Mohnish Pabrai – How To Calculate Intrinsic Value

I’ve just been re-reading one of my favorite investing books of all time, The Dhando Investor, written by Mohnish Pabrai. In Chapter 7, Dhandho 102: Invest in Simple Businesses, Pabrai provides a very simple example of how to calculate intrinsic value using the real life example of Bed Bath & Beyond Inc (NASDAQ:BBBY).

[schloss]

It’s a great illustration of how intrinsic value is not an exact figure but a range that you can compare to the company’s current market value to determine whether you want to dig further into the company.

Here’s an excerpt from The Dhando Investor:

When we see a huge gap between the price and intrinsic value of a given business—and that gap is in our favor—we can act and...