The Dhandho Investor: The Low-Risk Value Method to High Returns

Author: Mohnish Pabrai

This books describes a strategy/mindset called “Dhandho” which was used by Patels (People living in the Gujerat province of India) to acquire motels in the US in 1970s.  It means “endeavors to create wealth or business” in Gujerati.  In its core it is a practice to get high return with low risks!

Central Idea:

“Heads, I win; tails, I don’t lose much!”

Dhandho Framework:

Focus on buying an existing business
Buy simple business in industries with an ultra-slow rate of change
Buy distressed businesses in distressed industries
Buy business with a durable competitive advantage – the moat
Bet heavily when the odds are overwhelmingly in your favor
Focus on arbitrage
Buy business at big discounts to their underlying intrinsic value
Look for low-risk, high uncertainty business
It’s better to be a copycat than an innovator

Best Quote:

“We come to this world naked and we leave the world naked”