Other[Music][Music][Music]let me introduce you you don't needlet me introduce you you don't needlet me introduce you you don't need introductionintroductionintroduction but for some people i want to say thatbut for some people i want to say thatbut for some people i want to say that monis is indian american investor andmonis is indian american investor andmonis is indian american investor and philanthropistphilanthropistphilanthropist is managing partner of pobrai fundsis managing partner of pobrai fundsis managing partner of pobrai funds which was founded in 1999which was founded in 1999which was founded in 1999 on principles followed by warren buffetton principles followed by warren buffetton principles followed by warren buffett and his good friend of warren buffettand his good friend of warren buffettand his good friend of warren buffett and charlie munger he had famous lunchand charlie munger he had famous lunchand charlie munger he had famous lunch with buffett with his entire family andwith buffett with his entire family andwith buffett with his entire family and his friendhis friendhis friend guy's fire in 2007 or eightguy's fire in 2007 or eightguy's fire in 2007 or eight and today his fund is doing very welland today his fund is doing very welland today his fund is doing very well he is following concentrated approachhe is following concentrated approachhe is following concentrated approach and he is writer of dhando investor andand he is writer of dhando investor andand he is writer of dhando investor and mosaicmosaicmosaic he invests he invests in india andhe invests he invests in india andhe invests he invests in india and emerging marketsemerging marketsemerging markets over and over investments he has gotover and over investments he has gotover and over investments he has got deep interest in philanthropicdeep interest in philanthropicdeep interest in philanthropic activitiesactivitiesactivities and that's not foundation which wasand that's not foundation which wasand that's not foundation which was founded by himfounded by himfounded by him operating very well in pune and otheroperating very well in pune and otheroperating very well in pune and other cities and there are severalcities and there are severalcities and there are several dhakshna scholars who are gettingdhakshna scholars who are gettingdhakshna scholars who are getting admission in iit
Questioneradmission in iit and iit and medical colleges which is unparalleled and last year i came to know about this in millennium mem program on 8th of may and there after i wanted to go and see this but because of lockdowns still it is still it is pending so one is how would you like to structure the session will you like to give some opening remarks and then maybe it can be followed with question and answer
Warrenyeah i mean i'm actually more interested in uh in hearing what you guys have on your mind but first of all you know thank you for the gracious invitation and also for the very generous intro i appreciate that i'm also happy to note the connection with millennium maps it was fun to meet them in omaha i think that's uh that's a good one i was very impressed with them uh having made the journey all the way and uh and i think it's a wonderful
Otherand uh and i think it's a wonderful group and wonderful organization you know since many of you are from uh calcutta so it is my uh favorite indian city of all the cities in india calcutta is my most favorite city and i think mainly it is my most favorite city because it has the best food in india so uh i always uh look forward to my visits to kolkata because uh it's very varied you know and my cousin i have i have a few relatives who live in but one of them who is more famous than the others is uh my cousin who has a fabrice ice cream in uh in kolkata and uh you know he's got the naland uh ice cream that is done quite well so anyway he's uh he's in the food business and he makes sure that i go to all the hole in the wall dives in calcutta and get all the different like he'll take me one place for sandesh another place for something else it's already specialized
Questionersomething else it's already specialized so and uh anyway i've always liked cockatai and uh anyway i've always liked cockatai and uh anyway i've always liked cockatai most people don't spend enough time most people don't spend enough time most people don't spend enough time there there there but i think i would really like to hear but i think i would really like to hear but i think i would really like to hear from you and what you guys have on your from you and what you guys have on your from you and what you guys have on your mind and mind and mind and we can keep it free flowing from there
Questioneryeah one is till recently you were yeah one is till recently you were yeah one is till recently you were following value approach following value approach following value approach so last year i understand you went so last year i understand you went so last year i understand you went through next sleeps through next sleeps through next sleeps normal letters and you changed your normal letters and you changed your normal letters and you changed your strategy from value to growth strategy from value to growth strategy from value to growth can you give us more insight on this can you give us more insight on this can you give us more insight on this change of strategy and change of strategy and change of strategy and with this change of strategy maybe you with this change of strategy maybe you with this change of strategy maybe you are getting more time are getting more time are getting more time and in any case lockdown gives lot of and in any case lockdown gives lot of and in any case lockdown gives lot of time so that can also help us to time so that can also help us to time so that can also help us to discover what else is being followed up discover what else is being followed up discover what else is being followed up by you in these days by you in these days by you in these days
Otheryeah so you know actually there's a yeah so you know actually there's a yeah so you know actually there's a there's a book that came out there's a book that came out there's a book that came out recently uh it's called yeah recently uh it's called yeah recently uh it's called yeah wiser happier yeah wiser happier yeah wiser happier yeah yeah yeah so actually the book was uh yeah yeah so actually the book was uh yeah yeah so actually the book was uh published almost the same time published almost the same time
Otherpublished almost the same time in india and the us so there's ain india and the us so there's ain india and the us so there's a there's a paperback version available atthere's a paperback version available atthere's a paperback version available at in india but i think amazon ranin india but i think amazon ranin india but i think amazon ran out so they probably maybe have done aout so they probably maybe have done aout so they probably maybe have done a second printingsecond printingsecond printing it's an exceptionally well written bookit's an exceptionally well written bookit's an exceptionally well written book and i think you guys would uhand i think you guys would uhand i think you guys would uh would enjoy the book so if you if youwould enjoy the book so if you if youwould enjoy the book so if you if you have not got a copy i would say thathave not got a copy i would say thathave not got a copy i would say that would be a good investmentwould be a good investmentwould be a good investment to make so i received a galley copy ofto make so i received a galley copy ofto make so i received a galley copy of this book about a year ago it just camethis book about a year ago it just camethis book about a year ago it just came outoutout end of april but i got it about a yearend of april but i got it about a yearend of april but i got it about a year ago andago andago and uh because the author wanted me to justuh because the author wanted me to justuh because the author wanted me to just check you know fact check everything andcheck you know fact check everything andcheck you know fact check everything and all thatall thatall that and uh so he's an exceptional writerand uh so he's an exceptional writerand uh so he's an exceptional writer so chapter one is mainly on meso chapter one is mainly on meso chapter one is mainly on me but my favorite chapter is chapter sixbut my favorite chapter is chapter sixbut my favorite chapter is chapter six and uh chapter six is uh called nick andand uh chapter six is uh called nick andand uh chapter six is uh called nick and zach'szach'szach's excellent adventure so nick sleep is aexcellent adventure so nick sleep is aexcellent adventure so nick sleep is a wonderfulwonderfulwonderful investor he's based in the uk in londoninvestor he's based in the uk in londoninvestor he's based in the uk in london and he's been a friend of mine for maybe
Otherand he's been a friend of mine for maybe close to 20 years i've known nick for a long time but sometimes you know it would be maybe even four or five years between me talking to him or meeting him so we we were in touch but we were not in touch a lot but i always enjoyed the interaction but what i missed is that when i read williams uh williams chapter on nick and zach i realized that nick had gone through an evolution as an investor and he had he had actually transitioned significantly from graham to buffet to monger and then actually he went beyond so i found many things about his journey very compelling and so one of the things that him and his partner case zakaria did is they were they were managing about three billion dollars in 2014 and at the time the i think their largest position was amazon amazon would have been probably
Questioneramazon amazon would have been probably close toclose toclose to a third of the entire capital maybea third of the entire capital maybea third of the entire capital maybe close to a billion dollarsclose to a billion dollarsclose to a billion dollars and the uk the ukand the uk the ukand the uk the uk fund regulators were giving themfund regulators were giving themfund regulators were giving them a lot of pressure that thea lot of pressure that thea lot of pressure that the fund is very risky and the fund is notfund is very risky and the fund is notfund is very risky and the fund is not diversified etc so they were kind ofdiversified etc so they were kind ofdiversified etc so they were kind of puttingputtingputting a lot of pressure on these guys toa lot of pressure on these guys toa lot of pressure on these guys to reduce the concentrations and one of thereduce the concentrations and one of thereduce the concentrations and one of the things that theythings that theythings that they that was a kind of a bedrock ofthat was a kind of a bedrock ofthat was a kind of a bedrock of something they had learnedsomething they had learnedsomething they had learned over uh they started running the fund inover uh they started running the fund inover uh they started running the fund in 200120012001 uh it was very small fund i think whenuh it was very small fund i think whenuh it was very small fund i think when they started with in 2001 they never hadthey started with in 2001 they never hadthey started with in 2001 they never had you know 30 40 million dollars in it andyou know 30 40 million dollars in it andyou know 30 40 million dollars in it and uhuhuh and it grew investors came in over timeand it grew investors came in over timeand it grew investors came in over time andandand they also did well so the bedrock forthey also did well so the bedrock forthey also did well so the bedrock for them was that theythem was that theythem was that they did not believe in having an overlydid not believe in having an overlydid not believe in having an overly diversified portfoliodiversified portfoliodiversified portfolio and there were a lot of core principlesand there were a lot of core principlesand there were a lot of core principles that would be violatedthat would be violatedthat would be violated and both these guys had never imaginedand both these guys had never imaginedand both these guys had never imagined because when their funds started in 2001
Questionerbecause when their funds started in 2001 they were employees of a large fund house in the uk called marathon asset management would have had maybe 50 60 billion under management so they that these guys were analysts and they allowed them to set up a fund just for the two of them marathon basically said fine you guys can have this fund in addition to doing your analyst jobs and then after a few years i think three four years they were able to convince marathon management to spin them out you know let them go on their own which probably marathon management at this point regrets but anyway they they spun them out and so nick and zach never expected to be extremely wealthy but in 2014 when these uk regulators were giving them all this grief they were each worth close to 100 million dollars with all the fees and everything that they had made so they said
Otherthey had made so they said why do we need to put up with this nonsense so they email their investors and say we're returning all the capital and we are closing the fund and we have other things we want to do with our lives and they were both about 45 years old at the time and i i remember i got some calls like like some endowment in the u.s called me at the time and they said monish do you know that uh nick is nick sleep is returning all our money so i said yeah he's returning your money but he told you what to do so what what nick and zach told them is look we are very concentrated in this business fund and probably even 10 years from now the main positions will not change they're going to stay the same so we are closing the fund but what you guys can do when you return when you receive your the money is uh just invest it the way
Warrenthe money is uh just invest it the way we had it investedwe had it investedwe had it invested and these are the five six stocks thatand these are the five six stocks thatand these are the five six stocks that wewewe have most your money in put it in thosehave most your money in put it in thosehave most your money in put it in those stocksstocksstocks you don't need to pay us any feesyou don't need to pay us any feesyou don't need to pay us any fees anymore andanymore andanymore and you don't need to read our boringyou don't need to read our boringyou don't need to read our boring brothers you're done you just take yourbrothers you're done you just take yourbrothers you're done you just take your moneymoneymoney and put in those stocks so i told theand put in those stocks so i told theand put in those stocks so i told the endowment guy i saidendowment guy i saidendowment guy i said they told you what to do so what's yourthey told you what to do so what's yourthey told you what to do so what's your problem so they said uhproblem so they said uhproblem so they said uh our mandate doesn't allow us toour mandate doesn't allow us toour mandate doesn't allow us to own individual stocks okayown individual stocks okayown individual stocks okay so i said let me just understand this soso i said let me just understand this soso i said let me just understand this so if i set up a fund for youif i set up a fund for youif i set up a fund for you where you are the only investor and iwhere you are the only investor and iwhere you are the only investor and i buy the stock thatbuy the stock thatbuy the stock that is recommending thenis recommending thenis recommending then that should be okay and uh so this isthat should be okay and uh so this isthat should be okay and uh so this is kind of the craziness that goes onkind of the craziness that goes onkind of the craziness that goes on so anyway they got their 100 millionso anyway they got their 100 millionso anyway they got their 100 million each they shut down the fundseach they shut down the fundseach they shut down the funds i would and and what nick did with thei would and and what nick did with thei would and and what nick did with the 100 million is he put everything into100 million is he put everything into100 million is he put everything into three stocks amazon costcothree stocks amazon costcothree stocks amazon costco and berkshire hathaway and probably
Questionerand berkshire hathaway and probably amazon was maybe a third probably each of them was the third maybe amazon may have been little larger and at that time amazon was maybe around 300 a share now it is about 3 300 a share so for the most part and then zach put the money in six stocks so he was a little bit more diversified but from 2014 till now zach has made no changes to the portfolio it's sitting exactly where the way it was in the case of nick when amazon got to 1500 he got a little bit concerned about how much concentration he has amazon so he added a fourth stock and cut the amazon position half that fourth stock a source is also done very well it's done as well as amazon so they have done better than probably any fund manager has done after they shut the fund down while doing almost no work you know i mean he rides his bicycle he
Questioneryou know i mean he rides his bicycle he loves to race cars loves to race cars loves to race cars he drove uh he took a 50-day he drove uh he took a 50-day he drove uh he took a 50-day kind of car drive with his daughter from kind of car drive with his daughter from kind of car drive with his daughter from beijing beijing beijing going across going across you know going across going across you know going across going across you know europe europe europe etc all over so what i realized when i etc all over so what i realized when i etc all over so what i realized when i read the next leap chapter is that read the next leap chapter is that read the next leap chapter is that they had figured out a number of things they had figured out a number of things they had figured out a number of things and and and in fact even when i had first started as in fact even when i had first started as in fact even when i had first started as an investor an investor an investor i was a lot more of a person i was a lot more of a person i was a lot more of a person interested in rapidly growing interested in rapidly growing interested in rapidly growing businesses which generated high returns businesses which generated high returns businesses which generated high returns on equity on equity on equity but then uh you know in the mid 90s when but then uh you know in the mid 90s when but then uh you know in the mid 90s when i started out that's how i used to i started out that's how i used to i started out that's how i used to invest but then invest but then invest but then we had the dot-com bubble and i could we had the dot-com bubble and i could we had the dot-com bubble and i could see that bubble was coming see that bubble was coming see that bubble was coming so things were getting very elevated so so things were getting very elevated so so things were getting very elevated so i shifted i shifted i shifted to a more a grammy enough approach and to a more a grammy enough approach and to a more a grammy enough approach and it worked well because i think during it worked well because i think during it worked well because i think during the bubble i had the bubble i had the bubble i had no losses in fact 99 2000 we were up no losses in fact 99 2000 we were up no losses in fact 99 2000 we were up like like like 70 a year and uh it went pretty well 70 a year and uh it went pretty well 70 a year and uh it went pretty well from there from there from there but what i forgot to do was i forgot to
Todd Combsbut what i forgot to do was i forgot to switch back so once kind of valuations came back i so first of all growth and value are two sides of the same coin just because you buy amazon doesn't mean it's not a value stock and because you buy some coal company at one fifth the book value doesn't mean it's a it's a it's a it's a great value stock so all businesses are worth the sum of cash flows they would produce over their entire duration discounted by some reasonable interest rate so if you're very rapidly growing business the cash flows are increasing so you can pay more for it because you have a growing stream of cash flow then if you have a if you have a if you have a declining business or a flat business declining business or a flat business declining business or a flat business that also has a value but it'd be that also has a value but it'd be that also has a value but it'd be different value because different value because different value because those cash flows aren't growing those cash flows aren't growing those cash flows aren't growing and one of the important things that and one of the important things that and one of the important things that nick and zach nick and zach nick and zach figured out was this concept of
Todd Combsfigured out was this concept of scaled economy shared so scaled economy shared is a extremely powerful model so what happens with most businesses is as they scale they get operating leverage and the business gets more efficient and the profits increase so for example if i take a business like let's say mastercard so mastercard uh basically collects like 20 basis points or 25 basis points on every credit card transaction that is charged to mastercard anywhere in the world so that 20 25 basis points comes to them and of course their costs are a bunch of servers and a bunch of networks they don't have much cost and so as more and more transactions are going through mastercard their profitability keeps rising because their costs don't go up with but what a company mastercard does it keeps the spoils from the scaling they don't share the scaling
Questionerthey don't share the scaling profits with the customers so that is not what nick is talking about what he's talking about is enlightened businesses which as they scale give the benefits of that scale back to the customer and there are very very few businesses that are enlightened enough to do that so a great business which doesn't exist in india yet but maybe some of you might be somewhat familiar with is costco and in fact dmart you know avenue supermarkets took a lot of lessons from costco in their business model the dmart business model is kind of a combination of costco and walmart which is why nobody can touch that and which is why they do so well but the costco model is that costco for example has a rule that any any product they sell the maximum markup that they allow is 15 so they will not have a markup more than fifteen percent
Questionerfifteen percent on any any product they're selling and on any any product they're selling and on any any product they're selling and the products are really cheap compared the products are really cheap compared the products are really cheap compared to the other competitors so for example to the other competitors so for example to the other competitors so for example walmart or even amazon the typical walmart or even amazon the typical walmart or even amazon the typical margin margin margin is about 25 percent or 30 is about 25 percent or 30 is about 25 percent or 30 and so pretty much almost anything you and so pretty much almost anything you and so pretty much almost anything you can buy at walmart or can buy at walmart or can buy at walmart or amazon if you go to costco it will be amazon if you go to costco it will be amazon if you go to costco it will be maybe 10 maybe 10 maybe 10 cheaper so it's a significant delta now cheaper so it's a significant delta now cheaper so it's a significant delta now costco can easily costco can easily costco can easily charge more if they charge more charge more if they charge more charge more if they charge more their profits will go up but their profits will go up but their profits will go up but they believe that their lifetime profits they believe that their lifetime profits they believe that their lifetime profits will go down will go down will go down and costco does not think of itself as a and costco does not think of itself as a and costco does not think of itself as a retailer they think of themselves as a retailer they think of themselves as a retailer they think of themselves as a buying agent buying agent buying agent for their customers so they they charge for their customers so they they charge for their customers so they they charge membership fees you that guy paid 50 membership fees you that guy paid 50 membership fees you that guy paid 50 or 75 a year to be a member of costco to or 75 a year to be a member of costco to or 75 a year to be a member of costco to shop there pretty much all the 15 shop there pretty much all the 15 shop there pretty much all the 15 margin they take is used to run the margin they take is used to run the margin they take is used to run the business they don't make any money on business they don't make any money on business they don't make any money on that that that the only money they make is the the only money they make is the
Todd Combsthe only money they make is the membership fee so that the membership fee is actually what shows up in net income and so costco does not think they are in the business of trying to maximize profit they're in the business of trying to serve their customers so for example let's take like a category like wine for example so costco has these specialist wine buyers who have gone all over the world and they have found the best vineyards and then they have told those vineyard owners listen you don't need to do any marketing we will take your entire output for the next 20 years we will take you in you just focus on making great wine but we will take your output but we will pay you a fair price not the you know high price because we are giving you a guarantee you know as long as you keep your quality up you're guaranteed that the business will come to you and so
Todd Combscome to you and so they have great relationships with their suppliers and when you go to costco to buy wine for example in any wine store the same wine would be two or three times the price so their wines are extremely high quality they don't mark up more than 15 percent and the customers uh you know cannot get that have a deal so each time a new costco opens all the costco's benefit because they have more scale and more buying power so this scaled economy shared model that nixley honed in on he felt it was an extremely powerful model and it leads to very long runways so amazon follows the same model it's also scaled economy shares it believes in sharing as much as it can with a customer keep the price as low as possible all of that and you know look at lifetime value and the third berkshire hathaway you know they have like
Questionerthey have likethey have like insurance and so on they are followinginsurance and so on they are followinginsurance and so on they are following the same track so his perspective wasthe same track so his perspective wasthe same track so his perspective was that if you just had a portfoliothat if you just had a portfoliothat if you just had a portfolio that just followed this particularthat just followed this particularthat just followed this particular nuance of investingnuance of investingnuance of investing you would do extremely well and so whenyou would do extremely well and so whenyou would do extremely well and so when i read thati read thati read that i was very intrigued i said i have noi was very intrigued i said i have noi was very intrigued i said i have no argument with what he's trying to sayargument with what he's trying to sayargument with what he's trying to say i think the guy is pretty enlightened soi think the guy is pretty enlightened soi think the guy is pretty enlightened so i contacted nick again because i hadn'ti contacted nick again because i hadn'ti contacted nick again because i hadn't been in touch with him then he sent mebeen in touch with him then he sent mebeen in touch with him then he sent me thethethe all his letters and actually if you justall his letters and actually if you justall his letters and actually if you just won't go on googlewon't go on googlewon't go on google and just do next sleep investor lettersand just do next sleep investor lettersand just do next sleep investor letters or nomad industrial lettersor nomad industrial lettersor nomad industrial letters you can pull up all the letters they'reyou can pull up all the letters they'reyou can pull up all the letters they're on the internet he's posted themon the internet he's posted themon the internet he's posted them and i think those letters are reallyand i think those letters are reallyand i think those letters are really worth reading so the chapter six isworth reading so the chapter six isworth reading so the chapter six is worth readingworth readingworth reading but the letters are worth reading and sobut the letters are worth reading and sobut the letters are worth reading and so so i realized that the which should haveso i realized that the which should haveso i realized that the which should have been obvious to me forbeen obvious to me forbeen obvious to me for a long time is that you are going to do
Questionera long time is that you are going to do very well as an investor if you can identify businesses that have very significant growth ahead that have high returns and equity treat the customers really well and have a durable moat and a durable competitive advantage you don't necessarily need to just focus on the scaled economy shared that big sleep focused on another insight nixley brought was that he looked at this company walmart and walmart went public in 1970. okay so now walmart has been public for 51 years and the only people who have held the stock for the entire 51 years is the walton family so sam walton died sam walton's children have started dying and the grandchildren are still holding the stock so the walton family pretty much has not sold it got split amongst many different walton family people but they have not sold the stock they
Questionerbut they have not sold the stock they just get the dividend just get the dividend just get the dividend but they have held the stock for more but they have held the stock for more but they have held the stock for more than five decades after going public than five decades after going public than five decades after going public they held it even more if you look at they held it even more if you look at they held it even more if you look at the time it was founded the time it was founded the time it was founded so nixley to ask the question that if so nixley to ask the question that if so nixley to ask the question that if you owned you owned you owned walmart stock as an institutional walmart stock as an institutional walmart stock as an institutional investor in 1980 investor in 1980 investor in 1980 or 1990 what caused you to sell the or 1990 what caused you to sell the or 1990 what caused you to sell the stock stock stock right why would you sell such a great right why would you sell such a great right why would you sell such a great compounder and the flip side he asked compounder and the flip side he asked compounder and the flip side he asked the question the question the question if you want the stock of a company like if you want the stock of a company like if you want the stock of a company like kmart which went bankrupt kmart which went bankrupt kmart which went bankrupt why would you keep that stock you know why would you keep that stock you know why would you keep that stock you know what caused you to keep that stock what caused you to keep that stock what caused you to keep that stock and so if you can answer those questions and so if you can answer those questions and so if you can answer those questions those are really good uh those are really good uh those are really good uh good questions to answer and so what i good questions to answer and so what i good questions to answer and so what i realized is that in realized is that in realized is that in investing probably the best way to investing probably the best way to investing probably the best way to approach it approach it approach it is to think of yourself is to think of yourself is to think of yourself as if you are the promoter of the as if you are the promoter of the as if you are the promoter of the business business business don't think of yourself as an investor don't think of yourself as an investor don't think of yourself as an investor in the business
Otherin the businessin the business think of yourself as a promoterthink of yourself as a promoterthink of yourself as a promoter and apply the same kind ofand apply the same kind ofand apply the same kind of mental model a promoter would apply somental model a promoter would apply somental model a promoter would apply so in india for examplein india for examplein india for example we have lots of listed businesses whichwe have lots of listed businesses whichwe have lots of listed businesses which are more thanare more thanare more than 50 60 70 owned by the promoter50 60 70 owned by the promoter50 60 70 owned by the promoter this is pretty common amongst listedthis is pretty common amongst listedthis is pretty common amongst listed businessesbusinessesbusinesses and if you look at their wealth theand if you look at their wealth theand if you look at their wealth the wealth is also very concentratedwealth is also very concentratedwealth is also very concentrated because so much of the wealth is justbecause so much of the wealth is justbecause so much of the wealth is just sitting insitting insitting in in one business uh but they understandin one business uh but they understandin one business uh but they understand that business well in many cases it'sthat business well in many cases it'sthat business well in many cases it's probably the best placeprobably the best placeprobably the best place for them to keep their money becausefor them to keep their money becausefor them to keep their money because they don't know where else they would dothey don't know where else they would dothey don't know where else they would do so wellso wellso well so for example one of the things that umso for example one of the things that umso for example one of the things that um like i was thinking about in in 2019like i was thinking about in in 2019like i was thinking about in in 2019 i had been making uh a number of tripsi had been making uh a number of tripsi had been making uh a number of trips to turkeyto turkeyto turkey over the last several years over theover the last several years over theover the last several years over the last four or five yearslast four or five yearslast four or five years andi i visited this company in turkeyi i visited this company in turkeyi i visited this company in turkey in 2019in 2019in 2019 where the market cap was uh 19 millionwhere the market cap was uh 19 million
Otherwhere the market cap was uh 19 million dollarsdollarsdollars one night and uhone night and uhone night and uh the liquidation value of the businessthe liquidation value of the businessthe liquidation value of the business they are the largest warehouse operatorthey are the largest warehouse operatorthey are the largest warehouse operator in turkeyin turkeyin turkey they have the largest truck fleet inthey have the largest truck fleet inthey have the largest truck fleet in turkey they have the largestturkey they have the largestturkey they have the largest rail fleet for rail transportrail fleet for rail transportrail fleet for rail transport in turkey there are many differentin turkey there are many differentin turkey there are many different businesses that are very goodbusinesses that are very goodbusinesses that are very good the liquidation value of the businessthe liquidation value of the businessthe liquidation value of the business was somewhere between 300 million and awas somewhere between 300 million and awas somewhere between 300 million and a billion dollarsbillion dollarsbillion dollars so this company was trading atso this company was trading atso this company was trading at maybe you know somewhere betweenmaybe you know somewhere betweenmaybe you know somewhere between two percent of liquidation value andtwo percent of liquidation value andtwo percent of liquidation value and uh maybe you know six seven percent ofuh maybe you know six seven percent ofuh maybe you know six seven percent of the creation value somewhere in thatthe creation value somewhere in thatthe creation value somewhere in that rangerangerange and so um i tried to buy every share iand so um i tried to buy every share iand so um i tried to buy every share i couldcouldcould because i i talked to my friend who hadbecause i i talked to my friend who hadbecause i i talked to my friend who had helped me understand some of thehelped me understand some of thehelped me understand some of the businesses i said the only question ibusinesses i said the only question ibusinesses i said the only question i have here is am i dealing with crookshave here is am i dealing with crookshave here is am i dealing with crooks okay that's my only because i know theokay that's my only because i know theokay that's my only because i know the assets are good everything is goodassets are good everything is good
Otherassets are good everything is good and there was no nothing to indicate that the promoters were uh were not were not straight and so i i tried to buy every share i could and we were able to because turkey has the investors in turkey turkey's one of the best markets to invest in because the local population and even the local institutional investors have some of the shortest holding periods for stocks so most of the local investors in turkey believe that they will buy some stock at 10 o'clock in the morning and by noon they should be able to sell it and make 10 percent okay that's their so the trading volumes are extremely high so anyway we were able to buy one third of this business for seven million dollars and and i thought okay you know at that time my mindset was okay it's a good business so they are the like you know amazon car four
Questionerlike you know amazon car four alibaba all these guys are renting alibaba all these guys are renting alibaba all these guys are renting warehouses and these guys they're like warehouses and these guys they're like warehouses and these guys they're like hundred percent leased hundred percent leased hundred percent leased uh it's a very good business there they uh it's a very good business there they uh it's a very good business there they have like 12 million square feet of have like 12 million square feet of have like 12 million square feet of warehouses warehouses warehouses and they have a bunch of other and they have a bunch of other and they have a bunch of other businesses so my thinking at that time businesses so my thinking at that time businesses so my thinking at that time was that was that was that okay i know what the business is worth okay i know what the business is worth okay i know what the business is worth and when it gets close to and when it gets close to and when it gets close to valued at that price then let's say the valued at that price then let's say the valued at that price then let's say the valuation goes to 300 million or 500 valuation goes to 300 million or 500 valuation goes to 300 million or 500 million million million if the intrinsic value has not changed i if the intrinsic value has not changed i if the intrinsic value has not changed i can sell and move on can sell and move on can sell and move on and it'll be a good good investment and it'll be a good good investment and it'll be a good good investment after reading after reading after reading on nick sleep etc on nick sleep etc on nick sleep etc i think of myself as the junior partner i think of myself as the junior partner i think of myself as the junior partner of the of the of the promoters of the company you know i promoters of the company you know i promoters of the company you know i don't need to tell them what to do or don't need to tell them what to do or don't need to tell them what to do or neither are they interested in hearing neither are they interested in hearing neither are they interested in hearing from me what they should do because they from me what they should do because they from me what they should do because they know better than me what they should do know better than me what they should do know better than me what they should do but happy to just cheer them all from
Questionerbut happy to just cheer them all from the sideline so now my mindset is not that i'm going to track what the intrinsic value is and then you know when it reaches 90 percent of that or that to sell it my model is that as long as the business is improving and as long as the trajectory of the business is that it's you know over a longer term increasing in valuation and getting better we'll keep owning the business and it could be 10 years 20 years 30 years i don't know how long we will hold it but um so that mindset shifted it shifted from say looking at every position as a okay you know how much is this worth et cetera because if you look at a business like costco if you look at a business like amazon or even if you look at a business like dmart for example the key question you have to ask yourself is what is the destination what is what does this business look
Questionerwhat is what does this business lookwhat is what does this business look like in 10 years or 20 yearslike in 10 years or 20 yearslike in 10 years or 20 years and what is the probability that it willand what is the probability that it willand what is the probability that it will look like thatlook like thatlook like that at that time and most businesses youat that time and most businesses youat that time and most businesses you cannotcannotcannot even try to figure out what that whateven try to figure out what that whateven try to figure out what that what what it would look like in that timewhat it would look like in that timewhat it would look like in that time frame because capitalism is so brutalframe because capitalism is so brutalframe because capitalism is so brutal but some businesses you might be able tobut some businesses you might be able tobut some businesses you might be able to get some comfortget some comfortget some comfort
Warreni mean costco's business is so solidi mean costco's business is so solidi mean costco's business is so solid they justthey justthey just opened their first store in china and itopened their first store in china and itopened their first store in china and it got markedgot markedgot marked i mean there were lines mile long linesi mean there were lines mile long linesi mean there were lines mile long lines outside people trying to get into theoutside people trying to get into theoutside people trying to get into the store andstore andstore and uh if you if you fast forward 20 yearsuh if you if you fast forward 20 yearsuh if you if you fast forward 20 years costco could have thousand stones incostco could have thousand stones incostco could have thousand stones in china we don't knowchina we don't knowchina we don't know you know it could have five stores ityou know it could have five stores ityou know it could have five stores it may not do wellmay not do wellmay not do well or it could have a thousand stores weor it could have a thousand stores weor it could have a thousand stores we don't know but the thing is thatdon't know but the thing is thatdon't know but the thing is that it's likely it does well so if you wereit's likely it does well so if you wereit's likely it does well so if you were a shareholder of costcoa shareholder of costcoa shareholder of costco at this point you just say i'll justat this point you just say i'll justat this point you just say i'll just
Questionerat this point you just say i'll just hold the stock you know there's no need to make any other decision so anyway it's a long-winded answer to a very short question but that's kind of what i got out of the nick sleep uh chapter and his letters and i think you guys would enjoy reading both
Questioneryeah i just downloaded this book yesterday and you are circulating our group also the monies you have been investing in india and other emerging markets how has been your experience
Questionerwell i think india has been very difficult and i think that probably if i if i had more of a next sleep mindset when i which is what i i focus on now what i would have focused on in india and what i what i will focus on in india in the future would be quite different from the past i mean not that it doesn't work i mean like for example in uh in 2015 i had made an investment in a company in hyderabad
Otherhyderabadhyderabad called rain industries and uhcalled rain industries and uhcalled rain industries and uh we still are a shareholder of rainwe still are a shareholder of rainwe still are a shareholder of rain industries andindustries andindustries and uh in 2015 we had invested anduh in 2015 we had invested anduh in 2015 we had invested and owned 10 of the business that's theowned 10 of the business that's theowned 10 of the business that's the maximum i could own nine point nine ninemaximum i could own nine point nine ninemaximum i could own nine point nine nine percent as apercent as apercent as a uh as a foreign investor that's theuh as a foreign investor that's theuh as a foreign investor that's the highest percentage we can ownhighest percentage we can ownhighest percentage we can own and uh at that time i could not see aand uh at that time i could not see aand uh at that time i could not see a kind of a downside you know it lookedkind of a downside you know it lookedkind of a downside you know it looked like kind of like the business in turkeylike kind of like the business in turkeylike kind of like the business in turkey so rain was aso rain was aso rain was a relatively small company based inrelatively small company based inrelatively small company based in hyderabadhyderabadhyderabad maybe their annual revenues were aboutmaybe their annual revenues were aboutmaybe their annual revenues were about 200 million or less200 million or less200 million or less they did two acquisitions uh beforethey did two acquisitions uh beforethey did two acquisitions uh before 2015.2015.2015. i think one was in 2008 and the otheri think one was in 2008 and the otheri think one was in 2008 and the other one was 2011 or soone was 2011 or soone was 2011 or so and these two acquisitions increasedand these two acquisitions increasedand these two acquisitions increased their revenuestheir revenuestheir revenues from 200 million to 2 billionfrom 200 million to 2 billionfrom 200 million to 2 billion so they bought two businessesso they bought two businessesso they bought two businesses that were 10 times that increased theirthat were 10 times that increased theirthat were 10 times that increased their revenue by 10 times and both therevenue by 10 times and both therevenue by 10 times and both the businesses were bought they were notbusinesses were bought they were notbusinesses were bought they were not indian businesses one was in the us
Questionerindian businesses one was in the us and the other one was in europe and both these businesses they raised basically high yield debt in the us and the 100 percent debt financed both the companies with no recourse to the parent so what he was able to do jagan reddy who's the who's his managing director and the founding family is he was able to convince the debt markets to give him about 1.5 or 1.6 billion in debt which was the total purchase price of both the businesses and the only collateral he provided to them was that if it didn't work they could take those businesses so basically rain had no downside if this these deals did not work the india business would be unaffected it's like i'm buying a steel mill 400 million dollars some bank has given me 100 million dollar loan and i told the bank you have the steel mill has collateral
Questionersteel mill has collateral and if the deal goes upside down withand if the deal goes upside down withand if the deal goes upside down with the mr bank here's the steel mill here'sthe mr bank here's the steel mill here'sthe mr bank here's the steel mill here's the keysthe keysthe keys warm regards and i just leave okaywarm regards and i just leave okaywarm regards and i just leave okay that's basically how that deal was donethat's basically how that deal was donethat's basically how that deal was done and so the first deal he did which wasand so the first deal he did which wasand so the first deal he did which was thethethe the u.s business i think that was a 600the u.s business i think that was a 600the u.s business i think that was a 600 or 650 million purchase priceor 650 million purchase priceor 650 million purchase price uh which was all debt financed in theuh which was all debt financed in theuh which was all debt financed in the first year the business produced morefirst year the business produced morefirst year the business produced more than 100 millionthan 100 millionthan 100 million of free cash flow and and it producedof free cash flow and and it producedof free cash flow and and it produced uh continue to produce like 50 60uh continue to produce like 50 60uh continue to produce like 50 60 million a year after that so thatmillion a year after that so thatmillion a year after that so that business was alreadybusiness was alreadybusiness was already doing well and then he used thedoing well and then he used thedoing well and then he used the us business as collateral to do theus business as collateral to do theus business as collateral to do the second deal which was even larger whichsecond deal which was even larger whichsecond deal which was even larger which was about awas about awas about a 900 million dollar purchase which was900 million dollar purchase which was900 million dollar purchase which was rutgers in europe so when i looked atrutgers in europe so when i looked atrutgers in europe so when i looked at this companythis companythis company these two businesses in the u.s andthese two businesses in the u.s andthese two businesses in the u.s and europe were not doing well at that timeeurope were not doing well at that timeeurope were not doing well at that time in 2014 2015 so basically they werein 2014 2015 so basically they werein 2014 2015 so basically they were barely able to cover their interest
Otherbarely able to cover their interest expenses and the india business was pretty small so it didn't matter but the market cap was 200 million so the market was giving them zero credit for these international businesses because they felt like okay we don't know what is the future but i could not see a way that the company is worth less than what it was trading at and i could see so at that time i think the 2015 the share price was like 35 40 rupees per share and i could see that it was easy for them in a single year to make 40 rupees a share so i said okay this is a pretty simple business i'm just going to hold this stock for five six years they're gonna be one year that's going to come because it's a cyclical business where the earnings will be 40 50 rupees per share and i'm done at that point the stock cannot be at 40 rupees
Li Lucannot be at 40 rupees and so in 2017 2017 2018 that is exactly what happened their earnings in that year were 200 million dollars and uh the stock went to a market cap of more than two billion so it went you know more than 10x and of course i should have exited but by that time i had fallen in love with mr reddy and and i actually found that he's a very good operator and he's a very honest guy and uh that the business was actually getting better so i felt like okay this is something we want to hold because he's improving the business and all that like for example some of the things they do they spend more money that is required several million dollars a year to make the pollution from their plants be much lower than what is required by by law so that there no one is asking them to do that he's probably spending at least 10 million
Otherspending at least 10 million dollars a year extra just to keep the pollution lower than any of his competitors even though nobody's asking him to do that because he believes it's the right thing to do so it's like he just thinks long term which is why i like the guy and so anyway it went from 40 rupees to 400 rupees actually 40 from 40 to 450 rupees and and then it came all the way down 200 rupees right so and i'm just sitting there holding the stock and then last year during the when covered when covet hit it went down to 50 rupees so again and in fact in 2020 when it went to 50 rupees they've made so much money in the last four or five years so actually the stock was much cheaper than what it was in 2015 because they have added all these retained earnings and so it was ridiculous anyway so now rain is sitting at like 170 180 or something
Questionersomethingsomething and my love affair still continues but the thing is this is the kind of business that i would not buy with a next sleep framework the reason i bought this business was it was really really cheap and there was no way to really lose money but it is not a great business it has a great operator but it's not a great business you know it mastercard is a great business uh costco is a good business berkshire hathaway is a good business you can even say dmart is a good business but i would not call green industries a great business i would say at best it's a good business with a with a great capital allocator so so these are uh some of my learning so i i think in india one has to be it's a minefield is where i look at it i think one has to be careful and the issue is that i think what i run
Otherand the issue is that i think what i run into in india is that the truly great businesses generally speaking trade at very elevated valuations once in a while you find some dislocations but uh like for example you know if i look at a business like hdfc bank right so hgfc bank is not just a great bank it is probably one of the best banks in the world not one of the best banks in india it's probably one of the best banks in the world just in terms of how it runs and how it's operating and all of that and maybe when you put that lens on it's a value price but it's on normal metrics it doesn't appear cheap and then he also check with you can he can he arrange your lunch with charlie munger and then you found email went there in two days time and since you live in the same city so you have developed great fancy so can you give us some insights on your warren buffett and charlie
Questioneron your warren buffett and charlie munger learnings which could help us in investing world
Ted Weschlerwell you know sometimes i have to pinch myself i i feel like i'm forrest gump you know so first of all you know it's like if you are living in the time of gandhi or you're living in the time of newton or einstein and you get a chance to have lunch with these guys would you want to take that opportunity right and so what i realized is buffett was every year doing a charity lunch and and basically you could bid the highest bidder will get the lunch and i had made so much money off his intellectual property that i felt like you know there is a tuition view and uh and at that time when i was trying to win the lunch it used to go for 200 000 or 300 000 but in 2007 i think i think at that time my my net worth was around like 80 million dollars most of it because of
Questioner80 million dollars most of it because of warren and charlie so i said
Questionerso i bid on the lunch we won the lunch
Questionerso i bid on the lunch we won the lunch
Questionerso i bid on the lunch we won the lunch and then my friend guys peter and i we
Questionerand then my friend guys peter and i we
Questionerand then my friend guys peter and i we went with our
Questionerwent with our
Questionerwent with our family so it was a really wonderful so
Questionerfamily so it was a really wonderful so
Questionerfamily so it was a really wonderful so one of the things that buffett tries to do
Questionerone of the things that buffett tries to do
Questionerone of the things that buffett tries to do
Questionerbecause he has his lunch every year
Questionerbecause he has his lunch every year
Questionerbecause he has his lunch every year right is he wants to make sure
Questionerright is he wants to make sure
Questionerright is he wants to make sure that whoever has won the lunch thinks
Questionerthat whoever has won the lunch thinks
Questionerthat whoever has won the lunch thinks they got a bargain
Questionerthey got a bargain
Questionerthey got a bargain okay so he comes trying to give you
Questionerokay so he comes trying to give you
Questionerokay so he comes trying to give you as much value as you can so like like he
Questioneras much value as you can so like like he
Questioneras much value as you can so like like he told us when he came
Questionertold us when he came
Questionertold us when he came that look we had the lunch in new york
Questionerthat look we had the lunch in new york
Questionerthat look we had the lunch in new york he said i have nothing going on all
Questionerhe said i have nothing going on all
Questionerhe said i have nothing going on all after
Questionerafter
Questionerafter i'm completely free so whenever you guys
Questioneri'm completely free so whenever you guys
Questioneri'm completely free so whenever you guys are completely bored of me
Questionerare completely bored of me
Questionerare completely bored of me and you want me to leave you let me know
Questionerand you want me to leave you let me know
Questionerand you want me to leave you let me know and i'll leave
Questionerand i'll leave
Questionerand i'll leave but i don't have to be someplace in one
Questionerbut i don't have to be someplace in one
Questionerbut i don't have to be someplace in one hour or something
Questionerhour or something
Questionerhour or something we have as much time as you want so he
Questionerwe have as much time as you want so he
Questionerwe have as much time as you want so he puts you at ease like you can within 10
Questionerputs you at ease like you can within 10
Questionerputs you at ease like you can within 10 minutes you think you're
Questionerminutes you think you're
Questionerminutes you think you're having lunch with your grandfather which
Questionerhaving lunch with your grandfather which
Questionerhaving lunch with your grandfather which is great
Questioneris greatis great and um and yeah so he he arrangedand um and yeah so he he arrangedand um and yeah so he he arranged you know i told warren that you know myyou know i told warren that you know myyou know i told warren that you know my my wifemy wifemy wife reena was a big fan of his but herreena was a big fan of his but herreena was a big fan of his but her littlelittlelittle love in life is charlie bunger so warrenlove in life is charlie bunger so warrenlove in life is charlie bunger so warren is very competitive he says you knowis very competitive he says you knowis very competitive he says you know charlie is a very boring guy i am thecharlie is a very boring guy i am thecharlie is a very boring guy i am the guy who's interestingguy who's interestingguy who's interesting he's a useless old guy he's just nothe's a useless old guy he's just nothe's a useless old guy he's just not even worth talking toeven worth talking toeven worth talking to and he said you know i'm going toand he said you know i'm going toand he said you know i'm going to arrange for you guys to meet charliearrange for you guys to meet charliearrange for you guys to meet charlie because thenbecause thenbecause then i will know who's the better guy to havei will know who's the better guy to havei will know who's the better guy to have lunch withlunch withlunch with uh so i thought he was just joking aboutuh so i thought he was just joking aboutuh so i thought he was just joking about this right but then he set upthis right but then he set upthis right but then he set up he set us up to meet charlie for lunchhe set us up to meet charlie for lunchhe set us up to meet charlie for lunch and actually i enjoyed the charlieand actually i enjoyed the charlieand actually i enjoyed the charlie munger lunch a lot moremunger lunch a lot moremunger lunch a lot more uh than the buffett lunch which wasuh than the buffett lunch which wasuh than the buffett lunch which was which was funwhich was funwhich was fun and then that uh that led to aand then that uh that led to aand then that uh that led to a nice friendship with charlie which i wasnice friendship with charlie which i wasnice friendship with charlie which i was surprised atsurprised atsurprised at and so now charlie isand so now charlie isand so now charlie is 97 he's going to be 98 in97 he's going to be 98 in97 he's going to be 98 in in january he's uh so i think probably
Questionerin january he's uh so i think probablyin january he's uh so i think probably maybe uhmaybe uhmaybe uh about a year ago he stopped he stoppedabout a year ago he stopped he stoppedabout a year ago he stopped he stopped going to hisgoing to hisgoing to his club for bridge so i used to playclub for bridge so i used to playclub for bridge so i used to play bridge with him at his bridge clubbridge with him at his bridge clubbridge with him at his bridge club probablyprobablyprobably every two three weeks you know usuallyevery two three weeks you know usuallyevery two three weeks you know usually every friday afternoon him and hisevery friday afternoon him and hisevery friday afternoon him and his friends willfriends willfriends will get together for bridge so i had uh manyget together for bridge so i had uh manyget together for bridge so i had uh many many bridgemany bridgemany bridge sessions with him and his friends whichsessions with him and his friends whichsessions with him and his friends which was a lot of funwas a lot of funwas a lot of fun and you know it's just a surrealand you know it's just a surrealand you know it's just a surreal experience experience because i'd meetexperience experience because i'd meetexperience experience because i'd meet him and rick goran andhim and rick goran andhim and rick goran and these guys and i would ask them aboutthese guys and i would ask them aboutthese guys and i would ask them about things in the 50s and 60s andthings in the 50s and 60s andthings in the 50s and 60s and 70s and uh you know different things70s and uh you know different things70s and uh you know different things that were going on at the timethat were going on at the timethat were going on at the time and uh and of course i i think every fewand uh and of course i i think every fewand uh and of course i i think every few months uhmonths uhmonths uh charlie invites us at his place forcharlie invites us at his place forcharlie invites us at his place for dinnerdinnerdinner in fact i was just at his place forin fact i was just at his place forin fact i was just at his place for dinner probablydinner probablydinner probably two months ago and uh he's doing greattwo months ago and uh he's doing greattwo months ago and uh he's doing great he's uh all vaccinated and everythinghe's uh all vaccinated and everythinghe's uh all vaccinated and everything which is good
Questionerwhich is good but yeah i mean just extremely humble but yeah i mean just extremely humble but yeah i mean just extremely humble guy probably the smartest guy guy probably the smartest guy guy probably the smartest guy i've ever met and every guy any smartest i've ever met and every guy any smartest i've ever met and every guy any smartest guy i will ever meet is the most highest i would say that charlie most highest i would say that charlie most highest i would say that charlie has has has incredible horsepower and incredible incredible horsepower and incredible incredible horsepower and incredible wisdom wisdom wisdom and great humility and and great humility and and great humility and it's a he's a lot of fun to be with so it's a he's a lot of fun to be with so it's a he's a lot of fun to be with so it's great it's wonderful and your inspiration to start dakshna and your inspiration to start dakshna and your inspiration to start dakshna foundation in 2006. foundation in 2006. foundation in 2006. what was it i think i think the thing is what was it i think i think the thing is what was it i think i think the thing is that that that the reason dakshina was started is the reason dakshina was started is the reason dakshina was started is because i had no choice because i had no choice because i had no choice so i think in india a lot of people so i think in india a lot of people so i think in india a lot of people don't see it this way but don't see it this way but don't see it this way but but basically large inheritances to your but basically large inheritances to your but basically large inheritances to your kids and grandkids is actually kids and grandkids is actually kids and grandkids is actually a disservice to them so a disservice to them so a disservice to them so for me the journey was fun for me the journey was fun for me the journey was fun because uh we started from zero you know because uh we started from zero you know because uh we started from zero you know kind of built it and whatever kind of built it and whatever kind of built it and whatever and uh you know warren buffett says that and uh you know warren buffett says that and uh you know warren buffett says that if you are uh jesse owen son you know if you are uh jesse owen son you know if you are uh jesse owen son you know the american sprinter the american sprinter the american sprinter your son should not start hundred meter your son should not start hundred meter
Otheryour son should not start hundred meter dash for the at the 40 meter linedash for the at the 40 meter linedash for the at the 40 meter line maybe he can start at the 5 meter linemaybe he can start at the 5 meter linemaybe he can start at the 5 meter line but he should not start at the 40 meterbut he should not start at the 40 meterbut he should not start at the 40 meter line because he's not going to becomeline because he's not going to becomeline because he's not going to become a great sprinter if you give him thata great sprinter if you give him thata great sprinter if you give him that much head startmuch head startmuch head start so basically if you if you buy into theso basically if you if you buy into theso basically if you if you buy into the notion thatnotion thatnotion that very large inheritances are a disservicevery large inheritances are a disservicevery large inheritances are a disservice to yourto yourto your kids and grandkids thenkids and grandkids thenkids and grandkids then i think there's no choice because youi think there's no choice because youi think there's no choice because you only the only thing you can do with youronly the only thing you can do with youronly the only thing you can do with your money ismoney ismoney is you can either give it to your gene poolyou can either give it to your gene poolyou can either give it to your gene pool or you can give it to society those areor you can give it to society those areor you can give it to society those are your only two choicesyour only two choicesyour only two choices and if you're not going to give it yourand if you're not going to give it yourand if you're not going to give it your gene pool and you want to give it togene pool and you want to give it togene pool and you want to give it to societysocietysociety then it becomes actually a difficultthen it becomes actually a difficultthen it becomes actually a difficult question becausequestion becausequestion because it is much easier to make money than toit is much easier to make money than toit is much easier to make money than to give it away effectivelygive it away effectivelygive it away effectively giving money away is much harder i feelgiving money away is much harder i feelgiving money away is much harder i feel andandand so what i wanted to do with dakshina isso what i wanted to do with dakshina isso what i wanted to do with dakshina is i wanted to not start
Otheri wanted to not start thinking about giving money away when i am 75 or 80 years old because i felt like at that time i can will have no energy and only thing i can do is just write checks or something and i wanted to try to get started early and i also felt like see in in investing we try to minimize risk in to do philanthropy well you have to go high-risk highwater because you have to try to solve the problems that society cannot solve so you know poverty poverty illiteracy healthcare environment these are all tough problems you know so many so many billion billions of dollars are spent by very well-meaning governments and people and we don't we haven't solved those problems so so in philanthropy what you really need to do is be willing to fail you know uh swing boldly and be willing to fail and so i felt like in dakshina i want i
Otherand so i felt like in dakshina i want i when i started thatwhen i started thatwhen i started that i was about uh 42 years oldi was about uh 42 years oldi was about uh 42 years old so i said you know if 10 years we areso i said you know if 10 years we areso i said you know if 10 years we are just spinning our meals it's okayjust spinning our meals it's okayjust spinning our meals it's okay i'll learn a few things and then we'lli'll learn a few things and then we'lli'll learn a few things and then we'll uhuhuh get going from there and uh and actuallyget going from there and uh and actuallyget going from there and uh and actually what ended up happening is thatwhat ended up happening is thatwhat ended up happening is that we got traction right away it actuallywe got traction right away it actuallywe got traction right away it actually worked very wellworked very wellworked very well almost from the beginning within a fewalmost from the beginning within a fewalmost from the beginning within a few weeks we wereweeks we wereweeks we were we had a good model and we pursued thatwe had a good model and we pursued thatwe had a good model and we pursued that so it actually worked outso it actually worked outso it actually worked out uh significantly better than i expecteduh significantly better than i expecteduh significantly better than i expected and then what has happened which isand then what has happened which isand then what has happened which is really surprising is thatreally surprising is thatreally surprising is that some very good people uh you knowsome very good people uh you knowsome very good people uh you know started to uh support uh dakshina so forstarted to uh support uh dakshina so forstarted to uh support uh dakshina so for exampleexampleexample you know rkdhamani he you know d martyou know rkdhamani he you know d martyou know rkdhamani he you know d mart d martin and ake the money give us uhd martin and ake the money give us uhd martin and ake the money give us uh seven crores a yearseven crores a yearseven crores a year and uh and actually he would give evenand uh and actually he would give evenand uh and actually he would give even more if we could use the moneymore if we could use the moneymore if we could use the money you know but our model we can't use thatyou know but our model we can't use thatyou know but our model we can't use that for money so
Questionerfor money so he keeps asking you know can you take more i said no i can't take more and then we have prime watsa in canada he also gives us about a million dollars a year so so yeah dakshina has actually worked out exceptionally and basically the idea is that what i want to get to is that one day before my death uh hopefully there's one dollar left and everything else has been given away so if i can do it perfectly that would be the end result but we'll see how it actually ends up but so as time goes on because of compounding i need to keep increasing the engine production and it's not easy i think our current engine works well but it cannot absorb more than 7 8 billion a year and i think currently we are spending probably three four million a year so it will um once we saturate at the seven eight million then
Othersaturate at the seven eight million then i think we'll have to think about what we can do next after that but so far it's worked out very well
Questioneras you are aware india is going through second wave of forward 19 and it is quite widespread and there is a lurking fear that even third wave may affect us in such a situation if you were to invest in india would you wait for a deeper correction or still you will look at specific businesses and go ahead and if you were to invest how would you go about finding companies or would you be sector agnostic or you would look at some sectors and then you will look at companies
Otheryeah so i think those are good questions well i mean i think that kobet can give you an opportunity that's a possibility because it creates uncertainty i'm always a bottoms up investor so i always look at a specific business and i look at the kind of nuances around that business so
Questionerbusiness so business so so i think the i'm not i've never taken so i think the i'm not i've never taken so i think the i'm not i've never taken an approaching i need to have an approaching i need to have an approaching i need to have exposure to a certain sector or anything exposure to a certain sector or anything exposure to a certain sector or anything like that like that like that or even a certain country or anything or even a certain country or anything or even a certain country or anything like that so like that so like that so in my opinion i think the the first in my opinion i think the the first in my opinion i think the the first question to ask when you look at a question to ask when you look at a question to ask when you look at a business is business is business is is it within your circle of competence is it within your circle of competence is it within your circle of competence is it something you understand well is it something you understand well is it something you understand well and then the second is i think the sec and then the second is i think the sec and then the second is i think the sec the questions after that become easier the questions after that become easier the questions after that become easier because there are some businesses which because there are some businesses which because there are some businesses which may not get impacted much by covet may not get impacted much by covet may not get impacted much by covet you know just the nature of the business you know just the nature of the business you know just the nature of the business they just may not keep i mean let's say they just may not keep i mean let's say they just may not keep i mean let's say for example for example for example i look at a business like geo for i look at a business like geo for i look at a business like geo for example right example right example right what impact is kovit going to have on what impact is kovit going to have on what impact is kovit going to have on jio you know jio you know jio you know i don't think it makes much difference i don't think it makes much difference i don't think it makes much difference if people need to communicate if people need to communicate if people need to communicate they have bigger degree need to they have bigger degree need to they have bigger degree need to communicate when they can't see each communicate when they can't see each communicate when they can't see each other
Otherso if anything a business like jio does better uh while cooperate is happening on the other hand if there is some let's say private hospital the government they put all kinds of mandates on them right during covert and it may or may not even be able to make money so it becomes a lot murphier whether what would happen in the next year or two in uh in other businesses so i think i think that the question would be can you see clarity on it like for example i think last year when cove would hit i think airlines were not investable you could not invest in airlines because it was so opaque you knew air travel would go down then you don't know how much the government will have so some businesses will get affected a lot and other businesses actually will do better because of this like you know zoom has done much better because of gold
Questionerbetter because of gold
Questionerand uh so i think that you know john templeton used to say it a trouble is opportunity so when you have these types of events going on the baby will get thrown out of the bathroom and so if you can identify certain businesses that you understand well and they their prospects near term long term are pretty good then those might be worthwhile and i think especially if they fit into parameters like nick sleep where they are high quality businesses at the core then it's a good way to go so let me give you an example let's say the businesses which have been affected badly by because of kovaid are available at a much lower valuation compared to their past let's take the case of indian hotels say it's available at a much lower valuation currently it may not do well for next one year because of the effect of it but one is sure that the business
Questionerit but one is sure that the business will last would you invest in such a business or where you see deep value or you would look at businesses which are currently growing but the valuations a little elevated compared to the past so indian hotels is a very interesting business to talk about because i actually looked at them and i had a meeting probably a few years back i think in one of the investor conferences with the cfo and we do respect indian hotels is the poster child of a company that has had extremely poor capital allocation uh very very to put it bluntly horrible capital allocation so for example i'll just give you some one example which uh i brought up the cfo and then his response to me was that he was not in the company at that time that was the only way he could defend it but they bought they bought the pier hotel in new york
Questionerthey bought the pier hotel in new york uh many years agouh many years agouh many years ago and they paid a very high price to buyand they paid a very high price to buyand they paid a very high price to buy the peer hotelthe peer hotelthe peer hotel so the pure hotel is a great hotel isso the pure hotel is a great hotel isso the pure hotel is a great hotel is iconic propertyiconic propertyiconic property but what had already happened beforebut what had already happened beforebut what had already happened before indian hotelsindian hotelsindian hotels bought peer hotel was many of the mostbought peer hotel was many of the mostbought peer hotel was many of the most uh the best views the roomsuh the best views the roomsuh the best views the rooms the best views had already beenthe best views had already beenthe best views had already been converted into apartmentsconverted into apartmentsconverted into apartments and they had already been sold so theand they had already been sold so theand they had already been sold so the hotel was likehotel was likehotel was like 60 65 percent of the real estate had60 65 percent of the real estate had60 65 percent of the real estate had already been sold and given to thesealready been sold and given to thesealready been sold and given to these privateprivateprivate owners and the rooms that were leftowners and the rooms that were leftowners and the rooms that were left were not the prime rooms with greatwere not the prime rooms with greatwere not the prime rooms with great views etcviews etcviews etc but that wasn't even the worst part thebut that wasn't even the worst part thebut that wasn't even the worst part the worst part was thatworst part was thatworst part was that as part of the transaction all theseas part of the transaction all theseas part of the transaction all these people who had bought apartments in thepeople who had bought apartments in thepeople who had bought apartments in the pier hotelpier hotelpier hotel they were guaranteed for the durationthey were guaranteed for the durationthey were guaranteed for the duration of the time that they own theseof the time that they own theseof the time that they own these apartments so anyone else owning theapartments so anyone else owning theapartments so anyone else owning the apartmentsapartmentsapartments twice a day turn down service will betwice a day turn down service will be
Othertwice a day turn down service will be given to them for free
Otherokay so new york has very high very high labor rates you are going and fixing 60 70 apartments every day twice a day it didn't matter what the occupancy was you are losing money hand over fixed
Otherso i asked the cfo what is going on here like why would i mean if you just look at a spreadsheet when you were looking at doing this deal there's no way you can justify it the same thing happened with taj boston
Otherso i think my conclusion with indian hotels is it's a great place to stay and the guests are very well taken care of and i want to stay there but i don't want to put a penny into so so the thing is it doesn't matter how low the price goes for me in that particular case
Otherthe the thing is that i have questions so you know the tatas are wonderful but the businesses that bombay house had nothing to do with
Othernothing to do with bombay house had nothing to do with tcs bombay house had nothing to do with tcs and bombay house had nothing to do with and bombay house had nothing to do with titan titan titan those two businesses did extremely well those two businesses did extremely well those two businesses did extremely well the businesses that bombay house ran the businesses that bombay house ran the businesses that bombay house ran carefully with a lot of oversight carefully with a lot of oversight carefully with a lot of oversight like for example coral steel and tetley like for example coral steel and tetley like for example coral steel and tetley tea tea tea and tisco and telco and everything else and tisco and telco and everything else and tisco and telco and everything else that you guys know better than me you that you guys know better than me you that you guys know better than me you know what the results yeah so yeah maybe indian hotels was a yeah so yeah maybe indian hotels was a yeah so yeah maybe indian hotels was a wrong example wrong example wrong example but in principle if you get an but in principle if you get an but in principle if you get an asset which is currently affected by asset which is currently affected by asset which is currently affected by pov and you know that for next one or pov and you know that for next one or pov and you know that for next one or two years it may not do well two years it may not do well two years it may not do well yeah so i mean i think i think if you if yeah so i mean i think i think if you if yeah so i mean i think i think if you if you say to me you say to me you say to me that the company has great capital that the company has great capital that the company has great capital allocation allocation allocation okay yes and the second thing you say to okay yes and the second thing you say to okay yes and the second thing you say to me me me is that their balance sheet can more is that their balance sheet can more is that their balance sheet can more than easily handle than easily handle than easily handle whatever hiccup year or two or three is whatever hiccup year or two or three is whatever hiccup year or two or three is producing producing producing and you also say to me that at the core and you also say to me that at the core and you also say to me that at the core it's a great
Questionerit's a great business i i hate the hotel business business i i hate the hotel business business i i hate the hotel business okay you go on you know this make my okay you go on you know this make my okay you go on you know this make my trip or whatever trip or whatever trip or whatever and you you know transparently see all and you you know transparently see all and you you know transparently see all the prices and then you pick the lowest the prices and then you pick the lowest the prices and then you pick the lowest price price price i mean that's a useless business okay i mean that's a useless business okay i mean that's a useless business okay your your dumbest competitor is setting your your dumbest competitor is setting your your dumbest competitor is setting the price the price the price but for example you know i hate the but for example you know i hate the but for example you know i hate the airline business too but i have a lot of airline business too but i have a lot of airline business too but i have a lot of respect for indigo respect for indigo respect for indigo right now i still probably won't go into right now i still probably won't go into right now i still probably won't go into the airline business but the airline business but the airline business but they are the lowest cost operator they they are the lowest cost operator they they are the lowest cost operator they operate really well now covert is operate really well now covert is operate really well now covert is hitting them really hard hitting them really hard hitting them really hard i haven't looked at them i haven't i haven't looked at them i haven't i haven't looked at them i haven't looked at the balance sheet what was looked at the balance sheet what was looked at the balance sheet what was happening happening happening but yeah so if you can figure out that but yeah so if you can figure out that but yeah so if you can figure out that the core business is a great business the core business is a great business the core business is a great business run by great run by great run by great capital allocators looking out for capital allocators looking out for capital allocators looking out for the shareholders there could be some the shareholders there could be some the shareholders there could be some great bargains but please be careful some businesses you should only be a some businesses you should only be a some businesses you should only be a customer of
Questionercustomer of not an owner i have a question for you sure there is a saying that when you pay there is a saying that when you pay there is a saying that when you pay peanuts you get monkeys now if we go by the characteristics now if we go by the characteristics now if we go by the characteristics of great businesses who should be great of great businesses who should be great of great businesses who should be great capital allocators and cost saving capital allocators and cost saving capital allocators and cost saving then how do you filter the best value then how do you filter the best value then how do you filter the best value proposition out of such a lot proposition out of such a lot proposition out of such a lot because all those things are known to a because all those things are known to a because all those things are known to a lot of people and the business
Otherwell i mean i think that you know like well i mean i think that you know like well i mean i think that you know like charlie munger says charlie munger says charlie munger says why should it be easy to get rich why should it be easy to get rich why should it be easy to get rich you know so the thing is you know be you know so the thing is you know be you know so the thing is you know be patient patient patient and when you when you find something and when you when you find something and when you when you find something that is that is that is you know widely mispriced and you you know widely mispriced and you you know widely mispriced and you understand the asset well you understand understand the asset well you understand understand the asset well you understand everything well everything well everything well you can go in and you can go in and you can go in and that probably may not happen maybe that probably may not happen maybe that probably may not happen maybe more than two three times in two three more than two three times in two three more than two three times in two three years or something years or something years or something these are basically uh let me give a these are basically uh let me give a these are basically uh let me give a brief background brief background brief background yeah yeah uh yeah yeah uh yeah yeah uh i super superintended as chief finance i super superintended as chief finance i super superintended as chief finance officer and president of sri cement officer and president of sri cement officer and president of sri cement when i joined the company it was six
Questionerwhen i joined the company it was six rupees per share when i quit it was 30 000 rupees a share but i could never own it there were two reasons one was that i always used to find it expensive and number two was that i did not want to go into any hassle with the regulators on insider trading kind of a point and there was no esop in that company i agree with your philosophy of great capital allocators and cost savvy but then it has been compounding six rupees to 30 20 sorry not 30 20 000 rupees it was a 0.6 million ton company when i joined it became a 30 million company when i left net cash in books no debt all this was done but then i was always bugged by the valuation the market was giving and me being an insider i knew that maybe this is a great business but does it command that value and that is a dilemma which i face now that there are various great businesses compounding at great rate
Questionercompounding at great rate good capital location but how do you filter them
Otherwell i think i think you bring up a very good point in the sense that if an insider like you could not forecast future cash flows five or ten years out then obviously when you're an outsider looking into a business the job is that much harder and and the answer is that you only need one of those in your lifetime you have you have 50 years as an investor and you only need to be right once on a business like that so i'll give you an example there's a and i find this example even more compelling than nick sleeps example you know we are we have gone past an hour i'm not sleepy but i don't know what your normal time timings are mr chanduk have you blown past your time or are we okay
Otherno we are fine i think that's all right okay that's fine so so there's a company in south africa which is now
Questionersouth africa which is now 106 years old they were like a book book and magazine newspaper publishing company the company called naspers some of you may have heard of it naspers so in 2001 naspers 20 years ago invested 30 32 million dollars into this chinese company called tencent okay so they put 32 million into 10 cent and they got a 43 stake in that business and what is mind-blowing about naspers and the chairman i mean the guy who is the ceo who's now the chairman is through the 20 years that they owned it they never sold the stock and what what ended up happening is the 32 million dollar investment so 10 cent has a market gap now of about 700 or 800 billion uh us dollars and they they sold a little bit i think in the first four five years but basically they held about one third of ten cent so the the ten cent position that they own is like around 200 billion
Questionerthat they own is like around 200 billion dollars okay so this 32 million dollar investment became 200 billion became 8 000 fold return for them and they have done extremely well on their other investments and other things as well this wasn't just one aberration uh but everything else fails in comparison to tencent so the the company has probably got a value of about 200 300 billion dollars at this point and throughout this 20-year period they got tremendous pressure from every corner you can think of to sell off the 10 cent to sell off the 10 cent so 10 cent became a billion dollar position they were told to sell it 10 billion dollar position they were told 100 billion dollar position and to their credit the two guys who were at the top pretty much told everyone to get lost and even now i mean you guys may find this hard to believe but at 700 billion 10 cent is deeply undervalued
Questioner10 cent is deeply underwrapped deeply undervalued which is why they aredeeply undervalued which is why they aredeeply undervalued which is why they are not sellingnot sellingnot selling right so abita kahaniright so abita kahaniright so abita kahani so in the case of nick sleepso in the case of nick sleepso in the case of nick sleep when he bought amazon i mean he made hewhen he bought amazon i mean he made hewhen he bought amazon i mean he made he he made hehe made hehe made he bought some stock at 30 40 he boughtbought some stock at 30 40 he boughtbought some stock at 30 40 he bought some stock at 100some stock at 100some stock at 100 he bought some at 200 300. he did nothe bought some at 200 300. he did nothe bought some at 200 300. he did not get that much return on amazon by theget that much return on amazon by theget that much return on amazon by the time the fund was shut downtime the fund was shut downtime the fund was shut down or even till today i mean even if youor even till today i mean even if youor even till today i mean even if you look at wherelook at wherelook at where most of the amazon position is up 10 ormost of the amazon position is up 10 ormost of the amazon position is up 10 or 242424 but in the case of naspersbut in the case of naspersbut in the case of naspers what blows my mind and i and i studiedwhat blows my mind and i and i studiedwhat blows my mind and i and i studied these two guys at mass booksthese two guys at mass booksthese two guys at mass books i studiedand what i discovered when i studiedand what i discovered when i studiedand what i discovered when i studied these two guysthese two guysthese two guys is this was not a fluke this was not ais this was not a fluke this was not ais this was not a fluke this was not a bunch of gamblersbunch of gamblersbunch of gamblers these guys are extremely good at whatthese guys are extremely good at whatthese guys are extremely good at what they dothey dothey do and in fact he understood so one of theand in fact he understood so one of theand in fact he understood so one of the things that nick sleep understood isthings that nick sleep understood isthings that nick sleep understood is thatthatthat exactly the walmart story so what theyexactly the walmart story so what theyexactly the walmart story so what they understood is they are like a founder ofunderstood is they are like a founder of
Questionerunderstood is they are like a founder of tencenttencenttencent and you know the naspers has a veryand you know the naspers has a veryand you know the naspers has a very close relationship with tencentclose relationship with tencentclose relationship with tencent they sit on their board they actuallythey sit on their board they actuallythey sit on their board they actually co-invest all over the worldco-invest all over the worldco-invest all over the world with them it's a very good closewith them it's a very good closewith them it's a very good close relationship they haverelationship they haverelationship they have so basically naspers which was a southso basically naspers which was a southso basically naspers which was a south african newspaper companyafrican newspaper companyafrican newspaper company and the funny thing is that they boughtand the funny thing is that they boughtand the funny thing is that they bought that 32 million dollar stakethat 32 million dollar stakethat 32 million dollar stake from lee kashing okay so li kashing is afrom lee kashing okay so li kashing is afrom lee kashing okay so li kashing is a multi-billionaire in hong kong has donemulti-billionaire in hong kong has donemulti-billionaire in hong kong has done extremely wellextremely wellextremely well really smart guy he's worth 30 billionreally smart guy he's worth 30 billionreally smart guy he's worth 30 billion dollars if he had not sold this positiondollars if he had not sold this positiondollars if he had not sold this position he'll be worth 230 billion dollars okayhe'll be worth 230 billion dollars okayhe'll be worth 230 billion dollars okay so he probably is looking in the mirrorso he probably is looking in the mirrorso he probably is looking in the mirror saying why the hell did i sell thissaying why the hell did i sell thissaying why the hell did i sell this this position at all but anyway thethis position at all but anyway thethis position at all but anyway the thing is it would have been almostthing is it would have been almostthing is it would have been almost impossible for anyone to hold that stockimpossible for anyone to hold that stockimpossible for anyone to hold that stock for the 20 years that this company hasfor the 20 years that this company hasfor the 20 years that this company has held the stockheld the stockheld the stock and they're not done yet i mean in my
Questionerand they're not done yet i mean in my opinion when i look at something like 10 cent it would not surprise me if they hold it for 20 more years and the 8000 x they are not done yet
Questionerso the thing is that you know you don't need to be right that many times what you do need is extreme patience and when you find something that is incredible you know step up to the bat uh make it a meaningful bet
Othersir i will i will top it up with only one comment
Otherthe hand of god hand
Questionerslightly different uh in case we have only 15 minutes so ask one or two yeah just two um first question i have is uh see india for the first time in the last couple of years has grown about 100 to 150 unicorns with a billion dollar evaluations with probably a million dollar 10 million dollar revenues loss making the likes of zomato grow zerada the whole works across the spectrum it's almost like india of late 90s you as of late 1990s what do you think
Questioneryou as of late 1990s what do you think of this unicorn investing because as you correctly said in your introduction value and growth are two centers the same coin and it's up to the beholder how he sees the whole thing so what's your sense whether of these top 150 companies would you look at uh would these be on your radar or what could possibly be the next hundred x talk from here that's my first question
Questionersecond question is a little more interesting how do you spend your day what is your routine day like what are your weekends like
Questioneri might think of that um and would it be similar to what the what your friends do the big friends do
Warrenuh well so let me take your unicorn question first
Warrenit's almost for sure that in that group there are probably a few that will be outlier winners long term and quite a few that may not that may disappoint
Warrenis my best guess but the thing is that
Questioneris my best guess but the thing is that depending on you know your frameworks and circular competence and what you understand you know like i'll give you an example so let's take something like food delivery okay so some of my friends who are very good investors they just tell me this whole food delivery business is total nonsense okay it's it's a you know very heavy logistics business you have to have people you've got to do all this point-to-point stuff all this stuff going on and the restaurants are all upset because they have to give you 30 and all of that so there's a lot of issues there but the thing is if you fast forward maybe 10 or 20 years the situation could be quite different so we are going to kind of kind of i mean you're not going through so much uh habit change in india i think in the rest of the world there's a much bigger
Questionerrest of the world there's a much bigger habit changing for india you already always had the ability for some random restaurant to deliver your food at home and so on the us when i first came to the u.s the only thing you could get delivered was pizza in terms of food that was the only food delivery available now everything can be delivered and you know there are ventures like cloud kitchen and all of these things where they're working on the logistics right so there's one big warehouse which has got like 30 40 different kitchens and then maybe a drive through the middle and you know the driver will maybe pick up 30 orders of one shot and there'll be a very high density that you know three buildings he's delivering all 30 orders and so on so it could change quite radically in terms of scale in the years and then at that point brand matters
Otherbrand matters and and such so it's possible that the the top two three food delivery guys in the end uh become incredible businesses and they become a lot bigger than where they are today and so on what my my take on all this is that there's no need to have envy or scratch your head or even try to say i need to figure out which one over here things need to be at the end they need to be a no-brainer so when you're making an investment in the end before you make the investment it has to be a no-brainer like i i told you that even at 700 billion i don't consider 10 cent overvalued and that's because i looked at all the pieces what's inside those businesses and kind of where things are going and so on and there's just too many ways for them to win and too few ways for them to lose so anyway so the thing is i think that the bottom line is that
Todd Combsthe bottom line is that uh yeah you can look at these unicorns uh yeah you can look at these unicorns you can in most cases they won't make any sense in most cases they won't make any sense once in a while you might find once in a while you might find something where you have some experience something where you have some experience and and the pricing or whatever else might make the pricing or whatever else might make sense sense and uh maybe it it it makes sense at and uh maybe it it it makes sense at that point but if you that point but if you you can live a very good life and you you can live a very good life and you can actually be a very successful can actually be a very successful investor investor without making any of those bets so it's without making any of those bets so it's perfectly fine there's a hundred perfectly fine there's a hundred different ways to move on different ways to move on my my schedule is my my schedule is pretty uh pretty simple uh pretty uh pretty simple uh i learned from buffett and from monger i learned from buffett and from monger to run an empty calendar to run an empty calendar so in a given in a given so in a given in a given week or day i usually don't have week or day i usually don't have any calls or meetings or anything any calls or meetings or anything scheduled scheduled even mr chanda contacted us so many even mr chanda contacted us so many years ago years ago for this talk and then finally here we for this talk and then finally here we are are i forget mr chandra when did you contact i forget mr chandra when did you contact us us
Questioneryeah about two three months back
Otheryeah about two three months back yeah so like for example one of my rules and we extend a lot of emails so what i'm saying like one of my rules is i get so many requests for these things which i which is fine but i only do two a month so once you have party problem yeah once we book two in a month that's about my limit of what i can do then i say okay so i think these these sessions are set up into like for most of the rest of the year you know so so that's fine so basically i i try not to put stuff on my calendar and uh i usually sleep late i usually get up late most of my emails go to my assistant and then she gives me a folder at about 11 am which has everything printed you know he got mr chanda got many notes from me and and so on and basically i i find it if i get a folder at 11 o'clock by about 11 20 i'm done you know with whatever i need to take
Otheryou know with whatever i need to take care of for the day in terms of emails and uh and then whatever responses will come will we deal with the next day and then basically i like to read and so what i read and such just depends on what is going on and uh i grew up in dubai and india with afternoon naps so i take a nap most afternoons i had a very nice nap this afternoon and so basically i read i nap i read dinner i'd like to read again and that's pretty much the the i like to play bridge so i probably play like you know five five seven hours a week a bridge i like to ride my bike so today for example i went on a about a 20 kilometer bike ride and uh usually on the weekends i go on about a 40 kilometer bike ride so i like to play racquetball so now the clubs are open so i play racquetball and tennis so that's basically life so to act to the point of mr venkatas we
Questionerso to act to the point of mr venkatas we just talked about about your residuals i understand and sir you don't have any subordinates any research presence down the line to you so then in this world of so many information coming out and the research needs to be done then how you pop up with that individualism uh
Questionerwell i do now have a couple of guys and that was really an accident because we had another business that they were involved in and then i i pulled them in to help me with some research but basically it's very directed you know in the sense that if i'm looking at something i might ask them to to probe into certain areas and such but but warren and charlie didn't use anyone i i didn't have anyone for the first at least more than 20 years so uh i don't think i know i think the thing is that if you invert the problem you basically need to make only one or two bets in a
Otherneed to make only one or two bets in a year and you have a whole year your empty calendar you can read all kinds of things many things like indian hotels you're done in five minutes so you can look at other things you can be done with a lot of unicorns also in five minutes so you just look at things that look more interesting and there's onion on those
Questionerhi manuscripts thank you so much for our sake this will be our last question yeah we are left with five minutes thank you so much for taking time out and speaking with us i have listened to your conversation with the mba students at columbia it was very interesting to know how charlie monger went so you also mentioned that you are bullish on the businesses which cater to the funeral services in india where talking about death is kind of considered a taboo do you find it challenging to convince indians on this country thank you
Questionerindians on this country thank you
Otheri'm sorry can you just repeat the last
Questionersentence
Othercan you hear me yeah yeah just the last
Questionersentence
Otheryeah talking about death is kind of
Questionerconsidered a taboo in india so do you think it is kind of a challenge to convince indian investors on this country
Otherwell so i think that's a really good question uh uh basically the death business it's a metaphor so there are many businesses in the debt business so for example there are now because we have all these bankruptcy laws and all this stuff in india there is a mechanism for asset reconstruction so all this distressed debt which is the loans are upside down you know the essel and all of that that went through there's a process by which that can be cleansed out and come out the other end and you know people can buy it like you know the pila mal's bought the dhfl debt recently and
Otherdebt recently and and they were bidding with uh oak oak and they were bidding with uh oak oak and they were bidding with uh oak oak tree etc so so that business uh the business that so so that business uh the business that so so that business uh the business that the pyramid buying the pyramid buying the pyramid buying uh dhfl is a funeral services business uh dhfl is a funeral services business uh dhfl is a funeral services business okay it is a death business because you're you're taking something that has you're you're taking something that has you're you're taking something that has basically died or needs to be given basically died or needs to be given basically died or needs to be given another life another life another life and you're bringing it back or some and you're bringing it back or some and you're bringing it back or some company buying a bankrupt company buying a bankrupt company buying a bankrupt steel company or something is again the steel company or something is again the steel company or something is again the same thing same thing same thing so so the businesses that are so so the businesses that are so so the businesses that are in the business of in the business of in the business of either burying the dead either burying the dead either burying the dead or bringing them back to life or bringing them back to life or bringing them back to life are both really good businesses and in are both really good businesses and in are both really good businesses and in the the the in the us we have many examples in the us we have many examples in the us we have many examples of businesses that are in the funeral of businesses that are in the funeral of businesses that are in the funeral business so for example one of the business so for example one of the business so for example one of the big us retailers is tj maxx big us retailers is tj maxx big us retailers is tj maxx dj max says you know thousands of stores dj max says you know thousands of stores dj max says you know thousands of stores but what tj maxx does but what tj maxx does but what tj maxx does is they buy excess inventory is they buy excess inventory is they buy excess inventory that other retailers have made a mistake that other retailers have made a mistake that other retailers have made a mistake you know they bought 10 000 more pairs
Questioneryou know they bought 10 000 more pairs of jeans they wanted and tj maxx will buy them at one third of the bus and then they'll push them into all their stores and the people who are coming to their stores know that they will get it's kind of like a bazaar you don't know what you're going to get because the inventory and what their deals are getting keeps changing but tj maxx is a company that has done extremely well and they basically are flourishing with the mistakes of others right there's a company i own in the u.s called cerritage heritage growth properties so these are the old sears that were that have all been shuttered and shut down and heritage is redeveloping all that real estate okay into other uses you know sometimes they're becoming hospitals sometimes they're becoming strip malls whatever else or apartments and so on so they are in the rebirth business so
Otherso they are in the rebirth business so there is no taboo death is for sure if we didn't think that was for sure for you have got enough data now in the last few weeks the death is for sure and companies that are in that business will do very well so in the u.s when i first started investing there were a couple of actual companies are doing funeral services and they had done a roll up these are billion dollar companies that owned uh thousands of funeral homes and all of that it was an incredible business because i don't know how many people will die i don't know who will die in salt lake city but i know how many okay and so the recurrence of that business uh so funeral services in the u.s they never go bankrupt but they never have any revenue problem nobody ever asks how much you're going to charge okay in every other business people ask like
Questionerin every other business people ask like indian hotelsindian hotelsindian hotels how much is the hotel rate nobody askshow much is the hotel rate nobody askshow much is the hotel rate nobody asks when yourwhen yourwhen your uncle has died let me go find sixuncle has died let me go find sixuncle has died let me go find six places it will do the funeral and takeplaces it will do the funeral and takeplaces it will do the funeral and take the lowest pricethe lowest pricethe lowest price okay unless it was a really bad uncle nookay unless it was a really bad uncle nookay unless it was a really bad uncle no one's gonna do thatone's gonna do thatone's gonna do that okay so so basically you have pricingokay so so basically you have pricingokay so so basically you have pricing powerpowerpower nobody questions your margins peoplenobody questions your margins peoplenobody questions your margins people just want things done quicklyjust want things done quicklyjust want things done quickly and so on so it's a great businessand so on so it's a great businessand so on so it's a great business actually uh so i think if you if youactually uh so i think if you if youactually uh so i think if you if you think of it as a metaphorthink of it as a metaphorthink of it as a metaphor and look at businesses that are eitherand look at businesses that are eitherand look at businesses that are either in the debt business or in thein the debt business or in thein the debt business or in the rebirth business like assetrebirth business like assetrebirth business like asset reconstructionreconstructionreconstruction those are really good businesses to bethose are really good businesses to bethose are really good businesses to be thank you thank you will you take onethank you thank you will you take onethank you thank you will you take one more question and then we closemore question and then we closemore question and then we close uh so you are an admirer of oneuh so you are an admirer of oneuh so you are an admirer of one and warren invests mostly in youand warren invests mostly in youand warren invests mostly in you you you have large of your investmentsyou you have large of your investmentsyou you have large of your investments in indiain indiain india and i i mean in person distance so uhand i i mean in person distance so uhand i i mean in person distance so uh how do you see india in next 5 10 years
Questionerhow do you see india in next 5 10 yearshow do you see india in next 5 10 years in terms of gdp or instance of sayin terms of gdp or instance of sayin terms of gdp or instance of say per capita gdp or in terms ofper capita gdp or in terms ofper capita gdp or in terms of listed market application and where dolisted market application and where dolisted market application and where do you see theyou see theyou see the
Questionervalue in terms of listed base whichvalue in terms of listed base whichvalue in terms of listed base which which industry youwhich industry youwhich industry you see in the real estate spacesee in the real estate spacesee in the real estate space
Otherwell i mean i think that my uhwell i mean i think that my uhwell i mean i think that my uh my experience with india actually is ledmy experience with india actually is ledmy experience with india actually is led me to become somewhat skepticalme to become somewhat skepticalme to become somewhat skeptical so the thing is that india doesn't growso the thing is that india doesn't growso the thing is that india doesn't grow because of the government it grows inbecause of the government it grows inbecause of the government it grows in spite of itspite of itspite of it or like they say india grows at nightor like they say india grows at nightor like they say india grows at night while the government sleepswhile the government sleepswhile the government sleeps so i just find that there are so manyso i just find that there are so manyso i just find that there are so many low-hanging fruit in indialow-hanging fruit in indialow-hanging fruit in india in terms of things that could bein terms of things that could bein terms of things that could be unshackledunshackledunshackled so we went through some unshacklingso we went through some unshacklingso we went through some unshackling maybe 30 years agomaybe 30 years agomaybe 30 years ago and but still i find that there areand but still i find that there areand but still i find that there are huge amounts of market distortinghuge amounts of market distortinghuge amounts of market distorting regulations around which reallyregulations around which reallyregulations around which really it really crimp what an entrepreneur canit really crimp what an entrepreneur canit really crimp what an entrepreneur can do so for me thedo so for me thedo so for me the the main the main uh i would say
Questionerthe main the main uh i would say question or and the optimistic part of me says that i hope and pray that these shackles are removed uh because indians are natural entrepreneurs we we would do really well if we are given the incentives and you know the government steps out of the way so it has happened but i i just when i look around in different companies and different industries and i look around in terms of you know the the times of regulations and things that we have in the us i just see a night and day difference and uh so i hope i hope that the the the thing that is really kind of disheartening for me is india's india and singapore had the same per capita gdp about 70 years ago okay 70 75 years ago it was about the same it is no longer the same as you know okay this is a night and day difference and singapore actually had pretty much
Otherand singapore actually had pretty much no resources no resources no resources this is a small you know swamp infested this is a small you know swamp infested this is a small you know swamp infested area area area without any any infrastructure or without any any infrastructure or without any any infrastructure or anything so i feel that anything so i feel that anything so i feel that there is so much potential in india there is so much potential in india there is so much potential in india and so much further it can grow and can and so much further it can grow and can and so much further it can grow and can grow so grow so grow so so fast for so long but it would require so fast for so long but it would require so fast for so long but it would require significant changes significant changes significant changes uh to happen i don't particularly look uh to happen i don't particularly look uh to happen i don't particularly look at you know which sector at you know which sector at you know which sector or which area i just look bottoms up at or which area i just look bottoms up at or which area i just look bottoms up at businesses so if i can find businesses so if i can find businesses so if i can find a specific business which has some a specific business which has some a specific business which has some nuances that are interesting nuances that are interesting nuances that are interesting then definitely i would look at that but then definitely i would look at that but then definitely i would look at that but i don't start i don't start i don't start at a high level saying i need to be at a high level saying i need to be at a high level saying i need to be invested in the software invested in the software invested in the software business and let me find the best business and let me find the best business and let me find the best software company or so on software company or so on software company or so on i never look at it like that but um i never look at it like that but um i never look at it like that but um mr chandan this was a lot of fun thank mr chandan this was a lot of fun thank mr chandan this was a lot of fun thank you very much yeah yeah thank you so you very much yeah yeah thank you so you very much yeah yeah thank you so much for the insights you gave much for the insights you gave much for the insights you gave can i ask her to propose whatever thanks can i ask her to propose whatever thanks can i ask her to propose whatever thanks
Other[Music][Music] um hi monis thank you so muchum hi monis thank you so muchum hi monis thank you so much actually this uh forum has had someactually this uh forum has had someactually this uh forum has had some phenomenal speakersphenomenal speakersphenomenal speakers so i think it's a tough act to followso i think it's a tough act to followso i think it's a tough act to follow but i must say that this isbut i must say that this isbut i must say that this is this is one of the highest attendancethis is one of the highest attendancethis is one of the highest attendance that we've hadthat we've hadthat we've had um in these talks um so this wasum in these talks um so this wasum in these talks um so this was fantasticfantasticfantastic thank you so much i mean at this groupthank you so much i mean at this groupthank you so much i mean at this group we all have readwe all have readwe all have read your books and uh we followed you for ayour books and uh we followed you for ayour books and uh we followed you for a whilewhilewhile uh even like the way you've explaineduh even like the way you've explaineduh even like the way you've explained your dhando i think it was just soyour dhando i think it was just soyour dhando i think it was just so unique and just you know just like thisunique and just you know just like thisunique and just you know just like this talktalktalk um thank you so much for uh so crisplyum thank you so much for uh so crisplyum thank you so much for uh so crisply and succinctlyand succinctlyand succinctly uh talking to us about uh your thoughtsuh talking to us about uh your thoughtsuh talking to us about uh your thoughts and you know yourand you know yourand you know your insights and your the way you approachinsights and your the way you approachinsights and your the way you approach investinginvestinginvesting this is very helpful thank you so muchthis is very helpful thank you so muchthis is very helpful thank you so much hope you have a great day in omahahope you have a great day in omahahope you have a great day in omaha all right thank you very much