Compounders & QualityIndia
Pulak Prasad
Avoid big risks, buy quality at a fair price, and don't be lazy or crazy.
Pulak Prasad is an Indian fund manager who runs Nalanda Capital, a respected long-term investment fund. He is famous for a widely praised book that links investing to Charles Darwins ideas about how living things survive in nature. His method is built on three simple rules: avoid big risks first, buy high-quality businesses at fair prices, and act very rarely. Many readers call it one of the best investing books written by an Indian manager.
The method
Start by avoiding big dangers - dishonest, fragile, or hard-to-understand businesses - the way a careful animal avoids a predator. Then buy only genuinely excellent, healthy businesses that earn a high return on their money and keep earning it for years, and pay a sensible, fair price. Do deep homework before buying (dont be lazy), then hold for a long time and do very little (dont be crazy), making very few decisions so there are very few chances to be wrong.
The record
Prasad runs a well-regarded long-term fund known for buying few businesses and holding them patiently for many years. His approach has earned wide respect, but past results are history, not a promise - no method guarantees future returns.
Where they were wrong
Judging whether a business is truly high quality and whether its high returns will last is a hard judgement, and it can be wrong - the future is not certain. Do nothing fails if a business genuinely breaks, so stillness must go with watching for real change. And because he makes very few decisions, huge weight rests on each one being right, which concentrates risk rather than removing it.
Studies
6- Study 01Avoid the big risks firstBefore you ask how much you can make, ask what could ruin you - and like the deer, walk away from the danger first.Read this study →
- Study 02Quality at a fair priceBuy the healthy plant at a fair price and let it grow, instead of the cheap sickly one that stays cheap and gives little back.Read this study →
- Study 03Dont be lazy, dont be crazyThink hard before you buy, then sit wonderfully still after - effort at the front buys the calm to do almost nothing later.Read this study →
- Study 04Why cheap can be a trapWhen something looks unusually cheap, ask why before you touch it - a shrinking business is a warning wearing a bargains price tag.Read this study →
- Study 05A return on capital that lastsDont be dazzled by one high year - look for a high return on capital that stayed high for a decade, because lasting is the real sign of strength.Read this study →
- Study 06Very few decisionsThrow rarely and aim well: make very few, carefully studied decisions, then hold your good businesses and let the winners run.Read this study →
Primary sources
full register →Read Pulak Prasad in their own words. We reproduce none of it - these are the real things to go to.
What I Learned About Investing from Darwinbook
An Indian fund manager applies ideas from evolutionary biology to rejecting most companies and holding a rare few for the very long run. - available wherever books are sold - please buy the book
Nalanda Capital letters
An India-only long-term owner's publicly stated philosophy and holdings - a clear worked example of judging quality and durability in Indian listed companies.