Friday, 5 May 2017

Internship 2017-18 (List)

Hi Everyone,

First of all thank you for evincing interest in the internship and sending in your applications.

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. 

I carefully went through each application and short listed the names. From the short list, I picked a draw of 10 names which are :

  1. Vishal Prasad
  2. Shyam Sunder R
  3. Harsh Gupta
  4. Gummadi Jaya Chandra
  5. Sameer Sawant
  6. Vikas Kasturi
  7. Niyas CV
  8. Anubhav Bhambri
  9. Ankush Raghuvanshi
  10. Midhun James
Best wishes,
Ankur
 

Saturday, 8 April 2017

Value Investing- Internships 2017-18

Hi Everyone,

I intend to provide internships to interested candidates in the field of value investing for the year 2017-18.

Please find details about the same here : link.

Regards,

Ankur Jain



Friday, 17 March 2017

​​97 everyday and counting ?


A casual conversation with a PSU bank officer a few days back highlighted the problem that the PSU banks are staring in their face. It's not NPAs. NPAs is a known devil. The other piece which goes unnoticed is the human resources, or rather the absence of them. The bank officer mentioned that around 120-125 employees are retiring every month from his bank and it is becoming almost impossible to drive business or even to maintain business.

PSU Banks have a market share of 75% of the total deposits and around 75% of the total advances. They have a large market share of an industry which is expected to grow at a rate of 15-20% per annum.

I checked about the problem of human resources at the PSU Banks.

As per a question answered by the Government of India in Rajya Sabha in March 2015, the total number of employees in PSU banks as on 31.12.2014 were 851,308. In an answer to another question during March 2015 in the Rajya Sabha, the Government submitted that around 25% of the employees of banks are expected to retire by 2020. This means that around 213,000 employees would retire during the period of 6 years (CY 2015- CY 2020). This is an average of 35,471 employees retiring every year or 97 employees retiring everyday (including Sunday) till 2020. RBI has termed 2010-2020 as the decade of retirement for the PSU banks.

A large number of these would be people having experience in the critical areas of project assessment, appraisal. Also, this number does not include people who would resign and move over to private organizations. Sure, the banks will try to fill up the ranks quickly but it is easier said than done. And the new joinees would lack the experience required to write loans and recover the ones already lent.

In the light of such a cocktail (large NPAs, weak balance sheets and absence of experienced people), it is very likely that public sector banks will cede large slices of market share to private players which includes private banks, small finance banks, MFIs, NBFCs, payment banks etc.

Disclaimer : No investment recommendation.



Wednesday, 1 March 2017

Infosys ​Limited - What happened to the ROCK STAR ?

" Many shall be restored that now are fallen and many shall fall that now are in honor. "
                                                                                                                                                     - Horace

The poster boy of Indian corporate , the rock star of 90s, the company that gave hopes and wings (and jobs) to millions of Indians is going through a rough patch. Allegations have been leveled against severance pay given to the ex-CFO and some other ex-associates. Concerns have been raised about the high compensation package offered to the CEO, questions have been raised about the conflicts of interest and high valuations paid for acquisitions. Founders have raised concerns about corporate governance practices at the company. 

I read the transcript of the press conference and the investor call arranged by Infoys. The board is a highly distinguished one and they have tried to substantially explain each and every concern. They have taken cognizance of the concerns , have promised and taken steps to further strengthen the governance processes. I found those explanations as pretty reasonable. Of course, there are calls for more transparency and everything to be disclosed in the public domain, I do not belong to that camp. In my view, the board is very capable and sometimes in the larger interest, we should leave it to the collective wisdom of the board to decide what and how much to disclose.

Am I concerned about Infosys ? I am not.

Just like the life of a human being, the life of a company also goes through its own set of ebbs and flows. People learn and evolve, businesses learn and evolve and companies learn and evolve. I very strongly believe that just like the rock star status of the Infosys didn't remain forever, this rough patch too will not remain forever. "This too shall pass."


Coming to the investing part. It makes a lot of sense to look at companies that are going through some kind of trouble- Infosys at the moment is certainly one of them. I thought about the business of Infosys in the following ways :

Do I understand the business of Infosys ? No, I don't.

I appreciate the stellar role that technology companies have played in the past and will continue to play in the future. But I am not able to understand the business dynamics of Infosys. It doesn't mean anything about the technology companies, it doesn't mean anything about Infosys, it just means that I don't understand the business of Infosys.


Does it mean I will not invest in any technology company ? No
I would like to keep an open mind . I think I somewhat understand the high entry barriers around the search business of Google, I appreciate the design and thinking capabilities of Apple etc. but I don't understand a whole lot of technology companies. I would be open to investing in technology companies which I think I understand.

What is the most important thing in investing ?




 










As Mr Buffett teaches, the most important thing in investing is to understand your own circle of competence and the boundaries of it. Another equally important thing is to cultivate the discipline to remain within that circle.
 

 










And Mr Tom Watson Sr. shared his formula for success :  
“I’m no genius. I’m smart in spots—but I stay around those spots.”
                                                                                                  - Tom Watson Sr., Founder of IBM



 What is the valuation of Infosys ?

Doesn't matter. If something is not worth doing, it's not worth doing well.


Since I don't understand the business of Infosys, I have decided to give it a pass. I hope and believe that Infosys will be able to tide over this crisis quickly and regain its iconic status again.

Disclaimer : This is not an investment recommendation to buy or sell any company named in this post. These are thoughts of a rambling mind.

Saturday, 18 February 2017

Are we becoming Information Obese?

Are we becoming Information Obese?

Physical Obesity- we are aware, we can see and some of us suffer from it.
Information Obesity- we are unaware, we can’t see but a large number of us suffer from it.

If we compare the two, there are a lot of similarities:
Physical Obesity
Information Obesity

Intake of food more than our body can process
Intake of information more than our mind can
process

Large portion of the food consumed is unhealthy
Large portion of the information consumed is
unhealthy or irrelevant
Leads to lack of physical stamina
Leads to lack of mental stamina (concentration)

The lack of concentration leads to poor quality of work that we do and more often than not, poor decisions. If we were to learn to control the flow of information, we would be able to cultivate focus. Our quality of decisions would improve because every single day, every single minute of it, we do one thing- we make decisions.

A few years back, I realized that I was always anxious and in some kind of a hurry. My mind was always clogged with things to do, ideas to work on and a seemingly unending list of stuff to read. It seemed as if my mind was on an invisible treadmill where the only objective was to finish one thing and hop on to the next. If happiness was a state of mind, then my mind was far removed from it. There was no time for the mind to soak in and relish the work at hand. I was reading a lot, listening a lot but had little time to think and virtually no time to think through.

It reminds me of a joke I had read: An auto driver was driving very fast. The passenger on the back seat cautioned the driver of the high speed and the possibility of an accident. The smart driver replied: “Don’t worry. I drive so fast that I have no time for an accident.” I found myself very much like the auto driver. I am going so fast that I have no time to think.

What I didn’t want?  My mind to be like a conveyor belt or an assembly line which has to continue working all the time.
What I did want? My mind to be well-irrigated with information but not inundated with it. I wanted to do a few things but do them well. And in order to do things well, the mind has to be tranquil not anxious.
I concluded that I was information obese and needed to go on an information diet.

The next task was to take corrective steps to rectify the situation and become better at attaining focus.
How do we check physical obesity? The first thing we do is to reduce the intake of food. So, the first thing in my battle against information bombardment was to slow down the incessant flow of information. What did I do?

  • To start with a clean slate, you need to first wipe the slate clean. I unsubscribed from all blogs, all newsletters, cancelled subscription of all magazines, newspapers etc. I was constantly reading about other people’s opinions but had to not time to figure out my own. This step was like “zero budgeting”, what the Brazilian private equity firm 3G does to its acquiring companies. 
  • Next, I cleaned my study room of the all the stuff which was not required and out of date. This included loads of books and piles of papers. Just like our body removes dead cells and the trees get rid of dead wood, I also needed to remove the old to make place for the new.

The next thing in overcoming physical obesity is to reduce the amount of junk food that we consume. In parlance of information obesity, I would call it junk information or noise. When I analyzed what I read or heard or watched, a large portion of that was not relevant to the work at hand. 

Over a period of time, I reduced my exposure to the information that I considered unnecessary. I picked up a few things to read. Now, I read a few things but do them consistently. And doing a few things consistently has helped me more in terms of my knowledge and understanding than before. The ‘less is more’ approach has worked beautifully.

The final step in becoming physically fit is to process the consumed food properly. For the mind, it would be to process the information with full concentration and focus that it needs. The crux of putting our mind into one single thing that we do can be found in this doha of Kabir Das Ji:
जिन खोजा, तिन पाईयां
गहरे पानी बैठ
(One who has sought has found. But only by diving deep.)

And it order to go to the depth of things, we have to focus.
How I was losing focus?

  • My first weakness was that I would start reading/ working on my computer and would end up drifting to things which might be unrelated to the work at hand. Like, listening to a Ted Talk is informative but it can be destructive if you are in the middle of something and become distracted due to that talk. I now, take print outs of whatever I wish to read and put my computer to rest. I have realized it has led to significant productivity gains, for me.
  • I stopped checking my phone and the stock prices incessantly. I removed the mail, google finance and most of the apps from my phone. They all suck our time and mental energy bit by bit every time we check them. The problem is not with the devices, the problem is with our compulsiveness to check them.
  • Another point of distraction was multi-tasking. In order to do multiple things at a given time, I ended up doing less number of things each with a poor quality output. So, I decided to work on a template where I forced myself to work on a given thing for an extended period of time without distractions. As Monk Dandapani (very informative videos available on YouTube) says in his talk “If we practice distraction 24/7/365, we become very good at it. Conversely, if we practice focus, over a long period of time, we can become good at that as well.”
  • I started picking one thing at a time and learning to give all my attention to it. I would pick up the second thing only once I am done with the first.

How do successful people do it?

When we read about successful people (yogis, investors, philanthropists, musicians, sports persons etc.), we will realize that successful people are minimalist. They are sparse in their wardrobe, they are sparse when they talk, they are sparse in how they spend and they are sparse in how they work. By limiting the amount of things that want their attention, they are able to conserve their precious attention to the few tasks that really matter. And once they decide what they wish to do, they are able to attend to the task with full force. All their eyes, mind, intellect and efforts are devoted to the task at hand.

Gaining focus is not easy, but it’s not difficult either if that becomes our deep driving desire.

Over a last few months, I met a couple of investors who shared their feeling of being anxious all the time and being overloaded with stuff. I shared my own experience with them and also thought of writing a post. So, if you feel you are distracted and want to gain focus, you need to find for yourself where you energies are dissipating and you need to plug those leaks.

Have I attained whatever level of focus I aspire to have? No, but I work to improve on that every day. And I have tasted short periods of deep focus. I can now say with 100% conviction that the taste of focus is so sweet and so enduring that everything else falls pale in comparison.

My mind is relaxed now and I enjoy whatever I do. Focus puts us in the zone and puts us in a sweet spot. I feel, focus is meditation in action.


Thursday, 22 December 2016

Wit, wisdom, ethics and cholesterol


I came across a beautiful talk by Padma Bhushan Dr. B M Hegde where he regales the audience with his wit and wisdom.

His talk packs a punch with mantras to live a healthy life, meaning of culture and ethics, ills with modern medicine and how much is too much when it comes to cholesterol.

Link




Monday, 14 November 2016

Thoughts on recent volatility

 

"Condoms aren't completely safe. My friend was wearing one and got hit by a bus". For many years, I couldn't understand the meaning of this quote by Robert Rubin, ex-Secretary of Treasury of United States. It means that while thinking about risk factors- a new and potentially unthinkable lethal risk can emerge from nowhere and take one down. It's the black swan risk or risk of the "unknown unknown".

For the first time, I understood it when Ramalinga Raju of Satyam spoke "Satya" and informed the world about ghost cash in his company and how he had taken everybody for a ride - independent directors included. Coupled with global recession, markets went into a tailspin with this news and a lot of stocks fell down 50-70% in a matter of weeks. There were a lot of companies selling below cash because people stopped believing in cash held by companies.

However, if asked to point with certainty now, the month and year of the Satyam crisis, a lot of us might make a wrong guess. If you are guessing it right now, let me give you the answer : Satyam scandal broke out in January, 2009. So, in  a span of 7 years, market has shrugged off the crisis of confidence in Indian companies and has come out with newer highs. That's just one example- there have been many such global and domestic challenges which surfaced and subsided with time. It point towards another concept that problems get solved as they always have as they always do. So, no matter how grave the issue, it will get solved given enough time.

In the last few days, some major upheavals have happened. The issue of corporate governance at the House of Tatas, election of Mr Trump as the President of US and demonetization of Rs 500 and Rs 1000 notes in India. The black swan or should I say a "fleet of  black swans". 
 
First lets talk about the Tata Group. There are accusations flying thick and fast from both sides. There are many versions of the same story. We don't know and will never know what's the correct version. So, there's no point spending time reading and thinking about that. However, there is lesson to be learnt. Business comes first always and every time, management comes second always and every time.
 
The second issue is about Mr. Trump. The world is in a shock. I think people are more shocked about their own assessment going wrong (of Hillary becoming the President) rather than Trump becoming the President. The world's best experts, commentators, political readers, investors, reporters, big data analysts : all have gone wrong and wrong by a wide margin. That reminds me of Niels Bohr quote "Prediction is very difficult especially if it's about the future". We need to remember this and remind ourselves, whenever in doubt.

I don't think it matters a lot as to who is the President of the United States. The only thing that I think matters is "Is there a President ?". As long as the answer is yes, it's alright. As history teaches us again and again, a bad government is better than no government. So, as long as there is a democratically elected president in the world's largest economy, things will work out fine. Some policies will be good, some would not be so good but things will be okay on a wholesome basis.
 
The third and the most important issue is the demonetization of the existing high currency notes in India. The first effect is that people now are cashless and clueless. Over time, people will have cash in their pockets to spend so that's not a big problem. The second more important thing is that people are clueless. A large part of Indian economy is informal cash economy. Some of the businesses have a mix of A business (formal accounted business) and B business (informal unaccounted business). A large number of businesses are completely in B. There is no trail of money in the whole value chain. Those businesses will be the hardest hit. They don't have much clue whatsoever to dispose off the cash that they already have and also as to when and how will they resume their businesses. As of now, everyone and everything seems shocked and frozen. It may take time for cash and people to come back.
 
We don't know how much time it might take ? It might be a few months or a few quarters or even more. Nobody knows. By the time the dust settles, a lot of businesses might get massively hit and lot of businesses might shine.
 
What do we investors need to do ? One thing we need to do is to focus on the businesses we own and see if the recent events have reduced the strengths of those businesses. The cash flows would surely become volatile given the external factors but if the businesses are inherently strong, the cash flows would come back even if with a delay.

And if businesses are strong and managements are good and we have not bought stocks with debt, we just need to remind ourselves to :
 
(i)  hold on to our nerves
 
     And

         (ii) hold on to our stocks