Riding the Turtle
Even if it takes years for his expectations for inflation-driven stocks and others to pan out, Bobrinskoy has proved he’s a patient investor who is willing to wait for a stock’s price to catch up with his assessment of what it’s worth. To provide a margin of safety, he likes to buy a stock when it is selling at a 40% discount to his estimate of private or intrinsic value. Often, he’ll step in after it has taken a beating because of disappointing earnings that occurred for reasons he considers temporary. He typically hangs on for four to five years, although his turnover was higher than usual last year because many stocks in the portfolio shot up to their intrinsic value pricing targets in the bull market. He’ll also sell if an investment thesis proves wrong or if a better alternative comes along.
At the same time, he’ll hang on to a stock even after it sees a large drop if he believes the reason is temporary and the original investment thesis remains in place. Earlier this year one of his holdings, gaming manufacturer International Game Technology, fell 22% after a subpar earnings report. The stock rebounded sharply in July when an Italian gaming company entered into a merger agreement to buy the company for $4.7 billion in cash and stock.