Review: The Dhandho Investor, by Mohnish Pabrai


The Dhandho Investor: The Low-Risk Value Method to High Returns, by Mohnish Pabrai. Hoboken, NJ: John Wiley & Sons, 2007. 208 pp. $27.95 (hardcover).

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“From a standing start as refugees with virtually no capital, a person with the last name Patel today owns one out of every five motels in the United States” (p. 132). According to hedge fund investor Mohnish Pabrai, one word identifies how these Indian immigrants have achieved this extraordinary success in a little more than thirty years: Dhandho.

Dhandho (pronounced dhun-doe) is a Gujarati word. Dhan comes from the Sanskrit root word Dhana meaning wealth. Dhan-dho, literally translated, means “endeavors that create wealth.” The street translation of Dhandho is simply “business.” What is business if not an endeavor to create wealth? (p. 2)

In The Dhandho Investor: The Low-Risk Value Method to High Returns, however, Pabrai uses the word more narrowly to describe the low-risk, high-return approach to business taken by the entrepreneurial Patels.

According to Pabrai, the first Patels arrived in America in the mid-1970s with strange accents and nowhere to live. At the time, owing to a recession and gasoline rationing, the motel industry was suffering from drastically low room occupancy, and many motels were either for sale or in foreclosure. To the Patels, who saw that the banks would finance motel purchases for anyone with roughly $5,000, this circumstance represented an opportunity. According to Pabrai, the average “Papa Patel” sized up the situation this way: . . .

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