Stealing Great Investing Ideas From the Masters


Small-time investors often complain that the field is stacked against them -- that big investors with more information and more analysts will always win.

But there's a law that turns this perception upside down. Large investors are required by law to publicly disclose their investment holdings every quarter on a form called a 13-F filing. Small investors can simply scan 13-F filings to see what the world's greatest investors are buying and piggyback on their trades.

The law is truly a gem for small investors. In 2009, you could have seen that Warren Buffett's Berkshire Hathaway was buying shares of Wells Fargo and Wal-Mart , both of which have since surged. You could have known that David Einhorn had been selling his stake in Apple in the middle of last year, just before shares began to stumble. These 13-F forms are a legally mandated fly on the wall in the minds of the world's greatest investors.

And no one should feel shame copying investors' trades. Last month, I sat down with Mohnish Pabrai, a great investor himself, who told a story about having dinner with Charlie Munger. Warren Buffett's right-hand man told Pabrai that one of the keys to successful investing is to "carefully look at what the other great investors have done."

Here's what else Pabrai had to say on "shameless cloning" (transcript follows):

Mohnish Pabrai: What can I tell you? I am a shameless cloner. I have no original ideas. I don't even know why you're interviewing me, because there are all the other great minds that I've copied everything from, and very few things emanate from between my ears, but I'm good at absorbing some good things when I can see them. So I think that's one of the beautiful things; God bless the SEC for their 13-F requirements. And every time -- in fact, Nov. 14 was the last time when the 13-Fs came out -- you know, I'm like a pig in [%&*!]. It's just great, because there's so much to look at. That keeps me busy for a few weeks, and then the next 13-Fs come out.


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Morgan Housel owns shares of Berkshire. The Motley Fool recommends Apple, Berkshire Hathaway, and Wells Fargo and owns shares of Apple, Berkshire Hathaway, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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