Mohnish Pabrai's Session with Copenhagen Business School Investment Club on August 25, 2026

Chai with Pabrai

Mohnish Pabrai conducts a deep-dive Q&A session with the CBS Investment Club, detailing his concentrated investment philosophy. He explores

Key takeaways

• Build an auditable track record with personal funds for 5-10 years before managing external capital.
• Evaluate management teams by analyzing historical performance and competitor feedback rather than direct interaction.
• The 'Nifty Fifty' lesson: A single exceptional holding like Walmart can offset massive losses in a diversified portfolio if held indefinitely.
• In hyper-inflationary markets like Turkey, focus on hard assets like warehouses that act as natural inflation hedges.
• Concentrated position sizing is viable when the investor communicates clearly with stakeholders about the risks of not diversifying.

Main topics

• Investment management career advice
• Oligopoly dynamics in memory markets
• The Nifty Fifty and Walmart case study

Notable quotes

Don't worry about becoming good at selling. Worry about... becoming good at finding Costco's.

Conclusion

The episode serves as a masterclass in asymmetric betting and the disc

Transcript preview

Speaker 1 (0:24) We're Speaker 5 (0:24) so excited to have you here, to take the time for us to ask questions for you. Speaker 4 (0:33) My name is Gauss-Kern. speaking Speaker 5 (0:37) on behalf of the CBS Investment Club at Copenhagen Business School. Yeah, the CBS Investment Club is a club run by students. It's an investment fund focused on Nordic equities, just like gathering students from across the university, interesting in markets and capital allocation. So yeah, for those of you who don't know Monish, he is the founder and managing partner of... Babrai Investment Funds and also the CEO of Dando Funds and the author of the Dando Investor. Speaker 4 (1:12) And Speaker 5 (1:13) he also has some philanthropic activities where he is the chairman and founder of the Dakshana Foundation, where he gives impoverished children in India opportunities to study at IIT, which is equivalent to MIT in the US. So yeah, Monish, why don't we start with maybe... Things you have in your mind or we can go to the Q &A session? We Speaker 2 (1:37) should go straight to Q &A. Okay, Speaker 5 (1:39) cool, cool, cool. Cool. So my first question for you is, what advice do you have for students that want to go into the investment management business and try to emulate maybe what Buffett has done? Speaker 2 (1:53) First thing I would suggest is that you need to have very solid evidence that you are a good investor and that you are likely to be a good steward for other people's hard-earned money. And probably the best way to accomplish that is to have a auditable track record that you've built over a few years with your own funds. So what I would recommend is basically have a brokerage account which is dedicated, where you're not writing, you know, checks here and there, but where later at some point that account can be handed over to an audit firm and they can relatively easily... come up with an audited record of what the returns and such have been. So I would say the first thing is that there should be some reasonable period of time, five, 10 years or something, where you've built a record and you convince yourself that you're good at this. And then after that, if that goes well, then you are on convincing folks to give you money to manage. And on that front, you put your energies behind friends, family, and fools. And the most important are the fools. Oh, Speaker 5 (2:58) interesting, interesting. So, Speaker 3 (2:59) yeah, my next question for you is, how Speaker 5 (3:02) do you manage the impact of management team when you research the companies? They're often very good at sales and charismatic people. So how do you manage that? Speaker 2 (3:14) I think that you can usually understand the nature of management. by looking at the historic track record. You know, this track record is public, and if that team and CEO has been in that position for a while, then you have some pretty solid data points of kind of what they've done in the past. And that should give you a good indicator of what's going on. You can also talk to competitors to see what they think about the company and the individuals and such. So you can get a good... kind of feel for all of that. You don't necessarily need to be interacting with management to get a view. In fact, I think interacting with management might create distortions, whereas you might get a cleaner view from looking at the history and track record. Speaker 5 (3:56) My next question is, you have a very big part of your US portfolio in Micron, if I remember correct. What did you learn from selling Micron early? Speaker 2 (4:07) That was an investment I had made with Leeloo, who manages some money for Charlie Munger. And Leeloo and I also discussed it with Charlie. So that investment was made around 2017. And we exited in 2023. And I don't really have any regrets about the exit because I think it made sense with the data we were seeing. And of course, it's gone up a lot since then. The premise of the Micron investment was that There was a rational oligopoly of three players, SK Hynix, Micron, and Samsung that controlled the memory market. And barriers to entry are extremely high for a fourth player to get scale in the memory business. There's a lot of patents and processes and Speaker 3 (4:52) capital and different impediments to a fourth player Speaker 5 (4:55) having any chance of making it. Speaker 2 (4:57) So we had a market with three players. And from what we could tell, the three players were acting rationally in the sense that they were all profitable, making money, and they were not trying to beat each other up, if you will. And one of the things I had discussed with Charlie is whether these oligopoly situations were stable in terms of cash flows and business prospects and so on, or whether there was issues to be concerned about. And Charlie said that Warren Buffett had studied a large number of Coke and Pepsi bottlers all around the world in various U.S. cities and various countries around the world. And that's an oligopoly situation with two players. And he said that in probably 95 or 97 percent of markets, Coke and Pepsi bottlers in a particular geography acted rationally. And both companies made money. Both bottlers made money. But he said they were like. kind of three to five percent of markets where one of the players decided that they wanted to increase market share so they became more aggressive with promotions and pricing and so on and of course the second player has to respond to that because even though there's brand loyalty you know if i go to pick up 12 pack of coke and the 12 pack of pepsi is 30 cheaper i would switch. There is brand loyalty, but it's not extreme brand loyalty. So in these markets where these players were trying to take more market share from the other player and so on, nobody made any money because it was a race to the bottom. The other person also reacted and then pricing went down and just got more aggressive and so on. So you end up with markets where normally having a core portler is a license to print money, but you would end up with markets in three to 5 % of the cases where nobody made money. And in the Micron oligopoly situation. It was a similar situation where these three players, from what we could tell in 2017, and I met with all three players, made several trips to Seoul and met with Hynex and Samsung and also met with the senior management at Micron and so on, that they all understood all that and they were not going to be acting irrationally. But then in 2023, there was a change when Samsung, which was, Samsung basically had half the market, 50%, and the other two players had 25 % each, approximately. And Samsung decided they wanted greater market share. And so they got more aggressive with pricing to take more market share. And of course, the other two players, SK Hynix and Micron, had to react and respond. What happened in 2023 is all three players lost money. And what was a... rational market suddenly became an irrational, unpredictable market. And by then, the stock we had bought had approximately doubled. It wasn't a great return, but it was, I would say, kind of a low teens annualized return from when we had bought. And the future was murky. We couldn't tell. We were looking at negative cash flows. So I decided to exit. I think Leeloo exited around the same time. And then, of course, two, three years later, we had the AI boom and things went the other way, where now... It doesn't matter whether the players are rational or not. They're not able to keep up with demand. So they're all trying to produce full out with the AI and such. And so it is the way it is. You know, the investing business is an extremely forgiving business. And one can and will be wrong the majority of the time. And even if one is wrong the majority of the time, the results may be more than acceptable if you're following some rules. So I like to give the example that in the... late 60s and early 1970s in the U.S., there was a concept known as the Nifty 50. And the Nifty 50 was an approach to investing where basically the idea was that you bought equal amounts invested in the 50 strongest, most blue-chip companies in the U.S. So you would take a portfolio and put 2 % of the portfolio into American Express, 2 % in Coca-Cola, Pepsi, GE, Kodak, Boeing. McDonald's, so on, Polaroid, and so on. And you would just not care about the valuations, not care about anything, just hold these great businesses, and the end result would be good. What ended up happening is that in 1973 and 74, so these companies got bid up to very spectacular levels, like 50, 60 times trailing earnings. They got very expensive. In Speaker 3 (9:24) 73, 74, there was a stock market crash in slow motion. Speaker 2 (9:28) where over two years, the US stock market went down more than 50%. And the Nifty 50 went down a lot more than that. It got taken out back and shot. So the Nifty 50 was probably down like 60, 70%. And by 1975, no one had any interest in the Nifty 50. Everyone had sold the Nifty 50 Speaker 3 (9:47) position they had at steep losses. Speaker 2 (9:49) There's some controversy whether Walmart was part of the Nifty 50 or not. But to help me make my point, Let's make the assumption that Walmart was part of the nifty 50 and that one had put 2 % of the portfolio into Walmart. And let's assume that the people who invested in the nifty 50 did not touch it or sell it in the 73, 74 downturn or from then until now. They just kept the whole thing, didn't have any trades. And let's also make an extreme assumption that every holding in that nifty 50 went to zero except Walmart. So you made an investment in a portfolio of 50 stocks. 49 stocks have gone to zero. And only one stock that you bought, which is Walmart, just does what it did. And if you looked at the returns from 1972, when Walmart came public, to 2026, 54-year period, including reinvested dividends, Walmart has delivered about 15 % or 16 % a year annualized. And the S &P 500... 15 or 16 % a year, starting with 2%. What I'm saying is that with that 98 % going to zero and the S &P having the entire 100 cents, the nifty 50 portfolio with a 98 % error rate blew out the S &P by about 5 % a year, with 49 out of 50 stocks going to zero. Now, of course, 49 out of 50 stocks did not go to zero. We still have McDonald's and Amex and Coke. a lot of the other businesses. But many of the stocks did go to zero, like Xerox and Kodak and Polaroid and digital equipment and so on. But it didn't matter. Bottom line was that one holding was enough to offset all the other losses. And if we study stock markets for a very long period of time, let's say over the last 100 years, for example, the US markets, what we find is that all the returns of the equity markets have come from 4%. of the stocks. 96 % of the stocks have basically done nothing. They've gone to zero or done nothing. And all the returns at 9%, 10%, 11 % a year that we get has come from 4 % of the equities. The important thing was not to buy Walmart. The important thing was not to touch Walmart, to never sell it, no matter what was happening, no