Name of Book: - The
Dhandho Investor - The Low-Risk Value Method to High Returns
Author: - MOHNISH
PABRAI
No of Chapters: - 17
Number of Pages: - 196
Single Sentence description of Book: - Heads, I win;
tails, I don’t lose much!
Brief
details about the Author:- Author is an Indian American businessmen,
Investor and Philanthropist. He clearly
admits influence of Warren Buffett, Charlie Munger and Om Pabrai on his
investment style. He made into headlines by bidding US $650,100 with Guy Spier
for a charity lunch with Warren Buffett. His investment philosophy follows a
disciplined and checklist based approach to carry out value based investment in
stock market.
What this book is
about :- The book is about Low risk investments to generate high returns in
every business To establish the philosophy,
Author has given numerous examples in the book like investment of Patel’s and
Manilal Choudhari in Motel Business of America, Richard Branson in Virgin
Atlantics and Lakshmi Mittal in Steel Industry. All the examples illustrated
the theory of Low risk and High returns with calculations provided against the
each. Then author compared the above approaches with the approach of Warren
Buffet and Charlie Munger of stock market investing. Author found the starling
deal of similarity between both types of approaches of investments. Book dispels
the notion of High risk High returns approach that is normally taught in
schools/colleges and prevalent in society.
Summary of Dhandho Framework: - Book provides the
summary of Value investing in the form of eight points which are mentions below:
-
1. Focus on the
existing business,
2. Buy simple businesses with
Ultra-Slow rate of change- By this author means that only that means worth investing
which can sustain for a larger period of time.
3. Buy distressed businesses in distressed in
distressed industries,
4. Buy Businesses with durable
competitive advantage.
5. Bet heavily when the odds are
overwhelmingly in your favour.
6. Focus on Arbitrage.
7. Buy Businesses at Big discounts to
their underlying intrinsic value.
8. Look for Low Risk High Uncertainty
Business.
9. It is better to be a copycat rather than
innovator.
A Few special Insights: - Few interesting
things that I gained from book
- Book puts equal emphasis on
art of selling stocks along buying at deep discount.
- It provides details of
various resources a person can look into for value investing,
Overall review: - It is an
excellent book written on low risk investment approach to generate high
returns. It follows the laid guidelines of value investing. A must read for an
investor, entrepreneurs or business persons.
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