This is Pabrai Wagons Fund's report for the second half of 2025: it returned over 15%, reversing a loss from the same period last year, and later converted to an ETF. The fund seems optimistic given the strong rebound. Key holdings include Edelweiss Financial Services (India, 16.9% of assets), Warrior Met Coal (US coal, 14.4%), and TAV Havalimanlari (Turkish airport operator, 13.4%). These are just portfolio weights, not buy/sell actions.
One-sentence summary: Pabrai holds an [optimistic] stance on the market, with the fund posting a half-year return exceeding 15%, a sharp turnaround from the loss in the same period last year, and completing the conversion to an ETF.
As of December 31, 2025, the Pabrai Wagons Fund had net assets of approximately $103.5 million, with 94.1% invested in common stocks. The top three sectors (Metals & Mining, Capital Markets, Energy Equipment & Services) accounted for a combined 52.0%. The fund's portfolio is highly concentrated, consisting of only 13 individual holdings (including one REIT).
Portfolio Structure Overview:
| Asset Class | Market Value (USD) | % of Net Assets |
|---|---|---|
| Common Stocks | 97,324,173 | 94.1% |
| Real Estate Investment Trusts (REITs) | 4,802,534 | 4.6% |
| Money Market Funds | 1,498,431 | 1.4% |
| Other Assets/Liabilities, Net | (129,647) | (0.1%) |
| Total | 103,495,491 | 100.0% |
Top Ten Holdings (by Sector/Geography):
| Sector | Geography | Holding | Market Value (USD) | % of Net Assets |
|---|---|---|---|---|
| Capital Markets | India | Edelweiss Financial Services Ltd. | 17,529,260 | 16.9% |
| Metals & Mining | USA | Warrior Met Coal, Inc. | 14,927,181 | 14.4% |
| Transportation Infrastructure | Turkey | TAV Havalimanlari Holding AS | 13,873,441 | 13.4% |
| Metals & Mining | USA | Alpha Metallurgical Resources, Inc. | 6,090,344 | 5.9% |
| Energy Equipment & Services | USA | Valaris Ltd. | 4,757,760 | 4.6% |
| Industrial REITs | Turkey | Reysas Gayrimenkul Yatirim Ortakligi AS | 4,802,534 | 4.6% |
| Metals & Mining | Mongolia | Mongolian Mining Corp. | 4,549,077 | 4.4% |
| Air Freight & Logistics | Turkey | Reysas Tasimacilik ve Lojistik Ticaret AS | 4,198,604 | 4.1% |
| Household Durables | USA | PulteGroup, Inc. | 4,127,552 | 4.0% |
| Specialty Retail | USA | AutoNation, Inc. | 4,119,276 | 4.0% |
The fund's holdings are highly concentrated in three countries, accounting for a combined 89.0%. The USA is the largest single market (42.3%), with primary allocations to coal (Warrior Met Coal, Alpha Metallurgical), homebuilding (PulteGroup, Toll Brothers), and energy services (Valaris, Noble Corp). Turkey is the second-largest market (29.8%), covering transportation infrastructure (TAV Havalimanlari), logistics (Reysas Tasimacilik), retail (Gimat Magazacilik), and food & beverage (TAB Gida). India holds only one holding, Edelweiss Financial Services, which accounts for 16.9%.
Geographic Distribution Breakdown:
| Country/Region | Market Value (USD) | % of Net Assets |
|---|---|---|
| USA | 43,806,135 | 42.3% |
| Turkey | 30,814,142 | 29.8% |
| India | 17,529,260 | 16.9% |
| Switzerland | 4,873,400 | 4.7% |
| Mongolia | 4,549,077 | 4.4% |
| Greece | 2,053,124 | 2.0% |
| Other Liabilities, Net | (129,647) | (0.1%) |
| Total | 103,495,491 | 100.0% |
Metals & Mining is the fund's largest sector exposure (24.7%), with US coal stocks comprising 20.3% and Mongolian coal stocks 4.4%. This sector consists of three holdings: Warrior Met Coal (14.4%) is the largest position, followed by Alpha Metallurgical Resources (5.9%), with Mongolian Mining Corp. (4.4%) as a supplement. All three stocks are non-income producing securities, indicating the fund prioritizes capital appreciation over dividend income.
Top Five Sector Distribution:
| Sector | Market Value (USD) | % of Net Assets |
|---|---|---|
| Metals & Mining | 25,566,602 | 24.7% |
| Capital Markets | 17,529,260 | 16.9% |
| Transportation Infrastructure | 13,873,441 | 13.4% |
| Energy Equipment & Services | 10,721,224 | 10.4% |
| Household Durables | 8,184,152 | 7.9% |
The fund's total investment cost is $95,071,546, with a portfolio market value of $103,625,138, resulting in an overall unrealized gain of approximately $8.55 million (approx. 9.0%). Common stock cost is $89,373,859 with a market value of $97,324,173, yielding an unrealized gain of approximately $7.95 million; REIT cost is $4,199,256 with a market value of $4,802,534, yielding an unrealized gain of approximately $0.6 million. The money market fund cost equals its market value ($1,498,431). The fund's net assets are $103,495,491, slightly lower than the total portfolio market value due to approximately $0.13 million in other net liabilities.
As of December 31, 2025, the Pabrai Wagons Fund had net assets of $103,495,491, comprising paid-in capital of $95,287,098 and accumulated distributable earnings of $8,208,393. The fund has two share classes: Institutional Class with net assets of $46,986,540, 3,844,768 shares outstanding, and a net asset value (NAV) per share of $12.22; Retail Class with net assets of $56,508,951, 4,650,486 shares outstanding, and a NAV per share of $12.15.
During the reporting period, the fund incurred a net investment loss of $121,500, primarily due to total expenses of $720,876 (including investment advisory fees of $416,389), which, after advisor reimbursements of $196,040, resulted in net expenses of $524,836, against dividend income of only $403,336. However, realized and unrealized gains totaled $12,483,178, with unrealized appreciation of $11,593,116 (mainly from investment appreciation of $11,408,707), driving a net increase from operations of $12,361,678.
During the reporting period, the fund had a net capital inflow of approximately $12.6 million, detailed as follows:
| Class | Sales | Reinvested Dividends | Redemptions | Redemption Fees | Net |
|---|---|---|---|---|---|
| Institutional Class | 9,019,483 | 293,754 | (6,585,903) | 6,832 | 2,734,166 |
| Retail Class | 15,868,415 | 350,263 | (6,114,017) | 7,976 | 10,112,637 |
| Total | 24,887,898 | 644,017 | (12,699,920) | 14,808 | 12,846,803 |
During the same period, $647,228 was distributed to shareholders (Institutional Class $293,754, Retail Class $353,474).
As of December 31, 2025 (unaudited), the Pabrai Wagons Fund's net assets increased from $78,934,238 at the beginning of the period to $103,495,491, an increase of approximately 31%. Net capital transactions added $12,846,803, resulting in a total net asset increase of $24,561,253. Both share classes experienced net subscriptions: Institutional Class issued a net of 229,692 shares (sold 770,837, redeemed 565,604), and Retail Class issued a net of 867,865 shares (sold 1,365,063, redeemed 526,533), with total shares outstanding increasing by 1,097,557.
The Institutional Class total return for the second half of 2025 (through December 31) was 15.07%, significantly outperforming the -13.29% return for the same period in 2024. The NAV per share rose from $10.69 at the start of the period to $12.22, with a net investment loss of $0.01 per share offset by net realized and unrealized gains of $1.62 per share. The expense ratio (after reimbursements) remained at 1.00%, and the portfolio turnover rate decreased sharply from 69% in the prior-year period to 21%.
| Metric | H2 2025 | H2 2024 | Sept 29, 2023 - June 30, 2024 |
|---|---|---|---|
| Total Return | 15.07% | -13.29% | 24.86% |
| End of Period Net Assets (thousands USD) | $46,987 | $38,662 | $18,002 |
| Expense Ratio (after reimbursements) | 1.00% | 1.00% | 1.01% |
| Portfolio Turnover Rate | 21% | 69% | 45% |
The Retail Class total return for the same period was 14.84%, slightly lower than the Institutional Class, but also significantly reversed the -13.47% loss from the prior-year period. The NAV per share rose from $10.65 to $12.15. The expense ratio (after reimbursements) was 1.25%, higher than the Institutional Class's 1.00%. The Retail Class ended the period with net assets of $56,509 thousand, exceeding the Institutional Class's $46,987 thousand, bringing total fund net assets to $103,495 thousand.
| Metric | H2 2025 | H2 2024 | Sept 29, 2023 - June 30, 2024 |
|---|---|---|---|
| Total Return | 14.84% | -13.47% | 24.64% |
| End of Period Net Assets (thousands USD) | $56,509 | $40,272 | $14,352 |
| Expense Ratio (after reimbursements) | 1.25% | 1.25% | 1.26% |
| Portfolio Turnover Rate | 21% | 69% | 45% |
The Pabrai Wagons Fund commenced operations on September 29, 2023, and is registered as a non-diversified, open-end management investment company under the 1940 Act. The fund offers two share classes, Institutional Class and Retail Class, both of which began operations on the same date. Both classes have equal rights to earnings and assets, but the Retail Class bears distribution fees and its respective service fees. The fund's investment objective is long-term capital appreciation.
All equity securities (including REITs, BDCs, MLPs) traded on US or foreign national securities exchanges are valued at the last reported sale price or official closing price on the primary exchange. If no trade occurs on a given day, the midpoint between the most recent quoted bid and ask prices is used. Securities not traded on an exchange are valued at the last sale price on the over-the-counter market; if no trade occurs that day, the midpoint of the most recent closing bid and ask prices is used.
As of December 31, 2025, all fund holdings were classified as Level 1 or Level 2, with no Level 3 assets. Debt securities are valued by independent pricing services using evaluated mean prices, potentially employing matrix pricing, analytical models, and market transaction data; exchange-traded options are valued using the composite price from the NBBO (National Best Bid and Offer). For securities without active market quotations, fair value is determined by the Valuation Designee (Dhandho Funds LLC) appointed by the Board of Trustees, following established procedures. This process involves subjectivity, and different funds might arrive at different values.
Fair Value Hierarchy Distribution Table (as of December 31, 2025):
| Asset Class | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Common Stocks | $49,234,228 | $48,089,945 | $— | $97,324,173 |
| Real Estate Investment Trusts (REITs) | $4,802,534 | $— | $— | $4,802,534 |
| Money Market Funds | $1,498,431 | $— | $— | $1,498,431 |
| Total Investments | $55,535,193 | $48,089,945 | $— | $103,625,138 |
The fund has elected to be taxed as a "Regulated Investment Company" (RIC) and is not required to accrue for federal income taxes. To avoid excise taxes, the fund plans to distribute annually at least 98.0% of its net investment income and at least 98.2% of its realized capital gains. As of June 30, 2025, the fund had no year-end loss carryforwards; as of December 31, 2025, there were no unrecognized tax positions. Securities transactions are recorded on the trade date, and gains/losses are determined using the specific identification method; REIT dividends may include ordinary income, capital gains, and return of capital.
In early 2026, the fund completed two conversions, from Retail shares to Institutional shares and then to the Pabrai Wagons ETF, with conversion ratios of 1.191:1 and 1:1, respectively. The management fee remains at an annualized 0.90%, with an Expense Cap of 0.90%. This cap is in effect indefinitely but can be terminated at any time. As of December 31, 2025, the cumulative amount of fee reductions recoverable by the advisor was $761,103, expiring in three tranches: June 30, 2027 ($269,171), June 30, 2028 ($295,892), and December 31, 2029 ($196,040).
Performance Comparison: During the six months ended December 31, 2025, the fund purchased securities costing $30,581,904 and received $18,668,835 from sales or maturities, with no transactions in long-term US government securities. No dividends or capital gains were distributed to shareholders during the period (the prior fiscal year distributed $531,520 of ordinary income).
Position Moves: This section did not detail specific changes in individual holdings, only disclosing aggregate trading volumes.
Liquidity Management: The fund has adopted a liquidity risk management program approved by the Board, requiring illiquid assets not to exceed 15% of net assets. Illiquid assets are defined as those that cannot be sold within seven calendar days without significantly changing market value.
Accounting and Taxation: The fund operates as a single operating segment, with Mohnish Pabrai serving as the Chief Operating Decision Maker. Management has determined that two new accounting standards, ASU 2023-07 and ASU 2023-09, have no material impact on the fund. As of the most recent fiscal year end (June 30, 2025), the federal income tax cost basis of the fund's investments was not specifically disclosed.
As of December 31, 2025, the Pabrai Wagons Fund had an investment cost of approximately $84.61 million, accumulated unrealized tax losses of approximately $5.6 million, and had not drawn on any credit facility.
Tax and Earnings/Loss Overview:
| Item | Amount (USD) |
|---|---|
| Cost of Investments | 84,614,638 |
| Unrealized Tax Appreciation | 3,062,687 |
| Unrealized Tax Depreciation | (8,666,917) |
| Net Unrealized Tax Appreciation/(Depreciation) | (5,604,230) |
| Undistributed Ordinary Income | 2,437,353 |
| Undistributed Long-Term Capital Gains | — |
| Total Distributable Earnings | 2,437,353 |
| Other Accumulated Earnings (Losses) | (339,180) |
| Total Distributable (Accumulated) Earnings (Losses) | (3,506,057) |
Credit Facility Usage:
The fund has a credit agreement with U.S. Bank N.A. for up to $10 million, intended for temporary or special purposes only. As of December 31, 2025, this credit facility had never been used — the maximum daily balance, average daily balance, ending balance, and average interest rate were all zero, and no interest expense was incurred during the period.
Investment Advisory Agreement Renewal (Unaudited):
On August 13-14, 2025, the Board of Trustees (all five members are independent trustees) reviewed and approved the renewal of the investment advisory agreement between the Pabrai Wagons Fund and Dhandho Funds, LLC for an additional year. The Board made this decision based on material information received during meetings on June 18, 2025, and August 2025, concerning the fund, the advisor, and its services, as well as data provided throughout the year.
For the one-year period ended March 31, 2025, the fund underperformed the Morningstar category average, the peer group (Cohort) average selected by the independent advisor, and the broad market benchmark. The board reviewed both absolute and relative returns, with a greater emphasis on long-term performance. In evaluating relative performance, the board considered differences between the fund and the benchmark in investment objectives, strategies, risk tolerance, and portfolio construction, noting that some underperformance may be temporary while others could reflect deeper issues. The board also noted that the advisor has no other similar managed accounts available for comparison.
Performance Comparison:
| Comparison Object | Period | Fund Performance |
|---|---|---|
| Morningstar category average | One-year | Underperformed |
| Peer group (Cohort) average selected by independent advisor | One-year | Underperformed |
| Broad market benchmark | One-year | Underperformed |
(Note: The original text did not disclose specific return figures, only qualitative conclusions.)
The board has determined that the fees paid by the fund to the investment adviser are fair and reasonable. The key basis includes: the adviser has contractually agreed to cap the fund's annualized expense ratio at 0.90% (the "expense cap"), and the fund's current actual operating expenses are already below this cap. Compared to the Morningstar peer group, the fund's net expense ratio (after deducting Rule 12b-1 fees) is lower than the peer group average; compared to the similar fund cohort, the advisory fee is at the median level and below the cohort average, while the net expense ratio is also below the cohort median and average. The board also noted that the adviser has no other similar managed accounts available for reference.
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Edelweiss Financial Services Ltd. | Hold & Watch | Largest holding, the only India-based position, accounting for 16.9% | Market cap: $17,529,260 |
| Warrior Met Coal, Inc. | Hold & Watch | U.S. coal leader, largest holding in Metals & Mining | Market cap: $14,927,181, 14.4% weight |
| TAV Havalimanlari Holding AS | Hold & Watch | Core holding in Turkish transportation infrastructure | Market cap: $13,873,441, 13.4% weight |
| Alpha Metallurgical Resources, Inc. | Hold & Watch | U.S. coal stock, second-largest holding in Metals & Mining | Market cap: $6,090,344, 5.9% weight |
| Valaris Ltd. | Hold & Watch | Representative of U.S. energy equipment & services | Market cap: $4,757,760, 4.6% weight |
| Reysas Gayrimenkul Yatirim Ortakligi AS | Hold & Watch | Turkish industrial REIT, the only REIT holding | Market cap: $4,802,534, 4.6% weight |
| Mongolian Mining Corp. | Hold & Watch | Mongolian coal stock, supplementary to Metals & Mining | Market cap: $4,549,077, 4.4% weight |
| Reysas Tasimacilik ve Lojistik Ticaret AS | Hold & Watch | Turkish air cargo & logistics | Market cap: $4,198,604, 4.1% weight |
| PulteGroup, Inc. | Hold & Watch | U.S. homebuilder, representative of household durables | Market cap: $4,127,552, 4.0% weight |
| AutoNation, Inc. | Hold & Watch | U.S. specialty retail, auto dealer | Market cap: $4,119,276, 4.0% weight |