The office of an average hedge fund looks something like this: Rows of Ivy League grads sit at desks with four computer monitors, three telephones, a Bloomberg terminal, and a Red Bull. Everyone is poring over financial data, charts, and reports while frantically working the phones and often screaming at one another. It's about as high-stress as it gets.

Yet most hedge funds underperform a basic S&P 500 (SNPINDEX:^GSPC) index fund. High IQ and mountains of data don't automatically guarantee good performance.

Last week, I sat down with famed value investor Mohnish Pabrai, whose office looks nothing like an ordinary hedge fund. It's essentially just him in a small room -- and yet he has crushed the market over the last decade.

I asked him about his simplistic approach and how it helps him achieve high returns. Here's what he had to say.

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