Mohnish Pabrai's Latest Portfolio 2017

A hard core fan and follower of Warren Buffet and Charlie Munger, Mohnish Pabrai is an Indian born American value investor whom we should keep a track-off. He heard about Warren Buffet in 1994 and since then he has been following Warren Buffett's investment philosophy and thought processes. The first book read by Mohnish Pabrai about Warren Buffett was "Buffett: The Making of an American Capitalist" written by Roger Lowenstein. He identified very few stock market practitioners followed Warren Buffett's idea of investment. 

He started following Buffett's principles with a starting amount of US$1 Million and he realized that it really worked out. Mohnish Pabrai then decided to concentrate more on investment than running his tech company. He sold the company in 2000 to Kurt Salmon Associates for US$20 million and started his own investment fund named as Pabrai Funds which is currently having investment in United States, India and several other geographical areas. 

Silicon Vally Bank was the first investment made by Pabrai Funds during the tech-com bubble. It made 3 to 4 times returns in nearly 4 years time and became a great takeoff for Pabrai Funds.

Best Profitable Investment Of Mohnish Pabrai - Lunch With Buffett

In 2008, Mohnish Pabrai and Guy Spier paid $650,100 for a charity lunch with Buffett. Mohnish Pabrai openly admitted that his best investment was not on any stocks but having a charity aimed lunch with Warren Buffett for $650,100. In his words-"Every penny was worth. I think we would have been willing to pay a lot more than that. Well worth it. We were here with our families and it was just fantastic."

Mohnish Pabrai's Indian Portfolio 2017

Nearly 20 percent of Pabrai's fund is currently invested in India. He made investment in Rain Industries, Balaji Amines and Kolte Patil during 2014-15. Data shows that Pabrai Fund has made great returns in last 2 years as all three stocks have doubled from his initial investment levels.

Interesting Quotes from Mohnish Pabrai

About his gurus - Charlie Munger and Warren Buffett.

Charlie and Warren have provided me with many different perspectives and helped me build my confidence. Second, both Warren and Charlie have set up their lives very strategically. They execute everything carefully according to their systems. Charlie has repeatedly complimented me as an investor. I am in disbelief because I naturally have a low self-esteem. However, even though I do not believe what he tells me, I believe in his belief. 

Warren and Charlie have a very simple system. They are not trying to hoard cash. If a sensible opportunity shows up, they will simply put the cash to work. They are not particularly concerned with what happens in the economy or the country in the short term or even in the long term. Rather, they execute solely based on the understanding of the business.

Focus on Business

Warren and Charlie are not concerned with the details of the S&P 500 or the 10-year treasury. They are looking to purchase exceptional assets with great managers. If you look at Warren’s purchase of Coca-Cola in 1988 up to now, the economic cycles are irrelevant. It is the performance of the business that matters. It is hard enough to figure out the future of the business. Do not try to figure out the future of the country or the world, focus on the business.

Every Mistake Teaches You Great Lessons

Mistakes and adversities are blessings. When I look back in my life, I learned the most when I made mistakes. I made one of the biggest mistakes just before I started the Pabrai Funds. I thought I had found a way to ride the dotcom boom, and I raised $4 million in capitals, and of that value, $2.2 million was my own. 

The outside investors and I all saw that go to zero. We lost the $4 million and we all felt terrible. But I believe that the profits of over $100 million we saw in the next several years would not have been possible without the initial loss. It was a good thing to get hit hard at that time.

A Book To Read

I would suggest people read Poor Charlie’s Almanack. It is a book I try to reread every year. I find a new insight every time I read it. Business autobiographies are also really good resources. For examples, Sam Walton’s book, Made in America, provides great insights into the industry.

Dakshana Foundation

Inspired from  how Warren Buffett gives away his earnings, Pabrai decided to go with an annual give-away of 2% a year, which is about $1 million, through Dakshana Foundation. He also brings in about $1.3 million from other donors. Pabrai focuses on older students already attending the Jawahar Navodaya Vidyalaya, a government-funded rural school system in India. Dakshana Foundation plucks the top 10% of the approximately 40,000 kids who take a 10th grade government exam, and offers them an IQ test and entrance exam. 

The top students from this round are then offered room and board in eight countrywide campuses and full-time coaches to prepare for the IIT exam two years later. In a unique collaboration, the JNV system pays for the room and board, but Dakshana Foundation pays for the top-notch education, the exam fees. Once the student is accepted into the IITs or NITs, Dakshana Foundation will help with grants and scholarships for out-of-pocket expenses.