Video Link: https://youtu.be/tqbi0sWQtao
In this episode, Mohnish Pabrai was asked does Warren Buffett and Charlie Munger clone other investors when they're in their younger years?
In this episode, you’ll learn:
Does Warren Buffett clone other investors?
How Warren Buffett invest?
Why Mohnish Pabrai thinks that cloning is a very powerful tool?
To check out all Collection: Mohnish Pabrai <click here>
ARVIND NAVARATNAM 00:00
Just returning that comment from Charlie Munger. Did he touch upon how Buffett and Munger clone? Was that part of their [Inaudible]? You know, [Inaudible] the Cannibals and the Spin-offs, and the like Phillips 66 for example that –
Did they – you know, are they sort of cloners too when they're in their younger years?
MOHNISH PABRAI 00:24
That is a really excellent question, you know Warren doesn't talk much, you know, he's kind of like a poker player.
So, you know, I remember one time I was in his office with Guy Spier and we saw a book on his desk, which is the Japanese company handbook. It's basically like a Value Line, but it list every single Japanese stocks in a half page per stock in English, right?
And you know, it was folded over like he was reading it and Guy and I have been looking at Japanese net-nets. And I looked at that book and subsequently found that I could do the same thing in Capital IQ a lot faster. And so we found a bunch of companies that look like pretty good companies.
So when we're in the office, we said hey Warren there's these companies that we found through Capital IQ and you know, these are the names. And then Guy picked up the book and you know, he started leafing through to find those names to tell, you know, kind of dog-eared and mark for Warren that these are the names to look at.
So Warren is just kind of observing Guy, you know, randomly go and dog-eared his book without asking any permission or anything. And you know, while we're going through the whole process, you know, some of the good companies were at the back. You know, towards the end of the book.
And Warren said yeah, you know it's always that the good stuff is in the end. You know, we gonna keep leafing through to get to the end. But he would – he was a poker face. He didn't let us into any data on whether he was going to look at those companies or not look at those companies or any of that.
And then one time I had sent him a stock tip, I was very excited about this company and I wrote him a note that this is something he might want to take a look at because of the large cap for Berkshire's portfolio.
And I never heard back, you know, which is fine. Many times I sent Warren notes, I never hear back, that's kind of part from the course.
But later when I was talking to Charlie Munger. Charlie Munger said hey you know, that company you send to Warren, you know, he spent an incredible amount of time on it. I said "he did?" He said yeah, he said he did.
So then when I saw Warren the next time, I said let me ask him directly. So I said "Hey Warren, you know, I sent you that company what did you do with that?" And you know, he just gave a one-sentence answer on why he rejected it, right. And he gave no data to me that he had spent, you know, a zillion hours looking at it or any of that. That was just kind of, you know, under the radar.
So I think that Warren is not – Warren has done some cloning like I think Tesco was bought by Lou Simpson that he bought it for himself. I think Precision Castparts was bought by Todd Combs and now he'd bought it for Berkshire, the whole company. And so he really look at stuff, I saw that the one stock at [Inaudible] he spent some time on and so on.
And I think Charlie is probably more open on that front. I think Warren probably is more of, you know, "I want to do the work." So he may take it as an input, but he's very independent on his thoughts. So he's not gonna have a huge betting on it.
But I actually think that cloning is a very powerful tool because you know, someone else who is pretty smart, it's gone through all their filters.
And so, you know, we've talked about this before, Arvind. But you know, you can go bowling two ways. You can go to a bowling alley and bowl with bumpers or you can bowl without bumpers.
And the last time I asked Arvind the question, Arvind if you go to a bowling alley and all that mattered was the score, would you bowl with bumpers or without bumpers?
That I think last time, Arvind may have given the wrong answer. So let me ask him again. So Arvind – (Laughter) – if we go to bowling alley and we're bowling to the highest score, how should we bowl?
ARVIND NAVARATNAM 05:03
So Mohnish I'm very grateful that we recorded all our conversations. Because – (Laughter) – [Inaudible] the last conversation, you would observed that I said "I bowl with bumpers." (Laughter)
MOHNISH PABRAI 05:17
Okay, so now Arvind –
ARVIND NAVARATNAM 05:20
[Inaudible] I don't like, you know, the same way you don't like businesses with rapid change. My answers don't have rapid change either, so it's the same answer.
MOHNISH PABRAI 05:32
Okay, alright. (Laughter) And Arvind when you go to a real bowling alley. Do you bowl with bumpers or without bumpers?
ARVIND NAVARATNAM 05:44
Yeah, you know I'm not a big bowler actually. Do you – Are you a big bowler, Mohnish?
MOHNISH PABRAI 05:52
I am a Midwestern blue-collar American, of course I bowl. (Laughter)
ARVIND NAVARATNAM 06:01
MOHNISH PABRAI 06:02
I'm from Peoria, Illinois, I bowl on my way to picking up the McDonald's dividend. (Laughter)
ARVIND NAVARATNAM 06:11
Wonderful, other question?