This report covers the Pabrai Wagons Fund's performance for the second half of 2024. The fund lost about 4% but saw net inflows of $16.5 million. Its portfolio is 29.7% in Turkey and 51.4% in the US, with a slight overall loss of 0.9%. The top holdings are TAV Havalimanlari (a Turkish airport operator, 15.8%) and Edelweiss Financial Services (an Indian financial firm, 15.0%), both non-income producing (no dividends). Other notable positions include US coal stocks (Alpha Metallurgical, Warrior Met Coal) and auto dealers (Asbury Automotive, AutoNation), many also non-income. The fund uses no leverage.
One-sentence summary: Pabrai Wagons Fund saw a significant surge in net subscriptions in the second half of 2024 but posted a loss, with the overall portfolio showing an unrealized loss of approximately 0.9%. Heavily weighted in Turkey and the US, its largest holdings—TAV Havalimanlari and Edelweiss Financial Services—generate no income. 【Cautious】
As of December 31, 2024, the Pabrai Wagons Fund had total net assets of $46,535,631, with an equity allocation of 86.1% and cash and money market funds at 13.3%. By country, the US accounted for 51.4% ($23,873,010), Turkey accounted for 29.7% ($13,861,156), India 15.0% ($6,987,424), Greece 2.4% ($1,120,980), and Mongolia 2.0% ($912,571). The total cost of the portfolio was $47,186,594, with a market value of $46,755,141, representing a slight unrealized loss of approximately 0.9%.
The largest single holding is India's Edelweiss Financial Services (15.0%), followed by Turkish airport operator TAV Havalimanlari (15.8%). The top ten holdings by industry are as follows:
| Security | Industry | Country | Market Value (USD) | % of Net Assets |
|---|---|---|---|---|
| TAV Havalimanlari Holding | Transportation Infrastructure | Turkey | 7,363,971 | 15.8% |
| Edelweiss Financial Services Ltd. | Capital Markets | India | 6,987,424 | 15.0% |
| Alpha Metallurgical Resources, Inc. | Metals & Mining | USA | 3,137,882 | 6.7% |
| Warrior Met Coal, Inc. | Metals & Mining | USA | 3,135,072 | 6.7% |
| Anadolu Efes Biracilik | Beverages | Turkey | 1,545,379 | 3.3% |
| Coca-Cola Icecek | Beverages | Turkey | 1,821,711 | 3.9% |
| PulteGroup, Inc. | Homebuilding | USA | 1,885,059 | 4.1% |
| Toll Brothers, Inc. | Homebuilding | USA | 1,886,731 | 4.1% |
| Asbury Automotive Group, Inc. | Specialty Retail | USA | 1,881,052 | 4.0% |
| AutoNation, Inc. | Specialty Retail | USA | 1,858,050 | 4.0% |
US holdings are diversified across four sectors: Metals & Mining (13.5%), Specialty Retail (12.1%), Homebuilding (8.1%), and Oil & Gas (4.3%). Metals & Mining is the largest US sector, comprised of two coal companies, Alpha Metallurgical Resources and Warrior Met Coal, totaling $6,272,954. The Specialty Retail sector includes three auto dealers (Asbury Automotive, AutoNation, Group 1 Automotive), each valued at approximately $1,860,000, for a total of $5,606,258. The Homebuilding sector, consisting of PulteGroup and Toll Brothers, totals $3,771,790. The Oil & Gas sector holds only Occidental Petroleum, with a market value of $1,976,400.
Turkish holdings are highly concentrated in TAV Havalimanlari (15.8%), followed by beverage stocks (7.2%) and an industrial conglomerate (3.3%). Turkish beverage stocks Anadolu Efes ($1,545,379) and Coca-Cola Icecek ($1,821,711) total $3,367,090. Anadolu Grubu Holding has a market value of $1,548,659. Additionally, Turkey includes logistics stock Reysas Tasimacilik ($1,132,108, 2.4%) and REIT Reysas Gayrimenkul ($449,328, 1.0%).
Greek shipping company Danaos Corp. has a market value of $1,120,980 (2.4%), and Mongolian mining company Mongolian Mining Corp. has a market value of $912,571 (2.0%). The fund also holds Spirit Airlines convertible bonds with a face value of $150,000 and a market value of only $48,750 (0.1%), with a note indicating the issuer is currently in default. Cash and money market funds total $6,196,858 (13.3%), with an annualized yield of 4.40%.
The total portfolio cost is $47,186,594, with a market value of $46,755,141, representing an overall unrealized loss of approximately 0.9%. Notes indicate that TAV Havalimanlari, Alpha Metallurgical Resources, Asbury Automotive, AutoNation, Reysas Tasimacilik, Mongolian Mining, and Reysas Gayrimenkul are all non-income producing securities. The issuer of the Spirit Airlines convertible bond is currently in default.
In the six months ended December 31, 2024, the net assets of the Pabrai Wagons Fund increased from $32.35 million to $46.54 million, but both share classes posted negative returns. Net capital transactions added $16.50 million (compared to $29.83 million in the prior period), with net subscriptions of 633,000 shares for the Institutional Class and 686,000 shares for the Retail Class. Regarding redemptions, the Institutional Class saw 53,000 shares redeemed, and the Retail Class saw 153,000 shares redeemed.
Performance Comparison: The Institutional Class ended the period with a NAV of $11.84, posting a total return of -3.88% (prior period: +24.86%); the Retail Class ended with a NAV of $11.81, posting a total return of -4.05% (prior period: +24.64%). Both share classes moved from net investment income to a loss or minimal profit: the Institutional Class had net investment income of $0.00 per share (prior period: $0.06), and the Retail Class had a net investment loss of -$0.02 per share (prior period: +$0.04).
| Metric | Institutional (Current) | Institutional (Prior) | Retail (Current) | Retail (Prior) |
|---|---|---|---|---|
| Ending NAV | $11.84 | $12.47 | $11.81 | $12.45 |
| Total Return | -3.88% | 24.86% | -4.05% | 24.64% |
| Net Investment Income/Share | $0.00 | $0.06 | -$0.02 | $0.04 |
| Ending Net Assets (thousands USD) | $24,591 | $18,002 | $21,944 | $14,352 |
| Expense Ratio (After Reimbursement) | 1.00% | 1.01% | 1.25% | 1.26% |
| Portfolio Turnover Rate | 57.06% | 45.34% | 57.06% | 45.34% |
After expense reimbursements, the annualized expense ratio for the Institutional Class decreased from 1.01% to 1.00%, and for the Retail Class from 1.26% to 1.25%. The expense ratios before reimbursements narrowed substantially: the Institutional Class fell from 4.22% to 1.60%, and the Retail Class from 4.74% to 1.85%, reflecting the dilution of fixed costs as the fund's size increased. The portfolio turnover rate rose from 45.34% to 57.06%, indicating increased trading activity during the period. The fund was established on September 29, 2023, as a non-diversified, open-end management investment company with an investment objective of long-term capital appreciation.
As of December 31, 2024, the fund's holdings consisted of $25,394,568 in Level 1 assets and $21,360,573 in Level 2 assets, with no Level 3 assets. Common stocks were distributed across both Level 1 ($18,748,382) and Level 2 ($21,311,823). Convertible bonds were entirely classified as Level 2 ($48,750), while REITs and money market funds were all Level 1.
Valuation Method Comparison:
| Asset Class | Primary Valuation Method | Level |
|---|---|---|
| Exchange-Listed Equity Securities (incl. REITs, BDCs, MLPs) | Last sale price or official closing price; bid-ask midpoint when no trade occurs | Level 1 |
| Over-the-Counter Equity Securities | Last sale price; closing bid-ask midpoint when no trade occurs | Level 2 |
| Debt Securities | Evaluated bid prices from independent pricing services (incl. matrix pricing, comparable bond yields, maturity, ratings, etc.) | Level 2 |
| Exchange-Traded Options | Composite price from National Best Bid and Offer (NBBO) | Level 1 |
| Money Market Funds | Method not specified, classified as Level 1 | Level 1 |
The fund has elected to be taxed as a "Regulated Investment Company" (RIC) and plans to distribute substantially all of its taxable income to avoid federal income and excise taxes. As of December 31, 2024, the fund had no deferred post-October losses or capital loss carryforwards, nor any tax positions that did not meet the "more likely than not" standard.
The fund does not separate the effect of foreign currency exchange rate changes on investments from market price fluctuations. All realized/unrealized gains and losses related to foreign currency are included in the net realized and unrealized gains and losses on investments. Foreign currency differences on dividends, interest, and withholding taxes are also combined.
The fund typically declares and pays distributions of net investment income and realized capital gains once annually. REIT dividends may include ordinary income, capital gains, and return of capital. Premiums and discounts on debt securities are amortized/accreted using the effective interest method.
As of June 30, 2024, the fund's investment cost was approximately $30.10 million, with total gross unrealized appreciation of approximately $2.23 million. The specific tax cost and unrealized gains/losses are as follows:
| Item | Amount (USD) |
|---|---|
| Cost of Investments | 30,095,774 |
| Gross Unrealized Appreciation | 3,567,623 |
| Gross Unrealized Depreciation | (1,344,438) |
| Net Unrealized Appreciation | 2,223,185 |
| Undistributed Ordinary Income | 37,140 |
| Undistributed Long-Term Capital Gains | 260,884 |
| Total Distributable Earnings | 298,024 |
| Total Distributable (Accumulated) Earnings | 2,521,209 |
The fund has a $2 million line of credit, but it was unused as of December 31, 2024. The maximum daily borrowing, average daily borrowing balance, and ending borrowing balance during the reporting period were all zero, indicating the fund did not use any leverage.
On August 17, 2023, the Board of Trustees, consisting of five independent trustees, reviewed and approved the investment advisory agreement with Dhandho Funds LLC. The Board determined that the advisor possesses adequate personnel, resources, investment processes, and compliance systems. Key considerations included:
The Board ultimately concluded that the advisory arrangement (including the fee rate) was fair and reasonable and that the renewal of the agreement was in the best interests of the fund and its shareholders.
There were no accounting changes or disagreements during the reporting period, and no shareholder voting matters. The fund's proxy voting policies and quarterly portfolio holdings information are available on its website (www.wagonsfund.com) or the SEC's website.
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| TAV Havalimanlari Holding | Hold & Watch | Largest Turkish holding, but a non-income generating security | Market cap $7.36M, 15.8% of net assets |
| Edelweiss Financial Services Ltd. | Hold & Watch | Largest Indian holding, but a non-income generating security | Market cap $6.99M, 15.0% of net assets |
| Alpha Metallurgical Resources, Inc. | Hold & Watch | US coal stock, non-income generating | Market cap $3.14M, 6.7% of net assets |
| Warrior Met Coal, Inc. | Hold & Watch | US coal stock | Market cap $3.14M, 6.7% of net assets |
| Anadolu Efes Biracilik | Hold & Watch | Turkish beverage stock | Market cap $1.55M, 3.3% of net assets |
| Coca-Cola Icecek | Hold & Watch | Turkish beverage stock | Market cap $1.82M, 3.9% of net assets |
| PulteGroup, Inc. | Hold & Watch | US homebuilding stock | Market cap $1.89M, 4.1% of net assets |
| Toll Brothers, Inc. | Hold & Watch | US homebuilding stock | Market cap $1.89M, 4.1% of net assets |
| Asbury Automotive Group, Inc. | Hold & Watch | US auto dealer, non-income generating | Market cap $1.88M, 4.0% of net assets |
| AutoNation, Inc. | Hold & Watch | US auto dealer, non-income generating | Market cap $1.86M, 4.0% of net assets |
| Occidental Petroleum | Hold & Watch | US oil & gas stock | Market cap $1.98M, 4.3% of net assets |
| Danaos Corp. | Hold & Watch | Greek shipping company | Market cap $1.12M, 2.4% of net assets |
| Mongolian Mining Corp. | Hold & Watch | Mongolian mining company, non-income generating | Market cap $0.91M, 2.0% of net assets |
| Spirit Airlines Convertible Bonds | Hold & Watch | Issuer in default, market value significantly reduced | Face value $0.15M, market value $49K, 0.1% of net assets |