Turkish Warehouse 30x Return

A story about how Mohnish Pabrai found an extremely undervalued warehouse company in Turkey by being patient and thorough in his analysis.

"In 2018, I started visiting Turkey when markets were screening really cheap and everyone was exiting. I had a good friend in Istanbul, a classic Ben Graham investor, and I told him 'I'd love to visit Istanbul and see all the companies in your portfolio, starting with your strongest conviction.'

In 2019, we were driving to this company called Resas. My friend tells me it has a $16 million market cap, but the liquidation value if you sold it today is $800 million. I asked if it was a fraud. He said no, he was invested in it.

Resas was the largest warehouse operator in Turkey. They rent warehouses that are 99% leased, inflation-indexed, to blue chip clients like Amazon, IKEA, Carrefour, Mercedes, Toyota. I met the father and son who run the company, visited the warehouses, and couldn't find anything wrong.

When I started buying the stock, I found huge volumes were available. I spent $8 million to get a third of the company. Since 2019, they've increased the value of that business to probably $1.5-2 billion. The $16 million market cap is now about $500 million. Even though the Turkish lira collapsed from 5 to 33 per dollar, in dollars we're up almost 30x.

The family runs the business well, and I've never seen them make stupid decisions. So we'll just keep our stake and let it keep running. The key to moving the needle is inactivity - you have to be very patient and very inactive."