Chai with Pabrai Mohnish Pabrai’s Q&A session with the Asian Institute of Technology, Bangkok on August 30, 2022
Feb 21, 2023
In a lively Q&A, Mohnish Pabrai discusses the investment philosophy of Rakesh Jhunjhunwala, bridging day trading with long-term strategies. He delves into distinguishing great companies from great investments, using examples like Louis Vuitton and strategic insights about management. The dialogue emphasizes mastering valuation techniques like DCF and the critical role of downside protection. Patience and an understanding of market fundamentals, especially in sectors like education and investing in China, are highlighted as keys to success.
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Rakesh Jhunjhunwala's Titan Investment
- Rakesh Jhunjhunwala held a 4% position in Titan for 25-30 years, which grew to nearly half his net worth.
- He never visited Titan's manufacturing plants but benefited from decades of compounding growth.
Uber Cannibals and Buybacks
- "Uber cannibals" are companies aggressively buying back shares, often reinvesting nearly 100% of cash flow into buybacks instead of dividends.
- This strategy can lead to non-linear compounding and outstanding returns over decades.
NVR's Buyback Success Story
- NVR, a home builder, has bought back 75% of its shares over 28 years, turning $6 stock into $6,000.
- They changed to a just-in-time land acquisition model, boosting returns and capital efficiency.