Mohnish Pabrai discusses his 2nd largest position: Sunteck Realty | Summary and Q&A

TL;DR

Mastercard has been a successful investment, but the speaker suggests selling it to buy the lesser-known Suntech Realty in Mumbai, arguing that Suntech has significant potential.

Key Insights

• ⛔ Mastercard has been a successful investment, but its future growth potential may be limited due to potential disruptions in the payment systems industry.
• 🎁 Suntech Realty, while relatively unknown, has valuable real estate assets that surpass its market capitalization, presenting a potentially lucrative investment opportunity.
• 💱 The undervaluation of Suntech Realty was a result of market events, such as demonetization and regulatory changes, which caused many real estate companies to collapse.
• 🎮 The speaker suggests playing a game of investment choices to demonstrate the potential of Suntech Realty compared to Mastercard.
• 🔊 Suntech Realty has shown strong growth since the speaker's investment, with the stock price almost five times higher than the initial price.
• 🔇 The speaker emphasizes the importance of considering starting prices when evaluating investments, as it significantly impacts future returns.

Transcript

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Questions & Answers

Q: Why does the speaker suggest selling Mastercard to invest in Suntech Realty?

The speaker believes that while Mastercard has shown impressive returns, its growth potential may be limited. In contrast, Suntech Realty has valuable real estate assets that are undervalued, making it a potentially better investment choice.

Q: What events led to the undervaluation of Suntech Realty?

Suntech Realty was undervalued due to a combination of factors: demonetization, the implementation of the Real Estate Regulatory Act (RERA), and the Goods and Services Tax (GST) in India. These events caused many real estate companies to collapse, but Suntech Realty, which always conducted its business legally and transparently, emerged as a strong player.

Q: What factors differentiate Mastercard and Suntech Realty as investment opportunities?

Mastercard is a well-established company with a strong market position, but it is subject to potential disruption in the future, especially in emerging markets like China. Suntech Realty, on the other hand, possesses valuable real estate assets that exceed its market capitalization, offering significant growth potential.

Q: How has Suntech Realty performed since the speaker's investment?

Since the speaker's investment, Suntech Realty has seen significant growth, with its stock price increasing almost five times. The company's market value has also increased, showcasing its potential for further growth.

Summary & Key Takeaways

• The speaker recommends selling Mastercard, a well-known, high-quality business, to invest in Suntech Realty, an unknown company in Mumbai.

• Mastercard has shown significant returns in the past, but the speaker believes its future growth potential may be limited.

• Suntech Realty, on the other hand, has been undervalued due to market events but possesses valuable real estate assets that exceed its market capitalization.