Pabrai - A day at Work

For about a year now I've been following a sucessful US investor called Mohnish Pabrai whom has been operating since 1999 very much in the mould of Warren Buffett. I'm not going a write much about him here - you will need to read his book The Dhandho Investor or look at his website (only you will need a login from him). Pabrai recently published a transcript of his annual investor meeting which was held in September last year. There was obviously a lot of discussion at this meeting about his performance, past investments and philosophy but to me the most interesting point he made was to say a bit about how he works. You see it is easy to read up on the many investment principles but very difficult, without sharing an office with other investors, to find out how they actually work and find opportunities.

In the case of Pabrai he says he goes to work each day very much as a man of leisure and simply reads generally until he comes across something of interest. Then after only an hour or two on such specific idea he quickly decides whether or not to take it further. Somewhere else I read that he often only spends a couple of days of further research before investing.

That might not seem much to know about but is actually very useful information to me. As I sit down at my desk each day I don't really need to be there at all and unless a company I follow is reporting results there isn't anything I really need to do. Yet the possibilities are limitless - look at share prices, set up data base filters, read company accounts and brokers notes, try sector and company specific reasearch, read magazine and internet articles and so on. Once you start to look there is a huge amount of investment comment and "advice" available but the best opportunities come from digging much deeper. How to do that without being influenced by the market and journalistic chatter is key.

Incidentally the Pabrai Fund PIF3 (open to non US investors) returned -12.4% in the first quarter of 2008 after a loss of 7.8% in 2007. Naturally Pabrai focusses very much on his longer term record for this fund of an average of 15% pa since 2002. Not much different to me so I think I'll stick to managing my own money!

Quote from Pabrai I've taken from SmartMoney on how he can beat the market: "Lots of other investment managers have large teams; they have a lot more brainpower, they've got a lot more resources. The only advantage Pabrai funds have, which is why we have done better than the market, is attitude — my ability to be patient and not be swayed psychologically".