Our Investment Approach

We believe exceptional investment performance is usually the product of only a few great investments held for a very long time; the trick is to not only find the great investments, but also not sell them. Reminiscent of the defensive maneuver of American pioneers in the 1800s, the Firm will “circle the wagons” around its highest conviction holdings, which it believes will have the highest potential for investment returns. If the Firm needs to sell securities to meet cash needs, it will generally avoid selling these high conviction securities first.
1
BUSINESS
  • Enduring, predictable high ROEs* and FCF**
  • Identifiable, sustainable competitive advantages
  • Pricing power in excess of costs, inflation protection
  • Easy to understand
  • Normally avoid return-regulated industries
  • Strong balance sheets
2
MANAGEMENT
  • Management with exceptional skill, integrity, and passion
  • Treat shareholders like partners
  • Indifferent to Wall Street’s short-term focus
  • Lean corporate culture fosters independence, accountability
  • Compensation rationally determined
3
REINVESTMENT
  • Pattern of disciplined reinvestment
  • Extensive opportunities to reinvest FCF organically or through acquisitions
COMPOUNDING MACHINE
These three areas of analysis – business, management, and reinvestment – are the key components of what we call our “three-legged stool.” When we find a business that satisfies all three of our requirements, we refer to it as a “compounding machine,” and we seek to purchase shares at a modest valuation.

We know from experience that these businesses are rare.
1
BUSINESS
  • Enduring, predictable high ROEs* and FCF**
  • Identifiable, sustainable competitive advantages
  • Pricing power in excess of costs, inflation protection
  • Easy to understand
  • Normally avoid return-regulated industries
  • Strong balance sheets
2
MANAGEMENT
  • Management with exceptional skill, integrity, and passion
  • Treat shareholders like partners
  • Indifferent to Wall Street’s short-term focus
  • Lean corporate culture fosters independence, accountability
  • Compensation rationally determined
3
REINVESTMENT
  • Pattern of disciplined reinvestment
  • Extensive opportunities to reinvest FCF organically or through acquisitions
COMPOUNDING MACHINE
These three areas of analysis – business, management, and reinvestment – are the key components of what we call our “three-legged stool.” When we find a business that satisfies all three of our requirements, we refer to it as a “compounding machine,” and we seek to purchase shares at a modest valuation.

We know from experience that these businesses are rare.
1
BUSINESS
  • Enduring, predictable high ROEs* and FCF**
  • Identifiable, sustainable competitive advantages
  • Pricing power in excess of costs, inflation protection
  • Easy to understand
  • Normally avoid return-regulated industries
  • Strong balance sheets
2
MANAGEMENT
  • Management with exceptional skill, integrity, and passion
  • Treat shareholders like partners
  • Indifferent to Wall Street’s short-term focus
  • Lean corporate culture fosters independence, accountability
  • Compensation rationally determined
3
REINVESTMENT
  • Pattern of disciplined reinvestment
  • Extensive opportunities to reinvest FCF organically or through acquisitions
COMPOUNDING MACHINE
These three areas of analysis – business, management, and reinvestment – are the key components of what we call our “three-legged stool.” When we find a business that satisfies all three of our requirements, we refer to it as a “compounding machine,” and we seek to purchase shares at a modest valuation.

We know from experience that these businesses are rare.
Circle the Wagons: Key Principles
1.
Do not cut the flowers and water the weeds.
Hold on to the great businesses for dear life!
2.
Do not pay fancy prices for great businesses.
3.
Focus on the great businesses with great people and long runways.
Wide moats
Proven ability to reinvest capital at high rates without accounting gimmicks or much leverage
Pabrai Wagons Advisors,
4407 Bee Cave Road, Suite 513
West Lake Hills, Texas 78746-6496
About Pabrai Wagons Advisors
Dhandho Funds LLC, dba Pabrai Wagons Advisors is an investment management firm founded by Mohnish Pabrai. As of September 30, 2025, Mohnish Pabrai manages approx. $900 million in private partnership and mutual fund (the Pabrai Wagons Fund) assets through Pabrai Wagons Advisors and its affiliated advisor, Dalal Street LLC.
©2025 Pabrai Wagons Advisors. All Rights Reserved
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