During his recent presentation at The University of Nebraska, Mohnish Pabrai discussed Warren Buffett’s twelve truly great investing decisions. Here’s an excerpt from the presentation:
Pabrai: So this year in Buffett’s 2022 Shareholder Letter he had a couple of very candid and great quotes.
He said, over the years I’ve made many mistakes and our extensive collection of businesses consist of a few enterprises that have truly extraordinary economics. Many that enjoy very good economic characteristics and a large group that are marginal.
If you look at the 80+ acquisitions that Berkshire has done, Warren and Charlie probably themselves would acknowledge that probably at least half are outright mistakes.
And this is the best practitioners of the art. And then he goes on to say in 58 years of Berkshire management most of my capital allocation decisions have been no better than so-so.
And our satisfactory results have been the product of about a dozen truly great decisions. And which he’s saying is about once every five years.
So I try to basically look at this period from ’65 to ’22 and so you have let’s say 80 acquisitions in this 58-year period.
He probably bought at least 210 stocks. I used 210 for my convenience. I get to a round number. I like to work with round numbers, but it’s probably a larger number than 210.
And his key hires I’m expecting that in the last 58 years he had at least 10 key hires which were really important to Berkshire.
So if you look at these decisions there’s about 300 important decisions. And he’s saying that 12 move the needle.
And so basically it ends up being something like four percent, and we have four percent from like the Gods of investing which doesn’t give us a lot of confidence.
You can watch the entire discussion here:
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