VIDEO: Legendary Value Investor Mohnish Pabrai on Turkish Stocks, Big Tech and his $650k Lunch with Warren Buffett

By: KS Anthony | Read Comments (2)

When we last spoke to Mohnish Pabrai in April 2020, his confidence was as unwavering as ever. While gloom seemed to grip the market, Mohnish and other value investors were hunting down deeply discounted stocks in the fire sale that followed the March crash, marking a resurgence of active investing. Amidst the sell-offs in the uncertainty generated by the pandemic, Mohnish Pabrai seemed almost serene. "This too shall pass," he told SumZero. "Humanity dodged this bullet very well and will make sure there are no future pandemics that create the mayhem this one did."  

Lo and behold, he was right. As the world slowly shakes off its COVID-19 hangover, Americans are returning to movie theaters, retail stores, and air travel while transitioning into a "new normal" that blends working from home and office life through technology that proved invaluable throughout the global lockdown. In the financial world, interest in investing has never been higher, as evidenced by the daily glut of coverage on so-called "meme stocks" largely driven by individual investors like those found on Reddit's WallStreetBets, whose approach to the market more closely resembles gambling than the deep value investing proselytized by investors like Mohnish Pabrai, Warren Buffett, and Charlie Munger. 

We caught up with Mohnish early this month for a wide-ranging and often hilarious chat about his start in investing, the lessons he's learned along the way, his famous lunch with Warren Buffett, the meaning of dhandho, and his current investment positions. 

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Comments

  • Ranjit Thomas June 15, 2021 edit |

    Great job Divya. Enjoyed watching the video on a lazy summer afternoon. Some comments to get a discussion going:
    1. Why would you invest in your 25th best idea as opposed to your 3rd best one? Because it's hard to accurately rank one's ideas. If I have the choice to invest in GOOGL, FB, AMZN and MSFT (all of which I believe will do well in the future), why should I waste my time trying to accurately rank them? Also, when one has no control over what companies do, there's always a chance that they will let you down. 30 diversified positions (out of the say 3000 available) doesn't seem like too many to me.
    2. It's easier to talk about value investing than to actually practice it well (see above and below). It always helps to read/hear about it, but doing is far harder than knowing the concepts.
    3. BABA isn't at 20x EPS when you factor in their huge stock compensation, which they pro-forma out unlike US big tech. When you like a company, it's hard to resist the temptation to nudge your metrics in a way favorable to one's thinking. There are numerous times I've seen stocks touted as trading at a single digit multiple of FCF....which turns out to be only in the someone's imagination of what it would be in the future, not at current figures!
    4. MU: As a commodity producer, they ride waves. But like with industrial commodities, when times are good, they put most of their cash flow into capex. Free cash flow generation has been poor over time. Maybe this time will be different.
    5. SRG: Don't know it, but looks like constant losses, big debt and asset sales to survive. At the very least, doesn't look like much of a value investment to me! Maybe the properties are worth a lot with low interest rates and they can keep liquidating?
    6. A 100% tax on short term gains? It never amazes me that no matter how rich and successful a person becomes, the desire to stifle others' freedoms never leaves them. Personally, I think short and long term gains should be taxed at the same rate, with the corporate tax lowered (since it's a double tax). There's nothing noble about holding an investment for more than a year.

  • Divya Narendra June 16, 2021 edit |

    Ranjit glad you enjoyed the conversation. And your comments are, per usual, highly compelling. Maybe we will have to get you on a call with mohnish one of these days ;).

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