Mohnish Pabrai's Q&A at Oxford University - Oxford Alpha Fund on November 21, 2023
Jan 23, 2024
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Mohnish Pabrai, an investor and speaker, shares his journey in investing, the importance of evaluating management teams, and his experiences in philanthropy. He also gives advice to students and discusses the impact of his philanthropic investments.
Following value investing principles can outperform professional investors.
Evaluation of management track record and business mode is crucial in investing.
Deep dives
Monish's Entry into Investing and Observations on Value Investing
Monish stumbled upon Warren Buffett's investing philosophy and observed the stark contrast between Buffett's approach and that of professional mutual fund investors. He decided to test Buffett's principles and started with a 10-stock portfolio, which grew from $1 million to over $13 million by early 2000. Monish realized that following value investing principles could outperform professional investors.
Expanding the Circle of Competence in Investing
Monish believes that everyone starts with a small circle of competence, usually in industries or products they consume. However, he doesn't actively try to expand his circle and believes it happens naturally through curiosity and diverse interests. He emphasizes the importance of not overdiversifying and going deep into areas of expertise rather than having a wide but shallow knowledge base. Monish mentions successful entrepreneurs who focused on their industry and achieved great success while knowing little about other areas.
Assessing Management and Investment Process
Monish suggests looking at the track record of management rather than solely relying on their promises or expectations. He considers the quality of the business and its alignment with shareholder value as crucial factors. He also highlights the importance of evaluating the mode of the business, as a good management team alone cannot compensate for a mediocre business mode. Monish advocates for deep analysis and comparison, focusing on both past performance and the future potential of management.
Investment Committee and Cloning Great Ideas
Monish believes in giving investment managers full autonomy instead of relying on investment committees. He refers to Warren Buffett's approach where managers have the independence to make investment decisions. Monish acknowledges the difficulty in finding exceptional managers and suggests cloning great ideas from other successful investors. While mistakes are inevitable, he encourages seeking inspiration from others while being aware that even smart investors can be wrong at times.
Mohnish Pabrai's Q&A at Oxford University - Oxford Alpha Fund on November 21, 2023.
(00:00:00) - Introduction (00:00:49) - My introduction to investing (00:04:29) - Circle of competence; John Arrillaga (00:08:14) - Nick Sleep (00:10:22) - Learning from mistakes (00:14:53) - Assessing management team (00:17:01) - Transdigm (00:21:15) - Japanese markets (00:25:19) - Uncertainties in investing (00:27:36) - Autonomy for investment managers (00:31:49) - UGMA: A great gift from Congress! (00:34:03) - The Dakshana Foundation (00:37:41) - Returns from philanthropic investments (00:46:02) - Akshaya Patra Foundation (00:51:59) - Advice to students The contents of this website are for educational and entertainment purposes only, and do not purport to be, and are not intended to be, financial, legal, accounting, tax or investment advice. Investments or strategies that are discussed may not be suitable for you, do not take into account your particular investment objectives, financial situation or needs and are not intended to provide investment advice or recommendations appropriate for you. Before making any investment or trade, consider whether it is suitable for you and consider seeking advice from your own financial or investment adviser.
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