This is a brief update on the Pabrai Wagons Fund (WGNIX). The author thinks the S&P 500 is overpriced (27.5 times earnings, near 2000 bubble levels) and risky to buy, while the fund's holdings are cheap (only 6.7 times earnings), so he is cautiously optimistic. The top three holdings are all Turkish companies: TAV Havalimanlari (airport operator, 12.2% of assets), Anadolu Efes (beer maker, 10.5%), and Coca-Cola Icecek (Coca-Cola bottler, 10.2%). The fund has been around less than a year, so performance data is limited, and its heavy Turkish focus brings concentration and geopolitical risks not discussed in the report.
One-sentence summary: The author believes the S&P 500 is overvalued (27.5x P/E), while the fund portfolio trades at just 6.7x P/E, confirming the correct direction and a [cautiously optimistic] stance.
Since its inception, the fund has underperformed the S&P 500 by approximately 4 percentage points.
As of June 30, 2024, the Pabrai Wagons Fund (WGNIX) has returned 24.86% cumulatively since its launch on September 29, 2023, compared to the S&P 500's 28.77% over the same period. However, year-to-date in 2024 (through June 30), WGNIX has risen 15.68%, slightly outperforming the S&P 500's 15.29%. The report argues that the S&P 500's current P/E ratio of 27.5x is near levels seen in 2000 and far above the long-term average of 16x, making a buy-in relatively risky. In contrast, the fund's portfolio P/E ratio stands at just 6.7x, which the author believes validates the directional strategy.
Performance Comparison:
| Period | WGNIX | S&P 500 |
|---|---|---|
| Since Inception (2023.9.29-2024.6.30) | 24.86% | 28.77% |
| Year-to-Date 2024 (through June 30) | 15.68% | 15.29% |
The fund holds 26 stocks, with a net management fee of zero and an operating expense cap reduced from 1.14% to 0.90% effective January 1, 2024. The top ten holdings are highly concentrated, with the top three collectively accounting for 32.9% of net assets, all of which are Turkish companies.
Top Ten Holdings (as of June 30, 2024):
| Position | % of Net Assets |
|---|---|
| TAV Havalimanlari Holding AS | 12.2% |
| Anadolu Efes Biracilik Ve Malt Sanayii AS | 10.5% |
| Coca-Cola Icecek AS | 10.2% |
| Arch Resources, Inc. | 7.0% |
| Alpha Metallurgical Resources, Inc. | 5.4% |
| CONSOL Energy, Inc. | 4.0% |
| AG Anadolu Grubu Holding AS | 4.0% |
| Penske Automotive Group, Inc. | 4.0% |
| Danaos Corp. | 4.0% |
| Warrior Met Coal, Inc. | 3.9% |
Sector Allocation: Consumer Discretionary (30.1%), Consumer Staples (20.7%), Industrials (20.4%), Materials (16.8%), Energy (8.0%), Information Technology (3.0%), Cash and Other (1.0%).
The author states, "buying into it at a trailing P/E over 25 could be a risky proposition," meaning: "Buying into the S&P 500 at a trailing P/E above 25 could be a risky proposition." The author contrasts the fund's portfolio P/E of 6.7x with the S&P 500's 27.5x, emphasizing the valuation safety margin. Readers should note that this is a perspective from a position holder—the fund has been in existence for less than a year, its performance track record is limited, and heavy exposure to the Turkish market (with the top three holdings all being Turkish companies) introduces concentration and geopolitical risks that the original text does not explicitly address.
| Ticker | Direction | Author's One-Line View | Key Data |
|---|---|---|---|
| TAV Havalimanlari Holding AS | Hold & Watch | Largest holding, 12.2% of net assets, Turkish airport operator | 12.2% of net assets |
| Anadolu Efes Biracilik Ve Malt Sanayii AS | Hold & Watch | Second-largest holding, Turkish beer maker, 10.5% of net assets | 10.5% of net assets |
| Coca-Cola Icecek AS | Hold & Watch | Third-largest holding, Turkish Coca-Cola bottler, 10.2% of net assets | 10.2% of net assets |
| Arch Resources, Inc. | Hold & Watch | Fourth-largest holding, US coal company, 7.0% of net assets | 7.0% of net assets |
| Alpha Metallurgical Resources, Inc. | Hold & Watch | Fifth-largest holding, US coal company, 5.4% of net assets | 5.4% of net assets |
| CONSOL Energy, Inc. | Hold & Watch | Sixth-largest holding, US coal company, 4.0% of net assets | 4.0% of net assets |
| AG Anadolu Grubu Holding AS | Hold & Watch | Seventh-largest holding, Turkish holding company, 4.0% of net assets | 4.0% of net assets |
| Penske Automotive Group, Inc. | Hold & Watch | Eighth-largest holding, US auto dealer, 4.0% of net assets | 4.0% of net assets |
| Danaos Corp. | Hold & Watch | Ninth-largest holding, Greek container ship company, 4.0% of net assets | 4.0% of net assets |
| Warrior Met Coal, Inc. | Hold & Watch | Tenth-largest holding, US coal company, 3.9% of net assets | 3.9% of net assets |