Mohnish Pabrai

[learner]

During a presentation at Columbia Business School (link below), Mohnish Pabrai mentions that an investor could do a good job by spending just 15 hours/week.  He has alluded to something similar in various other instances.  Do you guys know if he ever expanded on that?  I was wondering what Mohnish’s suggested process for doing that would be.

 

Link to presentation:  http://cbs360.gsb.columbia.edu:8080/ess/echo/presentation/670921b2-4bad-4843-8dc5-4026360f1369

[APG12]

Maybe he meant that you could take a two hour nap every day and use the remaining hour to clone his portfolio in your own account.  ;D

[cubsfan]

Maybe he meant that you could take a two hour nap every day and use the remaining hour to clone his portfolio in your own account.  ;D

 

I love it!!

[tng]

I think he mentions it in almost all his talks to business school students. There are a lot of ways to easy beat the market:

 

1) Zero time / zero effort. Just buy Berkshire Hathaway.

2) Little effort. Blindly replicate what Buffett (or other known value guru) does on each 13F, regardless of how the price has moved or whether there is new data since Buffett made his purchase. Because you are dealing with a smaller portfolio, you can concentrate more on his highest allocations and likely do better. Historically, this has worked out well because the Buffett picks usually take more than 3 months to play out.

3) Little more effort. Get the top ideas from several gurus and actually do a little research on them. Maybe one of the stocks went up 100% since the last 13F so it isn't as attractive any more. You don't want to indiscriminately buy. Pick from this pool. Even if you make mistakes in your analysis and you are, in effect, blindly throwing darts, you are expected to do as well as the gurus on average.

[learner]

Thanks for the response.

[yadayada]

I think that once you become competent at this, then you it becomes a part time job really. You know what to look for, and if you have your screening process nicely tuned it shouldn't take that much time to maintain your portfolio every year? Certainly not a constant 40 hours a week. There are only so many annual reports and books you can read. Unless you do bankruptcy's

[learner]

I had a quick followup question.  Mohnish mentions multiple times a study by 2 Professors (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=806246) that shows that purchasing stocks that Buffett purchases after the news is made public and selling them after that news is made public would have earned a 11% alpha during 1976-2006.  Adding this to market return of 9-10% gives a 20% return.  Buffett has stated himself that float adds 6-7% to the returns, so the implied return on Berkshire should be closer to 26% (20%+6%).  However, Berkshire's longer-term annualized returns has been closer to 20%.  Can someone please help me understand why is there a 6% difference I'm noticing?

[merkhet]

I had a quick followup question.  Mohnish mentions multiple times a study by 2 Professors (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=806246) that shows that purchasing stocks that Buffett purchases after the news is made public and selling them after that news is made public would have earned a 11% alpha during 1976-2006.  Adding this to market return of 9-10% gives a 20% return.  Buffett has stated himself that float adds 6-7% to the returns, so the implied return on Berkshire should be closer to 26% (20%+6%).  However, Berkshire's longer-term annualized returns has been closer to 20%.  Can someone please help me understand why is there a 6% difference I'm noticing?

 

I can hold 4 of Berkshire's holdings as 100% of my portfolio. Berkshire cannot have 4 holdings as 100% of its portfolio.

[constructive]

Buffett has stated himself that float adds 6-7% to the returns

 

Insurance also requires large cash and fixed income allocation, which drags the returns down compared to an equity heavy portfolio.

 

If he has historically earned ~20% on equities, ~5% on fixed income and insurance adds ~7%, the total still worked out to 20%.

[learner]

Makes sense, thanks.

[John Hjorth]

I have been searching CofB&F meticulously before posting this, to find the most appropriate topic - by topic title - to post what's on my mind here. We actually have quite a lot of topics related to Mr. Pabrai here on CofB&F, based on what he is doing, and what he is engaging in.

 

Monish Pabrai has over the years been considered a quite controversial person here on CofB&F, based on his investment actions in Pabrai Investment Funds, combined with his promotional actions, related to his business, craft, trade.

 

From reading CofB&F over now many years, I've understood, that Mr. Pabrai is also a friend of Sanjeev [ @Parsad ].

 

- - - o 0 o - - -

 

Last year, in December, I donated absolutely pocket money to Dakshana Foundation, after which a secretary at Dakshana contacted me for information of my shirt size, to send me a T-shirt, based on that Mr. Pabrai has asked to do so. I refused, because it made no economic sense related to the purpose - helping talented indian young people from families with no or moderate means, to get good and relavant basic education, to provide for future upwards social mobility, by creating possibilities for entrance to higher Western education.

 

- - - o 0 o - - -

 

On 3^rd December 18:55 I suddenly got a pop-up from my PostNord app in my iPhone, that a package was registered to be send to me, from Monish Paprai, Pabrai Investment Funds!

 

I was absolutely puzzled! - I was soo nosy!  - More and more nosy as the package gradually moved closer and closer to me, with tracking notifications in the app by each time it moved! -At 19^th December I received notification that the package was delivered here, at home. No package anywhere to find! - I filed a report of a missing package the same day, totally upset!  - Next day, in the morning, the package landed in our mailbox.

 

It was a book : Pulak Prasad :"'What I learned about investing from Darwin", and a nice Holidays Greetings card, and the book with inserted compliments of Monish Pabrai! - I was in a really good mood the rest of the day, because of that! 

 

- - - o 0 o - - -

 

In Danish, we have a saying : 'Skindet bedrager' [translated to English : 'The skin deceives'][, which is not meant as a racist expression, or something like that]. I think it means 'Be careful about assessing or judging other persons cursory, or perhaps based on second hand opinions, assessments and judgements, it may be a totally different experience to interact with the person directly, and also dependent on the actual context!

 

I'm personally here not the least in doubt, that the present here, in my personal context, has been meant as a sincere token of appreciation of what I did last year! -And that matters a lot to me personally!

[Dalal.Holdings]

5 minutes ago, John Hjorth said:

I have been searching CofB&F meticulously before posting this, to find the most appropriate topic - by topic title - to post what's on my mind here. We actually have quite a lot of topics related to Mr. Pabrai here on CofB&F, based on what he is doing, and what he is engaging in.

 

Monish Pabrai has over the years been considered a quite controversial person here on CofB&F, based on his investment actions in Pabrai Investment Funds, combined with his promotional actions, related to his business, craft, trade.

 

From reading CofB&F over now many years, I've understood, that Mr. Pabrai is also a friend of Sanjeev [ @Parsad ].

 

- - - o 0 o - - -

 

Last year, in December, I donated absolutely pocket money to Dakshana Foundation, after which a secretary at Dakshana contacted me for information of my shirt size, to send me a T-shirt, based on that Mr. Pabrai has asked to do so. I refused, because it made no economic sense related to the purpose - helping talented indian young people from families with no or moderate means, to get good and relavant basic education, to provide for future upwards social mobility, by creating possibilities for entrance to higher Western education.

 

- - - o 0 o - - -

 

On 3^rd December 18:55 I suddenly got a pop-up from my PostNord app in my iPhone, that a package was registered to be send to me, from Monish Paprai, Pabrai Investment Funds!

 

I was absolutely puzzled! - I was soo nosy!  - More and more nosy as the package gradually moved closer and closer to me, with tracking notifications in the app by each time it moved! -At 19^th December I received notification that the package was delivered here, at home. No package anywhere to find! - I filed a report of a missing package the same day, totally upset!  - Next day, in the morning, the package landed in our mailbox.

 

It was a book : Pulak Prasad :"'What I learned about investing from Darwin", and a nice Holidays Greetings card, and the book with inserted compliments of Monish Pabrai! - I was in a really good mood the rest of the day, because of that! 

 

- - - o 0 o - - -

 

In Danish, we have a saying : 'Skindet bedrager' [translated to English : 'The skin deceives'][, which is not meant as a racist expression, or something like that]. I think it means 'Be careful about assessing or judging other persons cursory, or perhaps based on second hand opinions, assessments and judgements, it may be a totally different experience to interact with the person directly, and also dependent on the actual context!

 

I'm personally here not the least in doubt, that the present here, in my personal context, has been meant as a sincere token of appreciation of what I did last year! -And that matters a lot to me personally!

 

He seems like a good guy to be friends with and his charitable work much more effective than > 99% of nonprofits. I can see why Munger was friends with him.

 

I think that the gripe people have is solely investment related and his promotional way of going about it

[dealraker]

Reciprocity...one of Cialdini's 7 for a reason.  

[Gamecock-YT]

34 minutes ago, dealraker said:

Reciprocity...one of Cialdini's 7 for a reason.  

 

 

 

Let us know if you get hit up for a donation again soon, John.

Edited December 31, 2024 by Gamecock-YT

[John Hjorth]

@Dalal.Holdings, Charlie [ @dealraker ] & @Gamecock-YT,

 

Yes,

 

But whatever it is, I'm not a friend of Monish Pabrai. I have never personally in any way interacted with him before. I have never reached out to him, and did not expect him to react towards me, based on my actions.

 

What life so far has taught me is always to meet new persons in ones sphere, physical or digital, whatever, - always a priori in an openminded, positive and forthcoming way, subject to the least personal bias and prejudice possible for my part.

 

So consider the post above of mine a confession of my now former personal bias, negative bias towards Mr. Pabrai personally, for my part, that I personally - perhaps unjustly and without real and rational reason in the context - have adopted by reading CofB&F over the years, which led to a positive surprise for me, and a reassessment.

 

It is basically about the concept of appreciation - and how and when to show and signal it, and how that is managed at Dakshana Foundation, I'm sure based on policy setting by Mr. Pabrai.

 

Let me just say, that what I did donate to Dakshana Foundation this year has been unaffected by this present, and that I already did own a copy of the book. I'll keep the gifted copy, and then give my mint and already owned copy of the book to F. [Who is F? - Maybe later, maybe not.] - Presents generating new presents is great!

[klipbaai]

What a nice story!

[John Hjorth]

30 minutes ago, klipbaai said:

What a nice story!

 

Thank you, @klipbaai,

 

Exactly that experience, hopefully,  for everyone reading here,  was my purpose for posting about it here on CofB&F. There is nothing in life like getting surprised, in a positive way!, and sharing it!

 

- - - o 0 o - - -

 

Mr. Pabrais modus operandi as a money manager, feel free to include his public [promotional <- [?]]  appearance in several media,  is still, at least to me personally, a totally different and separate matter.

 

- - - o 0 o - - -

 

In post above of mine, I also forgot to mention, that I have send an e-mail to Mr. Pabrai, thanking him for the present.

[throw123]

 

Advertising on X now... numbers dont lie

[gfp]

A new spin on underperformance!  It will be interesting when the 5 and 10 year records underperforming are spun as a good thing

[Vish_ram]

He has experience spinning 20 years of underperformance. A picture with Munger can go a long way and long time. 

[John Hjorth]

8 minutes ago, Vish_ram said:

He has experience spinning 20 years of underperformance. A picture with Munger can go a long way and long time. 

 

 

[Milu]

Mohnish Pabrai is one of these supposed 'legendary' value investors. Never made sense to me. I'm sure he's a nice guy and all that but I've never been particularly impressed at any of his insights or talks. Looks to be a good businessman who grew and sold a successful business, then decided to become an investing guru. His lunch with buffett was probably his best 'investment' as he did end up building quite a good career on seemingly mediocre returns. 

[Vish_ram]

Using psychological techniques can be lucrative.

 

affinity to legends - you get instant trust, assumption of competence. quote legends frequently. 

 

Vocal proponent of successful methods (like of Nick Sleep) - assumption that you know of

this and so you’re a practitioner. 

 

affinity to value investing - value investors are self-righteous about the superiority of this method. It is generally an excuse for underperforming the benchmark (you can perennially say that benchmark has bloated overvalued stocks).

 

reciprocity - give a free pen and ask for managing your life savings

 

 Philanthropy - signifies wealth. People prefer that their money manager is a wealthy self made person. 
 

story telling - even a caveman loves stories. A great narration signifies command over subject matter. 
 

now package it all together! You got success.  

[LC]

Yes! New year, new Pabrai bashing thread! Good to see some traditions live on. 

 

Did he ever change his license plate? 

[Vish_ram]

Au contraire, learning from the Masters of this craft. Ban the bashers!