Buffett disciple Mohnish Pabrai names his favorite investment books

Do you want to invest in stocks with long-term value? Veteran investor Mohnish Pabrai has two books to recommend.

Speaking on CNBC Pro TalksPabrai – a valued investor and disciple of the billionaire Warren Buffett – said that “100 to 1 on the stock market“is an” extremely well written “book.

Written by Thomas Phelps and originally published 50 years ago, the book teaches you how to increase wealth a hundredfold through buy-and-hold investments.

Buy and keep is a passive investment strategy that involves buying shares and holding them over a long period of time, even if there are short-term fluctuations.

The founder of the Pabrai Investment Funds, which grew from $ 100,000 in 1999 to $ 1.2 million in revenue in March of this year, was discussing his playbook on what to buy and what to avoid.

Another book for those looking for “competitive advantage or the ability to earn superior returns,” he said, is “Christopher Mayer”100 excavators“-that is talking companies that returned $ 100 for every $ 1 invested.

Does the company earn very high returns on equity? Can it grow and thrive without the use of debt? … Can this business reinvest the high yields and equity at high rates?

Mohnish Pabrai

founder of the Pabrai Investment Funds

Investors should ask themselves a few questions, he said.

“Does the company earn very high returns on equity? Can it grow and thrive without the use of debt? … Can this company reinvest the high returns and capital at high rates?”

How to know if a company is a “home run”

To illustrate his point, Pabrai gave the example of Starbucks.

“When they open a store in the US, they get their money back in two years. When they open a store in China, they get their money back in 12-15 months,” he said.

These are “astronomical returns on equity,” the veteran investor said, adding that Starbucks had the ability to “get their money back very quickly.”

“The business is getting more efficient because most of us don’t hang around Starbucks. We pre-order, just get our latte and go. And it’s even more profitable. [for them]. “

Pabrai summed up his idea of ​​”home runs” – he said he is able to see a clear “10, 20, 30 year lead”.

“What I’m trying to say is if I find a business they can grow without
use of debt, … at an inexpensive price, then you hit a home run. “

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