75 hidden gems Article

Company Analysis
Recently I wrote an article for special edition of Indian Economy and Investing - 75 Hidden Gems This is reproduced for you below. I am long on stock not traded in last 90 days SATIN CREDIT – CASTING AWAY DEMONITISATION DEMONS Satin Creditcare is a large microfinance company providing collateral free, microcredit facilities to economically active women in both rural and semi-urban areas. Satin Creditcare Network Limited(“Satin”) was conceptualized and founded in 1990 by Mr. HP Singh – a qualified Chartered Accountant with over 25 years of experience in retail finance industry. In around 27 years since its inception, Satin today is India’s second largest MFI (as of Jun 2017) having started its journey with individual microloans to urban shopkeepers. Today, the Company has an established, scalable and a sustainable…
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Thomas Cook – Are sum of parts greater than M-cap

Company Analysis
Below is a post based an edited note to Insider Subscribers *** Thomas Cook (TC) now is a mini holding company which has multiple lines of businesses (a company which has 53 subsidiaries ) - A business analyst's nightmare   Investment in TC is investment in Prem Watsa who has tremendous record of long term wealth creation, although I was not happy when he started a new fund in 2015 to invest in India in parallel to TC, cause at time of acquiring TC he commented that all new investments in India will be via TC however in his recent letter to shareholders he has made it clear that only related business (read travel and hospitality) will be acquired by TC rest would go to Fairfax India as much as…
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Canfin homes – The out performance continues

Canfin homes – The out performance continues

Company Analysis, Industry Analysis
Previously I wrote on Canfin homes here The sustained outperformance was noticed when I was reviewing GRUH and REPCO a few days back **** GRUH Finance and REPCO homes both had decent year however when compared with Canfin homes there was performance was little subdued, which you will see in detail below The top line (Loan book growth) was good for both companies including loan mix Bottom line growth has clearly tapered down to 20s from 30s seen in FY12-14 years, both firms exercised good control on operational costs thereby continuing to reduce cost to income (C/I) ratio , GRUH following HDFC is having industry leading C/I ratio On Contrary CanFin homes had an another fantastic year Lending practices were tight with minimal net NPA GRUH’s return metrics remain best in…
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Forecasting and Reality – Review of Suven Life sciences

Company Analysis
I have previously written by Suven Life Science here and here Reading and learning about Suven Life sciences has been huge learning curve, it has taught me few things Forecasting in excel and actual numbers in real world are two different things, so one should not take their excel skills seriously. If you need a proof just refer my revenue and bottom-line prediction from last few years for Suven Drug discovery is a long , hard and uncertain process and putting your odds is as good as throwing a dice. There are far few too many variables to model an outcome Entrepreneurship is a long term commitment and as Investors, we are so lucky to jump the ship after a poor quarter, not the promoter who many times has put…
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Why we get fat and what can we do about it ?

Why we get fat and what can we do about it ?

Personal wellbeing
This article is not about investing love reading them go here. Why I am writing on health on a financial blog - Cause true wealth is of no use without great health Most of what I am writing below is my interpretation of a book by Gary Taubes Why We Get Fat: And What to Do About It . It’s a must read for breaking myths and our long held untrue beliefs. What is the first thing that people tell us when they see us becoming fat? Everyone will tell us to get our running shoes out and start burning those excessive calories. It’s indeed natural to think whatever we have gained can be burned off with increased physical activity. Incorrect The science tells us that obesity is ultimately the…
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How I missed Canfin Homes

How I missed Canfin Homes

Investing Process
There is a beautiful passage in Steven Johnson’s Where Good Ideas come from “Good ideas are like the neo nurture device. They are, inevitably constrained by the parts and skills that surround them. We have a natural tendency to romanticize breakthrough innovations, imagining momentous ideas transcending their surroundings…… We like to think of our ideas as $40,000 incubators direct from factory, but in reality they have been cobbled together with spare parts that happened to be sitting in the garage.” This passage has a striking resemblance to how I look for new companies to invest, trying hard to find a hidden jewel in an obscure corner outside BSE 500 without realizing that many of them are tangled in many spreadsheets stored on my PC Let me run you past one…
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Relying on Expert opinions

Relying on Expert opinions

Behavioural Finance
In general on this blog, I have not been very kind to stock market experts ( pundits,opinion baazs), you can read through some of my previous outbursts here In late 1980s, psychologist Philip Tetlock began an important research projects of the past three decades, studying how experts make predictions, who gets things right, and who gets things wrong. His inspiration came from watching experts predict the future of the Soviet Union -- an event that very, very few got right. Notably, most of those who misjudged the event wouldn't even admit that they got it wrong. The book draws one big conclusion: Most expert predictions are the equivalent of random guesses. The stock market is a perfect to see this unfolding every day, In this post I am showing you…
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Actions speak louder than words !

Actions speak louder than words !

Company Analysis
In a recent interview with Guru Focus ,value investor Rohit Chauhan pointed out very important points regarding approaching equity investing. One of the points which stood out for me was below [emphasis mine] 12. Before making an investment, what kind of research do you do and where do you go for the information? Do you talk to management? I follow the usual process of reading up on the last 10 years of financial statements and annual reports. In addition to that, I also try to understand the economics of the industry and competitive landscape. Finally I try to work through my checklist to analyze the idea from as many view points as possible. I do not depend on talking directly with the management as much and base my decision more…
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Book review: How to Fail at Almost Everything and Still Win Big

Book review: How to Fail at Almost Everything and Still Win Big

Bookworm
Over last fortnight I happened to read a fantastic book by Scott Adams - How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life This book has so much wisdom that I would recommend you to read at least once every year or two, moreover Scott has kept narrative so simple and contextual that you don’t lose interest . The book covers a variety of topics – Success factors , Ability to learn from failures , Grit , Affirmations, Right diet, Career Advice , Skills to acquire and so on and so forth. I will try to elucidate on themes that nudged me in my first read. Become system oriented rather than goal oriented -  The idea that one should have a system…
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Max India Demerger saga finishes

Max India Demerger saga finishes

Special Situtations
Last week the final (3rd) company from Max India demerger exercise got listed on bourses, we started tracking this story in Jan 2016. A lot has happened over last six months and it's time to take stock and understand how this spin off / demeger has played out. In Jan' 2016 we conservatively estimated that then market cap was a 5% premium to our calculated value of 3 sub-divisions. Let me do a memory jog for you On date of spin off the insurance business was valued at about ~INR 10,500 crores even lower than our conservatively calculated value. Was this expected ? This is what Joel Greenblatt has to say on Spin offs in his book "You can be a stock market Genius" Investors who didn't want Life insurance simply dumped…
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