of net assets |
| TAV Havalimanlari Holding AS | Hold & Watch | Turkish airport operator, operates in 8 countries | 7.7% of net assets |
| Warrior Met Coal Inc | Hold & Watch | U.S. metallurgical coal name | 4.4% of net assets |
| Arch Resources Inc | Hold & Watch | U.S. coal name | 4.1% of net assets |
| Microsoft Corp | Hold & Watch | Core tech holding, long-term hold preferred | 3.3% of net assets |
| Constellation Software Inc | Hold & Watch | Core Canadian software cluster, strong reinvestment engine | 3.3% of net assets |
| Spirit Airlines Inc | Hold & Watch | U.S. airline name | 3.3% of net assets |
| Brookfield Corp | Hold & Watch | Canadian conglomerate | 3.3% of net assets |
| Brembo SpA | Hold & Watch | Italian auto parts | 3.3% of net assets |
| Asbury Automotive Group Inc | Hold & Watch | U.S. auto dealer | 3.3% of net assets |
| Amazon.com Inc | Hold & Watch | Tech/retail leader, long-term hold preferred | 3.2% of net assets |
| AutoNation Inc | Hold & Watch | U.S. auto dealer | 3.2% of net assets |
| First Citizens BancShares Inc/NC | Hold & Watch | U.S. bank | 3.2% of net assets |
| PayPal Holdings Inc | Hold & Watch | U.S. fintech | 3.2% of net assets |
| Topicus.com Inc | Hold & Watch | Dutch software company, part of Canadian software cluster | 3.2% of net assets |
| Tiny Ltd | Hold & Watch | Canadian software company, has reinvestment engine | 3.1% of net assets |
| eBay Inc | Hold & Watch | U.S. e-commerce platform, smallest position | 0.8% of net assets |