Value Investing

Warren Buffett: Copy, Compound, Give Away

The $650,000 he paid to win a lunch with his idol was guru dakshina. For Mohnish Pabrai, the truest Eklavya of the investment world, the guru is none other than Warren Buffett. The only difference is that, in this case, the guru had more honourable intentions — the hefty, auction-determined bid price would not rob the shishya of his greatest skill; instead, the money would go towards San Francisco’s Glide Foundation, Warren Buffett’s favourite charity. For Pabrai and his friend Guy Spier, who bid jointly for the lunch, it was a masterstroke, because the charity was anyway on their agenda, having taken a leaf, once again, from Warren Buffett’s book. And so, while they contributed to the charity, they also bought themselves a chance to get up close and personal with the guru. “I had a huge tuition bill to pay — this was only a fraction,” Pabrai said at the time of winning the lunch in June 2007.

Warren Buffett: Copy, Compound, Give Away

In the egocentric world of investing where every Johnnie-come-lately is out to make a fortune, convinced his idea is the best ever, Pabrai has left his ego way behind in pursuit of the riches that he will eventually give away to people unknown to him — poor but bright students in India. But then, Pabrai is no average Joe straight out of B-school, thirsting to prove himself in the world of high finance. Rather, he is someone who has learnt hands-on from a very early age how business works, started his own business, sold it and then started his own fund with a capital of $1 million. Now, Pabrai Investment Funds has a corpus of over $485 million.

The 49-year-old Pabrai grew up in Mumbai, running his father’s business, which turned out to be the best preparation to become a good investor. “I was lucky in that my father ran a whole bunch of businesses, started them, grew them and bankrupted them! Many of these businesses were very highly levered and they would blow up because they had no stability.” From the age of 12 or 13, while their father travelled, Pabrai and his brother would look at cash flows trying to figure out how to get past the next day, just one day, every day. “I later realised that by the time I was 18, I had finished many MBAs. The period I went through with my dad helped me crack business models much faster than others of my age who were much smarter than me.”

Via: business.outlookindia