Last month I had the pleasure of attending the 2016 Pabrai Funds and Dhando Holdings annual meeting in Chicago. It turns out, this was the last Chicago meeting that Mr. Pabrai will be holding for his funds going forward. For those unfamiliar with Mohnish Pabrai, he is the founder and CEO of Pabrai Funds, and currently manages roughly $400mm in capital for individuals and institutions. Mr. Pabrai adheres to a value investment philosophy, whereas he has cloned Warren Buffett’s techniques and has applied them ever since he began investing 1994. Since then, Mr. Pabrai has had phenomenal returns over the years. Recently, however, his funds have under-performed over the last five-year stretch, which in Mohnish’s words, is an anomaly. Mohnish is very bullish on the future of his funds, which we’ll get to later. … [Read more...] about An Evening with Mohnish Pabrai – Pabrai Funds Annual Meeting 2016
I recently finished reading Seth Klarman's Margin of Safety, one of which I wish I had read earlier! I was able to find an online copy of this famous value investing book. If you're not familiar with Seth Klarman, he is a billionaire and founder of the Baupost Group, a value investment firm that manages about $30 billion. Before founding Baupost, Klarman worked for Max Heine and Michael Price of the Mutual Series Fund which is now part of Franklin Templeton. There, he was fortunate to learn how to invest unconventionally (value invest) and achieve high returns. After going to Harvard Business School, he helped found Baupost and quickly became known for this "unconventional" strategy of his. He is known as a very conservative investor, often holding large amounts of cash in times of high uncertainty. In these times, he has been known to hold up to 50% cash in the portfolio, waiting to deploy the capital in undervalued securities when the opportunity arises. This obviously takes a certain amount of discipline and patience to wait for these opportunities, as well as a considerable amount of faith from investors for allowing their holdings to be in such a low-return asset for a period of time. After 9 years of managing Baupost, he decided to impart some of his investment wisdom on the world by writing Margin of Safety: Risk Averse Value Investing Strategies for the Thoughtful Investor. Today, the book is out of print and can be bought for upwards of $1,500 for a copy! If you're interested in getting a copy, I would recommend typing in "Margin of Safety pdf" on Google and go with the free version from there. Although, one may argue that the $1,500 could be a bargain based on the insights you can gain from this book :-). The book is split into three sections: 1) Where Most Investors Stumble 2) A Value Investment Philosophy and 3) The Value-Investment Process. This post is focusing on the first section, covering a few chapters on "Where Most Investors Stumble". This … [Read more...] about Where Most Investors Stumble (Seth Klarman’s Margin of Safety)
Everyone compartmentalizes who they look up to for certain things. For investing, many look to Warren Buffett. For basketball some think of Michael Jordan, others will consider Lebron James or Steph Curry (take your pick). Well, I'm here to discuss Guy Spier, who is an investor I learned about roughly a year ago and is someone I look up to for investing and life advice. Since that time, I've read some of his annual letters, watched the videos of his student Q&A visits, listened to a podcast he has been on and read his book, The Education of a Value Investor. Guy Spier is the manager of the aquamarine fund, which has had exceptional returns, significantly outpacing the market. He also has a very decorated background. He received his MBA from Harvard Business School and also received a First Class degree in Politics, Philosophy and Economics from Oxford University. While Mr. Spier has proved himself to be an exceptional investor, what I have learned from him and look up to him for is not his investment success, but his life framework. I wanted to share a few insights from what I learned. Moral Compass and the Folly's of an Elite Education Out of Harvard, Guy Spier worked for DH Blair, a boutique investment bank and brokerage firm. Guy quickly realized that the place was full of greedy and self-interested people. They would dress up sub-par companies to be shining stars and sell them to the public. He was continuously torn at doing well at his job for his senior bankers and doing what was right. The job held him back from having the success and clear-mind that he wanted to have. DH Blair ended up leaving a tarnished mark on Guy's resume after the entire firm went down with securities fraud and other charges. Guy therefore had a lot of difficulty in finding a new job, because of DH Blair. He thought it was so interesting that coming from such a good educational background, that he and others would be pulled into going to firms like DH Blair. Why hadn't … [Read more...] about A few things I learned from Guy Spier
Warren Buffett's Ground Rules by Jeremy Miller is a new book covering Buffett's years before Berkshire Hathaway, when he ran Buffett Partnership Limited ("BPL"). These are years that many of us know very little about, mostly because Warren and Berkshire did not become widely famous until further in his career. Buffett ran the partnership from 1957 - 1969 with astounding results (see table at the end of this post). In these years, he was working with much less money than he is today, and therefore the universe of investment opportunities was much greater to him. Additionally, his investing philosophy was in it's early stages. He was not focused on buying high quality businesses like he is today. Buffett went after very cheap stocks despite their lack of luster, still being sure he was finding opportunities that would give his investors the highest after-tax return over a few short years, and then move onto his next investment ideas. I believe this book is great for any investor out there trying to learn more about business and investing. The wealth of knowledge Buffett extends through his letters, in addition to his candidness and care for his shareholders shows his high intelligence and the integrity he has held throughout his life. … [Read more...] about Warren Buffett’s Ground Rules – A little known era of the world’s greatest investor
I just finished reading Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance. I may be a little behind the rush to read this one, but I am very glad that I read it. I hadn't known very much about Musk. I saw a documentary on him a few years back and all that I could remember from it was that he was from South Africa, he was a genius and that he was involved with Tesla, SpaceX and Solar City. I now know him to be a relentlessly hard-working, visionary, genius that is pushing today's technological advances further than they have ever gone before. After listening to the 13 hour audiobook, I can now recommend to you that you read this one. Elon Musk is nothing short of amazing, and there's something we can all learn from him. One thing is for sure, you may not agree with his work/life balance, but hey, that's just Musk for you. Drive to learn From the start of the book, to the very end, you will learn that Musk has never stopped learning. When he was young and in grade school, he read every book in his school and local library. After this he decided to grab an encyclopedia. He said something to the like of, "It's amazing what you don't know that you don't know. You can learn so much just by reading." Musk was known to be lost in a book when he was young. While I'm sure he continues to read today, the book focused on his reading as he grew up and how it shaped what he has become today today. As an adult, they did give anecdotes showing his continual drive to learn. While Musk is a very talented engineer, there are those that he hires that specialize in certain areas. He often will pull people aside and quiz them for an hour, trying to see everything they know. The employee will feel like they are in an interview, firing off answers time after time, but they soon realize that it is just Musk wanting to learn more. “We’re all hanging out in this cabana at the Hard Rock Cafe, and Elon is there reading some obscure Soviet rocket manual … [Read more...] about Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
Why do we invest? The main reasons is that we forgo current use of resources for the potential of more in the future. Many new to investing are focused on making a quick return. This of course, would be nice (to get rich quick) but often people get poor, very quickly chasing this goal. A time-tested strategy in the stock market is by value investing. We all hear about the great legendary investors, Warren Buffett, Charlie Munger, Benjamin Graham, among many others. They all have their own investment intricacies, but when it comes down to it, value is at their strategies' core. So why not enjoy life, while making a solid return? … [Read more...] about Why SleepyCapital?