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TIP347: Value Investing in 2021 w/ Mohnish Pabrai

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May 2, 2021

Guest

Mohnish Pabrai

Mohnish Pabrai, a renowned value investor and philanthropy advocate, joins the conversation to share his investment wisdom. He reflects on 2020 as a pivotal learning year, emphasizing the 'spawning' framework over buybacks for business growth. Pabrai discusses the importance of patience in investing, likening it to watching paint dry. He also explores how curiosity fuels better investment decisions and how personal journey impacts professional success. Tune in for a rich mix of insights on value investing and personal development!

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Episode notes

insights

INSIGHT

Compounding Realities

Compounding at high rates is harder than it seems due to errors and misjudgments.
Consistent growth and a long-term perspective, like that of the Walton family, are key.

insights

INSIGHT

Owner's Mindset

Adopt the mindset of a business owner, not just an investor, focusing on long-term growth.
Look for companies with increasing intrinsic value and a strong, widening moat.

question_answer

ANECDOTE

Turkish Investment

Mohnish Pabrai bought a 33% stake in a Turkish company for $7 million, initially aiming for convergence and sale.
He now plans to hold long-term, focusing on business improvement and moat strength.

Get the Snipd Podcast app to discover more snips from this episode

The Long Game of Value Investing

02:05 • 14min

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Spawning Success: Innovation and Expansion in Business

15:39 • 12min

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Navigating the Cycles of Investment

27:45 • 9min

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Investing with Patience

37:14 • 10min

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The Journey of Self-Discovery

46:56 • 10min

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Embracing Flexibility and Curiosity in Investment Strategy

57:06 • 4min

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Finding Joy in the Game of Business and Investing

The book narrates the most brutal corporate restructuring in Wall Street history, focusing on the 2015 bankruptcy of Caesars Entertainment. It pits private equity legends from Apollo Global Management and TPG Capital against relentless hedge fund investors from firms like Elliott Management, Oaktree Capital, and Appaloosa Management. The authors, Max Frumes and Sujeet Indap, illuminate the complex financial engineering, legal battles, and the fight-to-the-death mentality of these modern financiers, which continues to impact workers, politicians, and broader society. The book provides a fascinating inside look at distressed debt markets and the strategies employed by these financial players.

Richer, Wiser, Happier

How the World's Greatest Investors Win in Markets and Life

William Green

In Richer, Wiser, Happier, William Green draws on interviews conducted over twenty-five years with many of the world’s greatest investors. The book highlights that the most successful investors are mavericks and iconoclasts who question conventional wisdom and think rationally, rigorously, and objectively. They maximize their odds of long-term success in markets and life by drawing insights from diverse fields such as neuroscience, economic history, psychology, philosophy, and more. Green explains how these investors can teach us not only how to become rich but also how to improve our thinking, decision-making, risk assessment, and resilience, and how to turn uncertainty to our advantage.

100 to 1 in the Stock Market

A Distinguished Security Analyst Tells How to Make More of Your Investment Opportunities

Thomas Phelps

In '100 to 1 in the Stock Market,' Thomas Phelps outlines a buy-and-hold investing strategy that focuses on identifying and holding stocks of companies with high growth potential for at least ten years. The book, written in 1972, analyzes over 350 stocks that increased significantly in value from 1932 to 1971 and identifies common characteristics of these successful companies. Phelps advocates for a patient approach, emphasizing the importance of not selling stocks to preserve wealth and pass it on to heirs. The book provides insights into long-term wealth creation and the identification of profitable business models without visible growth ceilings.

Backable

The Surprising Truth Behind What Makes People Take a Chance on You

Suneel Gupta

In 'Backable,' Suneel Gupta argues that the key to success lies in the ability to persuade others to believe in you. The book outlines a 7-step plan and includes 26 practical pointers for becoming 'backable. ' Gupta draws lessons from hundreds of the world’s biggest thinkers, including producers of Oscar-winning films, members of Congress, military leaders, culinary stars, venture capitalists, and executives from iconic companies like Lego, Method, and Pixar. The book emphasizes the importance of conviction, storytelling, and practice in making your ideas compelling to others.

One Up On Wall Street

Peter Lynch

In 'One Up On Wall Street,' Peter Lynch explains how average investors can outperform professionals by leveraging their everyday experiences and knowledge. Lynch advocates for investing in companies and products that are familiar and understandable, rather than following trendy or complex investments. He provides easy-to-follow advice on analyzing financial statements, identifying different types of companies (such as cyclical, turnaround, and fast-growing companies), and maintaining a long-term investment strategy. The book emphasizes the importance of simplicity, patience, and fundamental analysis in achieving successful investments.

On today’s show, Stig Brodersen talks with famous value investor Mohnish Pabrai. They explore Mohnish Pabrai's new investment framework and how retail investors can clone it.

IN THIS EPISODE, YOU'LL LEARN:

Why 2020 has been the year where Mohnish Pabrai learned the most since he found Warren Buffett in 1994
Why the Spawning framework is, and why it’s better than buying back shares
Where Mohnish would like to add to his circle of competence with no time cost
Why watching paint dry is the core of being a great investor

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
Learn more about Mohnish Pabrai’s Dakshana Foundation
Mohnish Pabrai’s website
Peter Kaufman’s book, Poor Charlie’s Almanack
Our interviews with Mohnish Pabrai about value investing and philanthropy
Our interviews with Mohnish Pabrai about value investing
Guy Spier’s thoughts on Seritage Growth Properties
Our interview with William Green about Mohnish Pabrai and much more.
Buy William Green´s book, Richer, Wiser, Happier

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