The Dhandho Investor: The Low-Risk Value Method to High Returns

by Mohnish Pabrai

Book Overview

A comprehensive value investing framework for the individual investor

In a straightforward and accessible manner, The Dhandho Investor lays out the powerful framework of value investing. Written with the intelligent individual investor in mind, this comprehensive guide distills the Dhandho capital allocation framework of the business savvy Patels from India and presents how they can be applied successfully to the stock market. The...

• Format: Hardcover
• Language: English
• ISBN: 047004389X
• ISBN13: 9780470043899
• Release Date: April 2007
• Publisher: Wiley
• Length: 208 Pages
• Weight: 0.88 lbs.
• Dimensions: 0.8" x 6.4" x 9.1"

Customer Reviews

Great

Pabrai's book provides great insight into how to practically apply the value approach to investing. Additionally, the Pabrai provides a low risk investment framework. The book draws on much of what Buffett has said over the years, but takes the extra step of demonstrating how Pabrai has put that wisdom into practice.

A 'must read' for any value investor!

Thank you Mr. Pabrai for sharing your investment philosophy! While I thought the initial portion of the book was not very helpful to someone already well-versed in value investing concepts, I thought the bulk of the book was exceptionally well-done with an inside look at how Mr. Pabrai analyzes his buy, sell, and hold decisions. The sell decision framework is particularly helpful. Also the many resources listed for finding undervalued stocks was great. This is definitely one of the best investment books out there and I highly recommend it.

Learn from one of the world best investors

Learn from one of the world's best investors. Mohnish Pabrai is one of the worlds best investors. By running a focused value hedge fund, he has been able to earn astonishingly high returns for many years. This well written and entertaining book presents his investment philosophy and characteristics in a simple and easy to follow manner. A "must read" for any serious value investor. Ask your money manager if he has read this book. If he has not - then fire him.

Excellent Primer on the Philosophy of Value Investing

Mr. Pabrai enjoys the distinction of being one of the best writers in the investment book universe. He is clear, concise, helpful and, above all, knowledgeable about his topic. If you doubt this, then all you have to do is look at his several articles in the past decade and/or his funds' returns. (They have regularly blown away the market averages with annualized returns -- after taxes and fees -- of over 28%.) The Dhandho Investor, much like other classics in the genre, explains the philosophy behind value investing and the basic mechanics of taking this investment approach. Mr. Pabrai goes about this process in a very logical manner that is easily grasped by the reader. First, he demonstrates the tenets of a value approach by discussing various entrepreneurs who have taken the simple "Heads, I win; tails, I don't lose much!" approach. (This, by the way, is one of Pabrai's main points. Read the book to see what exactly he means.) Examples include the Patels, a group of refugees who currently own billions and billions of dollars worth of hotels, on up to Richard Branson, Virgin's iconoclastic founder. Next, he explores the basics of value investing, builds on those themes, adds case studies, and finishes with explanations of more technical aspects of investing, such as when to sell. What is wonderful, though, is that he retains readability throughout and makes even complicated topics accessible to the reader. What is interesting about Pabrai is that he takes his idol, Warren Buffett's, ideas and expands them to a younger generation. He shows that a value approach relies on the investor's ability to: (a) think about, research and understand a business extremely well; (b) determine whether a company in that industry is worth buying based on this research; and (c) develop the temperament to buy only when the company sells at a discount to its intrinsic value. He shows how even a minimally internet-savvy investor can research a company quickly and effectively and then discusses such important topics as the art of selling; after all, buying a bargain stock implicitly requires that the buyer someday sell that stock once its value is realized. (Buffett likes to purchase stocks and hold them forever, but that is a stylistic difference between the two men. Still, WEB buys stocks that issue large dividends, so he is able to buy-and-hold, and then buy some more with the income from his dividend-paying stocks.) In all, this is a great book to help one develop the perspective necessary for effective value investing. When you add on the real world examples of entrepreneurs who have followed a value approach to creating a business and Pabrai's examinations of his own investment choices (including an enlightening discussion of a purchase he made in which the stock price went significantly downward, but his analysis indicated the company actually became *stronger* as a result), this book should help to show why the best investors employ the valu

Great Book on Deep Value Investing

This an excellent book, because it gives a different perspective on contrarian investing (e.g. David Dreman). No books explore so well the Kelly formula applied to investing. It permeates the entire book and gives you the tools to implement the "maximum pessimism principle", which was championed by John Templeton. Besides that, two things stand out in this book: "focus on low risk, high uncertainty situations", and "be a cloner". Fortunately we don't have to pay royalties by using the ideas of Buffett, Munger, Graham, Templeton and Greenblatt, so let's clone the best of them. Re-invent the wheel is one of the worst thing in business, and worst than that is: "this was not invented here". However, the "Dhandho Approach" requires psychological fortitude because you have to deal with the uncertainty and purchase stocks which are not popular with the herd. The only fault is that the author does not provide a list of the 10-12 books that had the most influence on his investment strategy.