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Weekend Reading - Some Interesting Stuff

4 days ago  
Business / Blogs/ Abhishek Basumallick Blog  
Just like low-cost airlines charge us for every additional feature, apparently, Boeing does the same to them! There were 2 critical safety features that Boeing sells as optional, which could have prevented the recent catastrophic crashes. Standard 737 Max planes are not equipped with a so-called angle of attack indicator or an angle of attack disagree light. https://www.nytimes.com/2019/03/21/business/boeing-safety-features-charge.htmlAmazon is planning to launch close to 2000 brick-and-mortar retail supermarkets in the US. It will be Amazon’s sixth physical retail format after Whole Foods, Amazon Books, Amazon Go, Amazon 4-Star and Amazon Pop-Up. Though Amazon is a behemoth in online retail, it's market share in overall retail in the US is small (between 5%-8% based on estimates). Now, it may be gearing up to challenge that position.http://knowledge.wharton.upenn.edu/article/amazon-grocery-store/While on the topic of Amazon, here is a detailed look at how Amazon progressively imp..
                 

Weekly Reading - Some Interesting Stuff

11 days ago  
Business / Blogs/ Abhishek Basumallick Blog  
A wonderful article on Stéphane Breitwieser, who robbed nearly 200 museums, amassed a collection of treasures worth more than $1.4 billion.When it comes to stealing from museums, Stéphane Breitwieser is virtually peerless. He is one of the most prolific and successful art thieves who has ever lived. Done right, his technique—daytime, no violence, performed like a magic trick, sometimes with guards in the room—never involves a dash to a getaway car. https://www.gq.com/story/secrets-of-the-worlds-greatest-art-thiefA detailed look at how the shared economy is shaping the traditional business model and how the hotel business is adapting and changing to the new situation.http://knowledge.wharton.upenn.edu/article/short-term-rentals-the-transformation-in-real-estate-and-travel-set-to-check-in/Delivery robots can, over time, also become "goods-shifting" robots.If the arrival of automated delivery robots could lower the effort to sell or return goods to the minimal amount it now takes to ..
                 

Weekly Reading: Some Interesting Stuff

one month ago  
Business / Blogs/ Abhishek Basumallick Blog  
A super interesting experiment of living modern life without Amazon, Google, Facebook, Microsoft and Apple. An eye opening account of how big tech has taken over our lives.https://gizmodo.com/i-cut-the-big-five-tech-giants-from-my-life-it-was-hel-1831304194An article on how to live a life of intellectual freedom and not be chained by borrowed ideas.Confusing models with reality is a cardinal sin of clear thinking. If you believe too strongly in your models of the world, you can start to ignore evidence that your model is wrong.https://medium.com/the-polymath-project/a-few-principles-for-thinking-clearly-d18a74a2ebe9I have a theory about why the notion of an arms race between human and machine intelligences is fundamentally ill-posed: the way to survive and thrive in an environment of AIs and robots is not to be smarter than them, but to be more mediocre than them. Mediocrity, understood this way, is an independent meta-trait, not a qualifier you put on some other tr..
                 

Resources to Learn Equity Valuation

2 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
This is a question I received today, "I am on my journey to study and understand value investing. Can you please suggest some good sources where I can build my skills in the mathematical part of value investing. I mean analyzing the numbers. The "how to" of value investing. As far as the mindset part is concerned, I read about behavioral finance. My weak link is the numbers part, since I don't have a formal background in accounting or finance."  I thought I would reply back to the person concerned. But then figured that this could possibly be a question that a lot of other investors, who may be starting out on their investing journey, may have. So, why not put it in a post so that it helps more people.  So, here goes some good references, which I have found useful.1) Aswath Damodaran course on valuation is available free on youtube (- https://www.youtube.com/watch?v=znmQ7oMiQrM&list=PLUkh9m2BorqnKWu0g5ZUps_CbQ-JGtbI9) This is really great and helps navigate thro..
                 

Weekly Reading - Some Interesting Reading

5 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
The politics of oil price, inflation targeting by the RBI and import duties present a bleak picture for the Indian economyhttps://www.bloomberg.com/view/articles/2018-10-08/india-politics-produces-confused-economic-policyThe story of Nokia's comeback.https://knowledge.insead.edu/strategy/how-nokia-bounced-back-with-the-help-of-the-board-10211Whitney Tilson ran a reasonably successful fund which he wound up after consistent under-performance. Now, in his new avatar as investment coach to wannabe fund managers, he professes his new, "Make Money" investing style!!In this presentation, Tilson discusses the pitfalls of both value and growth investing and how he is now combining value and growth in his new strategy.https://www.valuewalk.com/wp-content/uploads/2018/10/The-Best-of-Value-and-Growth-Make-Money-Investing-summary-Whitney-Tilson-10-8-18.pdfA very interesting interview of Cliff Asness, one of the pioneers of quantitative investing, discussed on various aspects of quant investing and..
                 

Weekly Reading: Some Interesting Reading

5 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
I’ve been trading for 15 years now and we’ve made over 50 percent compounded, as a rate of return (each year),” he says, adding, “Nobody can teach you trading; it’s more of a learn by experience kind of a job—each time you make a mistake, you learn from it, and try and avoid that mistake in the future.” -- Nikhil Kamath of Zerodha in Forbeshttp://www.forbesindia.com/article/tycoons-of-tomorrow/nithin-and-nikhil-kamath-code-zero/51347/1An extremely good article on how "fake news" is created to manipulate us by using our existing beliefs.Fake news may now represent an existential threat to democracy, not just because it can be used to subvert and countermand the will of the people, but also because it can be used to destroy the people’s will to act together. The term “fake news” should not be used to refer to something the reader dislikes or disagrees with.  Likewise, fake news no longer refers to a simple lie. Modern fake news is carefully designed so that its intended readers will..
                 

Book Review: The Art of Thinking Clearly

6 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
The Art of Thinking Clearly by Rolf Dobelli is simply a fascinating book on behavioural finance and psychology. It covers a vast number of cognitive biases and provides practical insights as well. This book is good even for non-investors as well.I will just provide the contents of the book, which in my opinion provides a fascinating glimpse of what one can expect from the book.This is a book which can and should be read by all.The Chapters 1. Why You Should Visit Cemeteries: Survivorship Bias.2. Does Harvard Make You Smarter?: Swimmer's Body Illusion.3. Why You See Shapes In The Clouds: Clustering Illusion.4. If 50 Million People Say Something Foolish, It Is Still Foolish: Social Proof.5. Why You Should Forget The Past: Sunk Cost Fallacy.6. Don't Accept Free Drinks: Reciprocity.7. Beware The 'Special Case': Confirmation Bias (Part 1).8. Murder Your Darlings: Confirmation Bias (Part 2).9. Don't Bow To Authority: Authority Bias.10. Leave Your Supermodel Friends At Home: Contrast Eff..
                 

Weekend Reading: Some Interesting Stuff

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
How the future of labour is not doomed by automation and thoughtful policies can make a better tomorrow for jobshttps://www.project-syndicate.org/commentary/future-of-work-labor-market-reform-by-zia-qureshi-2017-10How Kaspersky antivirus software was used by Russian spieshttps://www.nytimes.com/2017/10/10/technology/kaspersky-lab-israel-russia-hacking.htmlRelying on averages is misleading for non-homogenous data setshttps://www.linkedin.com/pulse/our-biggest-economic-social-political-issue-two-economies-ray-dalio/Why money to PSU banks should not be given with a riderhttp://www.livemint.com/Opinion/bcUUebZ3cE67ixTNMYsx3M/Dear-FM-please-attach-strings-to-bank-recapitalisation.htmlIn Japan, you can pay an actor to impersonate your relative, spouse, coworker, or any kind of acquaintance.https://www.theatlantic.com/health/archive/2017/11/paying-for-fake-friends-and-family/545060/?single_page=trueHow the insolvency and bankruptcy process is a once in a lifetime eventhttps://www.bloombergqui..
                 

Himadri Chemicals - A play on Li-Ion Battery

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Himadri is a Kolkata based company mainly focusing on coal tar pitch and carbon black.Product chainimage.jpg638x606 106 KBMain ProductsCoal tar pitch:- used in the manufacture of aluminum, which is used in automobiles, airplanes, televisions, radio components, rockets, beverage cans, wires, cables, smartphones, furniture, foil wraps.- finds downstream use in the manufacture of graphite electrodes in electric arc furnaces.- specialized coal tar pitch, which is used in long war head missiles.- manufactures coal tar-based thermoplastic polymeric coating, which is used as an anti-corrosive material in underground and offshore pipelines.- Coal tar distillation capacity is 4 lakh MTPA.- 70% market share- Debottlenecking of capacity at 20cr planned to increase capacityCarbon black:- used for reinforcement of elastomeric materials. Carbon black is a critical raw material in tyre and other rubber industries, inks, plastics and paints.- manufactures a range of specialty carbon black with specifi..
                 

Highlights from Book - Common Stocks and Common Sense - Edgar Wachenheim

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Common Stocks and Common Sense by Edgar Wachenheim is a case-study based book on investing. In structure it is similar to Beating the Street by Peter Lynch. Edgar used to run Greenhaven Associates with an excellent long term track record. In the book, he goes through some of his picks, the rationale of why he bought them, his process of stock selection and the emotions that goes with investing. It is a good book dealing with real-life examples of a good value investor. Below are the key points I noted from the book.The strategy is to try to purchase deeply undervalued securities of strong and growing companies that hopefully will appreciate sharply as the result of positive developments that already have not been largely discounted into the prices of the securities.I do my best to make decisions that make sense given everything I know, and I do not worry about the outcomes.When an investor is barraged with particularly bad or good news, he can reread the memos, notes, and mod..
                 

Stock Update: Century Ply

2 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
Q3 FY17 investor presentation and concall summary -• Hoshiarpur plant for MDF is to start in Mar 2017• Sainik sold 11,819 CBM (cubic meter) vs 12,037 cbm last year. This is despite impact of demonetization• Ply sales have been strong in January 2017 as well• There are around 3,300 plywood units in the country and out of 3,300 units, 2,500 are totally exempted, the turnover is less than Rs1.5 crore, 700 units are under the partial exemption their turnover is Rs1.5-5 crore and only 100 units are there which are in the full duty paying• MDF: Co 600 CBM/ day capacity MDF plant is expected to come on stream by April, 2017. It entails an investment of 380 cr with 207 cr spent till Q3FY17. • The company would also use the MDF produce to make value added products like doors, pre-laminated boards. While it would also produce high density fibreboard (HDF) for manufacturing wooden flooring• Market share: The company looked to maintain market share in difficult times post demonetisation...
                 

Stock Update - Sagar Cements: October despatches

2 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Weekend Musings

2 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
 The last few days has been quite eventful. We had the first meeting of the ValuePickr Kolkata group last Sunday.I had expected about 10 people when I first thought of this first. We ended up having over 40 participants sign up and 28 showing up on a rain-drenched Sunday morning and stayed on for over 3.5 hrs!!   Some interesting stuff I read:https://medium.com/@yegg/mental-models-i-find-repeatedly-useful-936f1cc405d#.vvs6mtaqaSuperb collection of mental models in one page http://thenextweb.com/lifehacks/2016/08/01/989517/ 7 mental models you should know for smarter decision makinghttp://awealthofcommonsense.com/2016/05/lessons-from-losing-big/Notes from the book What I Learned Losing a Million Dollars.https://hurricanecapital.wordpress.com/2016/08/02/peter-thiel-on-characteristics-of-monopoly/Peter Thiel, the billionaire VC, who founded PayPal and now Palantir and also was an early investor in Facebook, has written a book Zero to One where he talks about the attrib..
                 

ET Article - Focus on your stocks

6 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
Rudyard Kipling’s famous poem “If” started with these lines, which can be extended to investing as well.If you can keep your head when all about you       Are losing theirs and blaming it on you,   If you can trust yourself when all men doubt you,    But make allowance for their doubting too;   If you can wait and not be tired by waiting,    Or being lied about, don’t deal in liesThe last one week has been very eventful. For an investor with a reasonably long time horizon, one of the most important things to do, is to take a step back (or rather many steps back) in such situations and focus on the really important aspects. Today the noise and chatter on news and social media about credit, liquidity, bond rates, asset liability mismatch has risen to a fever pitch. I am not sure if all the commentators really understand the nuances of the problem or if they are just regurgitating what they are seeing and hearing. I for one,..
                 

Book Review: Essentialism

6 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
Essentialism - The Disciplined Pursuit of Less is authored by Greg McKeown. I read this and Deep Work by Cal Newport in succession. (I will cover Deep Work in another post)Like the name suggests, Essentialism talks about understanding what is essential to your life and then going ahead and concentrating to do it well. The author argues that following the Pareto Principle, most of the things in life are non-essential. I found this book to be a reminder for prioritizing the most important and valuable aspects and ignoring the rest. The concepts in the book are very valuable for an investor. Today, the biggest challenge for investors is not the access to information but on how to filter out the noise. There are hundreds of stock ideas floating around every day on WhatsApp groups, web forums, TV channels etc. Unless we are very clear on what to ignore, we will keep running from one thing to the other without being able to study and understand any one in depth.Some ..
                 

Royal Orchid Hotels - Good times are checking in

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Industry OverviewTourism in India accounts for 9.6 per cent of the GDP and is the 3rd largest foreign exchange earner for the country. It is expected to grow at 16% CAGR to reach INR 2,800 thousand crores in 2022.There are multiple growth drivers in the tourism and thereby in the hotels industry. The government has allowed 100 per cent FDI under the automatic route in the tourism and hospitality sector, including tourism construction projects such as development of hotels, resorts and recreational facilities. International hotel brands are targeting India. Carlson group is aiming to increase the number of its hotels in India to 170 by 2020. Hospitality majors are entering into tie ups to penetrate deeper into the market, such as Taj & Shangri-La entered into a strategic alliance to improve their reach & market share by launching loyalty program aimed at integrating reward program customers of both hotels. Berggruen Hotels is planning to add around 20 properties under its midmar..
                 

Tata Global Beverages

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
NOTES FROM AR 2017Tata Global Beverages (TGB) is a natural beverages company with brand presence in over 40countries. As the second largest tea company in the world, with a growing interest in coffee and water, TGB is home to a stable of innovative global and regional brands, including: Tata Tea, Tetley, Himalayan natural mineral water, Tata Gluco+, Good Earth tea, and Eight O’clock coffee.• 2nd Largest player in branded tea in the world• 20,000+ SKUs produced across tea, coffee and water• 40+ Countries with significant brand presenceBRANDS• Tata Tea - Premium, Elaichi Chai, Chakra Gold, Gold, Teaveda, Kanan devan, Gemini, Agni• Tetley - Presence in UK, France, US, Canada, India, Australia, Middle East, Poland• Good Earth, Jemca, Vitax, Teapigs, Joekels• Coffee - Eight O'Clock, MAP, Grand Coffee, Tata Coffee Grand• Water - Tata Water Plus, Tata Gluco Plus, Himalayan• Company has entered the new Asian markets of Singapore, Malaysia and China, which are large tea consuming markets. The c..
                 

Learning from Berkshire’s Acquisition Criteria

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Looking at the 100-plus businesses that Buffett has accumulated, a casual observer may feel that it is a collection of random businesses. But look closely and you will find a pattern. Who else, but Buffett has articulated the common thread amongst all his businesses when he published the Berkshire’s Acquisition Criteria.A fact that we need to keep in mind is that these criteria are not for his general stock purchases but for acquiring controlling stake or whole companies, but they give a glimpse of how Buffett things about buying companies.There are six criteria which are simple and straightforward.1. Large purchases (at least $50 million of before-tax earnings)Buffett looks at opportunities to deploy large amounts of cash. It makes very little sense to buy companies which would make up a fraction of a percentage or a couple of percentages in his overall portfolio. The same principle applies to investors as well – to look for companies where we can invest between 5-10% of our portfolio..
                 

Learning from Security Analysis - Part 1

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
I have started re-reading Security Analysis, 6th edition, (also will add on things from the 5th ed). I have been putting it on the backburner for sometime, but since the last time I read this was about 14 years back, decided that I have changed too much not to re-read this once more. Hoping to learn a lot more the second time around.From the preface to the 6th edition by Seth KlarmanValue investing is not a paint-by-numbers exercise. Skepticism and judgment are always required. For one thing, not all elements affecting value are captured in a company’s financial statements—inventories can grow obsolete and receivables uncollectable; liabilities are sometimes unrecorded and property values over - or understated. Second, valuation is an art, not a science. Because the value of a business depends on numerous variables, it can typically be assessed only within a range. Third, the outcomes of all investments depend to some extent on the future, which cannot be predicted with certainty; for ..
                 

My takeaways from Howard Marks' presentation

2 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
My notes from Howard Marks' presentation on 2-Mar-17:• Definition of "great" companies is dubious. Very difficult to identify great companies over a very long period • Investing is not a matter of buying good things, but buying things well (buying assets which are out of favour) • Forecasting is not possible as the future is not knowable. Try to know the knowable. Focus on specific sectors, industries, companies • The main decision to make at any point in time - whether to play defensive or offensive. You cannot play both at the same time.• Low purchase price is more important than anything else (including quality of company) • Have to think differently (variant perception) and better - need to have some knowledge different from everyone else • Most investors behave pro-cyclically • You need to have a philosophy and process that you can stick to even in most trying of times • Most corrosive of emotions is to sit up and watch others make money • P..
                 

Book Review: Phil Fisher - Common Stocks and Uncommon Profits

6 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
With so much happening in the Indian markets this week, I thought I will revisit one of my favourite investment gurus - Phil Fisher. His seminal classic Common Stocks and Uncommon Profits and Other Writings is a book that every investor should read. These are good times to take a step back from the market and read the classics to reinforce our understanding of the long term nature of markets and try to filter out the short term noise from the actual important signals.Here are Phil Fisher's 8 principles.Buy into companies that have practical plans for achieving dramatic long-range growth in profits and that have inherent qualities making it difficult for new entrants to share in that growth.Focus on buying these companies when they are out of favour. That is, when, either because of general market conditions or because the financial community at the moment has misconceptions of its true worth, the stock is selling at prices well under what it will be when its true me..
                 

Weekly reading: some interesting stuff

11 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
The current economic recovery is the third longest in history, and if it goes on another year, it will be the longest in history — there’s nothing to say it can’t [keep rising],” said Marks, founder and co-chairman of Oaktree, the largest investor in distressed assets in the world. “There are no laws of nature or physics at work here. So there’s nothing to say it can’t go on another year, another two years, another three years. Anything’s possible.No economic recovery has lasted more than 120 months, or 10 years. The U.S. recovery is in its ninth year. While there is no apparent reason why the recovery couldn’t hit a new record, Marks said it might be one of those historical limits that could stick.When there’s too much money, when there’s too little risk aversion, when there’s too little fear, too much eagerness, etc. — that’s how you get excesses to the upside that have to be corrected to the downside.The “supreme irony” of the shift to passive is that the actions of active managers ..
                 

My interview in Indian Economy and Market magazine

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Weekly Reading - Some interesting stuff

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Ray Dalio's principles, before his book launchhttps://www.nytimes.com/2017/09/08/business/dealbook/bridgewaters-ray-dalio-spreads-his-gospel-of-radical-transparency.htmlCharacteristics of successful investors (a bit generalized)https://www.zeninvestor.org/characteristics-highly-accomplished-investors/A glimpse of how man & machine work 'hand-in-hand' at Amazonhttps://www.nytimes.com/2017/09/10/technology/amazon-robots-workers.htmlA lot more Lithium mining is needed in the near futurehttps://www.bloomberg.com/graphics/2017-lithium-battery-future/Having a kaleidoscope of mental models helps in navigating the investment world when most are edges are disappearinghttp://www.business2community.com/strategy/kaleidoscope-thinking-think-faster-clearly-01916628#9CCeoepiwKy6hyJe.97The tough stance of RBI and the changing regulatory environment is forcing Essar to look at paring its debthttp://knowledge.wharton.upenn.edu/article/insolvency-india-essar-group-others-digging-deep-funds/..
                 

PI Industries - another look

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
I have been invested in PI Industries for many years now. The aspects which appealed to me first, continue to appeal to me even now. The company has, over the years, managed to strengthen its moat and scale greater heights. The way the company has scaled its CSM & CRAMS business along with strengthening domestic distribution has been exemplary. Recently, during the Valuepickr conference in Goa, I was thinking about if PI's business moat and whether it was widening or shrinking. So, I decided to see how they were placed and see if I can poke some holes in their story.BEAR CASEMove from contract research to manufacturing will mean additional capex, reduced asset turns and lesser ROERisks - i) GM seeds, ii) herbicide resistance in plants, iii) client concentration, iv) gene-edited seedsContract research market is slowing due to:New molecules are more difficult to get1st year sales have reduced drasticallyHigh cost of new development of new moleculesBio-tech is replacing agrochemi..
                 

Aarti Industries - Good Chemistry

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Business Overview• Aarti Industries (AIL) has 3 divisions –    o Specialty chemicals - Polymer & additives, Agrochemicals & intermediates, Dyes, Pigments, Paints & Printing Inks, Pharma Intermediates, Fuel Additives, Rubber chemicals, Resins, Fertilizer & Nutrients    o Pharmaceuticals – APIs, Intermediates for Innovators & Generic Companies    o Home & Personal Care - Non-ionic Surfactants, Concentrates for shampoo, hand wash & dishwash• One of the leading supplier to global manufacturers of Dyes, Pigments, Agrochemicals, Pharmaceuticals & rubber chemicals.• Manufacturing units (16):    o Specialty chemicals - 10    o APIs - 4    o home & personal care chemicals – 2Specialty Chemicals• Largest nitro-chlorobenzene producer of India with a capacity of 60,000 TPA• Amongst the largest producers of Benzene based basic and intermediate chemicals in India• Lowest cost producer of Benzene in the wo..
                 

Guru Speak - Charlie Munger speaks at the Daily Journal annual meeting

2 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Sagar Cement - August Despatches

2 years ago  
Business / Blogs/ Abhishek Basumallick Blog