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‘The Dhando Investor’ by Mohnish Pabrai - Book Review at Trader’s Narrative

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dhando investor mohnish pabraiThe Dhando Investor is the sort of book that is easy ignore. The title sounds strange and the cover art offers no real clue either.

To be honest, the only reason I gave it the benefit of the doubt was the author: Mohnish Pabrai. I had heard very good things about him as an astute asset manager so naturally, I was curious.

The book is a very unique take on the old Graham & Dodd “value investing” approach. It is especially valuable when you consider that it isn’t written by a journalist or a professional writer but by someone who has been implementing the investment philosophy he explains.

Like many value investors, Pabrai emulates Buffet. Even going so far as setting up his hedge fund or rather partnership fund, to exactly mimic the legal and fee structure of Buffett’s. He even runs things as a one man team. Exactly the way Buffett did. Thankfully for his investors, the elumation extends to his performance. The Pabrai Funds have gained 28% annual returns net after fees since 1999.

So what is Dhando? It can be summarized as follows: heads, I win; tails, I don’t lose much. It is the business philosophy of the Patels, the Indian caste from Gujarat province, who are reknown in India as businessmen.

I’ve had the pleasure of meeting and befriending a few Patels so I can tell you that the legend is true. They are the original Ferengies. I swear they have business built into their DNA. It seems like they can’t help but make money. It just comes naturally to them. The way, say, chewing gum comes naturally to Paris Hilton.

Anyway, I enjoyed reading Dhando Investor. It not only demystified how the Patels do what they do but it also explained why so many of them own motels in the States. Apparently a quarter of motels is owned by a Patel in the US! In Dhando you also learn about how Richard Branson started Virgin Airlines. Its shocking how little capital it took.

Pabrai also goes into detail outlining his own investment criteria and specific ideas. He takes you on a journey as he first identifies a sector, then zeroes in on one or two securities. In one case he was even a year earlier to the scene than Buffett. I believe that was L-3 Communications Holdings (LLL). Another specific example in the book is Frontline (FRO) a VLCCFs or crude oil shipping company.

In almost all his calls Pabrai is early, leaves a lot of money on the table and still manages to double or triple his original investment.

This is obviously not a trading book but I was surprised at how much I enjoyed it. If you’re interested in investing and want to learn more about value investing, I highly recommend Dhando.

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3 Responses to “‘The Dhando Investor’ by Mohnish Pabrai - Book Review”  

  1. 1 LP

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    Dang Dawg. You might as well be Indian and not Persian. You hit the nail on the head. It’s built into their DNA. We call them the Jews of the slightly more east. Shrewed business men and what amazes me is that much like the Jewish commuinty, they help out each other. I wish the rest of the world took that approach in help out their own, we would all be a lot better off. Even though I’m Indian, I can tell you that very few regions in India have this mentality. For example, South Indians have the DNA of a crab. Put us in a barrel and no one will make it out.

    Good review.

  2. 2 Babak

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    yeah, you’re right they are very united. That’s an admirable quality. And another source of their success. I forgot to mention that. In the end though, we can all start to practice this quality. That is the only way it will become part of our communities. Standing back and asking others to go first, won’t result in any change, will it?

  3. 3 Toby

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    I checked out reviews on this book after watching the video on in which Pabrai is interviewed. From the interview I wanted to know more about the book. I laughed at the description of a crab mentality from one reader above. Pabrai mentions a foundation that his family is setting up to provide opportunities for bright kids in India who do not come from backgrounds that will allow further education. I am so impressed. I plan to get the book from the library. I’ve read Buffet, I’ve read Graham — now I’ll read this to see what more I can learn. he’s a good role model

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