The Financial Economics · Sep 29, 2026
With Mohnish Pabrai, founder and Managing Partner of Pabrai Investment Funds
Nick Sleep let a single stock grow to 80% of his three-stock portfolio, and Mohnish Pabrai says it never mattered.
Most investors are told to trim a winner before it takes over their book. Sleep did the opposite, and Pabrai says the reason his friend still beat the market anyway comes down to an idea Pabrai calls escape velocity.
"We have more money than we ever thought we'd have. We are richer than we ever thought we'd be."
Pabrai is the founder and Managing Partner of Pabrai Investment Funds, which he has run since 1999, and the author of The Dhandho Investor. He and Sleep are personal friends, and this is Pabrai telling a room of investors how Sleep actually built his fortune.
The full segment is covered here so you can skip it.
Here are the 4 lessons that matter.
Key Takeaways
Nick Sleep and his partner returned all their outside capital rather than diversify a concentrated three-stock portfolio at a regulator's request
Sleep told investors to split the money 1/3 each into Amazon, Costco and Berkshire Hathaway, and to stop paying anyone fees
Once Amazon grew to 80% of the portfolio, Pabrai said it didn't matter — the fund had already reached what he calls escape velocity
Selling half the Amazon stake to buy ASOS was a mistake, Pabrai told Sleep at the time, though the portfolio still beat the market
The investing lesson Pabrai draws from "Zen and the Art of Motorcycle Maintenance" is to pursue the highest-quality businesses rather than trade around a winner
1. Nick Sleep Returns the Money
Pabrai said his friend Nick Sleep and his partner Zach ran about $2.6 billion roughly ten to twelve years ago out of London, where the British regulator pushed them to diversify a concentrated book. Rather than comply, the two of them returned every dollar of outside capital.
"We have more money than we ever thought we'd have. We are richer than we ever thought we'd be." — Mohnish Pabrai
Sleep told his investors that "my own money, I'm putting 1/3 into Amazon, 1/3 into Costco, and 1/3 into Berkshire Hathaway," and suggested they do the same with the capital he was handing back — with no manager left to pay a fee to. One US endowment called Pabrai in a panic when it heard the news. Its own rules barred it from buying individual stocks; it could only pay outside managers. Pabrai saw the opening.
"Let me just get this straight. I can set up a fund with the three holdings, and then you can invest, and you can pay me two and 20." — Mohnish Pabrai
