tag:blogger.com,1999:blog-51606740597724173232024-03-11T03:39:26.755+05:30Calculated WagersThis blog is an online diary to crystallize my thoughts and to share some of the interesting happenings in the securities markets.Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.comBlogger84125tag:blogger.com,1999:blog-5160674059772417323.post-6600974721418745072023-12-30T10:00:00.000+05:302023-12-30T10:00:17.709+05:30Mind at the crossroads<p><span style="background-color: white; font-family: "Helvetica Neue"; text-align: justify;">What should one do when the facts change and the original thought process doesn't hold any longer. As an investment professional, situations that warrant a change of mind come with a little higher frequency. New facts emerge and decisions have to be constantly revisited in light of those. In this post, I have listed down a few quotes that I remember and questions that I ask which help me decide. It's possible that you too may find them useful in your decisions, investments or otherwise.</span></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;"><b><i>When the facts change, I change my mind. What do you do, Sir ?</i></b></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;">This quote from Keynes has been my guiding light when I have to make decisions in the light of new facts.</p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px; text-align: justify;"><br /></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;"><b><i>The other person's viewpoint seems more rational and logical than mine. How should I handle my ego which prevents me from accepting it?</i></b></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;">Focus on what is right, not who is right. If my existing point of view is inferior to an alternate view point, I should immediately latch on to the better one. Knowledge like sunshine should be welcomed from all directions. It doesn't matter who the person on the other side is. Focus only on what is right.</p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px; text-align: justify;"><br /></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;"><b><i>How long will this change be required ?</i></b></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;">Till my last breath. Munger of his own admitting made the worst investment mistake by investing in Alibaba during the last few years of his life. But when he realised he was wrong, he quickly sold his investment and didn't fall for commitment. Even in his last years, he taught an important lesson through his actions. If you realise you are wrong, change the course. Period.</p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px; text-align: justify;"><br /></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;"><b><i>What is my North Star while investing ?</i></b></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;">I consider the investment thesis (moat around the business, its sustainability, the track record in terms of return on capital, risks and the quality of management) as the North Star. In a plethora of decision making points, I look upto my North Star. If the investment thesis continues to be as I thought earlier, no change is required even if the market doesn't agree with me for years together. I tell myself that I should be patient, stay put and not disturb the position. </p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px; text-align: justify;"><br /></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;"><b><i>What should an ideal mind be like ?</i></b></p><p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;">An ideal mind<span style="color: #fb0207;"> </span>should be like a spider's web. As soft as silk but stronger than steel. When conditions warrant, the mind should change itself effortlessly. However, when nothing has changed, it should be as hard as steel. Unmoved and firm. Like Angad's leg.</p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhxfQCLCaIeaKMrQiOtZbSgZmYSGHiz3BAG5tOesujX_E3Us__TWdctaeqpVBoo9N10Cl1oN7N-Ngtu6st3GG8VecteYxzq0nZyM2M9zeBu7ztHQOZNTqdXOCyPSYIKxDPA85hK_-Biq8Uz8J2J8dDvjufMMMP6Xq-4exC0iRKzwMH6H2y8q6OEbxvIlHA/s746/main-qimg-eb99562d3cc15f366741d6ffa0225449-lq.jpeg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="746" data-original-width="602" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhxfQCLCaIeaKMrQiOtZbSgZmYSGHiz3BAG5tOesujX_E3Us__TWdctaeqpVBoo9N10Cl1oN7N-Ngtu6st3GG8VecteYxzq0nZyM2M9zeBu7ztHQOZNTqdXOCyPSYIKxDPA85hK_-Biq8Uz8J2J8dDvjufMMMP6Xq-4exC0iRKzwMH6H2y8q6OEbxvIlHA/s320/main-qimg-eb99562d3cc15f366741d6ffa0225449-lq.jpeg" width="258" /></a></div><br /><p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-size: 11px; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;"><br /></p>
<p style="background-color: white; font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; text-align: justify;"><b><i>Should you change your mind about an investment idea, what about loss of face in front of the clients?</i></b></p><p style="font-family: "Helvetica Neue"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;">It's better to look foolish than to stay foolish.</p>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com2tag:blogger.com,1999:blog-5160674059772417323.post-73795197994506251132023-05-14T11:32:00.002+05:302023-05-14T11:41:28.712+05:30DESTROYED<p></p>
<p style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><i><span style="font-family: verdana;">“Any year that you don’t destroy one of your best loved ideas is probably a wasted year” – Munger</span></i></p>
<p style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">Many years back, I destroyed something in my mind. It was neither good nor an idea. It was a prejudice – a wrong notion. The notion to discriminate members of the LGBT+ community. How I picked it up, I don’t know. Most likely from the society around me. The general behaviour of people is to discriminate and mock members of the LGBT+ community. Reason- they are different from us and don’t fit into the established norms of the society. I started behaving like others around me. Monkey see, monkey do. I regret that behaviour of mine. </span></p>
<p style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">Over a period of time, the debates and discussions on TV and newspapers sensitised and educated me. I questioned my beliefs and I could see no good reasons to continue holding such beliefs.</span></p>
<p style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">Companionship is the most important physiological needs of a human being. Having a companion is a primal urge. According to a Biblical story, <i>Eve</i> was <i>created</i> by God by taking her from the rib of Adam, <span style="text-decoration: underline;"><b>to be Adam's companion</b></span>. Companionship is all about meeting of the minds, vibes, chemistry and frequency. Sexual orientation has nothing to do with it. </span></p>
<p style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">The case for legal acceptance of same sex marriage in India is with the Supreme Court now. The court has finished hearing arguments and the verdict is awaited. Marriage equality would be a giant leap in making our country more equal. Every citizen in India enjoys freedom under the constitution. Choosing one’s marriage partner should be one such freedom.</span></p>
<p style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">As I finish writing the post and wait for the court’s verdict, I wish all my brethren of the LGBT+ the best and recite the following lines from the poem ‘Gitanjali’ by Gurudeva Rabindra Nath Tagore.</span></p>
<p style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size-adjust: none; font-stretch: normal; font-style: normal; font-variant-alternates: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px 0px 5px;"><span style="font-family: verdana;">“Where the mind is without fear and the head is held high;<br />
Where knowledge is free;<br />
Where the world has not been broken up into fragments by narrow domestic walls;<br />
Where words come out from the depth of truth;<br />
Where tireless striving stretches its arms toward perfection;<br />
<span style="text-decoration: underline;"><b>Where the clear stream of reason has not lost its way into the dreary desert sand of dead habit;<br />
Where the mind is led forward by thee into ever-widening thought and action -<br />
Into that heaven of freedom, my Father, let my country awake"</b></span></span></p>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com2tag:blogger.com,1999:blog-5160674059772417323.post-83222570548642822702023-01-31T21:38:00.006+05:302023-01-31T21:57:50.467+05:30To Short or Not?<p><i style="text-align: justify;"><b><span style="font-family: verdana;">I don’t have any holding long or short in the Adani group shares. This note is to talk about shorting in general, my own experience of short selling and finally Buffett’s wisdom on shorting.</span></b></i></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">Adani Group stocks have been roiled in the last couple of days post the publication of the Hindenburg Report. Hindenburg is a US based short seller specializing in finding companies which it suspects to be fraudulent or having financial irregularities. The research house goes short on these companies, publishes it reports and makes money if the stocks go down.</span></p>
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<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana; text-decoration: underline;"><b>What is Short Selling?</b></span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">Normally, when we buy shares of any company, we expect the prices to go up over a period and thus make money. This is known as long investing. Short sellers on the other hand sell shares of the company they don’t have [either by borrowing shares from other owners or selling in the futures market] and buy them back when the price goes down thus making money in the process.</span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">Simply put long investors FIRST buy low and THEN sell high. Short sellers FIRST sell high and THEN buy low.</span></p>
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<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana; text-decoration: underline;"><b>Perils of short selling</b></span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">The first danger of short selling is the potential for unlimited losses. In the case of long investing – say you buy a stock at Rs 100. The worst-case scenario is that the stock can go down to zero. So, your maximum loss is pegged at 100. You can’t lose more than what you had invested.</span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">In short selling, the potential for losses is unlimited. Say you short sell a stock at Rs 100. Theoretically, the stock can go up to any price and so can your losses. </span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">The second danger in short selling is absence of staying power. In long investing, one can invest and stay patiently in the position for a long period of time. In short selling, if the position moves against you, you will have to keep pumping more money to cover your losses. The requirement of more money to stay in the game might severely constrain your position and you may have to bow out early [and wounded] even if you are eventually proven right.</span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><b><span style="font-family: verdana;">Markets can stay irrational longer that you can stay solvent ~ John Maynard Keynes</span></b></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">The third and most lethal danger of short selling is the possibility of a short squeeze. As I wrote earlier, in short selling the intention is to sell high and buy later at a lower price. Imagine you sold some stock at a high price and instead of price going lower, it goes higher and you have losses. You decide to take your losses, lick your wounds, and close out the position. For closing out the position you need to buy back the same quantity of shares which you had sold earlier. When you wish to buy the shares even at a higher price, to your surprise you find that there are no sellers in the market. The stock is locked in upper circuits day after day. The whole thing defies gravity and turns into a vicious loop.</span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">There have been many examples of short squeezes in the capital markets. The one which is etched in my memory is that of Volkswagen. The German billionaire Adolf Merckle, the owner of Porsche tried to take over Volkswagen (VW). Amongst many steps that he took, one was shorting the shares of VW in the market but the tide turned against him and shares of VW kept marching up. With no shares of VW available in the market to cover up, the losses in the position mounted uncontrollably. The monetary and reputational loss was so high that <a href="https://www.nytimes.com/2009/01/06/business/worldbusiness/06iht-adolf.4.19135905.html"><span style="color: blue;">Mr Merckle took his own life</span></a>.</span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><b><span style="font-family: verdana;">It's insane to risk something that you have and do need for something that you don’t have and don’t need- Warren Buffett</span></b></p>
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<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana; text-decoration: underline;"><b>My experience of short selling</b></span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">Soon after I started investing in the year 2004, being largely ignorant about the ways of the market, I took short positions in 2 companies because I found the valuations expensive. However, the prices went up considerably and I received a margin call from my broker. I had to liquidate my savings in the bank to fund the margin and eventually to close out the positions. The time I spent in that position was extremely unpleasant with sleepless nights. Having learnt my lesson that the odds are stacked against the investor in short selling, I decided not to do it again. I behaved like Mark Twain’s cat and haven’t touched the stove since.</span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><b><span style="font-family: verdana;">All I want to know is where I’m going to die so I’ll never go there- Anonymous Hermit</span></b></p>
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<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana; text-decoration: underline;"><b>Buffett on short selling</b></span></p>
<p style="font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><span style="font-family: verdana;">I have kept the best part for the end. I am sure you will relish and <i>learn</i> what Buffett has to say on short selling stocks. Credit for the following excerpts: Outstanding Investor Digest [OID]</span></p><p style="font-family: Arial; font-size: 11px; font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"><br /></p><p style="font-family: Arial; font-size: 11px; font-stretch: normal; line-height: normal; margin: 0px 0px 8px; text-align: justify;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEio7RPQKTu1Q4MDXp1_7JrWhqSAuTfy-XBNnl7E4lz0Xj6teqSjjhlv2zZinTF7zZfn_6Yu5-Ix7RHE3pHw2dTxUUrYfUWccwjec-j4RIwcdrIABaBIk4kmsOgfuPY_goAwnWa-tNk-ClvLnJbo_yOOemapj7yCH4lzvqjPEt-lviyVPzL8SyCRnfpo" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="1336" data-original-width="1600" height="390" src="https://blogger.googleusercontent.com/img/a/AVvXsEio7RPQKTu1Q4MDXp1_7JrWhqSAuTfy-XBNnl7E4lz0Xj6teqSjjhlv2zZinTF7zZfn_6Yu5-Ix7RHE3pHw2dTxUUrYfUWccwjec-j4RIwcdrIABaBIk4kmsOgfuPY_goAwnWa-tNk-ClvLnJbo_yOOemapj7yCH4lzvqjPEt-lviyVPzL8SyCRnfpo=w466-h390" width="466" /></a></div><div class="separator" style="clear: both; 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font-size: large;">Prayagraj [earlier Allahabad] is the city where the 3 holy rivers Ganga, Jamuna and Saraswati meet and their confluence is the 'Sangam'.</span></p><div class="gmail_default" style="font-family: verdana, sans-serif;"><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: verdana, sans-serif; font-size: medium;">Where is the Sangam in the field of investing? </span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: verdana, sans-serif; font-size: medium;">Go no far. Read what Buffett wrote in 1992 in the <span lang="en">Berkshire Shareholder Letter:<br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;"><br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: verdana, sans-serif; font-size: medium;"><span lang="en"></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: verdana, sans-serif; font-size: medium;"><span lang="en"></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;">"Leaving the question of price aside, the best business to own is one that, <u>over an extended period</u>, can employ <u>large amounts of incremental capital</u> at <u>very high</u> <u>rates of return</u>."</span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;">This is the trifecta which one should be looking for. True 30 years back, true today and will be true 30 years later. It's simple to read and understand but takes a lifetime to internalise and practice.</span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;"><br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;">While thinking about this topic, analogy of a fruit bearing tree comes to mind. Compare a fruit bearing tree with a business. The roots of a tree are similar to the moat/competitive advantages of a business. Only if the roots are strong, will they hold the tree against natural adversities like droughts and storms. Roots provide longevity to a tree. Same way, only if a business has strong competitive advantages, will it hold fort against economic headwinds, competition and the like.<br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;"><br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;">Next, fruits of a tree are akin to the ROCE [Return on Capital Employed] of a business. What good would a tree be if its roots are strong but it doesn't bear fruits? So, a good tree should have strong roots and should produce bountiful fruits. Similarly, a good business should have a strong moat which should reflect in healthy returns on capital.<br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: verdana, sans-serif; font-size: medium;"><span lang="en"></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;"><br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;">Last in the trifecta is growth. A good tree should have strong roots, bountiful fruits and should have fruits with healthy seeds which can be planted elsewhere to compound into more trees. Similarly, a good business should have a strong moat, healthy returns on capital and the opportunity size large enough to continually deploy the incremental capital at good rates of return.</span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;"><br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;">The confluence of these 3 is the</span></span><span style="font-family: verdana, sans-serif; font-size: large;"> Sangam of Investing. It </span><span style="font-family: verdana, sans-serif; font-size: large;">produces the proverbial nectar, compounding of wealth and leads to investment nirvana.</span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><span style="font-family: verdana, sans-serif; font-size: medium;"><br /></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: verdana, sans-serif; font-size: medium;"><span lang="en"></span></span></div><div class="gmail_default" style="font-family: Arial, Helvetica, sans-serif;"><span lang="en"><i><span style="font-family: verdana, sans-serif; font-size: medium;">There are many different ways to invest sensibly. Here, I am talking about investing in good quality businesses which I personally practice.</span></i></span></div></div><div><div class="gmail_signature" data-smartmail="gmail_signature" dir="ltr" style="font-family: Georgia; font-size: 18px;"><div dir="ltr"></div></div></div><br class="Apple-interchange-newline" />Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-4580226540840560342021-12-25T16:32:00.001+05:302021-12-25T16:34:06.995+05:30Thou shall value holding companies at a discount but not always<p style="font-stretch: normal; line-height: normal; margin: 0px; text-align: justify;"><span style="font-family: helvetica;">Shriram Group announced a restructuring of the group companies on Dec 13, 2021. The restructuring entails merger of listed operating companies Shriram Transport Finance (STFC) & Shriram City Union Finance (SCUF) and an unlisted company Shriram Capital (post the demerger of insurance and other non-lending businesses).</span></p><p style="font-stretch: normal; line-height: normal; margin: 0px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px; text-align: justify;"><span style="font-family: helvetica;">A couple of concerns which have been raised in the media about the restructuring:</span></p><p style="font-stretch: normal; line-height: normal; margin: 0px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><ol>
<li style="font-stretch: normal; line-height: normal; margin: 0px; text-align: justify;"><span style="font-family: helvetica;">Holding of Shriram Ownership Trust (SOT)-the promoter in the merged entity would be ~12%, which is considered low by some observers. Low enough that they have contemplated a ratings downgrade by rating agencies. </span></li>
</ol><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; text-align: justify;"><span style="font-family: helvetica;">I am not well aware about the mechanics of ratings but by simple logic, the number of shares held by SOT pre restructuring and post restructuring remain the same. The trust has not sold a single share in the last so many years. In fact, it has added to its share count by buying shares of SCUF from the open market in 2020 (<a href="https://www.bseindia.com/stock-share-price/shriram-city-union-finance-ltd/shriramcit/532498/disclosures-insider-trading-2015/"><span style="color: #0b4cb4;">here</span></a>), buying shares of STFC in 2019 and infusing additional capital in STFC through preferential issue of shares (<a href="https://www.bseindia.com/stock-share-price/shriram-transport-finance-coltd/srtransfin/511218/disclosures-insider-trading-2015/"><span style="color: #0b4cb4;">here)</span></a>. If the rating agencies were fine with the number of shares held by SOT earlier, why should it create a problem now when SOT has higher number of shares?</span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; text-align: justify;"><span style="font-family: helvetica;">We also have a case of HDFC Limited which is a lender with no identifiable promoter. Directors and employees of HDFC Limited own a stake which is in low single digits. The majority shareholding in HDFC rests with institutions and foreign investors. </span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; text-align: justify;"><span style="font-family: helvetica;">If no identifiable promoter and low shareholding of employees is not a concern in the case of HDFC, how should it be a concern for the merged entity of Shriram where there is a clearly identifiable promoter and employees (through a Trust) own a ~12% stake? </span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><ol start="2">
<li style="font-stretch: normal; line-height: normal; margin: 0px; text-align: justify;"><span style="font-family: helvetica;">The second concern is about the discount which should have been given to Shriram Capital while merging the same in the restructuring. The rationale is that Shriram Capital is a holding company and holding companies sell at a large discount to their intrinsic values, hence Shriram Capital should have been valued at a discount in the restructuring scheme.</span></li>
</ol><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; text-align: justify;"><span style="font-family: helvetica;">It's not a Biblical commandment that holding companies should be valued at a discount. Holding companies sell at a discount <b>because</b> shareholders in them neither get access to the cash flows of the investee companies nor they fully enjoy price appreciation of the investee companies since the investments are never sold /unlikely to be sold. Hypothetically, if a holding company were to announce a scheme where it would be wound up and the shareholders would get their proportional share of the investments which they can freely sell in the market- the discount to the intrinsic value of the holding company would evaporate in no time (ignoring frictional costs and taxation). </span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; text-align: justify;"><span style="font-family: helvetica;">In the case of Shriram Capital, it was a privately owned investment vehicle which held investments in STFC and SCUF. In the merger, the investments are being proportionally allocated to the shareholders of Shriram Capital. I believe it’s a completely fair game and there is no reason for a discount to be present in the restructuring scheme.</span></p><p style="font-stretch: normal; line-height: normal; margin: 0px 0px 0px 36px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><ol start="3">
<li style="font-stretch: normal; line-height: normal; margin: 0px; text-align: justify;"><span style="font-family: helvetica;">The third concern is about the challenges which the merger can throw both in terms of HR integration and business integration. This is a valid concern and <i>only </i>time will tell how the dust would settle. However, on a probabilistic basis the odds are higher that the merged entity should be able to handle any such challenge given the strong pedigree of the business and the management.</span></li>
</ol><p style="font-stretch: normal; line-height: normal; margin: 0px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px; min-height: 14px; text-align: justify;"><span style="font-family: helvetica;"><br /></span></p><p style="font-stretch: normal; line-height: normal; margin: 0px; text-align: justify;"><span style="font-family: helvetica;">(This post is not an investment advice. It is meant for discussion purposes only. My clients and I are invested in both STFC and SCUF)</span></p>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com4tag:blogger.com,1999:blog-5160674059772417323.post-14046910901165310322021-08-01T21:51:00.000+05:302021-08-01T21:51:04.358+05:30The Art of Playing<p><span style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">While the Olympics are on, I recalled this brilliant obituary of Raymond Poulidor.</span></p><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">Poulidor, a French cyclist, stood on the podium of the Tour de France 8 times but never was on the top step. In 14 tours he lost by a lot of margin.</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">However, he was the most popular cyclist. <br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">"The more Tours he lost, the more the crowds liked him and the more he earned. At the height of his celebrity, in the mid 1970s, almost half of respondents to one poll made him their first choice as a dinner guest. In 1974 alone more than 4,000 articles were written about him, besides university theses and sociological studies."</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">Why? <br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">You will find answers in the attached article.<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgw2px3xPGPLmix3mxRpDmIltOEzG1zFIngpQfs8P8oj5azVKaMCwivJoeMjPQVEHSVQptY_WdlmjKIljA-EusO43rZhZJY4xkSwFKVUyIrPxLpkNlifFHRtuJfWVLIkUlPNnfMmXiRy50/s2048/IMG_6185.heic" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2048" data-original-width="1533" height="775" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgw2px3xPGPLmix3mxRpDmIltOEzG1zFIngpQfs8P8oj5azVKaMCwivJoeMjPQVEHSVQptY_WdlmjKIljA-EusO43rZhZJY4xkSwFKVUyIrPxLpkNlifFHRtuJfWVLIkUlPNnfMmXiRy50/w581-h775/IMG_6185.heic" width="581" /></a></div><br /></div>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com3tag:blogger.com,1999:blog-5160674059772417323.post-85060700474339022682021-06-26T15:49:00.007+05:302021-06-26T15:52:24.805+05:30Internships 2021-22 : Update <div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">We have sent a set of business cases to all the applicants who had paid the application fee.</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">In case you had applied & paid the fee but didn't receive the business cases, please check your spam/bulk folder.</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">If you still don't have it, do write in @ internships.prayaascapital@gmail.com with your details.</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;">Thanks</div>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-64221507193289912972021-06-10T18:16:00.001+05:302021-06-10T18:53:32.679+05:30Internships - 2021/22<p style="text-align: justify;"><b style="font-family: "Helvetica Neue";">Internships- Year 4</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>PRAYAAS CAPITAL</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>Year 2021/22</b></p><p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b><br /></b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>About me</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Hello, my name is Ankur Jain and I run an investment management firm, Prayaas Capital (Chennai, India). </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">I try to invest in good quality businesses, run by good managements and available at reasonable valuations. This investment philosophy has been beautifully practiced by Buffett and Munger through their investment vehicle: Berkshire Hathaway.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">I started internships a few years back. The idea was to share my learnings with people who have embarked on their investing journey and have a deep desire to learn. I offered them for 3 years. After a break, I am opening internships this year again.</p><p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><br /></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>Method</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">We are going to pick up one business case and work through it over 2.5 months. Participants would be expected to work on the case during the weekdays followed by a discussion session every weekend. There would be 10 sessions of upto 90 minutes each.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">I would choose a business which I feel covers a lot of ground in terms of the investment aspects- moat around the business, risks, quality of management, valuations, position sizing etc. I would pick up a business which I have already studied. That would allow me an opportunity to discuss the case in depth.</p><p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><br /></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>Case Study Method</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Let’s read what Li Lu (Himalaya Capital) has to say about learning investment management.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">-------------</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Do you have any advice for students who are interested in getting into investment management?</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">The most important thing in understanding the investment business is by doing it. There is no substitute to actually doing it. <b><i>The best way to do it is study one business inside and out</i></b> for the purpose of making the investment- you may not actually invest. But having gone through the discipline of understanding one business as if you own 100% of that business is very valuable.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><i>(Li Lu, Himalaya Capital – interviewed by Heilbrunn Center for Graham & Dodd Investing)</i></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><i>-------------</i> </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">It reminds me of a simple advice to teach cycling to children.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Step 1: Put your foot on the pedal and start pedaling</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Step 2: Keep pedaling</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Similarly, to learn investment management, nothing is better than reading an actual business. Thus, we will pick up one business and learn about it. Hopefully, you would continue to pedal, there on. </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><br /></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>Batch size and medium of learning</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">The internship will have 2 batches. The number of participants would be 15 per batch. Sessions would be conducted over Zoom. </p><p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><br /></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>Requirements</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">This internship will not cover value investing basics. Participants are expected to have read and hopefully practiced value investing for atleast a couple of years. The idea is to polish what you might already know.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">The second requirement is that you should have sufficient time at your disposal. If your academic/ professional work is demanding and doesn’t spare you atleast 3 hours a day to work on the internship, it won’t be value accretive.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Thirdly, you should have a basic idea of accounting.</p><p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><br /></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>Selection Process</b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">If you are interested, please fill in the <a href="https://forms.gle/wqe72bx4RBzrZkuBA"><span style="color: #094fd1;">google form</span></a> and deposit an application fee of Rs 100.</p><p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Application fee to be paid by UPI to internships@apl</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">The number of applications is limited to 300. </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Once all the applications are in, I would share a set of business-related exercises to the applicants. You would be required to submit your answers to those exercises. Based on the responses, I would choose the best 30.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">The application window is open till June 25<sup>th</sup> 2021 or 300 applications whichever is earlier.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"> </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>Pay it Forward</b><b> </b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">There is an application fee of Rs 100 to be paid by all applicants.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">There is an internship fee of Rs 5000 to be paid only by the selected participants.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">This year’s internships are dedicated to <b><a href="https://www.facebook.com/yogyataeducation" target="_blank">Yogyata Education Trust</a>.</b> This trust provides monetary scholarships to meritorious students of Class X studying in the Government Schools. A small reward can act as a powerful incentive for students who are trying to do something meaningful with their lives. Yogyata has been founded by my friend and cousin, Anurag Jain.<b> </b>Knowing him, I know that the trust is ethically run, with bare bone overheads. Your contributions (both application fee and internship fee) will go to this trust.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><br /></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>FAQs </b></p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ques:<span> </span>What’s the timeline for the 2 batches?</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ans: <span> <span> </span></span>Tentative commencement dates: </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><span> <span> <span> <span> </span></span></span></span>Batch 1: August, 2021 Batch 2: November, 2021</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"> </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ques:<span> </span>Will all participants work on the same idea?</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ans:<span> </span>Yes, all participants in the same batch will work on the same idea. However, they will <span> <span> <span> <span> </span></span></span></span>work independently. Research would be individual and discussion would be in a group.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"> </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ques:<span> </span>Do I need to send my resume with the application?</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ans:<span> <span> </span></span>No</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"> </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ques:<span> </span>When does one pay the application fee and the internship fee?</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ans:<span> </span>Application fee of Rs 100 is to be paid at the time of applying. If selected, an internship fee of Rs 5000 is to be paid 1 week before the commencement of the respective batch. Fee once paid is non-refundable.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Application fee being a small amount across large number of applicants would first be pooled in an individual account and then passed on to Yogyata. Internship fee has to be transferred directly to Yogyata.</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"> </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ques:<span> </span>Do I get income tax benefit on the contributions made to Yogyata?</p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Ans:<span> </span>Yes, the trust enjoys exemption under Section 80(G). Tax exemption receipts would be issued only to the participants who get selected and pay Rs 5000. Given the logistical challenges, no tax exemption receipt would be issued for Rs 100 paid as the application fee. </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">In case of any other query, please write to: </p>
<p style="font-family: "Helvetica Neue"; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;"><b>internships.prayaascapital@gmail.com</b></p><div><br /></div>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com24tag:blogger.com,1999:blog-5160674059772417323.post-71667820852466230432021-05-28T17:27:00.015+05:302021-06-10T12:04:23.149+05:30Take the high road- It’s paved with gold<p><span style="font-family: "Helvetica Neue"; font-size: 14px;">Relaxo Footwears<br /></span></p>
<p style="font-family: "Helvetica Neue"; font-size: 14px; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px; text-align: justify;">Relaxo Footwears is a company run on solid corporate governance principles with no instance of wrongdoing. The management has been able to focus fully on the business instead of firefighting and wasting time on distractions. The income statement, balance sheet and cash flows are so clean that they seem to be performing a symphony orchestra. The company's chartered accountants should ideally charge less since they would have to spend so little time auditing the financials of the company.</p>
<div class="separator" style="clear: both; text-align: justify;"><p style="font-family: "Helvetica Neue"; font-size: 14px; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px;">Relaxo sells at a PE of 96.55</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkmE700sgXqcdZ0uA7wrMHJUqu6vhtWDO5xF1hrIbPxom3YSRlz832C95GCwJsCnotqZLh6onB6ieLBqygZt2LUzdfv3te1taxPQm9oeRuWYYobvxbNB1nIHysgytw5aKvB-dLYJpvW9A/s1114/Screenshot+2021-05-28+at+5.23.49+PM.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="403" data-original-width="1114" height="234" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkmE700sgXqcdZ0uA7wrMHJUqu6vhtWDO5xF1hrIbPxom3YSRlz832C95GCwJsCnotqZLh6onB6ieLBqygZt2LUzdfv3te1taxPQm9oeRuWYYobvxbNB1nIHysgytw5aKvB-dLYJpvW9A/w644-h234/Screenshot+2021-05-28+at+5.23.49+PM.png" width="644" /></a></div><br /><p style="font-family: "Helvetica Neue"; font-size: 14px; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px;">Data extracted from BSE</p><p style="font-family: "Helvetica Neue"; font-size: 14px; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px;">There would be lot of things that would go into determining the PE- the strength of the business model, growth ahead etc. But most importantly, good companies get rated higher due to the TRUST the shareholders have on the financials - they know 'what they see is what they get'. There is no <i>jhol (</i>mischief)<i> </i>in the financials.</p><p style="font-family: "Helvetica Neue"; font-size: 14px; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px;">I hope that current and prospective entrepreneurs realize that there is so much money to be made if you take the high road. Even if we keep discussion on morals aside, it makes immense economic sense to keep the books clean because the high road is paved with gold.</p><p style="font-family: "Helvetica Neue"; font-size: 14px; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px;">(This is not an investment recommendation to buy or sell the company mentioned in the post)</p></div><br /><p style="font-family: "Helvetica Neue"; font-size: 14px; font-stretch: normal; line-height: normal; margin: 0px 0px 13.6px;"><br /></p>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com1tag:blogger.com,1999:blog-5160674059772417323.post-29487142549488200262021-04-29T17:02:00.002+05:302021-04-29T17:07:19.261+05:30Karm yogis<div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small; text-align: justify;">In the current times when there is so much pain and hopelessness around, 2 obituaries I read come </div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small; text-align: justify;">across as precious drops of water on the parched landscape.</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small; text-align: justify;">Obituaries of 'karma yogis', of lives well spent in making oneself, the community and the country better.</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small; text-align: justify;">Even in their deaths, they leave a fragrance of hope, resolve and inspiration.</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small; text-align: justify;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small; text-align: justify;">From Business Standard</div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKACqwnYRjrDCL2j3KRJAGj7yR0WROT2NuQcW_9OBKP3tyrxItbl_zCf9fEG9xvOFYrrRilze33pHjuO7HH7bg7maFcTNpuvIwNVX_zEZD0p4pVpwlpHb6XW7rMfXw9Zc7RSsMVB83e7Y/s2760/Mr+M+Narasimham.heic" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2760" data-original-width="1140" height="1111" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKACqwnYRjrDCL2j3KRJAGj7yR0WROT2NuQcW_9OBKP3tyrxItbl_zCf9fEG9xvOFYrrRilze33pHjuO7HH7bg7maFcTNpuvIwNVX_zEZD0p4pVpwlpHb6XW7rMfXw9Zc7RSsMVB83e7Y/w623-h1111/Mr+M+Narasimham.heic" width="623" /></a><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2UHGbRNNqo2E7m33wcyN39ycrNbNBtnPWBNsgaToXmEb6OEfVMiiRwsHGfCn-MS4aexnbT4q6YVG5Bp_F3_m3L5yufSAPfCSwE_-tkBjQ0hc5VY399EBChQ5puCHNOa_ATw44LDNDYCM/s2727/Mr+Jagdish+Khattar.heic" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2727" data-original-width="1153" height="943" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2UHGbRNNqo2E7m33wcyN39ycrNbNBtnPWBNsgaToXmEb6OEfVMiiRwsHGfCn-MS4aexnbT4q6YVG5Bp_F3_m3L5yufSAPfCSwE_-tkBjQ0hc5VY399EBChQ5puCHNOa_ATw44LDNDYCM/w581-h943/Mr+Jagdish+Khattar.heic" width="581" /></a></div><br /></div><br /><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div><div class="gmail_default" style="caret-color: rgb(255, 255, 255); font-family: arial, sans-serif; font-size: small;"><br /></div>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-12518248017333472752021-04-20T12:44:00.005+05:302021-04-20T13:36:59.773+05:30Billionaires like Barbareek, are trying to save the one in doldrums<p><span style="font-family: "Bookman Old Style", serif; font-size: 11pt; text-align: justify;"></span></p><div class="separator" style="clear: both; text-align: center;"><span style="font-family: "Bookman Old Style", serif; font-size: 11pt; text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKon2TbvPtA0pJb1eWz96ZPhADXSdLuBD29RevhLj6KtRefiLiYoqp9mnndoFS22eVeL2aI3CoE2lCfgrh7gcho0pbHrd__xX-QIzg_L3N0SkqpFeXv9q2JyUIsfiEdKW_yTGe0rY0srI/s638/Screenshot+2021-04-20+at+12.54.32+PM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="477" data-original-width="638" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKon2TbvPtA0pJb1eWz96ZPhADXSdLuBD29RevhLj6KtRefiLiYoqp9mnndoFS22eVeL2aI3CoE2lCfgrh7gcho0pbHrd__xX-QIzg_L3N0SkqpFeXv9q2JyUIsfiEdKW_yTGe0rY0srI/w382-h285/Screenshot+2021-04-20+at+12.54.32+PM.png" width="382" /></a></span></div><span style="font-family: "Bookman Old Style", serif; font-size: 11pt; text-align: justify;"><br />One of my favourite stories from</span><span style="font-family: "Bookman Old Style", serif; font-size: 11pt; text-align: justify;"> </span><i style="font-family: "Bookman Old Style", serif; font-size: 11pt; text-align: justify;">The Mahabharata</i><span style="font-family: "Bookman Old Style", serif; font-size: 11pt; text-align: justify;"> </span><span style="font-family: "Bookman Old Style", serif; font-size: 11pt; text-align: justify;">is that of Barbareek, grandson of the Pandava warrior Bheema. Once it became clear that the war between the Pandavas and Kauravas was inevitable, Barbareek became keen to participate in it. While leaving, he took a vow that he would join the weaker side and the one in problems.</span><p></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><span style="font-family: "Bookman Old Style", serif;">Once all the warriors assembled for the war, Barbareek saw Lord Krishna sad and weeping in a corner. Staying true to his resolve to help the one in a problem, Barbareek asked him the reason for his sadness. Lord Krishna replied that he was sad because there is one person who stands in between the result of the war. And untold hardship will come to mankind if the war doesn’t end and remains in a stalemate. Barbareek told Krishna to stop crying and resolved to kill that person who had put Krishna in that hardship. He just needed to be told the name of the person. Krishna picks up a mirror and shows it to Barbareek. That person was Barbareek himself.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><span style="font-family: "Bookman Old Style", serif;">Why?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><span style="font-family: "Bookman Old Style", serif;">Because Barbareek was endowed with untold strength and could single <a name="OLE_LINK3"></a><a name="OLE_LINK4">handedly </a>conquer the war for either side. In the beginning, the Pandavas side was weaker, so as per his vow, he would join them. Over time however, he would destroy a big part of the Kauravas’ army, then Kauravas would become weaker and Pandavas would become stronger. To always help the weaker side, Barbareek would have to switch sides and fight from the side of the Kauravas. With time, Pandavas would become weaker. He then would have to leave Kauravas and join the Pandavas again. This would become an infinite loop and the war would never end. Lord Krishna foresaw this eventuality. <o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><span style="font-family: "Bookman Old Style", serif;">When shown the mirror, as the person who made Krishna sad, as per his vow Barbareek beheads himself and offers his head to Krishna.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><span style="font-family: "Bookman Old Style", serif;">Coming to the billionaires now. Newspaper industry was once the titan of the business world. With wonderful economics and political power, it enjoyed a formidable moat around its business castle. But time can erode the most powerful of the moats. Internet has upended this business upside down with the readers moving online. This was quickly followed by advertising and the marketing dollars moving online. Newspapers no longer carry the political, financial and the business muscle. Once a champion of newspapers, Buffett has sold all of his newspaper investments.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><span style="font-family: "Bookman Old Style", serif;">However, some billionaires around the world are trying to resuscitate newspapers – some hard-nosed capitalists are seeing opportunities and trying to infuse life into them while making money for themselves at the same time. Another species of billionaires who grew reading up these newspapers are trying to revive them by restructuring them, putting them in a non-profit foundation and endowing the foundation with substantial grants. Like Barbareek, these billionaires are on the side of the weak. Only time will tell, if they achieve their objectives.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><span style="font-family: "Bookman Old Style", serif;">These very interesting articles in The Wall Street Journal talks about these developments around the newspaper industry.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><a href="https://www.wsj.com/articles/alden-clashes-with-billionaire-over-future-of-tribuneand-of-local-news-11618027398?st=5ny5vbruw2b8si3&reflink=desktopwebshare_permalink">Link 1</a></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 22px; margin: 0cm 0cm 8pt; text-align: justify;"><a href="https://www.wsj.com/articles/hotel-magnate-seeks-help-to-save-tribune-publishing-bid-after-partners-withdrawal-11618773935?st=ymgzduwvuqjtr90&reflink=desktopwebshare_permalink" target="_blank">Link 2</a></p>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com3tag:blogger.com,1999:blog-5160674059772417323.post-36404493784623174382021-04-20T11:34:00.001+05:302021-04-20T11:34:55.643+05:30Are wealth and inner-calm mutually exclusive?<p>Not according to this oil farmer.</p><div class="gmail_default">His recipie - Go easy, Pause, Consider, Enjoy.<br /></div><div class="gmail_default"></div><div class="gmail_default">The state of his mind can be best described by the Hindi word "Santosh" and Urdu word "Sukoon".</div><div class="gmail_default"><br /></div><div class="gmail_default"><a href="https://www.youtube.com/watch?v=4qVRYBes6g8" target="_blank">https://www.youtube.com/watch?v=4qVRYBes6g8</a><br /></div>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-15747687317559757922021-02-12T11:12:00.001+05:302021-02-12T17:59:46.290+05:30 The Bitcoin Dream<p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm;"><b><span lang="EN-US" style="font-family: "Times New Roman", serif;">The Bitcoin Dream<o:p></o:p></span></b></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm;"><span lang="EN-US" style="font-family: "Times New Roman", serif;"> </span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt; text-align: justify;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Last night, I dreamt of my friend who always talks and tweets about Bitcoin. For the sake of hiding his identity, I have named him Bittu (for he is a Bitcoin buff). The dream went like this:<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: Hi Ankur<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: Hi Bittu<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: Did you read my latest tweet on Bitcoin?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: No, I am absent on Twitter.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: Why? You know there’s so much of valuable information available on Twitter.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: I know. But I also remember what my teacher Buffett says: “Value is what you get and price is what you pay”. I think, <i>for me</i>, the cost in terms of distraction and time spent on Twitter would be more than the value I would get. It would be a losing trade. Hence, I stay away.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: As you wish. By the way, did you invest in Bitcoin?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: No, I don’t understand it. My teacher Buffett teaches that one should stay within one’s circle of competence. I don’t understand Bitcoin and its dynamics and the chances are low that I would understand it even if I made an attempt.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: I suggest that even if you don’t understand Bitcoin, you should invest 1-2% of your networth. If it works out, it would make you rich.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: But I am already comfortably rich for my lifestyle. My teacher Buffett also teaches that one should not risk what one does have and does need in order to get something one doesn’t have and doesn’t need. More importantly, putting 1-2% might be a relatively small amount but it would break my discipline. Soon enough, I am sure there would be many opportunities which I don’t understand, vying for 1-2% each. I feel it would be a slippery slope- easier to start but difficult to stop.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: The way the governments around the world are printing money, it’s quite likely that there might be massive inflation. Bitcoin would be a good hedge against inflation.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: I don’t understand that part well enough. For the sake of discussion, if we assume that there might be high inflation, I feel that people would still require necessary products and services. And strong businesses would have the pricing power to pass on inflation to their customers. Hence, strong businesses too should serve as a hedge against inflation.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: People also say that if not a wealth creator, Bitcoin might act as a wealth protector.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: By whatever name you call it, ultimately every financial transaction has 2 components: cost and value. You need to have a fair idea of both in order to enter deals which<i> first</i> protect and <i>then</i> create wealth. If you don’t know either of them, you are entering quicksand. I know the cost of Bitcoin but not its value.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: The narrative around Bitcoin is changing. Even some of the best-known investors are throwing their weight behind it. You would get left behind.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: I don’t want to fall for social proof. I have fallen for it earlier and have learnt precious lessons out of it. If other investors understand Bitcoin and make money, they deserve it. The fact that they make money and I don’t, shouldn’t bother me.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: You are raving too much about your teacher Buffett. Do you know he has underperformed the benchmark for so many years and his investing methods have become a passe?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: Underperformance is partly because of the gigantic amount of money that he oversees and not necessarily because of obsolescence of methods. I manage small sum of money and understand his investing methods. His methods have worked for me in the past and hopefully they should work in the future as well.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: His methods won’t work forever. Till what point will you follow him?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: He has shown the path till $300 bn. Once I reach there, I will see.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: What’s the path?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: Buy good quality businesses run by good quality people and available at a fair price. Buy in sizeable quantities and hold them for a long period of time.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Bittu: Okay Ankur, I need to go. Good luck for creating wealth through investing in such businesses.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: Calibri, sans-serif; margin: 0cm 0cm 12pt 19.85pt; text-align: justify; text-indent: -19.85pt;"><span lang="EN-US" style="font-family: "Times New Roman", serif;">Me: Thanks, Bittu. Good luck to you too for creating wealth through Bitcoin.<o:p></o:p></span></p>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com2tag:blogger.com,1999:blog-5160674059772417323.post-27236821516948617602020-11-21T11:05:00.005+05:302020-11-21T11:14:32.096+05:30Risk can come from anywhere<p><span style="font-family: arial;">In life, risk can come from anywhere. More so, in equity investing. This thought has been captured very well by the following quote :</span></p><div class="gmail-quote_wrapper"><span style="font-family: arial;"><br /></span></div><div class="gmail-quote_wrapper"><span style="font-family: arial;"><span class="gmail-quote_sign">“</span>Condoms aren’t completely safe. A friend of mine was wearing one and got hit by a bus.<span class="gmail-quote_sign">”</span> — Robert Rubin</span></div><div class="gmail-quote_wrapper"><span style="font-family: arial;"><br /></span></div><div class="gmail-quote_wrapper"><span style="font-family: arial;">Lakshmi Vilas Bank (LVB) has been in the news for poor functioning and an aborted attempt to merge with Indiabulls. That tells a lot about both. As Yogi Berra said "You can observe a lot by just watching".<br /></span></div><div class="gmail-quote_wrapper"><span style="font-family: arial;"><br /></span></div><div class="gmail-quote_wrapper"><span style="font-family: arial;">On Nov 17th, RBI put LVB under moratorium and decided to merge the same with DBS India. Merging LVB with a strong entity like DBS would ensure safety of the depositors' money, I think. But what happens to the shareholders ? Read the following :</span></div><div class="gmail-quote_wrapper" style="font-family: Georgia; font-size: 18px;"><span style="font-size: x-small;"><span face="arial, sans-serif"><br /></span></span></div><div class="gmail-quote_wrapper" style="font-size: 18px;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEit5EO0DFMV_B8rxx0csz7SFsu-lK2KG9x_SGMXYH0YUMlAOxIeFjaqBbcZzbczDCdxpxe6K7qTfDNgqwTwCeO_kajTsJxlGSQTJoUxAxm01b7qNv4rey23BCokqZOGWk62wjLCcPAkFxc/s1019/chap+IV.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="424" data-original-width="1019" height="219" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEit5EO0DFMV_B8rxx0csz7SFsu-lK2KG9x_SGMXYH0YUMlAOxIeFjaqBbcZzbczDCdxpxe6K7qTfDNgqwTwCeO_kajTsJxlGSQTJoUxAxm01b7qNv4rey23BCokqZOGWk62wjLCcPAkFxc/w529-h219/chap+IV.png" width="529" /></a></div><br /><div style="font-family: Georgia;"><br /></div><div><span style="font-family: arial;">So, the entire equity capital of LVB stands written off and the shares are now worth zero. Didn't I tell you, that in life, risk can come from anywhere. And more so, in equity investing.<br /></span></div><div style="font-family: Georgia;"><br /></div><br /><div style="font-family: Georgia;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUfsHxphe7aMJIXjD2Q_yqWCimpBmDN2Zz73SqsXVtJjzi3vbpkFs_fZjknW4IhZzvLQP1_XCUbR3v7_Rgh14IpatJudSBvTk-43sZxlYKolH_3eq_8yHQnEZjveviSuXuSqKXXz39wSk/s798/NSE.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="633" data-original-width="798" height="415" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUfsHxphe7aMJIXjD2Q_yqWCimpBmDN2Zz73SqsXVtJjzi3vbpkFs_fZjknW4IhZzvLQP1_XCUbR3v7_Rgh14IpatJudSBvTk-43sZxlYKolH_3eq_8yHQnEZjveviSuXuSqKXXz39wSk/w522-h415/NSE.png" width="522" /></a></div></div><br class="Apple-interchange-newline" />Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com2tag:blogger.com,1999:blog-5160674059772417323.post-35232886857292862192020-07-16T20:22:00.004+05:302020-07-16T20:39:52.104+05:30Knowledge is like sunshine<p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Once upon a time, there lived a group of 4 friends: Cleverwit 1, Cleverwit 2, Cleverwit 3 and Dumbwit. As the names suggest, three of them were quite clever and one of them was considered dumb according to conventional standards.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">All of them lived in the ashram of their guru to attain education. After having spent many years in the ashram and having completed their education, they headed home. The journey home was long and encountered forests on the way. While passing through one of the forests, they came across some scattered bones.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Cleverwit 1: Hey! Let’s utilize our guru’s education and test ourselves. By looking at these bones, I can tell you that these belong to a lion. I can arrange them.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Cleverwit 2: And if you could do that, I should be able to put flesh and skin around it.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Cleverwit 3: Well, if both of you are successful, by the grace of our guru – I should be able to infuse life into the lion.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Dumbwit who was until now silent and patiently listening to their conversation shivered at the idea and expressed the danger, all of them would get into should the lion come to life. All cleverwits, too consumed by their knowledge and an opportunity to show it off dismissed his apprehensions and called him a coward.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Having realised that it would be difficult to rationalise with his friends once they have made up their mind, he requested them to let him climb a tree before they brought the lion to life. Cleverwits agreed and Dumbwit quickly climbed the tree. The Cleverwits were successful, the lion came to life and filled its belly with the bodies of 3 cleverwits. Dumbwit witnessed this sad scene from a tree and wished his friends had listened to him.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Cleverwits were all clever but they made a fundamental error. Dumbwit may have been otherwise dumb but he got his basics right.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">In investing too, we encounter situations where the business is all good and we may think we are clever to spot such a business but there is this element which if comes to life would devour the capitalist. The risk could come from a single supplier, single customer, single geography, single asset or dependency on a favourable regulation etc. The risk could also come from a questionable quality of management. Dubious related party transactions and schemes of arrangement are fertile grounds to perpetrate wrongdoings on minority shareholders. <o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;"><b>IF</b> we encounter such a business or a management with a fundamental flaw, we should think like Dumbwit and climb to a safe vantage point. Investing in situations fraught with grave risks is stupidity not bravado. Sadly, in investing stupidity often appears camouflaged as bravado.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">I read this story in Amar Chitra Katha (a popular comic magazine) and added to my mental framework. The message here is Buffett’s Rule No 1 in investing “Never lose money”. <o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;"> </span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Another favourite story of mine is one from the book of <b>Osho</b>.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Once a <i>dhobi </i>(washerman) came for his morning rounds to pick up dirty laundry from his customers’ houses. He was accompanied by his donkey whom he used to transport laundry. In the village also lived a <i>Seth </i>(wealthy merchant).<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Having arrived at the Seth’s house, the dhobi asked for laundry. The Seth saw a shining glass piece tied around the donkey’s neck.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Seth: Hey! What have you tied around your donkey’s neck? And where did you get it?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Dhobi: I don’t know what it is, Sir. I was passing through a road and found it lying there. I liked it, picked it up and tied it around my donkey’s neck.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Seth: Okay. It’s of no use to you and your donkey. Let me buy it from you. I will give you Rs 10 for it.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Dhobi thought for a few moments and agreed to sell but for Rs 20. Seth thought that the dhobi is going to come back in the evening and sell the same thing to him for 5 bucks. Seth spent the whole day thinking about the glass piece and waited anxiously for the dhobi to return in the evening.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">The evening finally came and so did the dhobi with the washed laundry and his donkey. But the glass piece around his neck was missing.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Seth: Wherrrre is the glass piece?<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Dhobi: Oh! Somebody in the market offered me Rs 50 and I gave it to him. Good that I didn’t give it to you for Rs 20 in the morning.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Seth: You fool ! That was a piece of diamond and was worth atleast 10,000 bucks and you sold it for 50.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Dhobi: Sir, I am ignorant and do not know anything about diamonds and their values. I asked you 20 bucks because my donkey eats grass worth that much in a day. And I thought either I would sell it for atleast that much or else I won’t. But you haggled for 10 bucks knowing very well that it was a diamond and was valued much more. Don’t you think you are a greater fool than me!<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">Most of the time in investing, we are like the <i>dhobi.</i> We are ignorant about the businesses and we don’t know their values. Market prices in isolation should not mean anything to us. But sometimes, we understand the business and we can also conservatively calculate its intrinsic value. IF we find ourselves in such a situation and the price offered by the market offers a good margin of safety, we should act decisively to buy and not act like the Seth and haggle for lower prices. <o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">This is a story which reminds me that historical prices are irrelevant. A business might have traded at much lower valuations in the past but we may have been the dhobi at that time knowing nothing about the business. The important thing is to know when you are the dhobi and when you are the Seth.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">I would like to add a word of caution here. This story should not turn you into an unjustifiable optimist and buy any business that you like disregarding the valuations. 3 things are important: you should understand the business, the business should be conservatively valued and finally it should be available at a good margin of safety.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">The above 2 stories remind me of the important elements of risk avoidance and acting decisively when things are within our circle of competence. These elements have been taught by investment masters over a long period of time. I have tried to understand these in the form of stories as stories have a powerful way of wiring our brains.<o:p></o:p></span></p><p class="MsoNormal" style="font-family: calibri, sans-serif; font-size: 11pt; line-height: normal; margin: 0cm 0cm 8pt;"><span style="font-family: arial, sans-serif;">I read these stories in different books in contexts which were not related to investing. But </span><b><span style="font-family: arial, sans-serif; font-size: 14pt;">knowledge is like sunshine and should be welcomed from all directions.<o:p></o:p></span></b></p><h2 style="text-align: left;"><span style="font-family: arial, sans-serif; font-weight: normal;"><font size="3">What say you?</font></span></h2>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com8tag:blogger.com,1999:blog-5160674059772417323.post-76152091648416340152020-06-16T20:17:00.002+05:302020-06-16T20:17:30.541+05:30Niti and Nyaya<div class="MsoNormal" style="-webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; caret-color: rgb(0, 0, 0); color: black; font-family: Calibri, sans-serif; font-size: 11pt; font-style: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; line-height: normal; margin: 0cm 0cm 8pt; orphans: auto; text-align: start; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px;">
<span style="font-family: Arial, sans-serif;">Many a time, we come across a business which is of a good quality but the management has conducted itself in the past in ways which do not <i>fully </i>conform to ethical and legal standards.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Should we reject that idea? On what parameters should we decide? <o:p></o:p></span></div>
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<i><span style="font-family: Arial, sans-serif;">Niti</span></i><span style="font-family: Arial, sans-serif;"> and <i>Nyaya<o:p></o:p></i></span></div>
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<span style="font-family: Arial, sans-serif;">In Sanskrit, both these words denote justice. However, according to philosophical texts, there is a subtle difference between the two. “Niti” stands for moral conduct, correctness of behaviour and is abstract in nature. “Nyaya” stands for rules and procedures and is absolute in nature. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">A king had a wise minister who always spoke the truth. The king once decided to put-down his minister. He showed his closed fist to the minister and said “You are so wise and you always speak the truth. In my fist, there is an ant. Tell me if it’s dead or alive.” The minister thought for a moment and replied that the ant is dead. The king laughed and feeling victorious- opened his fist. The ant was alive and walking. The king told the minister that he had been proved wrong. The minister remained silent. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Later on, one of the minister’s friend in the court asked if he knew that the ant was alive. The minister said, “Yes, I knew. But had I spoken the truth, the king would have closed his fist tighter and killed the ant. In order to save the life of the ant, I had to side with Niti (moral conduct) at the cost of Nyaya (legal conduct).”<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Let’s look at some examples of management actions through the lenses of Niti and Nyaya.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">A pharma company has a monopoly on some drugs and raises prices exorbitantly. Assuming that the drugs were not under any price regulation, the company was well within its right to raise the prices. So, Nyaya (legal conduct) was intact. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">But raising the prices beyond a reasonable limit causes undue hardships to families who needed the medicines. Did the company’s management behave with the correct Niti?<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">A company decides to pursue a buyback at a cheap price with negative consent from the minority shareholders and promoters do not participate in the buyback. Negative consent means that if the shareholders don’t opt out, it would be deemed that they agree to the buyback. Minority shareholders who didn’t understand the matter completely found their shares bought back (stolen) from their accounts at low prices. The company has followed all due legal procedures and hence has Nyaya on its side. But did it have Niti on its side? <o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">Munger once bought a business and had a couple of widows on other side of the transaction. Unaware about financial matters, the widows quoted a lower price than what Munger had calculated. He decided not to take advantage of their ignorance and paid the higher price. He ignored the rule-based conduct in favour of an overarching moral conduct.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">A company under debt reconstruction gets settlement terms from all the creditors. There are hundreds of small depositors who had put their savings into the company’s deposits. Realising that even though under financial stress, it can still pay the small depositors, the company decides to pay in full to them. An example where the management is guided by the moral conduct and not by the legal conduct alone.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">During our investing careers, we will come across many such permutations and combinations of intermeshed legal and moral conducts.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">When a management runs a business both with Niti and Nyaya on its side, one can quickly conclude that you have got the right set of partners.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">One can also immediately conclude when neither Niti nor Nyaya is present. Don’t venture close to such managements. You will lose both- character and money.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">If the management has been guided by a higher moral conduct at the expense of rules, look carefully. If you conclude that it is indeed the case, then it is a very good management to partner with.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial",sans-serif; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4.<span style="font: 7.0pt "Times New Roman";"> </span></span></span><!--[endif]--><span style="font-family: Arial, sans-serif;">The tough situations are the ones where a management has followed all legal procedures but their actions do not pass the test of moral conduct. What to do in such cases?<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">I think about them in the following way:<o:p></o:p></span></div>
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<li class="MsoNormal" style="line-height: normal; mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 36.0pt;"><span style="font-family: Arial, sans-serif;">Is the issue-at-hand going to damage the core business of the company?<o:p></o:p></span></li>
<li class="MsoNormal" style="line-height: normal; mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 36.0pt;"><span style="font-family: Arial, sans-serif;">What % of revenues or value pertains to this issue at hand? <o:p></o:p></span></li>
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<span style="font-family: Arial, sans-serif;">If the issue is small relative to the revenues/value of the business, I would tend to take it in my stride and not reject the idea outrightly.<o:p></o:p></span></div>
<ul style="-webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; caret-color: rgb(0, 0, 0); color: black; font-style: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; margin-bottom: 0cm; orphans: auto; text-align: start; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px;" type="disc">
<li class="MsoNormal" style="line-height: normal; mso-list: l2 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 36.0pt;"><span style="font-family: Arial, sans-serif;">Does the issue make me question the basic DNA of the management?<o:p></o:p></span></li>
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<span style="font-family: Arial, sans-serif;">Irrespective of the % contribution to revenues/ value, if the basic DNA of the management becomes questionable, I would stay away and not partner with them. Dubious schemes of arrangement and related party transactions are fertile grounds for such behaviour.<o:p></o:p></span></div>
<ul style="-webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; caret-color: rgb(0, 0, 0); color: black; font-style: normal; font-variant-caps: normal; font-weight: normal; letter-spacing: normal; margin-bottom: 0cm; orphans: auto; text-align: start; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px;" type="disc">
<li class="MsoNormal" style="line-height: normal; mso-list: l1 level1 lfo3; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 36.0pt;"><span style="font-family: Arial, sans-serif;">Are there more than one distinct corporate governance issues?<o:p></o:p></span></li>
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<span style="font-family: Arial, sans-serif;">Judging corporate governance practices in a business is quite a subjective call. Two well-meaning investors can have different perspectives on the same issue. It depends on one’s own tolerance level, risk appetite and overall attitude towards investing.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">-<o:p></o:p></span></div>
Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com3tag:blogger.com,1999:blog-5160674059772417323.post-56681803458660109492019-06-05T14:48:00.001+05:302019-06-05T14:48:26.282+05:30Opportunity Cost<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;">One of the most important and powerful factors and often ignored one while making decisions is opportunity cost. </span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: inherit;">If it's so important, why does it get ignored all the time ? Because it's abstract. And since it's abstract it goes out of sight. And out of sight quickly becomes out of mind. </span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;">Munger has spoken highly about <a href="http://gregmankiw.blogspot.com/2010/05/opportunity-cost.html" target="_blank">Greg Mankiw </a>who has highlighted the importance of opportunity cost in making decisions.</span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: inherit;">“If you take the best text in economics by Mankiw, he says intelligent
people make decisions based on opportunity costs—in other words, it’s
your alternatives that matter. That’s how we make all of our decisions.”
-Charlie Munger </span></span><br />
<br />
<span style="font-size: small;"><span style="font-family: inherit;">We have read about opportunity cost of capital and opportunity cost of time. I recently came across a <a href="https://www.youtube.com/watch?v=MuQAJq9GNM8" target="_blank">speech</a> (~13:00) by Mr Dilip Shanghvi (Sun Pharma) where he explains the importance of thinking about <b>opportunity cost of attention</b> while thinking about acquisitions. He termed it dis-synergies in acquisitions. I found it a very interesting way to think.</span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;">- </span></span><br />
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>
<span style="font-size: small;"><span style="font-family: inherit;"><br /></span></span>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-68918194299103316682018-04-15T12:51:00.004+05:302018-05-29T21:23:20.349+05:30Lata Bajoria- Queen of Hearts<div class="gmail_default" style="background-color: transparent; color: black; font-family: arial, sans-serif; font-style: normal; font-variant-caps: normal; font-variant-east-asian: normal; font-variant-ligatures: normal; font-variant-position: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">
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Jute business was big in Kolkata many years back and one man who ran the show with more than 25% of market share was Mr Arun Bajoria<span style="background-color: transparent; color: black; display: inline; float: none; font-family: "arial" , sans-serif; font-style: normal; font-weight: 400; letter-spacing: normal; text-align: left; text-decoration: none; text-indent: 0px; text-transform: none; white-space: normal; word-spacing: 0px;">. </span>There are other pieces about his takeover attempt on Bombay Dyeing and Ballarpur Industries. You can find more about him on the net.</div>
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This post is more about his wife : Mrs Lata Bajoria. There's a nice speech she delivered and you can watch it <a href="https://www.youtube.com/watch?v=UM59-ODy80w" target="_blank">here</a>.</div>
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I am sure her simple and witty speech will leave you motivated. If Mr Bajoria was "King of Jute", I would say Mrs Bajoria would be "Queen of Hearts".</div>
Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com2tag:blogger.com,1999:blog-5160674059772417323.post-5737515632810509492018-02-26T11:47:00.001+05:302018-05-29T21:03:59.964+05:302 Thought Leaders <div style="text-align: justify;">
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">In Ernest Hemingway’s novel “The Sun Also Rises”, there is a
dialogue “How did you go bankrupt?” </span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">The response is “gradually and then suddenly”.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">It is so apt.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">While reading about NPAs and the resolution process, I read a
column written by Dr M S Sahoo- Chairperson of the “Insolvency and Bankruptcy
Board of India (IBBI)” where he quoted Hemingway.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">I was immediately drawn towards Dr Sahoo’s writings and found
them </span><span style="font-family: "arial" , sans-serif; margin: 0px;"><span style="color: #bb5321;"><a href="http://www.ibbi.gov.in/" target="_blank">here</a></span></span><span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">.
You can find them under the resources tab.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">Dr Sahoo delivered Dr R H Patil Memorial Lecture where he talked
about important concepts of -</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;"><span style="margin: 0px;">1.<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant-caps: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">Institutional
Environment</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;"><span style="margin: 0px;">2.<span style="font-family: "times new roman"; font-stretch: normal; font-style: normal; font-variant-caps: normal; font-weight: normal; line-height: normal; margin: 0px;">
</span></span></span><span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">Institutional
Arrangement</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">Using an example of stock exchange and anonymous screen-based
trading system-he explains the above concepts in a lucid manner.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">Another important concept he touches upon is that of
Economic Liberty with an example of how 4 persons received show cause notices
from the competition authority.</span></div>
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<b><span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">“Different conducts can invite the same
outcome under economic laws and the same conduct may yield different outcomes in
different contexts. So, it is not so much the conduct, as the context- who,
why, when, what, where and how- of the conduct that matters. Rule of reason to
guide economic liberty.”</span></b></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">This helps me to further understand the case of Intellect Design
Arena which I wrote about in my last post. It is not the conduct alone but
“context and conduct” meshed together which matters.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">Dr Sahoo spoke very highly of Dr R H Patil – the “Father of
National Stock Exchange” and how his thinking got shaped by Dr Patil.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">I read up on Dr Patil and came across this beautiful </span><a href="https://www.moneylife.in/article/ldquoi-have-tried-to-create-a-world-to-protect-othersrsquo-risks-ndash-that-too-through-systems-and-designrdquo/4983.html"><span style="font-family: "arial" , sans-serif; margin: 0px;"><span style="color: #bb5321;">interview</span></span></a><span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;"> in Moneylife magazine. </span></div>
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<span style="font-family: "arial" , sans-serif; margin: 0px;">Some
excerpts:</span></div>
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<span style="font-family: "arial" , sans-serif; margin: 0px;">“After the Harshad Mehta scam in 1992,
the government was groping in the dark about what to do…G.V. Ramakrishna was
the SEBI chairman. The finance ministry had called a meeting and I only got to
know what was to be discussed on reaching there. Montek (Ahluwalia, then
finance secretary), Dr P.J. Nayak (then jt. secretary and now chairman, Axis
Bank), Mr Ramakrishna, Mr Nadkarni (IDBI chairman) and I were present. The
concept of NSE was born at that meeting. We wanted to do things differently. We
discussed setting up a professional organisation with screen-based trading, a
weekly settlement system, etc.”</span></div>
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<b><span style="border: 1pt; font-family: "charter_btroman" , serif; margin: 0px; padding: 0cm;"><br />
</span></b><strong><span style="border: 1pt; font-family: "arial" , sans-serif; margin: 0px; padding: 0cm;">“</span></strong><span style="font-family: "arial" , sans-serif; margin: 0px;">I then said, “I want to
move over to NSE.” The company had already been formed and I was a director on
its board. He was shocked. He said, “People aspire for power and you are saying
that you want to go to an entity which nobody is sure if it will succeed or
not. Aren’t you taking too much of a risk?” I said, “Sometimes one should take
the risk.” He said, “Are you sure you want to take a risk at this age?” I said,
“It is only at this age that I can take the risk. Both of us -- my wife and I
-- have been earning; we both lead very modest lives. We have decent savings.
If we continue to live modestly, I can take that risk.” In fact, many people
said that I was a fool. But my own feeling was that, once you retire from IDBI,
who remembers you? So, I decided that it does not matter whether or not I
succeed in setting up NSE. My grandfather used to say, if you make a whistle
out of a carrot, it is good if it plays; and if does not, you can always eat it.”</span></div>
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<strong><span style="border: 1pt; font-family: "arial" , sans-serif; margin: 0px; padding: 0cm;">“As someone who creates new
markets, where do you invest your money?</span></strong></div>
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<b><span style="border: 1pt; font-family: "arial" , sans-serif; margin: 0px; padding: 0cm;"><br />
<strong><span style="font-family: "arial" , sans-serif; margin: 0px;">“</span></strong></span></b><span style="font-family: "arial" , sans-serif; margin: 0px;">In RBI bonds and in
mutual funds - there too I invest in FMPs - so no risks. You need a different
mindset to take risks. I prefer to devote my limited energies to do things that
are more productive, especially from a social point of view. I have tried to
create a world to protect others’ risks -- (laughs a lot) - that too through
systems and design. Remember, systems and design only. After all, what are
margins? They are walls so that the speculators don’t jump into the sea.”</span></div>
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<span style="font-family: "arial" , sans-serif; margin: 0px;">Amazing
clarity about building institutions, risks and priorities in life.</span></div>
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<span style="color: #222222; font-family: "arial" , sans-serif; margin: 0px;">I am sure the readers will feel motivated- as I felt- after
reading about the above thought leaders. They help us build layers of understanding
and shape our own personalities.</span></div>
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Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com2tag:blogger.com,1999:blog-5160674059772417323.post-74195824497463644942017-12-20T13:51:00.001+05:302018-05-29T21:07:57.557+05:30Field Marshal Sam Manekshaw- On Leadership and Discipline<div style="text-align: justify;">
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While going through the old readings, I found this incisive and witty speech of Field Marshal Manekshaw.</div>
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The speech continues to be as didactive and refreshing as it would have been 19 years back, when delivered. </div>
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<a href="https://im.rediff.com/news/2014/apr/03sam-manekshaw-on-discipline.pdf" target="_blank">Link</a></div>
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Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com1tag:blogger.com,1999:blog-5160674059772417323.post-10922165061668682692017-12-03T08:07:00.000+05:302017-12-03T08:07:57.551+05:30Session at MDI- Corrigendum<div style="text-align: justify;">
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A reader pointed out that the order of 5 steps in presentation and the internship note was different. In the presentation, the downside risks come before management while in the internship note, I have mentioned management before downside risks.</div>
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Thank you for pointing out. I uploaded an internship note which was written earlier. Sorry.</div>
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While thinking about the process over a period of time, I realized that the process would be more robust if I evaluate downside risks before I evaluate the management.</div>
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Revised internship note : <a href="https://drive.google.com/file/d/1RuT-IY0Cje5Ahbt2UURdN3ZfOXZGy-DK/view?usp=sharing" target="_blank">Link</a></div>
Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-60596779000089843542017-12-02T11:53:00.000+05:302017-12-02T11:53:28.435+05:30Session at MDI<div style="text-align: justify;">
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<span style="font-size: small;"><span style="font-family: inherit;">I had the privilege to speak at Bakshi Sir's class yesterday.</span></span></div>
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<span style="font-size: small;"><span style="font-family: inherit;">It was a quite an interactive session with the upcoming batch of value investors.</span></span></div>
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<span style="font-size: small;"><span style="font-family: inherit;">Please find the abridged presentation : <a href="https://drive.google.com/file/d/191KuJh-G-5ZV8Hsjjr2XQ1CXuiAPNPhc/view?usp=sharing" target="_blank">Link</a></span></span></div>
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<span style="font-size: small;"><span style="font-family: inherit;">Also, in conjunction find a note on the framework which I share with every batch of interns. It explains the same concepts as in the presentation: <a href="https://drive.google.com/file/d/1e_PoFx0Ko0yEW7RJiHMfax2DR8adBdgF/view?usp=sharing" target="_blank">Link </a></span></span></div>
Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-12793660228833764832017-09-02T13:04:00.003+05:302018-05-29T21:08:21.666+05:30The Art of Adding Weights<div style="text-align: justify;">
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<span style="font-size: small;"><span style="font-family: inherit;">I
strongly believe that adding weights at the appropriate places is the
most important element in our lives, and more so in investing.</span></span></div>
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<span style="font-size: small;"><span style="font-family: inherit;">"Adding
weights" means that in anything that we think about , there are always a
few factors which carry most of the freight. If we are thinking about
risks, there would be a few risks that would determine the beauty or lack of it in a business. If we think about
opportunity size or tailwinds, again there would be a few factors which
would determine which way the scale tilts. And the same goes with
position sizing in the portfolio: a few positions where the investor has
the strongest conviction (with minimal risk) will determine if the
returns are better than average. I think the concept of
adding weights is universally applicable in whichever field we operate
or whatever decision we think about. </span></span></div>
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<span style="font-size: small;"><span style="font-family: inherit;">This is nothing new. It is just <a href="https://en.wikipedia.org/wiki/Pareto_principle" target="_blank">Pareto's</a> principle described from a different view-point. </span></span></div>
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<span style="font-size: small;"><span style="font-family: inherit;">Our job as an investor is to <span style="font-size: large;"><b>carefully</b>
</span> determine which factors should carry the maximum weight. Adding weights
without careful consideration can make sure that the disadvantages also
get out sized. Looking at a good business but getting stuck with
manager remuneration which is a few percentage points higher than
average is a classic case of adding weight on the wrong side, in my
view.</span></span></div>
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<span style="font-size: small;"><span style="font-family: inherit;">Like
the game of fruit ninja, we should develop the art of quickly slicing away
the factors which are benign or non-core. And then spend a large amount
of time, attention and thinking power on factors that are the heaviest.</span></span></div>
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Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com2tag:blogger.com,1999:blog-5160674059772417323.post-52154336191421964572017-07-20T11:17:00.000+05:302017-09-06T14:58:00.062+05:30Meeting Managements- Listen to Mr. Bakshi<br />
<span style="font-family: inherit;">Meeting the management has been a conundrum for investors. To meet or not depends on the individual style. There is no right or wrong answer.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">But I think it is important to remember what Mr Bakshi said in 1982. </span><br />
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<span style="font-family: inherit;">Listen to this song :</span><br />
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<span style="font-family: inherit;"><a href="https://www.youtube.com/watch?v=4hsoOkXEpbA" target="_blank">Link</a></span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">Remember to replace the word "pyaar" with "bias". </span><br />
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<span style="font-family: inherit;">I have written name of Mr. Bakshi to attract attention to this post. But it is not Prof. Bakshi but the lyricist of the song, Mr. Anand Bakshi :-)</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">So, every time you walk in to meet any management , have this song on your lips and hopefully you will come out just fine. </span>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0tag:blogger.com,1999:blog-5160674059772417323.post-51690654844670773132017-05-05T09:33:00.000+05:302017-05-05T09:33:11.180+05:30Internship 2017-18 (List)<div style="text-align: justify;">
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Hi Everyone,</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><br /></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">First of all thank you for evincing interest in the internship and sending in your applications.</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><br /></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Replying and acknowledging the individual mails was not possible. However, I have taken due care that none of the mails remain unattended in the bulk /spam folder. </span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><br /></span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">I carefully went through each application and short listed the names. From the short list, I picked a draw of 10 names which are :</span></span></div>
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<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"><br /></span></span></div>
<ol>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Vishal Prasad</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Shyam Sunder R</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Harsh Gupta</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Gummadi Jaya Chandra</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Sameer Sawant</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Vikas Kasturi</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Niyas CV</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Anubhav Bhambri</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Ankush Raghuvanshi</span></span></li>
<li><span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Midhun James</span></span></li>
</ol>
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Best wishes,</span></span><br />
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;">Ankur </span></span><br />
<span style="font-family: Arial,Helvetica,sans-serif;"><span style="font-size: small;"> </span></span>Ankur Jainhttp://www.blogger.com/profile/01368912969506438596noreply@blogger.com0