What I Learned About Investing from Darwin Quotes

“The second major opportunity cost is a reduced focus on existing businesses because of the distraction of a bad acquisition. You can see this in Bayer’s annual reports of 2018, 2019, and 2020, in which a lot of ink was expended on justifying the acquisition and on steps being taken to mitigate the disaster. As usual, numbers tell a better story, as I will explain next.”
― Pulak Prasad, What I Learned About Investing from Darwin

“When we started Nalanda in 2007, there was a lot of buzz around a company called Eicher Motors led by a young, dynamic guy called Siddhartha Lal. Lal had inherited a hodgepodge of poor-quality businesses from his father in 2004. They manufactured motorcycles, footwear, garments, tractors, trucks, auto components, and a few other products, and none was an industry leader. In a remarkably bold strategic move, Lal decided to divest thirteen of the fifteen businesses to focus on just two products: trucks and motorcycles.30 Almost every analyst was gung ho about the future of Eicher; they were all taken in by its dynamic leader who was aggressively culling businesses, something that Indian firms rarely did. However, in 2007, this was a turnaround story with no empirical evidence of success. The company’s biggest hit, the Enfield Classic motorcycle, was launched only in 2010. We decided not to invest in the business. By the 2010s, the company’s motorcycles had taken on cult status in the Indian consumer’s mind. Sales exploded from just 52,000 units in 2009 to 822,000 units in 2019: a sixteen-fold growth. If you had listened to what we had to say about the business, you would not have invested. Your opportunity loss? Seventy times your money from 2007 until 2021. Tesla and Eicher Motors are the kinds of type II error we will inevitably commit because we reject highly indebted businesses, rapidly evolving industry landscapes, and turnarounds.”
― Pulak Prasad, What I Learned About Investing from Darwin

“The team found that the bumblebees soon started committing more type II errors: they started avoiding flowers even where there were no spiders, thereby reducing their foraging efficiency. In the wild, this instinct to avoid danger at the cost of going hungry must have played a significant role in the tremendous success of the species over millions of years. If the bumblebee can, why can’t we?”
― Pulak Prasad, What I Learned About Investing from Darwin

“Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround.”
― Pulak Prasad, What I Learned About Investing from Darwin