Video Link: https://youtu.be/K_hufWWDO0M
In this episode, Mohnish Pabrai was asked what value investing models does he use most often and any examples of models that he used in the past?
In this episode, you’ll learn:
How does Mohnish Pabrai invest?
Look for a reason to say 'No' approach in investing.
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MOHNISH PABRAI 00:08
Yeah and that's kinda little difficult question to answer because some things are being process almost on a subconscious level. You know, in a sense that I may not – myself – even articulate clearly to myself what [Inaudible] are.
But in general you know, if I'm looking at a stock, you know, I'm looking for a reason to say no, not a reason to say yes.
And I'm looking for a reason to say no as soon as possible so that I can go back to other things of more interest. And so when people bring up a stock to me or when I look at 13-F or something, or Dataroma or something.
I will ask myself, okay first of all, you know, is it within circle of competence? If it clearly out then, you know, good I'm done with it. So that's done.
Then if it is within circle of competence then I ask myself the second question, is it super cheap? And nowadays, you know, with the way the US market are, I don't think market are overvalued. But I don't think they are, you know, they are nothing like 2009.
And so there's – In fact, you know the – I found a couple of things to do which are in the US, it's kind of very low liquidity in volume so I'm just nibbling everyday as much as you can get. But for the most part, we haven't found anything in the US for awhile. And even the idea I'm looking at now, it looks interesting its outside the US.
So the models are you know, those are the first two models; competence and valuation. And that pigment blows out large portion of it. And then if it looks like something within circle of competence and then it looks like it's cheap. Then I'll spend you know, maybe half an hour or something.
[Pabrai cough] Excuse me.
And again, the idea is to find something that is going to be a showstopper which is telling me, Aha I got why I would not want to be interested in buying this. And then if I don't find it in half an hour then I will you know, invest some more time, might be an hour or two. Again, digging a little deeper and again with the idea always to find a reason to stop looking and moving on.
So and if I'm continuing to look then that means that there are a few aspects of the business that I'm finding very attractive. And at least till that point, I have not found anything which is telling me to stop looking. But I don't know (if) that helps on the model side.