We Study Billionaires - The Investor’s Podcast Network

TIP597: Darwin's Investing Lessons w/ Kyle Grieve

Jan 2, 2024

01:06:33

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Kyle Grieve, an investor, shares lessons from reading What I Learned About Investing From Darwin. Nalanda Capital's 3 key principles are avoiding big risks, buying high-quality at a fair price, and not being lazy. Topics include risk, importance of robustness, identifying evolving businesses, and honest signaling.

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Quick takeaways

Invest in exceptional businesses by avoiding big risks, buying high-quality businesses at a fair price, and being very lazy.

Analyze honest signals from a business's past performance and reputation instead of relying on uncertain future forecasts.

Prioritize long-term evolution and robustness over short-term trends by identifying businesses with a high return on capital employed, a wide moat, and low business and financial risk.

Deep dives

Investing in Exceptional Businesses: Three Core Concepts

Pulak Prasad, an investor from Nalanda Capital, shares three core concepts for investing in exceptional businesses: avoiding big risks, buying high-quality businesses at a fair price, and being very lazy. He emphasizes the importance of investing in businesses with a strong historical track record of profitability and a durable competitive advantage. Prasad's strategy focuses on analyzing honest signals from businesses' past performance and reputation, rather than relying on uncertain future forecasts. He also highlights the significance of paying a reasonable multiple for exceptional businesses, prioritizing long-term evolution and robustness over short-term trends.

Applying Evolutionary Principles to Investing

01:21

Investing Based on Historical Analysis

01:21

Introduction

3min

The Impact of Charlie Munger

13min

Investing Lessons Inspired by Nature

6min

Investing with Multiple Mental Models

9min

Avoiding Certain Attributes for Successful Investments

5min

Genetics, Domestication, and the Importance of ROC

19min

Natural Selection and Evolution on Galapagos Islands

14min

Evaluating and Acquiring Exceptional Businesses at Fair Prices

2min

On today’s episode, Kyle shares the lessons he learned from reading What I Learned About Investing From Darwin by Pulak Prasad.

The book is authored by Pulak Prasad, an investor out of India who helps run Nalanda Capital. From 2007 to 2022, they compounded their capital at 19% per annum turning 1 rupee into 13.8 rupees during that time sample!! But more important than their track record is the unique ways they run their fund.

The book illuminates 3 key principles that Nalanda uses for its investing framework:

1. Avoid big risks.

2. Buy high-quality at a fair price.

3. Don’t be lazy – be very lazy.

To help readers understand why he invests this way he dives deep into many of Darwin’s principles to help you understand their potential power in investing.

IN THIS EPISODE, YOU’LL LEARN:

00:00 - Intro

20:26 - What a cheetah can teach you about risk

24:33 - Why you should be more focused on risk than returns

25:40 - How things in nature and investing mostly stay the same

27:42 - Some interesting data on why great companies remain great, and poor companies remain mediocre

28:29 - What a Russian scientist can teach us about the power of focusing on one investing metric to help identify wonderful businesses

34:58 - The importance of robustness in nature, and why you should search for the same attribute in business

37:00 - How to identify businesses that can evolve in a fast-changing world and remain on top

43:01 - What guppies can teach us about honest and dishonest signaling

46:06 - Why we should prioritize the past over making bold predictions

48:11 - How to invest without ever doing a discounted cash flow ever again

51:05 - What bear teeth and finches can teach us about the importance of avoiding noise

55:20 - How to use the presence of noise as an opportunity to outperform

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
Check out What I Learned About Investing From Darwin.
Learn more about the Berkshire Summit by clicking here or emailing Clay at clay@theinvestorspodcast.com.
Follow Kyle on Twitter and LinkedIn.
Check out the books mentioned in the podcast here.

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