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COMLB 26: What Is the Meaning of Mohnish Pabrai's Vanity Plate? - Views on News from Equitymaster
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The Equitymaster Research Digest

COMLB 26: What Is the Meaning of Mohnish Pabrai's Vanity Plate?
Apr 29, 2016

  • The Magic of Expected Returns
  • Microcap Millionaires impressive CAGR
  • Berkshire Hathaway AGM

Mohnish Pabrai, the famous value investor, has a great car license plate. It reads 'COMLB 26'. 'LB' is an abbreviation for pound, so the plate translates to 'COMPOUND 26'.

Pabrai chose the number 26 to remind him of one of his life's biggest goals: to grow his portfolio by a factor of 1000x over 30 years, which would be a CAGR of 26% per annum.

Pabrai, of course, was inspired by his idol Warren Buffett, who averaged an eye-popping 31% per annum over the 43 years between 1950 and 1993.

So how's Pabrai doing?

He's so close! In the 18 years between 1995 and 2013, Pabrai has returned an impressive 25.7% (we only have data till 2013). His portfolio suffered huge reversals between 2007 and 2009, falling 47% on a compounded basis. Absent this damage, his performance would have been even better.

A different approach

I hope you noticed the difference in his approach to most value investors' approach. Pabrai targets an expected annual return. He doesn't try to buy stocks at a small discount to their intrinsic value and sell when the price gets there.

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