Anything by Charlie Munger is pure gold and this speech is no exception. It is phenomenal and full of wisdom. In the first part, Charlie talks about elementary mental models from various disciplines and their application to investing and business. In the second part, he talks about the art of stock picking. I have read the speech multiple times and it deserves to be read in full and I would encourage everyone to do that. I have taken the liberty of highlighting a few portion of the speech which stand out for me. Enjoy! Full text of the speech Charles Munger, USC Business School, 1994 I’m going to play…
-
-
MCX – time is a friend for this business
I want to find businesses which get better with time like aged whisky. These are businesses which have a competitive advantage which is not only sustainable but grows over time. And that led me to the concept of businesses for which time is a friend. Businesses go through cycles and however strong the business may be, it will face its share of difficult times. These could be due to an external reason such as industry or economy-wide slowdown or due to internal reasons specific to the business. Most business struggle to survive during these so called downcycles. But are there businesses which handle the adversity well and emerge stronger with…
-
Opportunity in financials in India
Introduction Companies in the financial sector in India including banks and NBFIs have created tremendous amount of value over the years. There is a good reason for that. As I have discussed in one of the previous articles as well, it is rare to find businesses which have high returns on capital and at the same time have ample opportunities to reinvest the capital at the same high returns in the core business. If such businesses exist they can be the dream compounding machines. Financials is one space where companies with good business models can do exactly that. This has been addressed in an article I read by Saumil Zaveri…
-
Hawkins Cookers – An Enduring Moat
Introduction In this article, I want to talk about a business which will be any value investors’ delight. It would surely be a favorite of Warren Buffet. The company in question is Hawkins Cookers and any investor in India would have surely heard of it. This is a well-known story with a narrative which is familiar to most. If not let me lay it out briefly at the outset and then go into the details. Hawkins is engaged in manufacturing and marketing pressure cookers and other cookware for Indian households. They have built a reputation for manufacturing high quality products and is a well-known brand in India. In terms of…
-
Ambika Cotton Mills Ltd. – Quality Cotton Yarn Manufacturer
Introduction Ambika Cotton is engaged in the production of specialty cotton yarn which is used in the manufacturing of premium quality shirts and t-shirts. While yarn manufacturing is a commodity business, Ambika has managed to carve out a profitable niche for themselves. Consistent with the commodity nature of the business, most other companies’ margins fluctuate with the raw materials. Also, as we will see the spinning sector is characterized by over-investments during the recovery cycle, which leads to overcapacity and depressed pricing thereafter during the downturn. We will also see how in this industry Ambika has stood apart from the bunch and differentiated itself. There are two aspects to…
-
Coca Cola vs. Sees Candy
Introduction In this article, I want to focus on two types of businesses which are terrific businesses in their own right. Coca Cola and Sees Candies are the best examples of the two types of businesses which I would like to discuss. We can refer to these two businesses as standardized product led competitive advantage (or just product led competitive advantage) vs quality led competitive advantage. I chose Coca Cola and Sees Candies because Warren Buffett invested in both of them and doesn’t stop singing praises of these businesses till date. These businesses have made Warren Buffet insanely rich. While many people may not have heard of Sees Candies but…
-
Max Ventures – A Unique Demerger Opportunity
I wrote the below article which analyses Max Ventures in November 2016. Introduction In my last article, I described my investment framework and the four areas of focus. The first two areas which I talked about were: Demerger situation New venture started by an established businessman The special quality about these two situations is that the stock price is artificially depressed for reasons other than the quality of the underlying business. I recently came across an opportunity which is a combination of these two situations – Max Ventures & Industries Limited (MVIL). MVIL was listed on stock exchanges (NSE and BSE) on 22nd June 2016 at a price of 45…
-
My learnings in the Indian stock market
Introduction I have been investing for the past 3-4 years in Indian stock markets. I have read and learned a lot about investing over these years. When I started, I read indiscriminately whatever I could get my hands on including investment philosophy of reputed investors like Charlie Munger, Warren Buffet, Benjamin Graham, Ray Dalio, Howard Marks, Jeremy Grantham, Seth Klarman, Sanjay Bakshi, Peter Lynch, Philip Fisher, Bill Gross, Prem Watsa and so on. Of course I have been influenced by some of these investors more than others. Most influential for me have been Warren Buffet, Charlie Munger and Sanjay Bakshi. Through this indiscriminate reading and through my own experiences, I…
-
Performance of select real estate developers in India
Introduction As we saw in part 1 of this article that we are at the cusp of a turnaround in the real estate sector in India. We are probably 2-3 years away from a broad-based recovery. If that is so, the next question is – what is the best way to take advantage of this turnaround. From an investment perspective, is there a better way of playing the real estate cycle than buying a house. The answer is yes, we can chose to invest in the stocks of select real estate developer(s). The stocks should provide a better return than the underlying real estate during the upturn in the cycle.…
-
Current state of real estate sector in India
Introduction Real Estate industry globally is cyclical in nature and in India it is no different. The real estate cycle is tied to demand and supply of real estate and it is in turn closely tied to the cycles of construction activity and the economy in general. The dynamics of demand and supply of real estate are affected by couple of factors which accentuates its cyclical nature. Speculators / investors: if we all bought real estate only for our own consumption i.e. only for the purpose of living, the real estate cycle would be much more smooth. However, real estate is also an investment option to park our savings and…