Mohnish Pabrai is an Indian-born entrepreneur, successful value investor, author and philanthropist. A bit of an investing late bloomer, Pabrai is a devout follower of Warren Buffett, although he had never heard of him until he was 30. So intent was he to pick the brain of his idol, Pabrai once spent over $650,000 just to have lunch with Buffett. Putting Buffett’s principles to work for himself has brought him great fortune, which he gladly invests in the lives of the poorest in India.

Key Takeaways

  • Well-known for spending more than $650,000 for the opportunity to have lunch with Warren Buffett, Mohnish Pabrai is one of the world's most successful value investors.
  • As head of Pabrai Investment Funds, which now manages more than half a billion dollars, he has outperformed his benchmark consistently, rewarding both his investors and his wallet.
  • With over $100 million in net worth, Pabrai gives back through his charitable organization, the Dakshana Foundation.

Early Life and Education

Growing up in Mumbai, India, Pabrai was fortunate enough to attend an elite private school. For the three years he attended the school, he could smell the stench of raw sewage emanating from the slums just feet away. While the sights and smells of the “untouchables” were obvious, their struggles were never mentioned by any of his teachers or classmates, which left a lasting impression on him.

Pabrai came to the United States in 1983 to study computer engineering at South Carolina’s Clemson University, where he graduated summa cum laude. After graduating, Pabrai worked in research and development (R&D) at Tellabs before launching his own successful IT consulting firm, TransTech, Inc., in 1991. He funded the company with his 401(k) account and $70,000 on his credit card, and sold it for $20 million in 2000.

Success Story

Using principles and strategies he learned from Warren Buffett, Pabrai founded Pabrai Investment Funds in 1999. His long-only equity fund has returned a cumulative 517% net for investors versus 43% for the S&P 500 Index since the fund's inception in 2000. Outperforming the S&P 500 by 1103% from its inception through 2013, Pabrai quickly became one of the most recognized value investors in the world. At its inception, the fund had $1 million in assets under management (AUM) and reached a peak of $570 million in AUM in 2019. Holding between 15 to 20 companies, his portfolio concentrates on India and emerging nations, as he doesn't find many mispriced or under-valued stocks in the U.S. market.

In 2004, he wrote his first book, “Mosaic,” in which he whittled Warren Buffett’s investing methods down to just a few simple points. In his next book, “The Dhandho Investor,” Pabrai laid out in more detail how he only invests in companies with huge return potentials and little risk. He suggests that what holds many investors from success is their egos and need for “action” by taking too much risk.

Net Worth & Current Influence

Never forgetting the extreme poverty millions in his homeland of India struggle with, Pabrai founded the Dakshana Foundation in 2005. Along with his wife, Pabrai runs his nonprofit with the same efficient principles that made him a wildly successful value investor, using checklists and simple metrics to help turn those living in the slums into millionaires. The goal of the foundation is to “recycle” most of Pabrai’s wealth back into society, with the overall vision of alleviating poverty in his native India.

The foundations seeks to identify the most brilliant minds among India’s poorest children and prepare them for the difficult entrance examination for the prestigious Indian Institutes of Technology. Graduates from the nation’s top engineering and technology universities are nearly guaranteed successful employment. Vinod Khosla, the billionaire co-founder of Sun Microsystems is among its long list of successful alumni.

As of 2017, Pabrai had a net worth in excess of $100 million and claimed that his net worth increased at an average annual rate of 16% from 1995 to 2015.

Most Influential Quotes

During his childhood education in India, Pabrai knew the answer to his country’s problems at an early age, saying “I came to the ­conclusion that poverty is driven by lack of education.”

Describing his logical approach to running his foundation, Pabrai said, “I wanted to make the greatest difference in the greatest number of lives in the most ­efficient manner possible.”