Mohnish Pabrai: Selling: Harder Than You Think (Especially When Winning Big)

In this presentation at FLAME University, Mohnish Pabrai explains why selling good businesses is much harder than buying them, especially when they’ve experienced significant gains. He believes he’s made mistakes in the past by selling out too early due to perceived high valuations, ultimately missing out on further growth. Here’s an excerpt from the presentation:

Pabrai: I think selling is a lot harder than buying.

Buying is easy, selling becomes hard. And something that becomes very hard if you have a big gain. Usually it is a mistake to sell a great business because of valuation.

I would say that if I were a owner of Varun and I was sitting on a 5x gain or something I would give it a lot of rope. It might be a mistake to give it a lot of rope but I think that a lot of mistakes I made have been where a lot of money was left on the table because something looked optically expensive.

So Varun has tailwinds in the sense that Pepsi loves them. Pepsi will give them more and depending on where those geographies are and what the economics of those deals are it could work extremely well.

And I may be wrong about the NARTD’s of India. It just looks like something like 700 looks really high to me for a country like India. It’s less than 100 today, 100, 120 could go up 7X, that’s a lot.

But I would just say if you’re in the happy position of owning a great business you should give it a lot of rope.

That’s what I learned is I regret a lot of sales that I made of really good businesses because they looked what I considered overvalued and it turned out I was wrong.

You can watch the entire discussion here: