With working capital requirements low, and cost of failure estimated at just $2 million - considering his music business was on track to make $12 million that year - he took the plunge. He noted that he’d have to pay for fuel only 30 days after the plane landed, salaries 15 odd days later, and receive payments from booking about 20 days before the flight.
Instead of incurring the major capital cost of buying a Boeing jumbo jet for $200 million, he convinced Boeing to lease it to him which they would normally do only did for major clients. After conducting some basic first-hand research by calling various airlines to get such a flight ticket, he concluded that this sector was underserved. Richard was in the music recording and distribution business one day, he happened to receive a business plan about starting a business class airline from London to New York. Mohnish tells an awe-inspiring tale about how Richard started his airline business. We’ve all heard of Richard Branson, the founder of Virgin Group. Here he closes the chapter with one of his investing mantras - “Few Bets, Big Bets, Infrequent Bets.” Ch 3: Virgin Dhandho Bet meaning business opportunity, not the one in a casino. The take home - work hard, save all you can, and then bet it on a single no-brainer bet. This story, according to Mohnish, exemplifies the Dhandho framework: “Heads, I win tails, I don’t lose much!” Ch 2: Manilal DhandhoĪ similar story to the previous one, where the protagonist starts with working two jobs, then starts running a motel, and then went on to become a hotelier. Low-cost gave them the ability to offer low prices low prices meant higher occupancy rates higher occupancy translated into super-normal profits and that allowed them to get more properties for expansion. This give Patel Motels a low-cost advantage to its competition. That along with meticulous hisab (accounting record), ensured that operating expenses were kept low. The entire family would pitch in to run the hotel, thus eliminating the need for hired help. With this clarity of possible options and their logical outcomes, they took the plunge. But, if all goes well, we can pay off the bank in three to four years, while making a profit after tax of $15,000 per year.”
We would then, worst-case-scenario, start over at minimum wage. If that happens, we would lose our down payment, and the bank would take control of the motel. Since it’s an age-old industry with a long history of cash flows, the only thing that can trash its prospects is a prolonged recession. Or with bank financing, we can buy a small motel for $50,000.
#The dhandho investor free download full
“Either we work on minimum wage at $1.6 per hour, netting ~ $6,000 per year ( if both elders in the family worked full time). The thinking of the head of the family would’ve been something like this:
They saw the motel business as a way of making a decent living, while getting free family accommodation. After spending decades there, a few thousand of them came to the US as refugees. At the same time, thousands from the Patel community were kicked out from Uganda (Africa) after it came under a dictators rule. Ch 1: Patel Motel Dhandhoĭuring 1973, USA was entering a recession as a result, many properties were on sale at relatively cheap prices. Mohnish here sets the tone by sharing four remarkable stories which defy business school logic and emphatically state that one needn’t undertake high risk to seek high returns. Part 1: Four stories of “low-risk, high-return” business endeavours Four stories of “low-risk, high-return” business endeavours.The book has 17 chapters, but it’s easier to see them as three parts, let's call them: PS: the book is full of beautiful quotes, so I’ve taken the liberty of adding them here and there. With that introduction, let’s get into his book. Beyond being a money manager, Mohnish is - an eloquent speaker ( here’s his YouTube channel), and a committed philanthropist through an organisation he calls the Dakshana Foundation. Having paid homage to them many a time, Mohnish often states that most of what he knows and practices comes from them. He’s a devoted disciple of investing icons, Warren Buffett and Charlie Munger. Mohnish is an Indian-born American, settled in Irvine, California.
Its literal meaning though, is “endeavours to create wealth.” “Dhandho” is a Gujarati word that simply means “business”. Today I’m sharing my notes from a famous book first published in 2007 - The Dhandho Investor, by Mohnish Pabrai. Here’s what I was listening to while writing today’s article go ahead, play it in the back. It was a relatively brief piece, which was received well. Last week I wrote about, The Evolution Of Media ( link to its summary).
0 kommentar(er)
