What Mohnish Pabrai Learned From Nick Sleep On Investing

What Mohnish Pabrai Learned From Nick Sleep On Investing | London Business School 2021 Talk Summary

I discuss Mohnish Pabrai’s wisdom and how he evolved his investing process based on Nick Sleep’s letters. He highlights an incredibly important question we should ask as investors.

I share my key takeaways from Mohnish Pabrai’s talk with London Business School (LBS) students on May 19, 2021.

The main Mohnish topics I recapped in the video include:
-Pizza Hut, and Ghost Kitchens
-Running A Business Prepares Us As Investors
-Specialize Between Ages 11-20: Learn How To Invest When You’re Young
-If You Want To Start A Fund
-Management is a Risk Factor
-GrafTech and The Terms Changed
-Alibaba and how Mohnish “Must Like It”
-Four Diverse Stocks Is All You Need
-Dakshana Foundation Swings For The Fences
-Mumbai India Real Estate
-Mohnish’s Take On Macro and Coke Bottlers
-Evolving Based on Nick Sleep’s Lessons
-Most Importantly: What Is The Destination?

Mohnish admits one of his mistakes is focusing too much on the Ben Graham concept of discounted pies instead of the Charlie Munger concept of growing pies.

Mohnish shared a lot of lessons from Nick Sleep, including how we should think of ourselves as the founding business owner and be in an investment for the long haul.

Nick Sleep is known for pursuing quality in his investing work, and he expanded on the teachings of Buffett and Munger through his investment letters to shareholders. Nick Sleep is an example of living according to his inner scorecard as Mohnish describes.

Mohnish said he would have needed to hold one of the Indian stocks he regretted selling in 2000 for 26 years in order for it to be a 500 bagger, or to return 500x. He mentioned Kotak Mahindra, Blue Dart, and Skypack.

So Mohnish said he wishes he would have read Nick Sleep in 1994 instead of in 2020, otherwise he wouldn’t have sold his Indian stocks in 2000 because both the valuations and destinations of these stocks looked good.

Mohnish said among the most important lessons he learned from Nick Sleep is to buy great businesses run by great managements, but don’t sweat the intrinsic value.

The most important question is to first ask: What is the destination of the business?
And accompanying this question, what will the business look like in 10, 20, 30 years?

Second, is the business getting better? Is the moat getting wider and deeper?

Third, is the valuation reasonable? It can appear overvalued, that’s OK, just not egregious, not crazy valuation.

Mohnish said if the entrepreneurs are not selling, so why are you selling? Along our investing journeys, keep asking what the destination is and this will guide our investing decision making process well.

If you’re interested in learning how to take control of your finances and start becoming an investor like Warren Buffett, check out my free PDF guide.

I look forward to making more investor friends! Add me on Instagram: michellemarki! 🙂