Q3 2025 witnessed an unprecedented reshuffling of Pabrai’s offshore drilling exposure. He sold 817,522 Valaris shares (-43.40%) and nearly eliminated Noble Corp by selling 1,489,744 shares (-86.17%). Simultaneously, he established a massive new position in Transocean totaling over 24.4 million shares at $3.12 each. This rotation suggests Pabrai now sees Transocean as offering superior value at its depressed price point, despite the company’s different risk profile. The shift appears driven by relative valuations rather than abandoning the offshore drilling thesis entirely.

While rotating within offshore drilling, Pabrai significantly increased his metallurgical coal conviction. Alpha Metallurgical received 71,673 new shares (+15.57%), elevating it to the #2 position at 25.91% of the portfolio. Combined with Warrior Met Coal at 34.00%, metallurgical coal now comprises approximately 60% of total assets – up from roughly 50% in Q2. This concentration demonstrates unwavering belief in the essential role of metallurgical coal in steel production and these companies’ ability to generate substantial returns at current valuations.

The complete exit from AutoNation after just one quarter represents an unusually rapid position closure for Pabrai. While the exact reasoning remains unclear, this swift reversal suggests either: (1) the initial automotive retail thesis was invalidated by new information, (2) the capital was needed for what he perceived as a superior opportunity in Transocean, or (3) AutoNation simply reached his price target faster than expected. Regardless of the specific reason, this demonstrates Pabrai’s willingness to act decisively when circumstances change, rather than holding positions based solely on avoiding the admission of error.

Despite extensive trading activity, the portfolio maintains its characteristic high concentration with the top three holdings now representing over 82% of assets. The reduction from Q2’s near-parity among the top four positions to Q3’s clear hierarchy (34%, 26%, 23%) suggests Pabrai is becoming more selective and focused on his highest-conviction ideas. The portfolio structure now clearly emphasizes metallurgical coal as the core thesis (60% combined) with a single, concentrated bet on offshore drilling through Transocean (23%), rather than spreading offshore exposure across multiple operators.

The Transocean position deserves special attention as it represents over 22% of the portfolio concentrated in a single stock trading at just $3.12. At this price, Pabrai appears to be making a classic distressed value bet on the world’s largest offshore drilling contractor. Transocean operates ultra-deepwater and harsh environment drilling rigs, commanding premium day rates but carrying significant debt. The massive 24.4 million share position suggests Pabrai sees asymmetric upside potential, possibly betting on: (1) a sustained recovery in offshore drilling demand, (2) Transocean’s ability to refinance debt at better terms, (3) the company’s competitive advantages in ultra-deepwater, or (4) simply that at $3.12, the risk-reward is exceptional even with the company’s challenges. This is the type of binary, high-conviction bet that defines Pabrai’s investment style.