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Benchmark indices gained on Friday, as the Modi government is expected to win the no-confidence vote, to be held at 6 pm today. In the 545-member (including the Speaker) Lok Sabha, the BJP-led NDA can bank on around 311 members.

The S&P BSE Sensex ended the day at 36,496, up 145 points while the broader Nifty50 index settled at 11,010, up 53 points.

IT and pharma stocks gained as the rupee hit an all-time low. The Nifty IT index was trading up by 1.5 per cent with Infosys, Tech Mahindra and HCL Tech up between 1.6 per cent to 2.6 per cent. Meanwhile, in the pharma sector, Sun Pharma and Cipla gained over 2.5 per cent each.

Among individual stocks, Bajaj Finserv hit a record high, after the Bajaj Group-owned asset & wealth management firm posted a 41 per cent surge in its first-quarter profit on Thursday.

Bajaj Auto, on the other hand, dipped 9 per cent after the company reported a lower than expected 21% year on year (YoY) growth in standalone net profit Rs 11.15 billion in June quarter (Q1FY19). Analysts on an average had expected a profit of around Rs 13 billion for the quarter

Shares of Reliance Industries (RIL), Bandhan Bank, Jubilant FoodWorks, Bajaj Finance, Bajaj Finserv, HEG and 3M India have hit their respective all-time highs on the BSE in intra-day trade on Friday.

Bandhan Bank has soared 10% to Rs 679, extending its past three days 11% rise on the BSE, after the bank reported a strong 47.5% year on year (yoy) growth in net profit at Rs 4.82 billion in June quarter (Q1FY19), on back of strong operational income. The private sector lender had a profit of Rs 3.27 billion in year-ago quarter.

Bajaj Auto dipped 8% to Rs 2,876 on the BSE in noon deal trade after the company reported a lower than expected 21% year on year (YoY) growth in standalone net profit Rs 11.15 billion in June quarter (Q1FY19). Analysts on an average had expected profit of around Rs 13 billion for the quarter. The stock dipped 9% from its early morning high of Rs 3,152 on the BSE. Turnover during the quarter under review grew 33% at Rs 78.24 billion against Rs 59 billion in the corresponding quarter of previous year.

Shares of Sterlite Technologies rallied 7% to Rs 324 per share on the BSE in early morning trade after the company reported nearly two-times increase in its net profit on year on year (YoY) basis in June quarter (Q1FY19) and an all-time high order book position of Rs 60.34 billion.

Here are some picks from the week gone by.

Company: Tech Mahindra CMP: 658.00 Mastermind

Company: Jindal Steel CMP: 183.40 Mastermind

Company: Bata India CMP: 840.00 Mastermind

Company: Ajanta Pharma CMP: 1024.00 Mastermind

Company: Bajaj Finserv CMP: 6660.10 Mastermind

Please read our disclaimer here.
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Bill Nygren is a fund manager at Oakmark Funds. He is also Chief Investment Officer for U.S. Equities at Harris Associates. He’s particularly well-known for being a value investor who doesn’t fear the technology sector.

This post summarises key takeaways from his talk at Google in December 2017. While he reinforces many core value investing principles, he also challenges us to think differently.

The difference between gambling and investing

A value investor recognizes there are different ways she can put capital at risk and the difference between gambling (negative expected value) and investing in stocks (positive expected value)

Buying stocks like you would buy groceries

Bill observed the way his mother shopped for groceries by buying more of something that was on sale and deferring her purchase of something that wasn’t yet on sale

Smart money is not always smart

He spent two years as a research analyst at Northwestern Mutual Life where he pitched ideas of companies that he found were trading below their asset values. However, the portfolio managers chose not to buy such stocks until after they were recommended by 2-3 Wall Street analysts, by which time the price had moved to above asset values.

Investing in technology stocks, avoiding hindsight bias and trusting the process

An Oakmark analyst pitched Bill Netflix in 2010 when it was valued at $15 / share, a fraction of HBO on a per subscriber basis. Bill passed on the stock and it subsequently went up to $200 in Dec 2017.

However, he does not classify passing on Netflix in 2010 as a mistake. Here’s why.

At the time, Bill spoke to industry experts who said Netflix was incredibly risky due to several reasons:

  • Competitors like HBO spent several times on programming and could “squash Netflix whenever they wanted to”
  • Netflix only had one blockbuster show at the time, House of Cards, which they would likely lose to an established network when it went up for rebid
  • Their programming costs were likely to increase dramatically when content partners realized their rate of subscriber growth

When the potential rewards aren’t commensurate with the risks determined by your process irrespective of what the stock (asset) has done in the meantime, trust your process.

On a related note, if you don’t own bitcoin, read this.

Having humility

In early 2017 Bill’s Oakmark bought Netflix for the first time after an analyst presented the stock as:

A Netflix subscription costs $10 / month compared to $15 / month for HBO, Spotify, and others. However, customers rated Netflix as more valuable than the other subscriptions. i.e. Netflix could charge $15 / month and it would then be trading at 13x earnings

By growing its subscriber base at 25% annually and putting $8B / year into programming, they now had a moat that would be incredibly hard to attack

A successful investor is humble enough to change his mind when considering changed facts from different perspectives

Your cheese will always be moved

20 years ago buying low PE, low PB was enough to generate alpha. Today computers are smarter at combining these characteristics with growth metrics.

What a value investor did 20 years ago won’t work today. What works today won’t work 20 years from now

His focus, therefore, is on identifying companies where there are non-operating assets that can generate earnings in the future and therefore will be missed by algorithms. Think about how your investing framework is evolving.

Sphere of competence – prudence or excuse?

The idea that technology is out of your sphere of competence because it changes so fast is outdated because all sectors are changing rapidly. Predicting Intel’s growth five years from now is no riskier than predicting P&G over the same period.

How likely is it that Google / Facebook / Youtube growth in India will leave the print and broadcasting businesses unchanged over the next 5-10 years?

Sometimes, value hides in plain sight

Post-2008, most banks were trading at much lower than their book values, many for good reason. Oakmark started buying banks at the time most people predicted Armageddon for bank stocks.

The risk was that banks would get over-regulated like Utilities which traded at 2x book value. At the same time, banks were in the process of repurchasing shares automatically increasing book value. The potential downside was limited which made them value buys.

Which sectors don’t get talked about in India these day? Or better yet, only get talked about negatively?

Deciding when to sell

When buying, Oakmark predicts seven years of operating earnings taking capital requirements into account and assuming similar valuations. They revisit the 7-year projection each year, and as long as the growth trajectory continues to be strong, they don’t mind holding stocks that have risen sharply

On their sell decisions: “We look to sell stocks trading at above 90% of fair value after buying them at 2/3rd (67%) of fair value”

There is a difference between deciding to add a new stock to your portfolio versus reviewing one that’s already in there. Defining your process leads to better decision-making

The crowd’s often right – get rid of losers early

When a stock falls 20% after you’ve bought, the typical value investor response is to buy more of it. Bill believes in doubling the scrutiny of the stock when it falls to understand if there was something you missed the first time because the stock might be falling for a good reason.

Before averaging down, study your track record to determine how often was that a winning strategy

Broadening your value investing horizon

Value investing discussions tend to be about “the usual suspects”. Reading about Warren Buffett tends to be like comfort food for value investors, even though you already know what made him successful after the first 2-3 books.

Bill has found it useful to read books by varying investors, hedge fund managers like Paul Tudor Jones, George Soros, Michael Steinhardt instead of reading “the 15th book on Warren Buffett detailing his breakfast habits”.

The next time you find yourself reusing yet another Buffett / Munger quote, branch out in your reading. You’ll be a better investor as a result.

Finally, probably his most telling comment:

Being a successful investor means you love it so much that you can’t (and don’t want) to turn it off

Click here to watch the entire video (64 minutes)

The original article appeared on thecalminvestor.com and is available here.

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Verdict: The Cool and Nice Stock

IPO Snapshot:

TCNS Clothing Co. Limited is entering the primary market on Wednesday 18th July 2018, with an offer for sale (OFS) of up to 1.57 crore equity shares of Rs.2 each by PE investor, promoters, current MD and former employees, all in the price band of Rs. 714 to Rs. 716 per share. Representing 25.63% of the post issue paid-up share capital, total issue size is Rs. 1,125 crore at the upper end of the price band. Issue closes on Friday 20th July and listing is likely on 30th July.

Company Overview:

TCNS Clothing Co. is a New Delhi head quartered branded apparel maker for ethnic women wear, operating 3 brands – W, Aurelia and Wishful, with sales mix of 57:33:8. Its 465 exclusive branded outlets (281 for W, 183 for Aurelia, 1 for Wishful) accounted for approximately 50% of FY18 topline of Rs. 838 crore. Further, products are sold through 1,469 large format stores, 1,522 multi-brand outlets and online/ e-commerce websites, which account for 28%, 11% and 10% of the topline respectively. While design operations are in-house, manufacturing is completely outsourced. The brand outlets, all on long term leases, are either company operated or franchised out. Company plans to open 75-80 new stores each year, to strengthen its brands.

Financial Performance:

During the 4 year period from FY14 to FY18, company’s revenue has grown at a CAGR of 49%, from Rs. 170 crore in FY14 to Rs. 838 crore in FY18. While EBITDA CAGR was an impressive 64%, reported PAT jumped at 83% CAGR to Rs. 98 crore in FY18, from just Rs. 9 crore in FY14 i.e. 10 fold rise in 4 years! Reported net margins at 11.7% in FY18 are also very healthy. To attract and retain talent at the top, company has generously awarded ESOPs over the past few years, which augmented employee costs by Rs. 22 crore, Rs.74 crore and Rs. 90 crore in FY18, FY17 and FY16 respectively. This lead to company reporting net loss of Rs.41 crore in FY16 and net profit of only Rs. 16 crore in FY17. Adjusting for this one-off item, adjusted net profit for FY18 would be Rs. 113 crore, leading to net margin of 13.4% vis-à-vis reported net margin of 11.7%. Going forward, while ESOPs will continue to appear in the P&L, impact will be reduced as most of stock options are granted. Current equity of Rs. 12.26 (FV Rs. 2 each) is also very low, leading to reported EPS of Rs. 15.36 for FY18. As of 31-3-18, net worth stood at Rs. 431 crore, translating into BVPS of Rs. 77. RoE for FY18 at 22.7% is also very healthy. Despite high growth rates, company’s working capital management has been strong, with both outstanding inventory and debtor days reducing gradually over the past 4 years, to 2.5 months and 1.2 months respectively. Company is debt free, with cash surplus of Rs. 51 crore or Rs. 8.30 per share.

Objects of Issue and Shareholding Pattern:

Since the IPO is a 100% OFS, no funds will flow into the company. Free cash flow from operations will be used to fund future expansion. Promoter holding of Pasricha family at 43.68% currently, will shrink to 32.42% post IPO. Shareholding of US based PE investor TA Associates (through entity Wagner) will contract to 29.39%, from current 40.66%. With acquisition price per share (via a secondary deal in Aug 2016 from another PE firm Matrix) of Rs. 373, the PE fund is making a handsome 39% CAGR on its 2 year investment, while continuing to hold a sizeable chunk. Company’s financial performance over FY16-18 is also supportive of this spurt in valuations, wherein revenue grew at 31% CGAR while adjusted net profit grew 5 fold. A key positive for the company, which is quite uncommon for mid-sized ones, is it has been a professionally run organisation for many years now, which augurs well for business sustainability. Current and former senior leadership team have sizeable ownership (~16% pre-offer holding). While current MD, 41 year old Anant Daga is part encashing his 7.93% holding, two former heads are also only part-exiting via the OFS.

Valuation:

At Rs. 716 per share, company’s market cap will be Rs. 4,390 crore, with EV of Rs.4,340 crore. This leads to PE multiple of 39x, based on adjusted FY18 earnings and a multiple of 32x, based on adjusted FY19E.

Below is a peer comparison table:

FY18 Data Revenue Revenue 

Growth

EBITDA margin Net margin RoE Mcap PE EV/Sales EV/EBITDA
Rs. cr. FY18-17% % % % Rs. Cr. times times times
Arvind 10,826 17% 9% 3% 9% 10,629  34x  1.3x 13x
Aditya Birla Fashion 7,181 8% 7% 2% 12% 10,418  88x  1.7x 24x
Future Lifestyle 4,498 16% 10% 3% 9% 7,521 60x  1.8x 18x
Shoppers Stop 3,697 -2% 6% -ve  -ve  4,755 -ve 1.3x  21x
Trent 2,157 19% 11% 4% 6%   11,266   129x  5.4x 47x
Page Industries  2,552 20% 22% 14% 46% 31,778 91x 12.4x 56x
TCNS   838 20% 19% 12% 23% 4,390 39x 5.2x 27x
Kewal Kiran 462 -3% 26% 16% 19% 1,769  24x 3.6x 14x

While Arvind Limited, with a basket of own and international licensed brands, has topline of close to Rs. 11,000 crore with double digit revenue growth, its margins are on the lower side. On similar lines, Aditya Birla Fashion, with some industry leading brands like Louis Phillipe and Van Heusen, clocks very slim margins of 2% on the net level. Future LifestyleShoppers Stop and Trent lag due to poor RoEs. Page Industries has been a market out-performer with its consistent growth and high return ratios, which are aptly reflected in its premium valuation multiples. Although Kewal Kiran operates on very high margins, its growth rates have tapered off over the past couple of years, making investors uncomfortable in assigning higher multiples. TCNS falls in between Page and Kewal Kiran, enjoying the best of both worlds with high growth rates, healthy margins and attractive valuation. Based on FY19E, its EV/Sales multiple stands at 4.3x (5.2 on FY18 basis) while EV/EBITDA multiple for FY18 is 27x and for FY19 22x. Thus, TCNS seems to be in a sweet spot with respect to valuations.

Conclusion:

While the company size is still small, high growth rates and huge market opportunity make the valuation reasonable. Professional management and marquee investor pedigree are added positives. Hence, we assign a ‘subscribe’ to the IPO.

The original IPO review is by Geetanjali Kedia, appears on sptulsian.com and is available here.

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Valuations are looked at through the prism of cash flows, earnings, corporate governance, return ratios, debt-equity proportion and so on. Within these, the most primary valuation tool used by investors is the Price Earnings (P/E) ratio.

The P/E ratio is arrived at by dividing the stock market price with the company’s Earning Per Share (EPS). For example, a Rs 200 share price divided by EPS of Rs 20 represents a PE ratio of 10. Theoretically, it translated into the assumption that if we were to buy this company today it would take 10 years to earn back our investment.

The Trailing P/E ratio uses the earnings of the last 12 months, while the Forward P/E uses the expected earnings for the next 12 months, which means it requires estimating the forward earnings.

At Mumbai’s Morningstar Investment Conference in October, equity market strategist Ridham Desai and head of Morgan Stanley’s Indian equity research team tackled the subject of India’s high P/E.

The problem with looking at the PE ratio is that earnings is a cyclical variable that fluctuates. If earnings are high, the PE will appear low. Does that mean the market is cheap? Probably not because earnings will then fall.

If earnings are low, which they have been for the past 3-4 years, PE multiples are high. Does that make the market expensive? Probably not because earnings are going to rise.

Since the market is forward looking, the PE is a bad metric to judge valuation.

Read Ridham’s detailed views here

Karl Siegling, Managing Director and Portfolio Manager at Cadence Capital Limited, questioned the use of this tool years ago in a post which has been reproduced below.

1) The biggest and by far the most dangerous component of the PE ratio is that the earnings are the accounting earnings as defined by the accounting standards for a particular country. These earnings are not the cash earnings of the business. In fact, many companies listed on the Australian Securities Exchange (ASX) earn no cash despite reporting profits.

2) A second problem with the PE assumption is that future earnings will be at least what they are currently. In the case of a company trading on a 10 times PE ratio, we as investors are taking a chance that earnings will be at least what they are today for the next 10 years!

Working as an investor in the industry, it is quite clear that estimating the earnings of a company listed on the ASX for a year or two into the future is extremely difficult, let alone 10 years into the future.

3) A third problem with the PE ratio is the idea that 10 times earnings is cheaper than 15 times earnings. The assumption that a company will earn its current earnings for the next 10 years and an investor will get their money back is of course theoretical.

A company’s earnings may well go up significantly or down significantly over the next 10 years. It would follow that we as investors should prefer to own a company whose earnings go up significantly over the next 10 years rather down significantly. The PE ratio has no way of telling us what will happen!

4) A fourth problem with the PE ratio is that it tells the investor nothing about a company’s balance sheet. It may be that a company trading on a 2 times PE multiple is actually incredibly expensive since the company has a very large amount of current debt that it has no way of paying, and as a consequence, the company will be declared bankrupt in the current financial year.

We need only look back to the recent global financial crisis to find many examples of companies in exactly that situation.

5) A fifth problem with the PE ratio is that it tells us nothing about the quality of a company’s earnings. We may look at one company trading on 8 times earnings and declare it cheaper than a company trading on 16 times earnings.

We often hear conversations along these lines. However, upon closer inspection we discover that the company trading on 8 times earnings has just had a one-off profit never to be repeated and that the company on 16 times earnings has displayed 20% per annum earnings growth for the past 15 years.

It may well be that once these factors are taken into account, the company on a 16 times PE multiple is actually a better investment than the company on 8 times.

The list of problems associated with the PE ratio goes on and on. But I have restricted this discussion to what may be the top 5 problems associated with the PE ratio. Let’s promise ourselves that we will never look at the PE multiple again as a serious tool for fundamental analysis.

In a blog postvaluation guru, author and professor Aswath Damodaran, suggested three rules when employing the PE ratio.

A low PE ratio can be indicative of cheapness, but it can also be the result of high debt ratios and low or no cash holdings. Conversely, a high PE ratio can point to over priced stocks, but it can be caused by high cash balances and low debt ratios.

1) When comparing PE ratios across companies, don’t ignore cash holdings and debt.

As the diversity of companies within sectors increases, the old notion of picking the lowest PE stock as the winner is increasingly questionable, since you may be choosing most highly levered company in the sector.

2) When comparing PE ratios across time, don’t ignore cash holdings and debt.

I have noted the ebbs and flows in both cash as a percent of the firm value and debt as a percent of value across time, sometimes due to shifts in the numerator (cash and debt values changing) and sometimes due to shifts in the denominator (market value of equity changing). Whatever the reasons, these shifts can affect the PE ratios for the market, making it look expensive when cash balances are high and debt ratios are low.

3) Any corporate action that changes the cash or debt as a percent of value will change the PE ratio.

Consider a company that has a large cash balance and is planning on using that cash to buy back stock. Even if nothing else changes, the PE ratio for the company should decrease after the buyback, as (high PE) cash leaves the company. Thus, the practice of forecasting earnings per share after buybacks and multiplying those earnings per share by a constant PE will overstate value. This effect will be even more pronounced if the company borrows some or all of the money to fund the buyback since a higher debt ratio will also push down the PE even further.

The original article appears on morningstar.in and is available here.

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The benchmark indices pared their day’s gains to end flat on Friday.

The S&P BSE Sensex ended at 36,542, down 7 points. The index had hit a fresh all-time high of 36,740.07 in intra-day deals earlier today tracking global markets ahead of information technology (IT) heavyweight Infosys June quarter earnings later in the day. The broader Nifty50 index settled at 11,019, down 4 points.

Among sectoral indices, the Nifty PSU Bank index fell over 2% weighed by a decline in Canara Bank and Indian Bank.

Shares of smallcap companies were under pressure with the S&P BSE Smallcap index falling more than 1% after a sharp decline in stock prices of PVR, KNR Constructions, Inox Leisure and Gujarat Narmada Valley Fertilizers & Chemicals (GNFC).

Idea Cellular share price fell 2.7 per cent intraday on Friday after global research firm Credit Suisse maintained its Underperform rating on the stock with a target price at Rs 45, implying a 17 per cent downside. After the merger between the company and Vodafone, the new entity may prioritise cost savings over market share retention and the cost base should be close to current Bharti mobile cost base, the research house said.

Shares of Bajaj Finance hit a new high of Rs 2,460 per share on the BSE, rising by 2% today and extending their 2.5% gain on Thursday, on expectations of healthy financial performance for the quarter ended June 2018 (Q1FY19). In past two months after the March quarter (Q4FY18) results, Bajaj Finance have outperformed the market by surging 32% as compared to 2.8% rise in the S&P BSE Sensex.

Cyient fell 3.42% to Rs 716.65 on BSE after consolidated net profit fell 32.67%. Net sales rose 1.71% to Rs 10.80 billion in Q1 June 2018 over Q4 March 2018.

Infosys rose 2.8% to Rs 1330.90 on BSE ahead of the company’s Q1 June 2018 results later today, 13 July 2018. On the BSE, 2.08 lakh shares were traded in the counter so far compared with average daily volumes of 2.18 lakh shares in the past two weeks.

A gradual recovery in domestic volume growth performance and new launches in the premium category, both in scooters and motorcycles, is expected to help TVS Motor post strong volume growth and improve margins, going ahead. Domestic two-wheeler volume growth has been disappointing in May, as sales dipped to 2.4 per cent year-on-year, before recovering partially in June to about 8 per cent.

Reliance Industries (RIL) crossed Rs 7 trillion market capitalisation (market cap) mark for the first time on Friday and became second Indian firm to cross this mark after information technology giant Tata Consultancy Services (TCS). The stock touched a fresh record high of Rs 1,107 on BSE, up by 2.5% from its previous close with a market cap rising to Rs 7.01 trillion at 09.52 am; the BSE data shows. TCS is at top of the rank with Rs 7.55 trillion market cap, the BSE data shows.

Shares of HCL Technologies have slipped 2.3% to Rs 982 per share on the BSE in otherwise firm market after the company said it had received its board’s approval to conduct a share buyback of up to 36.3 million equity shares worth nearly Rs 40 billion. The company made announcement on Thursday after market hours. The buyback price of Rs 1,100 per share is at around 9% premium over its Thursday’s closing market price of Rs 1,005 at BSE. Currently, the promoters’ holding in the company stands at 60%.

Fortis Healthcare Ltd said on Friday it accepted an investment offer from Malaysia’s IHH Healthcare Bhd, capping a months-long bidding war for control of the firm that drew interest from domestic and international suitors. Cash-strapped Fortis said IHH will invest Rs 40 billion ($584.11 million) at Rs 170 per share in the company that operates about 30 private hospitals in India, where the race to cash in on a private healthcare boom is heating up. The offer is at a 19.5 per cent premium to Fortis’ closing price on Thursday.

Here are some picks from the week gone by.

Company: Dabur India CMP: 375.20 Mastermind

Company: Karnataka Bank CMP: 114.50 Mastermind

Company: Glenmark Pharma CMP: 565.60 Mastermind

Company: Dr. Reddys CMP: 2315.00 Mastermind

Company: UPL Limited CMP: 568.30 Mastermind

Please read our disclaimer here.
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When it comes to the world’s best investors, Charlie Munger (Trades, Portfolio) is in a league of his own. For most of his career, Munger has been the right-hand man of Warren Buffett (Trades, Portfolio), which has, to some degree, limited his impact on the world of investing (although not by much). When people think of Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), it is Buffet, not Munger, who first comes to mind.

But that does not mean Munger has no investment skill. Indeed, before he joined Berkshire, he ran his ownq partnership where returns we as good as, if not better than, those of Buffett.

Still, for the past several decades, Munger has been known as Buffett’s right-hand man, so it is extremely likely he has had more influence on Buffett’s strategy than anyone else.

With this being the case, I gathered some of Munger’s most informative quotes about investing and shaping an investment process. Hopefully, these pointers will help you form your own strategy and run a portfolio that works for you.

Munger on the benefits of using checklists to find potential investments:

“You need a different checklist and different mental models for different companies. I can never make it easy by saying, ‘Here are three things.’ You have to derive it yourself to ingrain it in your head for the rest of your life.”

Do not be overoptimistic. Learn your limits:

“Most people who try [investing] don’t do well at it. But the trouble is that if even 90 percent are no good, everyone looks around and says, ‘I’m the 10 percent.’”

The market is efficient, but there’s scope for outperformance if you work hard enough:

“I think it’s roughly right that the market is efficient, which makes it very hard to beat merely by being an intelligent investor. But I don’t think it’s totally efficient at all. And the difference between being totally efficient and somewhat efficient leaves an enormous opportunity for people like us to get these unusual records. It’s efficient enough, so it’s hard to have a great investment record. But it’s by no means impossible. Nor is it something that only a very few people can do. The top three or four percent of the investment management world will do fine.”

Wait for the best opportunities:

“Move only when you have an advantage. It’s very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor. We just keep our heads down and handle the headwinds and tailwinds as best we can, and take the result after a period of years.”

When considering an investment, look not at what could go right, but what could go wrong:

“Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead. Tell me where I’m going to die, that is, so I don’t go there.”

To be successful at investing, you have to understand your own nature. If you try to play by someone else’s rules, you will not succeed:

“How do you learn to be a great investor? First of all, you have to understand your own nature. Each person has to play the game given his own marginal utility considerations and qqin a way that takes into account his own psychology. If losses are going to make you miserable and some losses are inevitable, you might be wise to utilize a very conservative pattern of investment and savings all your life. So you have to adapt your strategy to your own nature and your own talents. I don’t think there’s a one size fits all investment strategy.”

And finally, some people are just not designed to be good at investing:

“How do some people get wiser than other people? Partly it is inborn temperament. Some people do not have a good temperament for investing. They’re too fretful; they worry too much. But if you’ve got a good temperament, which basically means being very patient, yet combine that with a vast aggression when you know enough to do something, then you just gradually learn the game, partly by doing, partly by studying.”

Disclosure: The author owns no stocks mentioned.

The original article is written by Rupert Hargreaves and appears on gurufocus.com. It is available here.
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The 3rd article in this series explains about the key performance indicators (KPI) to track any pharmaceutical company and measure their performance. Few of those metrics are R&D spends, ANDA filings, Operating Segments, to know particularly in which market the company deals, what is the status of the products in the companies pipeline, the number of patents that have been filed by any company etc. It’s not necessary for every pharma company to have the same standards of operating and therefore financial metrics and KPI can differ from company to company.

how-indian-pharma-industry-works-part-3

The original post is written by Shuchi Nahar, appears on alphainvesco.com and is available here.

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The benchmark indices pared most of their day’s gains to end marginally higher on Friday tracking recovery in the global markets.

The S&P BSE Sensex ended at 35,658, up 83 points while the broader Nifty50 index settled at 10,773, up 23 points.

Among sectoral indices, the Nifty Auto index settled over 1% led by rise in the stocks of Ashok Leyland, Hero MotoCorp and Tata Motors.

The rupee recovered 21 paise from intra-day low of 69.03 to trade at 68.82 against the US dollar in late morning deals. As the US is set to impose tariffs on Chinese goods today and sustained foreign capital outflows pressured the sentiment, the rupee fell sharply to 69.03 a dollar before quoting 68.82. The rupee moved in range between 68.82 and 69.03.

Shares of paint company Asian Paints, fast moving consumer goods (FMCG) firm Hindustan Unilever (HUL) and information technology giant Tata Consultancy Services (TCS) from the Sensex have hit their respective new highs on the BSE on Friday. Thus far in the current calendar year 2018, these three stocks have outperformed the market by gaining in the range of 15% to 39%, as compared to 4.5% rise in the S&P BSE Sensex.

Shares of Den Networks and Hathway Cable & Datacom fell more than 5% for the second straight session after the Reliance Industries’s (RIL) chairman Mukesh Ambani on Thursday announced the launch of Jio’s fibre to home or fixed line broadband services called Jio GigaFiber. Hathway Cable & Datacom dipped 10% to Rs 18.55, extending its previous day’s 15% fall on the BSE. Meanwhile, Den Networks has slipped 7% to Rs 62.20, after falling 11% yesterday. Both these stocks are trading at their respective 52-week lows on the BSE.

Shares of real estate firm Sobha rallied 6% to Rs 507 on the BSE in early morning trade after the company said sales bookings for the first quarter of FY19 increased by 22% to Rs 7.62 billion as compared to corresponding quarter last year on higher volumes.

The Titan Company’s stock shed about 5.6 per cent in trade on Thursday, after the company indicated jewellery segment sales in the June quarter (after several quarters of strong growth) would be weak and below the company’s own targets. The management said the sector had gone through a soft patch during the first five months of this calendar year, as seen in a 39 per cent decline of gold import by volume.

Auto component maker Varroc Engineering made a decent debut on Friday, listing at Rs 1,032 on BSE, a 6.72% premium over its issue price of Rs 967. On NSE, the scrip got listed at Rs 1,015, up 4.96%.

After a strong performance in 2017-18, investors have given a thumbs-up to RBL Bank’s move to hike stake to 100 per cent from the current 60.5 per cent in Swadhaar Finserve, which offers services in underbanked areas. Since the announcement on June 28, RBL’s stock has gained about five per cent, outperforming the 0.4 per cent rise in the Nifty Bank index.

Here are some picks from the week gone by.

Company: Godrej Industries CMP: 589.00 Mastermind

Company: Wipro Ltd. CMP: 262.45 Mastermind

Company: Tata Global CMP: 266.20 Mastermind

Company: Bharti Airtel CMP: 362.40 Mastermind

Company: Sun TV Network CMP: 791.85 Mastermind

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The second part of this series explains the various business segments in which a pharmaceutical company works. This post will help us to understand the significance of different segments in detail and will give a brief idea about how pharma companies make money through R&D , sales and marketing. The need of having a strong distribution channel, dispensing the right goods at the right place and at right time is equally important.

how-indian-pharma-industry-works-part-2

The original post is written by Shuchi Nahar, appears on alphainvesco.com and is available here.

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Following article is first in the series of articles on the Indian Pharmaceutical Industry, the first article is written to familiarize ourselves with the terminology or the jargons of the pharmaceutical industry. We will briefly touch upon terms like API, Intermediates, Formulations, Innovator drug, Generic drugs, life cycle development etc.

The Indian Pharmaceutical industry is about $ 17 bn industry (2016) with as many as 20,000 registered companies (includes MNC’s and small-scale units) directly or indirectly involved in the business of selling medicines. India has the distinction of being the lowest cost producer of medicine in the world. India also has the feather of being the largest exporter of generic drugs in the world, we have some great franchises like Lupin, Sun Pharma etc.

how-indian-pharma-industry-works-part-1

The original post is written by Shuchi Nahar, appears on alphainvesco.com and is available here.

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