Rain industries: Mohnish Pabrai Reveals his Multibagger Stock Pick

Intensive Stock Research Can Be Injurious to Financial Health

First of all, we have to compliment Mohnish Pabrai for legitimizing the investment modus operandi of novice investors.
On the aspect of cloning, novice investors always used to have an inferiority complex that they are indulging in the ‘low life’ activity of peering into the portfolio of other investors and copying their stock picks.
However, Mohnish changed all that by declaring that he is himself a “shameless cloner” and copies the stock picks of other illustrious investors.
In one stroke, Mohnish removed the stigma attached to cloning.
Similarly, the aspect of research (or the lack of it) has been a sore point for novice investors.
Novice investors merrily buy stocks without even knowing what the Company is doing and what its fundamentals are.
Mohnish has now put his seal of approval on this practice by declaring that he also takes “only a few seconds” to decide whether a stock is investment worthy or not.
“When I get an investment idea, I just look at two numbers, the stock price and its value,” Mohnish said.
“If it doesn’t hit me very strongly, with some intensity, in the first few seconds or the first few minutes, I move on,” he added in his typical drawl.
“Intensive stock research can be injurious to financial health and spending too much time on a company can make you biased,” Mohnish concluded, making it clear that the academicians who write reams of research paper on stocks are making a big mistake.
Of course, we have to bear in mind that a “few seconds” of research for Mohnish is equivalent to a “few hours” for us and so we have to do proper due diligence before parting with our hard-earned money.

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“Another learning that I have had in recent times is to focus on stocks in India,” Mohnish said.
Saurabh Madaan, the moderator, a razor-sharp data scientist at Google, took the cue.
“Tell us a little bit more … you are the master of cloning,” he prompted, flattering Mohnish in a subtle manner.
“For young students and investors, can you share an example and walk us through the investment process so that they get the same inspiration,” he added, sensing Mohnish’s reluctance to talk about individual stocks.
Mohnish fell for the bait and revealed crucial information about his stock picks.

Rain Industries has tripled … will keep going for a while

First, I must compliment myself because when it was reported in April 2015 that Mohnish had bought a truckload of Rain Industries at the throwaway price of Rs. 34.52, I had referred to a research report by Parry Pascricha to explain the investment rationale.
I called Parry Pascricha’s research report a “textbook example” of how to research a company.
Mohnish has endorsed this. He credited Parry Pascricha for suggesting the stock idea and also praised him for the “immaculate” and “awesome” report.
“The stock has tripled and it will keep going for a while,” Mohnish said, making it clear that more multibagger gains are due from Rain Industries.
At this stage, we must note that according to Parry Pascricha, Rain Industries has a target price of Rs. 177. The CMP is Rs. 100+.
IDBI Capital has also recommended a buy of Rain Industries with a target price of Rs. 139.