Mohnish Pabrai – The Checklist Investor Crushing The Market By 1100%

Mohnish Pabrai: The Relatable Super Investor

Mohnish Pabrai is an Indian born investor, came to the United States to attend Clemson University in South Carolina in 1983.

He didn’t major in finance.

Pabrai was an engineery by trade and running a successful IT business and never heard of Buffett until he was 30. In fact, the first investor Pabrai discovered was Peter Lynch, not Buffett.

Anyway, here’s the part of the story that resonates with me and a lot of other DIY investors.

I found very strange was how you can have an entire industry which does not function with a solid framework. To me, it is like people doing brain surgery by just ‘winging it’.

That is how I saw mutual funds work – they were just winging it, or they come up with any nuance or ‘flavor of the day’ they want to pursue.

I had a thought that if novices like me simply adopted Buffett’s approach and invested in the equity  markets with a concentrated portfolio, etc. that I was likely to do better than most of the industry professionals.

So I said it was worth testing this hypothesis out. I was lucky at the time in 1994; I had about $1 million in cash. I had just sold some assets of my business and I decided to go ahead and manage that in a Buffett-style concentrated portfolio, buying things I understood, etc. That is how I got into value investing.

He was an immigrant, didn’t have any formal investing training and realized how nonsensical the investment industry was.

Starting with his own money to launching a fund, it’s a good thing Pabrai “got” into value investing.

Pabrai’s long-only equity fund has returned a cumulative 517% net to investors vs. 43% for the S&P 500 Index since inception in 2000. An out-performance of 1,103%.
– H/T Valuewalk.

Did he have a unique process to achieve such returns?

No.

If you go through the material available on Pabrai, you’ll realize what a diehard Buffett and Munger fan he is. From an old interview in 2008, he said that he read Poor Charlie’s Almanack 7 times.