OtherSo, Monish, thank you so much for taking the time to visit students at London Business School. We are incredibly privileged to have you here. Thanks once again. For those who are on the call on the LBS side, Monish has been very gracious with his time and hopefully his insights today. And for those who don't know him that well, he's the founder and managing partner of Prime Investment Fund and the CEO of Town of Funds and the author of Dhandho Investor and Mosaic. He's also the founder and chairman of Dakshana Foundation, which has gotten over 2,500 impoverished but brilliant students admitted to the IITs, which are very prestigious engineering school back in India. He obviously has been a business owner and operator before, having founded TransTech back in the 1990s, I think before most of us were even born. And eventually it became a Fortune 500
Othereventually it became a Fortune 500 company, which he sold in 1996, I believe. And he started in his investing career in 1999. And the records speak for themselves. He's accomplished tremendous things in the investment world. He's He's probably one of the most well-known investor to emerge out of India. Monish, thanks once again. And just general flag, so Monish has kindly agreed to do this event. We're sort of doing this series on behalf of the India Club, where the Investment Management Club and I'm India Club are coordinating to raise awareness about the COVID situation in India. And there's a fundraiser, which I'll I'll put a link below. So, anything that means donate towards those proceeds would be greatly appreciated. So, Monish, why don't we start with any high-level thoughts, things on your mind, you know, any any opening note have and maybe we
Questionerany any opening note have and maybe weany any opening note have and maybe we can then delve into a Q&A going forward.can then delve into a Q&A going forward.can then delve into a Q&A going forward.
OtherYeah, well, Rashid, it's a pleasure andYeah, well, Rashid, it's a pleasure andYeah, well, Rashid, it's a pleasure and an honor to be with you. I do want toan honor to be with you. I do want toan honor to be with you. I do want to correct one thing in your wonderful uhcorrect one thing in your wonderful uhcorrect one thing in your wonderful uh intro for me is TransTech was not aintro for me is TransTech was not aintro for me is TransTech was not a Fortune 500 company. It was a Inc. 500Fortune 500 company. It was a Inc. 500Fortune 500 company. It was a Inc. 500 company. I wish it was Fortune 500, butcompany. I wish it was Fortune 500, butcompany. I wish it was Fortune 500, but that's okay. No, so it's a pleasure tothat's okay. No, so it's a pleasure tothat's okay. No, so it's a pleasure to be here and uhbe here and uhbe here and uh I have always enjoyed my uh numerousI have always enjoyed my uh numerousI have always enjoyed my uh numerous visits and trips to London and the UK.visits and trips to London and the UK.visits and trips to London and the UK. I always always enjoy the food. It'sI always always enjoy the food. It'sI always always enjoy the food. It's wonderful.wonderful.wonderful. And uhAnd uhAnd uh I would just say that uh I feel thatI would just say that uh I feel thatI would just say that uh I feel that this is uhthis is uhthis is uh uh this is a very interesting timeuh this is a very interesting timeuh this is a very interesting time from a investment perspective because uhfrom a investment perspective because uhfrom a investment perspective because uh we have so muchwe have so muchwe have so much change and transformation going onchange and transformation going onchange and transformation going on in all our economies. You know, a lot ofin all our economies. You know, a lot ofin all our economies. You know, a lot of ourourour habits went through changehabits went through changehabits went through change in the last year or so.in the last year or so.in the last year or so. And uh many of those habits are going toAnd uh many of those habits are going toAnd uh many of those habits are going to stay with us, you know, evenstay with us, you know, evenstay with us, you know, even post-pandemic and so on.
Questionerpost-pandemic and so on. And so, for example, this one thing I was thinking about is that when I first came to the US, I was 18 years old in 1983. And I was in this small town in South Carolina, Clemson, college town. And there was a Pizza Hut in the town. And at that time, Pizza Hut did not deliver. It was purely a dine-in restaurant. I don't even think there was much of a carryout business. And it was really kind of a full-service dine-in, where you went in and you got a booth and you got a pitcher of Coke and you know, life was good. And a couple of years after I got there, Pizza Hut had just started experimenting with delivery. So, they had thousands of locations, which were all these full-service locations with salad bars and everything. And they had just started a few locations where they were experimenting with delivery.
Otherexperimenting with delivery. And of course, if you fast forward to today, I mean, Pizza Hut has no dine-in for the most part. I mean, if they have dine-in, it's more an exception than the rule. It'd be a rare exception, actually. And uh the the business got completely reconfigured in the sense that I mean, if you go to a Domino's or Pizza Hut, it's really like an assembly line. You know, it's a continuous oven. And you know, the whole name of the game is how quickly can you get the pizza ready and how quickly can you get it delivered. But for the longest time in the US, for several decades, the only thing you could get delivered home, as far as food goes, was a pizza. There was really nothing else that you could really get delivered. And now now we've had a sea change in that, right? I mean, we've got You can You can get anything delivered, any kind of food.
Questioneranything delivered, any kind of food.anything delivered, any kind of food. And even like like now the DoorDash appAnd even like like now the DoorDash appAnd even like like now the DoorDash app says, "Hey, if you want the guy to picksays, "Hey, if you want the guy to picksays, "Hey, if you want the guy to pick up something from 7-Eleven on the way,up something from 7-Eleven on the way,up something from 7-Eleven on the way, you've got like 8 minutes to tell usyou've got like 8 minutes to tell usyou've got like 8 minutes to tell us what you want and we'll do that aswhat you want and we'll do that aswhat you want and we'll do that as well." So, they've they've broadenedwell." So, they've they've broadenedwell." So, they've they've broadened that quite significantly.that quite significantly.that quite significantly. So, I would just say, if you just lookSo, I would just say, if you just lookSo, I would just say, if you just look at that one one area, which isat that one one area, which isat that one one area, which is food delivery andfood delivery andfood delivery and and all of this,and all of this,and all of this, we are in a very I would say embryonicwe are in a very I would say embryonicwe are in a very I would say embryonic stage right now. So,stage right now. So,stage right now. So, if you fast forward, you can just seeif you fast forward, you can just seeif you fast forward, you can just see thatthatthat both in the production of food at theboth in the production of food at theboth in the production of food at the restaurant levelrestaurant levelrestaurant level and the delivery of the food, there'sand the delivery of the food, there'sand the delivery of the food, there's going to go throughgoing to go throughgoing to go through a lot ofa lot ofa lot of you know, efficiencies and Amona-you know, efficiencies and Amona-you know, efficiencies and Amona- AmazonizationAmazonizationAmazonization ofofof all of that. So, you know, on the backall of that. So, you know, on the backall of that. So, you know, on the back end, we've got cloud kitchen and allend, we've got cloud kitchen and allend, we've got cloud kitchen and all kindskindskinds entities experimenting with theseentities experimenting with theseentities experimenting with these warehouses, where you are not takingwarehouses, where you are not takingwarehouses, where you are not taking high streethigh street
Questionerhigh street real estate and such. You're going to have some warehouse relatively close to large population centers, which has got maybe 30 or 50 kitchens. And then uh currently, DoorDash, when they deliver, mostly it's one-to-one. You know, one restaurant one, which is ridiculous, actually, to think about it. Because even Pizza Hut, for example, they used to, you know, pool the deliveries. The driver goes with five or 10 pizzas at a time. So, we can just see that probably on the delivery end, you'll get a lot more densification. And so, one driver might on one trip might make 20 deliveries or something. And depending, you know, if it's very urban, they could just in one building do 20 deliveries. And on the production end, they're going to look at the back end of how food is prepared and how ingredients are sourced and all of that. So, these cloud
Questionerand all of that. So, these cloud kitchens might even pool their purchasing power and such on the back end. So, we haven't seen a lot of those come through yet. But you can just see that if you fast forward 10 or 20 years, there would be a sea change. And there would even be, you know, you can say AI AI deployment. So, the drivers would be positioned in advance of you making the order. Because they would statistically know, "Okay, you know, at this time we get these types of orders." And we're not going to send our driver to Chipotle after someone places an order. They're already going to be there or be pretty close to there and so on. So, and then, you know, of course, you have drones and everything else that might come in as well. So, I just feel that if you just look at this one area, it's going to transform. And as it gets
Otherit's going to transform. And as it gets more efficient, people will have a lotmore efficient, people will have a lotmore efficient, people will have a lot of behavior changeof behavior changeof behavior change in how they they react to all of that.in how they they react to all of that.in how they they react to all of that. So, and I think you can go across toSo, and I think you can go across toSo, and I think you can go across to many other industries and such. And Imany other industries and such. And Imany other industries and such. And I just think that there's a lot ofjust think that there's a lot ofjust think that there's a lot of reconfiguration. Reconfigurationreconfiguration. Reconfigurationreconfiguration. Reconfiguration generally you know, create efficiencies,generally you know, create efficiencies,generally you know, create efficiencies, create opportunities. So, it can be acreate opportunities. So, it can be acreate opportunities. So, it can be a good place.
QuestionerFascinating. With that, I'll open up theFascinating. With that, I'll open up theFascinating. With that, I'll open up the floor for questions. I do have one thatfloor for questions. I do have one thatfloor for questions. I do have one that maybe I can kick us off till peoplemaybe I can kick us off till peoplemaybe I can kick us off till people you know, start raising their hands andyou know, start raising their hands andyou know, start raising their hands and type them into the chat. So,type them into the chat. So,type them into the chat. So, to what extent Monish, do you think thatto what extent Monish, do you think thatto what extent Monish, do you think that your the experience of building your ownyour the experience of building your ownyour the experience of building your own business has helped you become a betterbusiness has helped you become a betterbusiness has helped you become a better investor? How important is it forinvestor? How important is it forinvestor? How important is it for you know, investors to have hands-onyou know, investors to have hands-onyou know, investors to have hands-on experience of actually buildingexperience of actually buildingexperience of actually building building, managing, running businesses.building, managing, running businesses.building, managing, running businesses. And to that end, what what sort ofAnd to that end, what what sort ofAnd to that end, what what sort of advice do you give to current students
Questioneradvice do you give to current students as they're thinking about their careers on that note?
QuestionerSure. Yeah, you know, Buffett has a quote. He says, "I'm a better businessman because I'm an investor and I'm a better investor because I'm a businessman." There's a huge cross-pollination between the two. And he has another quote. He said, "You know, talking about walking on land to a fish for 100 years is not the same as actually walking on land for 5 minutes." Okay, so so basically, you know, you can you can be blue in the face talking to a fish about walking on land. And it's really not going to really explain to the fish what that means till the fish And of course, the fish can unfortunately not walk on land, so sad. But you know, unless you actually do it. So, I think there's a a lot to be said for having met a payroll and having gotten
Otherhaving met a payroll and having gotten customers and all of that to get an appreciation for what a real business looks like and what a real business goes through. And uh so, I think that if you look at a business through a bunch of spreadsheets, it's going to be quite myopic. And in In almost all entrepreneurs do not run their businesses through spreadsheets. In fact, many of them don't use spreadsheets. You know, they basically understand that there are three or four variables that are going to control 80% of the outcome or 90% of the outcome. And they focus on those three four variables. That's pretty much all they try to do. So, I think it is a huge advantage to And and and the second thing is that, you know, just the way the human brain is set up. So, the brain is the, you know, the fastest growing organ when we are born. When we are born, it's
Otherwhen we are born. When we are born, it's a very undevelopeda very undevelopeda very undeveloped organ because it has to get through theorgan because it has to get through theorgan because it has to get through the birth canal.birth canal.birth canal. And because the birth canal is soAnd because the birth canal is soAnd because the birth canal is so narrow,narrow,narrow, the brain is the, uh, you know, thethe brain is the, uh, you know, thethe brain is the, uh, you know, the biggest organ that has go through thebiggest organ that has go through thebiggest organ that has go through the birth canal.birth canal.birth canal. And so, they pretty much, you know,And so, they pretty much, you know,And so, they pretty much, you know, evolution has made the brain as large asevolution has made the brain as large asevolution has made the brain as large as it could possibly uh be at birth, butit could possibly uh be at birth, butit could possibly uh be at birth, but that is still not large enough.that is still not large enough.that is still not large enough. And so, it goes through a veryAnd so, it goes through a veryAnd so, it goes through a very significant explosion in sizesignificant explosion in sizesignificant explosion in size and neurons in the first 5 years ofand neurons in the first 5 years ofand neurons in the first 5 years of life. And so, it's the fastest growinglife. And so, it's the fastest growinglife. And so, it's the fastest growing organ for a long time.organ for a long time.organ for a long time. And then the the growth tapers off. AndAnd then the the growth tapers off. AndAnd then the the growth tapers off. And actually, from theactually, from theactually, from the age of about 10 or 11 to about 19 or 20,age of about 10 or 11 to about 19 or 20,age of about 10 or 11 to about 19 or 20, the neuron con- connections get cut.the neuron con- connections get cut.the neuron con- connections get cut. So, there's a culling process that goesSo, there's a culling process that goesSo, there's a culling process that goes on whereon whereon where in that window of time between about 11in that window of time between about 11in that window of time between about 11 and 20,and 20,and 20, the brain is optimally set up tothe brain is optimally set up tothe brain is optimally set up to specialize. So, these neuron connectionsspecialize. So, these neuron connectionsspecialize. So, these neuron connections get cut, but they are ready to take on
Questionerget cut, but they are ready to take on data which allows them to allows you to become really good at something. So, you know, if you look at people like Michelangelo or Bill Gates or Warren Buffett, all of them basically had intense specialization in what became their eventual calling during the teen years. And of course, our education systems are the exact opposite. So, what they do is they force you to be a generalist right at the time when you should be a specialist. So, there are only some countries like Germany. Germany gets it, you know, they have uh this they start sep- separating the kids at about 13 or 14 between the ones who are going to go to college, ones who are going to be vocational, ones who are going to be factory workers. And the ones who are going to be factory workers already start doing some apprenticeship and internships in
Othersome apprenticeship and internships in real factories. And we end up with Germany which is a manufacturing powerhouse while having some of the highest wages in the country in the world. So, the two would seem to be at odds with each other. If you have very high wages, you can't be a manufacturing powerhouse. But Germany has flipped that on its head. So, it does extremely high-end sophisticated manufacturing, pretty much the best in the world, mainly because not because, you know, Germanic genes which are pretty good, but I think it's because the those people got those experiences at the time when the brain was optimized to specialize. So, they're better factory workers than any factory workers around. And and that shows up in the numbers. And so, the unfortunate thing about our education system is it blows that window completely.
Questionerit blows that window completely. You know, I think unfortunately, most of you are way past that window. It's so sad that we're not talking when you were 12 years old because I could have actually had some take-home value and impact, but now this is just purely for entertainment. No impact. And uh so, the the second part of this is that uh you know, this is the unfortunate part of this whole way our evolutionary biology works and the way Western society is set up, it's just at odds with each other. And I think in terms of careers, you know, you can't force things. So, I think the important thing is that if you set up a lemonade stand when you're 10 years old, that has a huge impact 20 years after in your ability to run or manage a business. So, even these small things that you might do during the period when the brain is specializing can have massive impacts
Otherspecializing can have massive impacts later. So, I think my advice is that you always pursue your passions. You don't really care about, you know, which employer is the most prestigious or would look good on a resume or pays the most or whatever else. It really should be about what are you most excited about working on. And the best job is one that you would take if you weren't getting paid. So, that's the ones to focus on. So, I think that's what I would suggest.
QuestionerThanks for that, Monish. We'll we'll still try and hopefully have an impact. I'm I'm hopeful on that front. Have a question raised hand from Taha. Taha, could you just unmute yourself and ask your question, please?
QuestionerHi, Monish. Thank you so much for um meeting with us. I I just want to say I'm a I'm a really big fan. Um I came across you through uh Preston and Stig on their on their podcast. I
Questionerand Stig on their on their podcast. I listened to several of your interviews and also on the value investing uh podcast from Columbia. So, yeah, I'm I'm and and like you, I kind of discovered investing through through through mainly through Buffett. And and it's funny actually, when I when I asked Stig Brodersen, um cuz I wanted to repay them for all the value that they added in my life. And and I so, I asked Stig like, I want to give some money to the charity as a way of paying you guys back. You know, what do you recommend? And he yeah, actually recommended your foundation. But I so so, this this talk has also prompted me to to want to give to the to the foundation. And hopefully one day we'll meet in person either in maybe in the AGM uh Buffett's next AGM or or whatever. I I don't know, maybe when you're in London or something. But anyway, my question
Questioneranyway, my question is umis umis um what advice would you give to someonewhat advice would you give to someonewhat advice would you give to someone who who like you wants to clone Buffettwho who like you wants to clone Buffettwho who like you wants to clone Buffett and and is starting from scratch uh andand and is starting from scratch uh andand and is starting from scratch uh and umumum you know, what was the best thing youyou know, what was the best thing youyou know, what was the best thing you did and what was the worst thing youdid and what was the worst thing youdid and what was the worst thing you did?did?did? UmUmUm that's the question. Thank you.that's the question. Thank you.that's the question. Thank you.
WarrenYeah, wellYeah, wellYeah, well uh Taha, thanks for the uhuh Taha, thanks for the uhuh Taha, thanks for the uh for the kind words on uh Dakshana,for the kind words on uh Dakshana,for the kind words on uh Dakshana, though I think I would I would encouragethough I think I would I would encouragethough I think I would I would encourage you to focus right now on COVID versusyou to focus right now on COVID versusyou to focus right now on COVID versus Dakshana. That seems to be more of aDakshana. That seems to be more of aDakshana. That seems to be more of a immediate, more pressing need. But Iimmediate, more pressing need. But Iimmediate, more pressing need. But I would say that, you know, one thing thatwould say that, you know, one thing thatwould say that, you know, one thing that uhuhuh Munger says is thatMunger says is thatMunger says is that uh if you're looking to start a fund,uh if you're looking to start a fund,uh if you're looking to start a fund, you should already be wealthy.you should already be wealthy.you should already be wealthy. And Munger's perspective is that if youAnd Munger's perspective is that if youAnd Munger's perspective is that if you you you really should start a fund afteryou you really should start a fund afteryou you really should start a fund after you've proven to yourselfyou've proven to yourselfyou've proven to yourself that you're good at it, you're good atthat you're good at it, you're good atthat you're good at it, you're good at managing money and such. And if you'remanaging money and such. And if you'remanaging money and such. And if you're any good at managing money just becauseany good at managing money just because
Questionerany good at managing money just because of the way compounding works,of the way compounding works,of the way compounding works, uh you know, over a couple of decades,uh you know, over a couple of decades,uh you know, over a couple of decades, uh even with a relatively smalluh even with a relatively smalluh even with a relatively small initial capital pool,initial capital pool,initial capital pool, you could be independently wealthy. Andyou could be independently wealthy. Andyou could be independently wealthy. And then at that point,then at that point,then at that point, it proves that you can at least do thisit proves that you can at least do thisit proves that you can at least do this for yourself.for yourself.for yourself. And uh at least serves a baseline thatAnd uh at least serves a baseline thatAnd uh at least serves a baseline that it's possible you could do it forit's possible you could do it forit's possible you could do it for others. But I think that uh so, I thinkothers. But I think that uh so, I thinkothers. But I think that uh so, I think I've always felt thatI've always felt thatI've always felt that the that should be the the litmus testthe that should be the the litmus testthe that should be the the litmus test on whether one should start a fund oron whether one should start a fund oron whether one should start a fund or not. In terms of I think uhnot. In terms of I think uhnot. In terms of I think uh cloning Buffett and such, I mean, Icloning Buffett and such, I mean, Icloning Buffett and such, I mean, I think thatthink thatthink that we are very blessed because Buffett,we are very blessed because Buffett,we are very blessed because Buffett, Munger, Ben Graham, and so many otherMunger, Ben Graham, and so many otherMunger, Ben Graham, and so many other uh wonderful practitioners in this fielduh wonderful practitioners in this fielduh wonderful practitioners in this field have been uh selflessly sh- havehave been uh selflessly sh- havehave been uh selflessly sh- have selflessly shared their knowledge andselflessly shared their knowledge andselflessly shared their knowledge and experiences over the decades.experiences over the decades.experiences over the decades. So, there's a very rich repositorySo, there's a very rich repositorySo, there's a very rich repository of information and experiences that haveof information and experiences that have
Questionerof information and experiences that have been very freely shared, you know, been very freely shared, you know, been very freely shared, you know, including in the Berkshire annual letters and uh Ben Graham's books and uh letters and uh Ben Graham's books and uh letters and uh Ben Graham's books and uh some of the biographies on Buffett and some of the biographies on Buffett and some of the biographies on Buffett and Munger and so on. So, I think there's a Munger and so on. So, I think there's a Munger and so on. So, I think there's a very rich data set there very rich data set there very rich data set there uh that one can uh one can tap into. And uh that one can uh one can tap into. And uh that one can uh one can tap into. And so, I think that's uh that's wonderful so, I think that's uh that's wonderful so, I think that's uh that's wonderful because uh because uh because uh uh basically, if you can just study uh basically, if you can just study uh basically, if you can just study those, then the second part of it which those, then the second part of it which those, then the second part of it which is applying it, I mean, once you have is applying it, I mean, once you have is applying it, I mean, once you have the frameworks, that's half the battle, the frameworks, that's half the battle, the frameworks, that's half the battle, maybe three quarters of the battle, maybe three quarters of the battle, maybe three quarters of the battle, is to just have the right framework. And is to just have the right framework. And is to just have the right framework. And uh then you can go from there. uh then you can go from there. uh then you can go from there. And I think I think in uh And I think I think in uh And I think I think in uh in my case, in my case, in my case, I would say that probably the I would say that probably the I would say that probably the the biggest mistake I made the biggest mistake I made the biggest mistake I made was focusing for too many years was focusing for too many years was focusing for too many years on Graham, on Graham, on Graham, which is, you know, buying discounted which is, you know, buying discounted which is, you know, buying discounted pies, pies, pies, versus Munger, which is buying growing versus Munger, which is buying growing versus Munger, which is buying growing pies. pies. pies. And I would say that, you know, someone
OtherAnd I would say that, you know, someone like Nick Sleep Brodersen in your backyard and maybe you should trust Nick's arm to do a webcast with you. He's basically that, uh you know, he takes it one step further, which is not just growing pies, but you think of yourself like the entrepreneur who founded that growing pie. And you hold on for the long haul. You know, think of yourself as the founding family. And uh and such. So, I think those are things that can be quite helpful. Thank you very much. Thank you. Very nice to hear you. Thank you.
OtherNext up, we have Saurabh. Uh thanks, Monish, for your time. Uh I'm also a big fan of yours. Uh so, you know, from your Buffett meeting, one of your key takeaways was the idea of inner scorecard. So, just wanted to understand the concept better and how it helped you or benefited you in terms of professional and personal
Questionerin terms of professional and personal life. Thank you.
Ted WeschlerYeah, I think that's a wonderful question. So, Buffett told us at the at the lunch in 2008 and actually at that time Alice Schroeder's biography on him had not come out yet. He had read the manuscript but the book hadn't come out and the the subject of the inner and outer scorecard is covered in her book. So, this is this a reference I would say that if you want to probe further, you could you could go to through that biography. But Buffett said basically there are two ways you can go through life. You can go through life with an inner scorecard or you can go through life with an outer scorecard. And you know, he said would you like to be the best lover in the world but known as the worst or would you like to be the worst lover in the world but known as the best? And if you know how to answer that
QuestionerAnd if you know how to answer that question correctly then you've got it made. And the inner scorecard is a very powerful mental model because there are many times when the world does not calibrate its response to your how they think of you appropriately. They may think you're way more awesome than you actually are or they may think you're way more useless than you actually are. And the correct way to think about it and calibrate is to have an internal yardstick and to have internal objective measures. And so, I think that if you can set a true north internal compass both in terms of integrity, you know, how you go about your affairs and you measure yourself based on that inner scorecard then I think that's a great great way to go. There's a book that uh Nick Sleep recommends, you know, Zen and the Art of Motorcycle Maintenance.
OtherMotorcycle Maintenance. It became a bestseller even though the first 140 publishers turned it down. It's quite a weird book on many fronts. I would say that probably after you read the first 10 pages you'll probably toss it aside saying this is I don't know nonsense. And you know, probably won't have the patience for it. But he goes through in effect, he doesn't talk about scorecards. But he goes through this concept of the pursuit of quality. You know, and uh that book had a huge impact on Nick Sleep. And it had a huge impact on how he ran the Nomad Fund. And he was looking to do a quality job. And he wasn't trying to do a quality job just to make it look good for the rest of the world. He wanted to himself be convinced that he had done that it was a job well done. And and that you know, Nick Nick has a quote in his letters and I'm kind of
Questionerquote in his letters and I'm kind of paraphrasing. He says that you know when people ask me or ask Zach and me what we accomplished in the war, he said we'd like to say that we delivered we converted a dollar into $10. Right? And so so he clearly that is an outer scorecard measure the dollar into $10. But I think for him the important thing was how did you do that? How how did you go about converting the dollar into 10? And did you do the best possible job in getting there? And they set up a whole environment. I mean they used to read annual reports till they were blue in the face. Zach didn't even have a desk. You know, he they ran this $3 billion fund. One of the partners doesn't have a desk and he'd come in and you know, read in his lazy boy. And that's what he did. He didn't see the need to have a desk. And the job was well done. Okay.
QuestionerOkay.Okay. Uh thanks, Manish. Next up we have Dave.Uh thanks, Manish. Next up we have Dave.Uh thanks, Manish. Next up we have Dave. Hi.Hi.Hi. Thank you very much for the time.Thank you very much for the time.Thank you very much for the time. Um also a big fan just to uhUm also a big fan just to uhUm also a big fan just to uh umumum set it on the record. Umset it on the record. Umset it on the record. Um I have two questions. Uh one uh a littleI have two questions. Uh one uh a littleI have two questions. Uh one uh a little broader.broader.broader. So, I was wondering if you could shareSo, I was wondering if you could shareSo, I was wondering if you could share with uswith uswith us um how do you deal with management umum how do you deal with management umum how do you deal with management um especially in the holdings you have? So,especially in the holdings you have? So,especially in the holdings you have? So, if you have some secret around that. Andif you have some secret around that. Andif you have some secret around that. And the other one is uh if you could talkthe other one is uh if you could talkthe other one is uh if you could talk about one of your older positions,about one of your older positions,about one of your older positions, GrafTech. I was really interested inGrafTech. I was really interested inGrafTech. I was really interested in that.that.that.
OtherSure. The older position you are lookingSure. The older position you are lookingSure. The older position you are looking at, what was the name you said? Uhat, what was the name you said? Uhat, what was the name you said? Uh GrafTech. Oh, GrafTech. Yeah, yeah,GrafTech. Oh, GrafTech. Yeah, yeah,GrafTech. Oh, GrafTech. Yeah, yeah, sure. Yeah, yeah, yes. Yeah, yeah, yeah.sure. Yeah, yeah, yes. Yeah, yeah, yeah.sure. Yeah, yeah, yes. Yeah, yeah, yeah.
Ted WeschlerSo, yeah. Thank you. Well, I mean ISo, yeah. Thank you. Well, I mean ISo, yeah. Thank you. Well, I mean I think for the longest time Ithink for the longest time Ithink for the longest time I never interacted with management. And Inever interacted with management. And Inever interacted with management. And I think there was a few reasons for that.think there was a few reasons for that.think there was a few reasons for that. One was thatOne was thatOne was that Buffett and Graham always said that youBuffett and Graham always said that youBuffett and Graham always said that you know, when you interact with
Warrenknow, when you interact with managements, the one skill that a CEO all CEOs have in common or virtually all CEOs have in common is they're incredible sales guys. They couldn't in general get to the positions they're in if they weren't good at selling. And not only are they good sales guys you would be talking to them about a subject in which they know everything and you know nothing. And so you have this super salesman talking to you about a subject that he's he or she is a you know, great expert on and uh the knowledge delta is pretty significant. So, the and the charisma is pretty high. So the end result is that you are likely to have a distortion in your perspective. And the distortion would be more hurtful than helpful. Because you may gain some data or input on the way to think about the business or the industry. But that probably gets outweighed
QuestionerBut that probably gets outweighed with your you know, warm and fuzzy feelings about this great leader running this company. So, they always suggested that instead of you know, talking to the management look at what they said 10 years ago. And look at what transpired after that. So, focus on the track record and focus on the history. Don't focus so much on what they are telling you. And even this year at the Berkshire annual meeting Buffett said that one of the greatest risk factors that businesses have which doesn't even get mentioned in the large risk factor section of the 10K or the 20F is that you end up with a CEO who's very personable. Everyone likes him, the board likes him. And is thoroughly incompetent at his or her job. And so to discern from body language of a CEO who is great and who is useless is really hard to do.
Todd Combsis really hard to do. It's a lot easier to do it when you look at the track record because then that's black and white. So this is an area where I think an individual investor is not necessarily at a disadvantage from the institutional investors just because they don't have access. It may be an advantage not to have access and for the institutions it may be a disadvantage. So, for the longest time I never interacted with management. More recently I have begun to interact more with them because I think uh it's kind of useful to understand the industries and stuff but I have to keep in mind the charisma and I have to keep in mind that these guys are really good sales guys. And recently for example, there was one CEO where it took me about I think about 15 months to figure out that the guy really wasn't that great. And so it you know, you get to these gray zones
Charlieit you know, you get to these gray zones where and where and where and the I would say that the uh in in live interaction uh in in live interaction uh in in live interaction you would have difficulty you would have difficulty you would have difficulty understanding understanding understanding how good a Buffett is or how good a how good a Buffett is or how good a how good a Buffett is or how good a Bezos is Bezos is Bezos is or how bad a Al Dunlap is or how bad a or how bad a Al Dunlap is or how bad a or how bad a Al Dunlap is or how bad a Jeff Immelt is. Jeff Immelt is. Jeff Immelt is. Uh I think Jeff Immelt is a really good Uh I think Jeff Immelt is a really good Uh I think Jeff Immelt is a really good example. example. example. And you know And you know And you know in at least in American business in at least in American business in at least in American business a good number of CEOs a good number of CEOs a good number of CEOs belong to fraternities or were president belong to fraternities or were president belong to fraternities or were president of a fraternity. of a fraternity. of a fraternity. Or they were on the football team. Or they were on the football team. Or they were on the football team. Or they were a quarterback, whatever, Or they were a quarterback, whatever, Or they were a quarterback, whatever, right? right? right? And uh And uh And uh Jeff has all of those things on his Jeff has all of those things on his Jeff has all of those things on his resume. resume. resume. I think he was on the football team. I I think he was on the football team. I I think he was on the football team. I think he was president of the think he was president of the think he was president of the fraternity, all of those good things. fraternity, all of those good things. fraternity, all of those good things. And even someone as smart as Jack Welch And even someone as smart as Jack Welch And even someone as smart as Jack Welch who had watched this guy over a while who had watched this guy over a while who had watched this guy over a while got snowed. got snowed. got snowed. You know, I mean it's really surprising You know, I mean it's really surprising You know, I mean it's really surprising to but you can clearly see that Jeff to but you can clearly see that Jeff to but you can clearly see that Jeff checks all the boxes. checks all the boxes.
Questionerchecks all the boxes. He's a white male.He's a white male.He's a white male. He's very tall.He's very tall.He's very tall. He's handsome.He's handsome.He's handsome. He's got good academic credentials.He's got good academic credentials.He's got good academic credentials. And everyone likes him.And everyone likes him.And everyone likes him. So, how could he not succeed?So, how could he not succeed?So, how could he not succeed?
QuestionerYou know, checks all the boxes.You know, checks all the boxes.You know, checks all the boxes. UhUhUh so, I thinkso, I thinkso, I think one has to be very wary of that and Ione has to be very wary of that and Ione has to be very wary of that and I don't want to single out Jeff, butdon't want to single out Jeff, butdon't want to single out Jeff, but I think it's just such a good example.I think it's just such a good example.I think it's just such a good example. And there actually two books that cameAnd there actually two books that cameAnd there actually two books that came out recently, which I think areout recently, which I think areout recently, which I think are interesting books to read. They're bothinteresting books to read. They're bothinteresting books to read. They're both ononon GEGEGE and I think one is called Lights Out,and I think one is called Lights Out,and I think one is called Lights Out, which was, you know, what happened withwhich was, you know, what happened withwhich was, you know, what happened with GE and the other was Hot Seat, which isGE and the other was Hot Seat, which isGE and the other was Hot Seat, which is the one Jeff Immelt wrote. So, one isthe one Jeff Immelt wrote. So, one isthe one Jeff Immelt wrote. So, one is you get his perspective on hey, youyou get his perspective on hey, youyou get his perspective on hey, you know, it wasn't me, everything's fine.know, it wasn't me, everything's fine.know, it wasn't me, everything's fine. You know, I really kicked ass actually.You know, I really kicked ass actually.You know, I really kicked ass actually. AndAndAnd of course, the other one, which isof course, the other one, which isof course, the other one, which is Lights Out,Lights Out,Lights Out, is probably goingis probably goingis probably going more on the other other direction. So, Imore on the other other direction. So, Imore on the other other direction. So, I think it's fun to read both those booksthink it's fun to read both those books
Questionerthink it's fun to read both those books just to get the two different points of view.
Todd CombsRegarding GrafTech, so I made the I made you know, so I would say that I went through some evolution in the last year or so. And today if GrafTech came up on the radar, I would have a lot less interest in the business than I had at the time I made the investment. But at the time the investment was made, it was pretty mathematical and quantitative in the sense that GrafTech has a dominant position in these EAF electrodes that go into the EAF furnaces. And uh they had uh a large portion of their production already sold in take or pay contracts. Uh which means that, you know, these companies had to take this output. And so the the margin was known, the cash flows were known, a lot of stuff in the future, which for most businesses you would try to extrapolate, a large portion of that was locked in.
Questionera large portion of that was locked in. So, it was relatively easy to look at the market price of the stock versus the the likely future cash flows. And they also had a kicker about a quarter, I think, of the production was not sold in advance. And so there you had more of a open-ended, you know, market forces that would determine and that could go either way. It could be super profitable or marginally profitable and such. So, you had a range of kind of additional cash flows over there. And when you did the math, it was a very compelling investment. And uh of course, when COVID hit, the world turned upside down. And so my big concern was that these take or pay contracts were no longer going to be solid because the companies who had signed those contracts could make the claim that there was a force majeure event and the contract was void.
Otherand the contract was void. And a lot of courts would agree that pandemic is a force majeure event. And just like, you know, if we had a non-refundable air ticket before the pandemic, it suddenly became refundable. You know, the the terms changed. And so GrafTech became a lot more uncertain after March 2000. So, first of all, those contracts were very questionable whether they'd be able to keep them or not. And the second is that the world was shutting down. I mean, all these factories were being shut, the car production was shut. And therefore, as a result, it was almost for sure that steel production would decline. And so with steel production declining, there would be a real loss of demand for those electrodes. So, the the new cores of the world, which had signed these contracts, would definitely pursue all legal remedies
Questionerremedies to get out of them. And uh so my take was uh we were we were in a position in March 2000 where I was able to exit at a slight profit. So, we had a significant profit on GrafTech before the pandemic. It turned into a small profit. And so I said, "Hey, I'd even exit at a loss because I don't want to watch this story unfold in slow motion." But we were able to get out at a small profit and uh in hindsight, I would not make any uh changes to that decision even though today GrafTech is back to the pre-pandemic price. But it just became very uncertain and the bet the nature of the bet changed. All right. Thank you very much. Just a quick follow-up on that. Did the ownership from Brookfield um affect your decision whatsoever to have a company
QuestionerCompletely irrelevant.
QuestionerGot it. So, I think I think there's a lot of noise
Questionerlot of noise with Brookfield where, you know, people bring up that Brookfield kind of has sharp elbows in the way they dealt with uh TK Offshore and and that whole saga. And there was a the concern with GrafTech was that they would do a take under. That was the issue. And I found that whole concept really strange because Brookfield had warranted voluntarily IPO'd the business. So, you know, it's like they owned the whole thing. They IPO'd it and now they want to take it back again. Like, you know, that the whole round tripping to me made no sense because and actually the situation with Brookfield was that the ownership of GrafTech was split across a number of Brookfield entities. It wasn't just one entity of Brookfield that owned it. There were a number of different entities that owned it, including some PE funds. So, these private equity funds it would
QuestionerSo, these private equity funds it would have been a major home run for them, you know, what they bought it for and what it was trading at. So, these PE funds have a 10-year life. And they have to return the money after 10 years. So, they had to sell down their position, which is why they took the company public and which is why Brookfield was in those entities selling down. So, I didn't really see a a take under risk. I felt that even if Brookfield changed mind and even if it decided that, "Okay, I'm going to just take this business private because I see a lot more upside that I didn't see before." My take was, you know, we were buying at like $7 a share, somewhere in that range. Before the pandemic hit, it was trading at $14, $15 a share. So, my take was take it under. You know, if it's 15 and they make an offer, the offer has to be 18, 19 or
Otheroffer, the offer has to be 18, 19 oroffer, the offer has to be 18, 19 or something. And yeah, maybe it's worth 40something. And yeah, maybe it's worth 40something. And yeah, maybe it's worth 40 or maybe it's worth 50.or maybe it's worth 50.or maybe it's worth 50. Okay.Okay.Okay. ButButBut it's, you know, I viewed it as a lowit's, you know, I viewed it as a lowit's, you know, I viewed it as a low probability event even if it happened.probability event even if it happened.probability event even if it happened. The investment still delivered a decentThe investment still delivered a decentThe investment still delivered a decent return.return.return. So, I find in general, I don't overdoseSo, I find in general, I don't overdoseSo, I find in general, I don't overdose on conspiracy theories.on conspiracy theories.on conspiracy theories. And there's a lot of people who like toAnd there's a lot of people who like toAnd there's a lot of people who like to overdose on conspiracy theories. Youoverdose on conspiracy theories. Youoverdose on conspiracy theories. You will live a very happy life if you tonewill live a very happy life if you tonewill live a very happy life if you tone downdowndown that everything is a conspiracy againstthat everything is a conspiracy againstthat everything is a conspiracy against
QuestionerLovely. Thank you very much. Sure.Lovely. Thank you very much. Sure.Lovely. Thank you very much. Sure. Great. And next up we have Gus.Great. And next up we have Gus.Great. And next up we have Gus.
QuestionerHi yeah. Good evening or good afternoon,Hi yeah. Good evening or good afternoon,Hi yeah. Good evening or good afternoon, Manish. Um thanks so much for your time.Manish. Um thanks so much for your time.Manish. Um thanks so much for your time. This is this is a real privilege. Um bigThis is this is a real privilege. Um bigThis is this is a real privilege. Um big fan as well. Um two questions if I may.fan as well. Um two questions if I may.fan as well. Um two questions if I may. I I'd love to hear you just rationalizeI I'd love to hear you just rationalizeI I'd love to hear you just rationalize your recent investment in Alibaba.your recent investment in Alibaba.your recent investment in Alibaba. Um and then secondly, um beyond talkingUm and then secondly, um beyond talkingUm and then secondly, um beyond talking stocks, how do you think about portfoliostocks, how do you think about portfolio
Questionerstocks, how do you think about portfolio construction and specifically umconstruction and specifically umconstruction and specifically um position sizing?position sizing?position sizing?
Todd CombsYeah, so I will duck the AlibabaYeah, so I will duck the AlibabaYeah, so I will duck the Alibaba question.question.question. Sure.Sure.Sure. We will uhWe will uhWe will uh maybe if Rashid has me has me backmaybe if Rashid has me has me backmaybe if Rashid has me has me back or maybe one of your successors, Rashid,or maybe one of your successors, Rashid,or maybe one of your successors, Rashid, has me back in a few yearshas me back in a few yearshas me back in a few years and we don't own Alibaba. Though I thinkand we don't own Alibaba. Though I thinkand we don't own Alibaba. Though I think we may we may own Alibaba for a while.we may we may own Alibaba for a while.we may we may own Alibaba for a while. When we don't own it,When we don't own it,When we don't own it, like GrafTech, I'm be very happy to talklike GrafTech, I'm be very happy to talklike GrafTech, I'm be very happy to talk about it.about it.about it. At this point, uh we're still adding toAt this point, uh we're still adding toAt this point, uh we're still adding to our position.our position.our position. So, uh I don't like to talk about thingsSo, uh I don't like to talk about thingsSo, uh I don't like to talk about things that we'rethat we'rethat we're you know,you know,you know, Sure.Sure.Sure. you know, which are in the portfolio andyou know, which are in the portfolio andyou know, which are in the portfolio and uh actually going through some changeuh actually going through some changeuh actually going through some change and such as we speak. So, but you know,and such as we speak. So, but you know,and such as we speak. So, but you know, I must like it.I must like it.I must like it. You know, if I'm buying it, I must likeYou know, if I'm buying it, I must likeYou know, if I'm buying it, I must like it. That's all I can say. Andit. That's all I can say. Andit. That's all I can say. And and such. Uh I I think it's a businessand such. Uh I I think it's a businessand such. Uh I I think it's a business uhuhuh worth studying. It's a business worthworth studying. It's a business worthworth studying. It's a business worth uh diving into and studying. I thinkuh diving into and studying. I thinkuh diving into and studying. I think it's a fascinating business.
Questionerit's a fascinating business.
Questionerit's a fascinating business. And I'm sorry, what was your second question? Did you have a second question?
QuestionerUh yeah. Um portfolio construction, specifically how you think about position sizing.
QuestionerYeah. So, I think on that front, if you uh talk to someone like Charlie Munger, he would say that, you know, four diverse stocks, carefully selected, is all you need. Of course, the uh the operative words are carefully selected. And Munger Munger also says that if you lived in Peoria, Illinois, which if you guys have never visited Peoria, Illinois, might be a fun place to visit sometime. And you owned the Ford dealership in town and you owned the McDonald's franchise in town and you owned the best class A office building in town and the best apartment tower. Those were the four assets you owned. And you don't need to own all of them.
Otherown all of them.
Otherown all of them. You could own partially. You could have
OtherYou could own partially. You could have
OtherYou could own partially. You could have a, you know, 10% stake in the four
Othera, you know, 10% stake in the four
Othera, you know, 10% stake in the four dealership for example.
Otherdealership for example.
Otherdealership for example. So they could these could be partial
OtherSo they could these could be partial
OtherSo they could these could be partial ownerships.
Otherownerships.
Otherownerships. He says that you would likely
OtherHe says that you would likely
OtherHe says that you would likely do extremely well over the years
Otherdo extremely well over the years
Otherdo extremely well over the years and
Otherand
Otherand live a pretty happy life as an investor.
Otherlive a pretty happy life as an investor.
Otherlive a pretty happy life as an investor. And someone looking at that from the
OtherAnd someone looking at that from the
OtherAnd someone looking at that from the outside would say, "Well,
Otheroutside would say, "Well,
Otheroutside would say, "Well, you are geographically so concentrated."
Otheryou are geographically so concentrated."
Otheryou are geographically so concentrated." So even though you're in four different
OtherSo even though you're in four different
OtherSo even though you're in four different industries, four different asset
Otherindustries, four different asset
Otherindustries, four different asset classes,
Otherclasses,
Otherclasses, it's all in the same geography.
Otherit's all in the same geography.
Otherit's all in the same geography. And that is true, but I think that
OtherAnd that is true, but I think that
OtherAnd that is true, but I think that if you look at most entrepreneurs,
Otherif you look at most entrepreneurs,
Otherif you look at most entrepreneurs, they don't even have four bets.
Otherthey don't even have four bets.
Otherthey don't even have four bets. 98% of their assets is one bet.
Other98% of their assets is one bet.
Other98% of their assets is one bet. And
OtherAnd
OtherAnd they don't have sleepless nights.
Otherthey don't have sleepless nights.
Otherthey don't have sleepless nights. You know, they're they're pretty
OtherYou know, they're they're pretty
OtherYou know, they're they're pretty comfortable
Othercomfortable
Othercomfortable with single bet and a lot of them eggs
Otherwith single bet and a lot of them eggs
Otherwith single bet and a lot of them eggs in one basket. So I think that uh
Otherin one basket. So I think that uh
Otherin one basket. So I think that uh if you know what you're doing, well, if
Otherif you know what you're doing, well, if
Otherif you know what you're doing, well, if you don't know what you're doing, please
Questioneryou don't know what you're doing, please index.index.index. Pretty honorable way to go go through life and you still get the power of compounding, but if you know what you're doing, then it seems like insanity to own 30 stocks or even 20 stocks. I mean, why would you put money
QuestionerBuffett would say, "Why would you put money into your 27th best idea instead of your third best idea?"
QuestionerYou know, so that just makes no sense and the idea that you would actually understand 27 businesses as well as each of them or equally is is unlikely. So there's circle of competence issues, there's a depth of understanding issues that come in. And so so for my for my point of view, the answer has been at least in proprietary funds has been to go with like a 10 by 10 portfolio, you know, 10 stocks 10% each is seems like a good medium. In my personal portfolio, sometimes I've had one stock.
Charliesometimes I've had one stock. You know, and sometimes and I don't think I've had many occasions when there've been more than four or five positions. In the in the Dakshana Foundation, you know, where we have thankfully we've now got significant assets. I think we've got uh north of uh 20 or 22 23 million in uh marketable securities in Dakshana. It's invested in a very concentrated way. I mean, I don't think most of it is in more than three positions. And of course in Dakshana, the the idea there is that even when we do our work, you know, the the places where you spend our money, it's the exact opposite of what we do in investing. In investing, we never swing for the fences. Or in in British terms, we don't go for hitting sixers. Okay? We try to get, you know, one run here and one run there. That's what we're trying to do. But in investing in in in in
OtherBut in investing in in in inBut in investing in in in in philanthropy,philanthropy,philanthropy, what you want to do is just go forwhat you want to do is just go forwhat you want to do is just go for sixers every time.sixers every time.sixers every time. Okay? Because that's the only way youOkay? Because that's the only way youOkay? Because that's the only way you can possibly move the needle on thesecan possibly move the needle on thesecan possibly move the needle on these really tough problems is is be willingreally tough problems is is be willingreally tough problems is is be willing to fail.to fail.to fail. AndAndAnd so anyway in Dakshana, we're veryso anyway in Dakshana, we're veryso anyway in Dakshana, we're very willing to fail when we spend the money.willing to fail when we spend the money.willing to fail when we spend the money. And I don't think it's that risky toAnd I don't think it's that risky toAnd I don't think it's that risky to havehavehave three or four well-selected stocks in inthree or four well-selected stocks in inthree or four well-selected stocks in in Dakshana andDakshana andDakshana and likely to work outlikely to work outlikely to work out and likely to help us do even more good.and likely to help us do even more good.and likely to help us do even more good. Thanks so much.Thanks so much.Thanks so much.
QuestionerGreat.Great.Great. Next up we have Chesh. Chesh, if youNext up we have Chesh. Chesh, if youNext up we have Chesh. Chesh, if you don't mind unmuting yourself and maybedon't mind unmuting yourself and maybedon't mind unmuting yourself and maybe putting your video on, that'd be great.putting your video on, that'd be great.putting your video on, that'd be great. Monish, thank you for your time. MyMonish, thank you for your time. MyMonish, thank you for your time. My question is actually to get aquestion is actually to get aquestion is actually to get a perspective onperspective onperspective on your experience in investing in Mumbaiyour experience in investing in Mumbaiyour experience in investing in Mumbai specifically as a real estate play.specifically as a real estate play.specifically as a real estate play. I think the pandemic has made it veryI think the pandemic has made it veryI think the pandemic has made it very clear that the inequality between theclear that the inequality between theclear that the inequality between the haves and the have-nots hasn't been
Questionerhaves and the have-nots hasn't been starker. And I think that slum rehabilitation, the way it is programmed, the way the regulations are in Mumbai, arguably can be one of the best impact investment idea with returns with real good changes to lives of thousands of people, but I don't see really, you know, big players looking at it. Do you have a view on it and and maybe just a general idea of what got you to Mumbai would be very nice to understand.
OtherYeah, so I think well, I I don't want to talk about the investments we have because again they're portfolio positions, but I can just give you some general perspective on Mumbai real estate. I would say that the when you look at what you pay for real estate in Mumbai in terms of the quality and size of what you get, it's one of the worst kind of, you know, bargains if you will. It's it's just
Otherbargains if you will. It's it's just terrible uh value for money. The housing stock in general for the entire city is terrible. In fact, uh the way I look at Mumbai is that 80% of Mumbai is a teardown. It needs to be torn torn down and redeveloped. And that is happening. So it's happening in two different ways. Uh one is there's a large number of very old buildings, let's say 50, 60, 70 years, uh which are relatively low rise, maybe three or four stories. And they have a decent amount of land. And if those are torn down and, you know, put a 40-story tower in, the economics can become quite interesting. And what the government has done, they've codified in very precise laws how that is supposed to take place and how the interests of the the apartment owners, the condo owners, is protected. So for example, they there's a method by which the entire building has to agree
Questionerwhich the entire building has to agree and a certain percentage of owners have to agree. And then once the the residents are, you know, basically moved out so that demolition can take place, the developer has to pay them a preset monthly rental allowance for the entire period before they can move back in. So someone may have a, you know, 800 square foot apartment and they would have negotiated that when I move back in, I get a 2,000 square foot apartment for example. Okay? And whatever else and my rent for the next three or four years gets paid. Something like that. And so these societies will negotiate these deals, but the way the laws are set up that it it really is pro apartment owner and uh basically the the developer could could lose money, but it's in general unlikely that the the owners would be in the short end of the stick. Uh they're well
Othershort end of the stick. Uh they're well protected. So that's that's good. I think they've done a decent job there. And uh on the slum redevelopment side, in general, that's pretty dirty business. It is very political. There's probably a lot of kickbacks. And there's a lot of uh I would say uh quote unquote mafia involvement in that entire process, which is why you don't see kind of you know, organized developers playing in that space. I mean, they basically have no competence. To So there are these kind of third parties who will, you know, do all the work, get the deal kind of done in whatever way they get it done and then present the package to a organized developer and insulate them from that process and that can work. But basically, yeah, so there is there is some redevelopment taking place. Even there the laws are very good and they
Otherthere the laws are very good and they are very enlightened. So for example, are very enlightened. So for example, are very enlightened. So for example, the the the the slum dwellers have to be given the slum dwellers have to be given the slum dwellers have to be given housing in the exact same location. The housing in the exact same location. The housing in the exact same location. The old rule was that they would move them old rule was that they would move them old rule was that they would move them out like 20 miles or something and give out like 20 miles or something and give out like 20 miles or something and give them housing, but their livelihoods are them housing, but their livelihoods are them housing, but their livelihoods are right there. right there. right there. You know, everything for them is right You know, everything for them is right You know, everything for them is right there. So So now the laws require that there. So So now the laws require that there. So So now the laws require that you have to give them housing you have to give them housing you have to give them housing in the same location. So you see this I in the same location. So you see this I in the same location. So you see this I think Oberoi reality, you can see this. think Oberoi reality, you can see this. think Oberoi reality, you can see this. They have this Ritz-Carlton tower coming They have this Ritz-Carlton tower coming They have this Ritz-Carlton tower coming up and if you look carefully, right next up and if you look carefully, right next up and if you look carefully, right next to it there's a, you know, maybe to it there's a, you know, maybe to it there's a, you know, maybe 10-story buildings or a few buildings 10-story buildings or a few buildings 10-story buildings or a few buildings which is where all the the old sub slum which is where all the the old sub slum which is where all the the old sub slum dwellers have been uh given housing dwellers have been uh given housing dwellers have been uh given housing right next to the the Ritz and that right next to the the Ritz and that right next to the the Ritz and that works. So I think I think the works. So I think I think the works. So I think I think the the city over the long haul the city over the long haul the city over the long haul will go through a complete teardown and will go through a complete teardown and will go through a complete teardown and rebuild because the land is so valuable.
Otherrebuild because the land is so valuable. But that whole process will happen in fits and starts.
QuestionerGreat. Next up we have Rahul. Hi Monish. Thank you for being here with us. I wanted to ask you when you invest internationally, especially in emerging markets, how much time do you dedicate to macro stuff and in particular exchange rates? And if that changes when you're doing a Graham style investment versus a longer hold investment. Thank you.
QuestionerYeah.
OtherYeah, Rahul, I think that's a good question. And the answer is I spend almost no time on those things because I have no competence. I couldn't tell you what currencies are going to do or what macro is going to do or you know, who's going to go in and out of power or whatever else is going to happen. And I also think that those factors for the most part don't matter. So, for example, there's a company in
Todd CombsSo, for example, there's a company in Turkey which is the Coke bottler for Turkey. Okay? Not only is it the Coke bottler for Turkey, they're also the Coke bottler for Pakistan. Which is, you know, significant market and a few other uh geographies and they were they Coca-Cola, I think, owns 10% 10 or 20% of the company. And uh 3G owns, you know, from Brazil, 3G owns a portion of the parent company eventually coming down. So, they've got some good investors uh in the mix. It really doesn't matter what happens to the currency. I mean, the currency could devalue by 100% and they will just raise their price accordingly. So, you know, the bottom line is that uh uh that business you know, it gets hot, people like to drink Cokes. People like to drink Cokes no matter who's in power. Their annual, you know, cases sold every year in Turkey goes up
Questionercases sold every year in Turkey goes up with GDP. It may even go up when I mean,with GDP. It may even go up when I mean,with GDP. It may even go up when I mean, like, for example, recently in thelike, for example, recently in thelike, for example, recently in the pandemicpandemicpandemic their consumption in restaurants wenttheir consumption in restaurants wenttheir consumption in restaurants went down a lot, right? Because restaurantsdown a lot, right? Because restaurantsdown a lot, right? Because restaurants were closed. And they got some of thatwere closed. And they got some of thatwere closed. And they got some of that back with the home sales,back with the home sales,back with the home sales, you know, with people buying it, but ityou know, with people buying it, but ityou know, with people buying it, but it didn't quite make it up. But youdidn't quite make it up. But youdidn't quite make it up. But you th- this is a quite a six sigma eventth- this is a quite a six sigma eventth- this is a quite a six sigma event you're talking about, you know, a ayou're talking about, you know, a ayou're talking about, you know, a a pandemic coming in. But I think that forpandemic coming in. But I think that forpandemic coming in. But I think that for the most part, if the business uh youthe most part, if the business uh youthe most part, if the business uh you know, I think you just have to look atknow, I think you just have to look atknow, I think you just have to look at the nature of the business.the nature of the business.the nature of the business. AndAndAnd there's some businesses that arethere's some businesses that arethere's some businesses that are uhuhuh very significantly immune to a lot of,very significantly immune to a lot of,very significantly immune to a lot of, you know, macro stuff that might happen.you know, macro stuff that might happen.you know, macro stuff that might happen. And they're there I mean, you could buyAnd they're there I mean, you could buyAnd they're there I mean, you could buy the Coke bottlerthe Coke bottlerthe Coke bottler in Turkey a lot cheaperin Turkey a lot cheaperin Turkey a lot cheaper than any Coke bottler anywhere else inthan any Coke bottler anywhere else inthan any Coke bottler anywhere else in the world.the world.the world. And the economics of that businessAnd the economics of that businessAnd the economics of that business versus all the other Coke bottlers
Questionerversus all the other Coke bottlers anywhere else in the world are almost the same. You know, they're very similar businesses. So, one really shouldn't be trading. And it's it's a well-managed company, it's got a good management team, high-quality family that owns it, very high-quality investors. There's nothing wrong with it. It's a good well-managed business. Thank you. Thank you very much.
OtherSlightly conscious of time. Maybe uh Saurabh, a quick question from you.
QuestionerYeah, sure. Thanks for the opportunity again. Uh so, I just wanted to delve deeper into your changing investing philosophy recently, maybe inspired by Nick Sleep and even we can see Warren Buffett uh owning companies for decades. So, you know, how it has changed your decision-making points or the you know, your diligence or the 10 Commandments uh you used to refer earlier. Thank you.
Otheryou used to refer earlier. Thank you. The 10 Commandments definitely need some updating. Maybe we need to take it down to five Commandments. We'll have to see. You know, uh one of the things about the 10 Commandments is that what they tried to do was they tried to make it easier for humans to understand how to live a good life, you know, so they they needed to create a CliffNotes version because the Bible is too big. You know, Old Testament, New Testament, these are too big, complicated documents. So, they came up with the 10 Commandments saying, "Okay, here's the CliffNotes version, you know." Then someone told God, "Listen, man, this 10 Commandments is too much. Can you just give me one command because I can't handle 10. Just give me one." Okay. So, God said, "No problem. You know, I'm God. I can I can do it all in one sentence. Okay, I don't need 10
Questionerin one sentence. Okay, I don't need 10 sentences." So, God came up with one command. You know what the one command was? Do unto others as you you would have them do unto you. Okay. So, God basically encapsulated everything into one command saying, "Just follow this edict and everything is taken care of." Instead of saying, "Thou shalt not covet thy neighbor's wife. Thou shalt not covet thy neighbor's goat. Thou shalt not covet thy neighbor's house." He just said, "Do unto others as you would have others do unto you." And that takes care of all the wife adultery in one shot. So, I think that uh
QuestionerYeah, I mean, I I would say that reading Nick Sleep added a layer on top of what I understood from Munger and Buffett, even though I think a lot of the Nick Sleep lessons were embedded in the Munger and Buffett lessons, but they were not as explicit about it, so
Questionerwere not as explicit about it, so probably took some me listening to another person to really understand it.
QuestionerBut the idea is that you think of it as if you're a business owner. So, Rashid, I'll give an answer, but we are past time. Is that okay for you guys? So, if any of you guys, you know, need to leave, please feel free, you know, I won't take it personally, but you know, we're we're going over and I don't want to be disrespectful if you got other uh other commitments.
QuestionerBut I was I was just uh actually just earlier today I was looking at this is that in um 1995 when I first started investing, I had a million dollars that I had gotten from the sale of my business and so a portion of my business.
QuestionerAnd I had just begun to learn about Buffett and Munger. I decided I would invest this money in the equity markets and I wanted to grow it
Otherequity markets and I wanted to grow it and scale it and see what would happen. So, out of the million, I put 40,000 into four Indian stocks. So, I opened a brokerage account in India in '95. Which was quite a convoluted process then because it was just there was no demat or anything at that time. And one of the stocks basically went up 160X or 140X. It's you know, the like a one and a half million that I got out of $5,000. It was a huge home run. And when that happened in 2000, the other three stocks were either flat or down. They hadn't done much. And I said, "Okay, you know, it is ordained and written in in the Bible that if you get 100 bagger out of four bets, that is your quota, you know? And so, I thought, "Okay, this is fine. The other three, there's nothing happening." I sold the other three stocks. Now, there was no good reason to sell
QuestionerNow, there was no good reason to sell the other three stocks. If I had just held onto the other three stocks, one of them actually went down 90% and that, you know, basically was a useless investment, so let's forget about that one. But there were two others in my portfolio that one went up from the time I bought it till today 500X. And the other one went up about 150X. Now, to capture those 500X and 150X, I needed to have a 26-year holding period. Right? I needed to be holding it till today. And actually there was if I had read Nick Sleep in '94 instead of 2020, I would have had no difficulty holding those stocks. Because Nick's Nick asked a few questions. So, the first question he asked is what is the destination? What is this What does this business look like 10 or 20 or 30 years? Right? So, you you can try and answer that question. The second question he asks is
OtherThe second question he asks is is the business getting better? Okay, so as time goes on, is the business getting better? Is the moat getting wider? Is the moat getting deeper? And the third question is is the valuation reasonable? And what he means is that yeah, it can appear overvalued, that's okay. Just not egregious. It just can't go crazy, like crazy valuation. So, these these other two stocks that I sold, one was Kotak Mahindra, which is actually now my broker. And I had only invested out of $40,000, I only put $2,400 into Kotak. And I put the $2,400 into Kotak almost at the last second because they were my broker. And I had had a lot of interaction with them getting the accounts set up and talking to different entities, different people, and I was extremely impressed. I was very impressed with the people I was dealing with. And I I said, "You know,
Questionerdealing with. And I I said, "You know, this business, the brokerage business, is going to do nothing but grow. It's a great business and these guys are really good guys." At that time, Kotak did not have their banking license. The banking license came 8 years after that. And that's when it went, you know, as an product. But there was no reason in 2000 to sell the stock because the business was definitely better than 2000 uh by the time '95. And it was a reasonable valuation and destination still looked good. So, that was done. The second business which I sold that I shouldn't have was Blue Dart, which is the FedEx of India. So, I made two bets because the Indian postal system was so bad, you know, that I knew that private parties had to step in to give people assurances that packages get there in the next day or letters get there next day. So, I made two bets. One
Otherthere next day. So, I made two bets. One was Sky Pack Courier and another was Blue Dart. They both were listed companies. So, my bets were one was on the broker banking, whatever happens there, and these two bets were on courier services, which were very green field, huge runway ahead. Sky Pack went down 90%. Didn't go anywhere. And Blue Dart is up 150X. And FedEx later took a stake in Blue Dart. So, there was no reason to sell those businesses. There was no the it was the destination looked good, the evaluation reasonable. So, what I've learned now from this lead is that basically buy great businesses run by great managements, but don't sweat the intrinsic value. So, don't worry about oh, this is worth 100 million and now it's trading at 120 million. No. What you want to ask is what is the destination? And the entrepreneur is not selling, so
QuestionerAnd the entrepreneur is not selling, so why are you selling?
OtherSo, Rashi, this was a lot of fun. Thank you very much. I really enjoyed the session and I hope you guys did, too.
OtherManish, the pleasure was ours. Thanks on behalf of everyone at the Investment Management Club. I think you found it very insightful.
OtherAnd just a final plug for the quick fundraiser, I've posted the link on the chat, so people can take a look. That'll be massively appreciated. So, yeah, please join me in thanking Manish. Hopefully, we'll see you back at LBS in the near future. All right, thank you. Great being here. Take care. Bye.