This is a letter from Pabrai Wagons Fund (ticker WAGNX) to its investors. The manager is optimistic about the portfolio, believing it can beat the S&P 500 over the long term, but the fund lost 13.47% over the past year while the index gained 15.16%. However, performance has improved since March 2025. The stocks are cheap, with a P/E ratio of 9, far below the S&P 500's 28. Three key holdings: Edelweiss Financial Services (India, 24.8% of assets) — the manager thinks its planned spin-offs are each worth over $1 billion; TAV Havalimanlari (Turkey, 16.0%) — the manager believes its wholly owned Almaty Airport accounts for most of TAV's value; and Warrior Met Coal (U.S., 9.3%) — a metallurgical coal company.
One-sentence summary: The author holds a [bullish] stance on a highly concentrated, deeply undervalued global value stock portfolio, believing it can outperform the S&P 500 over the long term, though recent performance still lags the index significantly.
In the 12 months ended June 30, 2025, WAGNX returned -13.47%, while the S&P 500 rose 15.16%, lagging by approximately 28.6 percentage points. However, the fund has outperformed since March 2025: from March to June, WAGNX gained 5.55%, beating the index's 4.70%; in June alone, WAGNX rose 9.01% versus the index's 5.09%. Since its inception on September 29, 2023, the fund has an annualized return of 4.40%, far below the S&P 500's 25.20%.
The fund's holdings are primarily global value stocks, with a portfolio P/E ratio of just 9x, compared to the S&P 500's 28x (well above its long-term average of 16x). The top ten holdings are highly concentrated, with the largest position Edelweiss Financial Services Ltd. (India) accounting for 24.8% of assets, TAV Havalimanlari Holding AS (Turkey) at 16.0%, and Warrior Met Coal, Inc. (USA) at 9.3%. By sector, financials (24.8%), industrials (22.2%), consumer discretionary (16.5%), materials (15.7%), and energy (14.8%) are the main segments. The fund has net assets of approximately $78.93 million, holds 18 positions, and has a portfolio turnover rate of 69%.
The report argues that Edelweiss Financial has a market cap of only $1.2 billion, but each of its four planned spin-off subsidiaries is valued at over $1 billion, with the first IPO estimated at $1.0–1.5 billion. The second-largest holding, TAV Airports, has a market cap of $2.4 billion, and the author believes its wholly owned Almaty Airport already accounts for most of TAV's value. Other holdings include Turkey's Reysas (real estate and logistics), metallurgical coal companies (Alpha Metallurgical Resources, Warrior Met Coal), U.S. offshore oilfield services (Valaris, Tidewater, Noble Corp.), auto dealer AutoNation, and homebuilders. The author's original statement: "The Fund is 'circling the wagons' around its highest conviction ideas." This means: "The fund is concentrating its bets around its highest-conviction ideas." The author believes it has the potential to outperform the S&P 500 over the long term, but readers should note this is a position-holder's perspective.
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Edelweiss Financial Services Ltd. | Hold & Watch | Believes the spin-off value is significantly undervalued, with the first IPO valuation estimated at $1-1.5 billion | Market cap $1.2 billion, accounting for 24.8% of assets |
| TAV Havalimanlari Holding AS | Hold & Watch | Judges that Almaty Airport already accounts for most of TAV's value | Market cap $2.4 billion, accounting for 16.0% of assets |
| Warrior Met Coal, Inc. | Hold & Watch | One of the core holdings in metallurgical coal | Accounts for 9.3% of assets |
| Alpha Metallurgical Resources | Hold & Watch | A metallurgical coal company, alongside Warrior Met Coal | Specific share not disclosed |
| Valaris | Hold & Watch | One of the U.S. offshore oil service holdings | Specific share not disclosed |
| Tidewater | Hold & Watch | One of the U.S. offshore oil service holdings | Specific share not disclosed |
| Noble Corp. | Hold & Watch | One of the U.S. offshore oil service holdings | Specific share not disclosed |
| AutoNation | Hold & Watch | An auto dealer holding | Specific share not disclosed |
| Reysas | Hold & Watch | A Turkish real estate and logistics company | Specific share not disclosed |