Mohnish Pabrai is a managing partner of Pabrai funds, which is modeled (copied) from Warren Buffet's partnership. In this book, he explains the theory that he had used to have annualized 28% returns. All right, so what is it?
Buy stuff really, really cheap. Less than intrinsic value.
The catchy title of Dhandho is simply Hindi (Indian?) for business. He stresses that one should only buy business that are on a fire sale. The goal is to recoup all your invested capital in about five years or less, when the market recognizes the intrinsic value of the stock.
Also, he describes the Kelly formula, which is used to compute the amount of one's bankroll that one should bet based on the outcome, edge, and odds of the wager.
So what to buy? Looking at his filing with the SEC, his most recent position is in STMP. This is the company stamp.com, which is exactly what it sounds like. I will place an order for 500 bucks worth, and see where it goes.
1 comment:
Check out how much Pabrai sunk into Delta Financial, formerly DFC, now DFCLQ.PK. Some times stuff is really cheap because... well, the market knows.
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