Two Ways to Get Your Hands on Undervalued Companiesby Mohnish Pabrai
Plan A is always to buy the Coke and Moody's of the world at 50% off. If you buy these type of businesses at that discount and it takes 2-3 years to trade at intrinsic value, you'll do very well. Intrinsic value will be much higher in 2 to 3 years. So 50 cents may be worth $1.30 or $1.40. This is always Plan A.
But plan A is virtually impossible to execute across the entire portfolio because they are so very, very rare. When plan A fails, we go to plan B.
Plan B is to buy at half off, regardless of business quality (as long as you're pretty sure intrinsic value is very unlikely to decline).
