Mohnish Pabrai on Tencent: "China is a difficult place to invest"

In Mohnish Pabrai's latest interview with the Rotman School of Management, he shares insights on his investment process and the difficulty of investing in China
See the full Q&A session here: • Mohnish Pabrai's Chat ...

[@jamiemiller6156]

I've watched a lot of Pabrai's content over the last few years and even Pabrai can't seem to find the discipline to follow what he preaches. The obsession with trying to get higher and higher returns all of the time seems dangerous as there always seems to be something better around the corner. The problem with that is better never seems good enough for him. I'm not in the same galaxy as Pabrai is as far as investing, but my goal is to be boring. Fewer investments, longer hold times and a fixation on the process, not necessarily the results. I'm much more drawn to Guy Spier and Charlie Munger than Pabrai at this point in time.

[@tombrady4977]

Guy Spier is also plain noise. Cant answer a simple question, talks like a politician.

[@hansschmidt8292]

I like to watch Pabrai talking, there is always something to learn. But he had his best time in investing quite some years ago. His performance in recent years was similar to the S&P. And I agree that he is quick in changing his opinion, BABA and Tencent are good examples.

[@BradKaellner]

Reysas is pretty boring tbf

[@fearlyenrage]

@@BradKaellnerInformation: He made a killing with it (Reysas). He learns as he goes new facts and that is changing his investments like some of us do to. Nick Sleeps letters are very good indeed for anyone who dint read them, worth your time.

[@fearlyenrage]

@@redditreader5509 information: everybody can do that but certainty dosnt come from copying behavior. Certainty comes from confidence in beliefing you did the mental work properly. And peace comes when you are asure that it had been done with intelectual honesty. Now why donst anybody invest like this?

[@cricbuzz1123]

Lots of wisdom through his discourse and also through his actions while putting money on the table. I wonder if he would have had a similar opinion if say BABA or tencent had doubled in price since he bought it. We would never know this, but a lot of learning on cloning for sure.😂

[@Dr.Dumpnpump]

When I see a new video by Brad, I click, and listen, and then I listen again.

[@BradKaellner]

😉

[@kevinl9839]

China investing starts at about 18:20 for those interested

[@cricbuzz1123]

While it's unlikely tencent will become a 50T market cap company but I found this piece of information somewhere last month and found this to be a good lil mental model. For example - united steel Corp reached a market cap of 1 B for the first time in 1901. Yes, and at that time, it would have been unimaginable for the investors of that time that a company worth 100B would exist. However, 54 years later in 1955, GM became th3 first company with 10B market cap and another 40 years later in 1995, GE became the first to cross 100B. What is more, it took only another 23 years for another company to reach 1000B in 2018 and the company was Apple. Yes. Only sky is the limit to our cap to the upper limit of market cap. 😂. So nothing should surprise if we see a company worth 10 T in another 25-30 years and a company worth 100T another 50- 75 years from now 😂

[@mangalpal8921]

Microsoft, Amazon, Google, apple, tencent and Tesla are my bet to be first 10T

[@cricbuzz1123]

@@mangalpal8921 and by when do you think, thay may happen?

[@mangalpal8921]

@@cricbuzz1123 most probably somewhere in the mid of next decade. However, Microsoft has a good chance to be a 🥇

[@tonyg.3696]

Terry Smith has pointed out that some of the Nifty 50s wouldve worked out, even if you paid too high a price. You’d have to buy Loreal & avoid Polaroid, for example. Thanks for the great video.

[@BradKaellner]

Thanks for watching! 🍻

[@yunuse.1106]

Hi Brad. I really wonder whether we can invest in India or not? Is it possible? (I searched on google and they say it's impossible)

[@brotherleo4090]

I am glad to have found you, Brad. Because of you I follow pabrai. Interesting how he recommends 110 to 1 book by T. Phelps whose main premise is to hold on to stocks for as long as possible. Yet he got rid of BABA and now Tencent might not make it long enough. He does change his mind yet I am so fortunate to know about him. Thank you

[@BradKaellner]

I change my mind when the facts change... what do you do? ;)

[@brotherleo4090]

I don't know if anything changed with BABA, other than chinese govt had to tweak some things but he sold BABA for Prosus. I'm sure he saw a better option. His approachability is 2nd to none, it seems.

[@mawean]

I get a different learning: It is (also) about the mistakes. It’s in the way you deal with them. Buffett-although he generally *wants* to hold stocks forever-keeps many stocks for less than a year or even just a quarter. Why? Because he learned something only after he bought those stocks and he sees them as mistakes. So, he quickly gets rid of them and moves on. Like he got rid of the airlines at the beginning of covid (at a loss) and never looked back. So, it’s all in the way you deal with winners *and* losers-both are important. Don’t hold on to losers and never look back. Regarding winners: separate important information (i.e. deteriorating business) from noise. Mohnish here describes the (passive) coffee can approach which already leads to great returns if the stocks are carefully selected and never touched afterwards. This is not what the really great investors do. They actively manage their portfolio-also Charlie, who doesn’t *seem* to touch his portfolio but also acts aggressively if fundamentals change.

[@BradKaellner]

Good points 🎯

[@tombrady4977]

Terry Smith has this nice piece where he calls out this non-sense language in investing. Granular, deep dives,…. He must love Pabrai, circling the wagons, mouse traps,… just hilarious.

[@BradKaellner]

Funny, I’m just learning about “Twaddle Tendency” from Poor Charlie’s Almanack

[@magalengo]

Brad, I believe the Walton’s are selling a significant amount of Walmart shares each year (in the billions) due to wanting to keep their ownership percentage in Walmart stable. Walmart is buying back shares each year, and the family doesn’t want to have their ownership grow to over 50% of shares outstanding. I read this information a couple of years ago, so that may have changed.

[@BradKaellner]

Nice insight Matt 🙌

[@RockyP-xw8rd]

In China you need to invest with the gov. Not against them. See Petro China, postal savings bank of China, etc.

[@BradKaellner]

Makes sense

[@hetregentwel]

Brad, are you ever gonna share your portfolio?

[@BradKaellner]

Maybe

[@fasteddy-fd3kr]

Circle the wagons... Reevaluate them once in awhile?

[@BradKaellner]

We’ll go with that 🍻

[@sergeykonov8859]

Brad , great breakdown, thank you !

[@BradKaellner]

My pleasure!

[@janoz06]

Thanks Brad for the video. Lots of wisdom

[@BradKaellner]

My pleasure!

[@georgepeters4536]

Doesn't Pabrai have a terrible investment record the past long while?

[@budfox711]

12.5% over 20yrs.

[@BradKaellner]

He has beaten the S&P since 1999… puts him in a very small subset of investors

[@sebfox2194]

No.

[@vinayakayt-yj5eu]

He has been pumping and dumping stocks. Srg Baba Now possibly tencent. Better to learn to invest or just index instead of shameless cloning a shameless cloner

[@BradKaellner]

He’s certainly not pumping Tencent in this video

[@Eline_Meijer]

Monish returns are less than the SP500 in the last 10 years. The last 10 years were the best years of the stock market and he didnt beat the SP500...... Monish talks big but he is not a great investor

[@BradKaellner]

It’s often tough for value investors to beat the S&P during strong bull runs. Better to judge an investor over an entire career

[@Eline_Meijer]

@@BradKaellner True but its not an excuse. Trying to learn from someone who can't do the single thing people pay him to do is detrimental to good investing. By listening to him, you propose his views and capabilities as something to inspire to, while in reality, a lot of other super investors did way better than the SP500. Long story short, retail investors are not hedge funds, I work in a NY based value hedge fund and even I can't do what we do on my own. Monish risk his intire fund on Micron (MU) and its a very risky move, something that I won't advise anyone.

[@compounding999]

He`s cooled to china in recent months

[@BradKaellner]

Certainly

[@fearlyenrage]

Intent to inform: To analyse what he did we should look at the trackrecord of his doing. Reysas made economicaly sense but for sure the disintrest of the market made no-sense at the time he found it. Why should it be a hot business to store stuff? Makes absolute no-sense-sense. It is the most boring enterprise there is BUT to have the vacancy by good businesses made sense for him. And to rent space is a good business, because things must be stored in good conditions away from the weather or bastards who try to steel it away. Robust companys pay their rent adequadtly and push risk of losing out, down. And thats one of many reasons why he bought in.

[@BradKaellner]

🎯

[@sheanathan3566]

Man of contradictions Advocates buy and hold yet wanting to sell tencent because it’s a mega cap (which it was when he bought it) and it is with whiners political risk (which it was when he bought it)

[@BradKaellner]

Aren’t we all just walking contradictions

[@tombrady4977]

Why? He called the digital Warren Buffetts. That was probably the most embarrassing thing I have ever seen. Even beats his Alibaba golden goose comments. He seems to always invest far outside his circle of competence. It might be even the null set.😂

[@BradKaellner]

Embarrassing for you?

[@tombrady4977]

@@BradKaellner I know you have this massive Pabrai obedience tendency. You should learn to listen to him when he is right and question things he is wrong. Remember when talked about Tencent and how nobody could figure out their business model. Then he said : let the Indian guy explain the business model,….“ and what followed was so embarrassingly obvious that you can find that out by just reading one of their reports. Digital Warren buffetts what BS. They mention in every report their huge investment portfolio. Tencent is software/computer games plus a VC fund. No secret here. But hey it’s a digital Warren Buffett.

[@fmalexander5555]

You old guys need to get into Crypto. I've already had a 8000x. HEX, evidence on the chart. ✌️😯✨️🧡💚❤️💜💛 Circle the wagons means protect your most valuable long.

[@BradKaellner]

Thanks for that clarification 🍻

[@fearlyenrage]

@@BradKaellner Information: to get it precise: Circle the wagons means protect your most valuable partners that have a lot of good stuff you could use/sell/rent or what ever capital gains produces. Like when you go camping, the groupmembers have all something you could use and that members/stuff you have to protect from beeing robbed! That circeling was a active strategy in the WildWest against robbery, so you could hideout behinde the waggons and shoot the bastards that are rideing outside the circled wagons. That circle was like a wall against the bastards who try to rob the stuff from the Wagons! You could shoot them easy because they rode on a horse unprotected, unlike the group inside the bandwagon circle. Results in the saying "circling the wagons" =)

[@karamsulaiman6605]

A bit late to the party Mohnish.

[@BradKaellner]

Which party?

[@karamsulaiman6605]

@@BradKaellner That is China is not a place for long-term investors. That was a no-brainer dating back to the Chinese Education companies being wiped out!

[@karamsulaiman6605]

Meanwhile Mohnish ignored all the signs that succeeded and was in love with China. He just noticed that it is dangerous to invest in.