12: Starting early: Investment lessons with Monsoon Pabrai

Monsoon Pabrai has the distinction of being the second female and youngest guest I have had on the podcast. Monsoon brings a unique perspective on investing from having grown up in the industry, and she joins us to share how she is making her own way and the impact her father has had on her investing style. Monsoon is the Managing Partner and Portfolio Manager of Drew Investment Management, plus you may recognize her as the daughter of past podcast guest and investor Mohnish Pabrai. I am very excited to share my conversation with Monsoon Pabrai with you.

Investing the Templeton Way with Lauren Templeton is a podcast that explores the world’s most intriguing investment topics from the overseas markets to mastering our own minds. Gather investment wisdom and educate yourself as you listen to interviews with exclusive managers, executives, and entrepreneurs on a wide range of engaging topics.

Meet Monsoon

Monsoon Pabrai is the Managing Partner and Portfolio Manager of Drew Investment Management, LLC. Drew Investment Management, LLC manages the Drew Investment Fund I, LP, an investment partnership modeled after the original Buffett partnerships. The fund has no management fee, a high water mark, and only charges a performance allocation on profits that exceed a 6% compounding hurdle. 

Monsoon’s Childhood With Mohnish Pabrai

As the daughter of Mohnish Pabrai, investing runs in the family. However, growing up, her parents were just “mom and dad” to her. Monsoon describes her parents holding her to incredibly high standards and being heavily involved in her education. 

Mohnish taught Monsoon and her sister about investing from a young age. He would teach them about the business models of airlines, Disneyland, and soda companies and how they compete with each other. When she was eight years old, Monsoon’s dad bought her her first stock—allowing her to pick the one she wanted.

“He asked us everywhere we would spend our time with him and my mom, whenever we were outside of the house, ‘What is something that we think will be there in three, five, or ten years?’ That's a tough question as an eight-year-old kid, and I answered Target and my younger sister answered Disney, and he just bought us one share each, framed, that said my first stock and it's still in our bedrooms since 2003.” - Monsoon Pabrai [3:50-4:17]

Even though he was a great teacher and role model, Mohnish never pushed Monsoon to go into the investment industry. He encouraged entrepreneurship above anything else. The two biggest lessons that Monsoon has learned from her father that she applies to all areas of her life are to have no self-pity and no envy.

Monsoon’s Lunch With Warren Buffett

When Monsoon was twelve, her father bid on and won a lunch with Warren Buffett—a lunch that Mohnish decided to have Monsoon and her sister attend also. The lunch took place nearly a year later, so she spent the that time researching everything she could about Mr. Buffett. 

“We built a scrapbook of his life for him and we gifted it to him when we met him. I think we were the first kids at the lunch, which was exciting.” - Monsoon Pabrai [7:18-7:26]

Mr. Buffet talked with the family about a variety of interesting topics, and the conversation was mostly about how to live a good life. 

Monsoon’s Investment Style

Monsoon leans toward the Charlie Munger (Berkshire Hathaway Vice Chairman) style of investing and she also mentions learning a great deal from Guy Spier’s style. She favors excellent businesses and has a disdain toward the cigar-butt style (one last puff of value). The best way to understand the difference between these two styles is by using Charlie Munger’s candy shop analogy: One person will go into a candy shop and buy the cheapest thing they see on the first day. The other person will go in and identify their favorite candy, and they will keep going back to the shop until that candy sells at a price attractive enough to make them comfortable with the purchase.

The downside is that excellent businesses come at a higher price; however, they also often come with the potential for value creation lying beyond what is contemplated in the current share price. Monsoon will have very little activity during the year until the prices are low enough for her to feel comfortable buying, and her goal is to not have a reason to sell. She admits that she buys things at higher prices than her dad would.

“The joke between my dad and I, and now Guy, is that I am not my dad's daughter, I’m Guy’s daughter in my style.” - Monsoon Pabrai [11:41-11:50]

Even though her dad has teased her for some of her purchases in the past, they treat it lightly, and both respect each other’s portfolios.

Monsoon’s Career Path

Monsoon always wanted to work on a small startup team. She likes having access to the CEO and learning directly from the leader of the company. One of the first teams she joined was for a robot that performed gel manicures at home. She was the only person with a business background on a team of engineers.

At the advice of her dad, Monsoon met with an industrial psychologist in her early 20s. He helped her figure out the right working situation for her, which was one where she was a leader. She likes working with people but also values autonomy, which is why she ended up managing her own fund.

“I really enjoy managing my own fund, raising capital the way I want, pursuing clients the way I want, and making investment decisions the way I see best fit. I'm like a confident person and confident in my ability. I have a great network of people, you know, including dad and Guy, to talk to with ideas.” - Monsoon Pabrai [22:57-23:16]

Monsoon’s Involvement With the Dakshana Foundation

Monsoon is actively involved in her father’s charitable organization, the Dakshana Foundation, which uses education to alleviate extreme poverty in India. 

The organization identifies bright 16-year-old students and helps them prepare for testing to get into the Indian Institute of Technology, a prestigious institution with an extremely low acceptance rate. Around 50-60% of the organization’s students get accepted, and those who do not often attend other strong engineering schools in India. 

After going through two years of training with the Dakshana Foundation and four years of school, most of the participants are able to support their families and escape poverty. 

“​​You see a very fast return to the family. And then within a year or two of working a good tech job, they're able to support their family and just change the entire situation. And so if they have younger siblings, they're now able to help them get prep, help them go to school, and whatever they may want.” - Monsoon Pabrai [31:59-32:18]

Monsoon is proud of the legacy that her dad has created with the Dakshana Foundation, and told him that she wants to take over someday. Currently, she is the Vice President of Strategy and is in charge of all new ventures.

Monsoon’s Advice for Young Investors

The single most important lesson that Monsoon has learned regarding investing is to be harder on her ideas than anyone else. 

“​​When you make a thesis of what's going to go right, you need to destroy it and take it apart. And it won't fully withstand. But if it can withstand the majority of it, that's pretty good.” - Monsoon Pabrai [47:10-47:21] 

Her best advice to young investors in college is to use every school break to work an internship and build a strong resume. 

Connect With Monsoon

Twitter: https://twitter.com/typhoon_girl

Website: https://www.drewinvestments.com/about

Monsoon’s Reading List: https://www.drewinvestments.com/reading-list 

The information presented in this podcast or available on the website is not intended as and shall not be construed as financial advice. This podcast is produced for entertainment value. Investing is inherently risky. And I encourage you to seek financial advice from a professional who is aware of the facts and circumstances of your individual situation.

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