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The Multibaggers

3 days ago  
Business / Blogs/ Abhishek Basumallick Blog  
The biggest money is made when you have a lollapalooza effect - a strong trend in increasing business momentum and stock price momentum. At times the trend can continue for years. The real multibaggers come from those who can ride such stocks.Page, Eicher, Symphony, Divis, Aarti, Atul, Pidilite, Asian Paints and many such companies.It usually starts with increasing earnings and low valuations. Then the business continues doing well and the growth keeps coming. Others get attracted to the growth and low valuation and start buying. Increased buying increases the liquidity and attracts the big boys. Then they start getting in and the price momentum accelerates. And the company keeps defying the odds and posting good results and consistent growth. The PE keep re-rating upwards. The valuation after a point goes out of whack. Some investors book out. You need to keep abreast of the developments in the company. There will come a time when the growth will slow down. Try to assess if ..
                 

We Are Hiring

3 days ago  
Business / Blogs/ Abhishek Basumallick Blog  
I am looking to expand the Intelsense Advisory team. Intelsense is an equity-only advisory service focused on three different styles of investing- long-term, technofunda and quantitative investing for a diverse range of clients in India and across the world.The best-fit candidate would be:- Honest, hard-working and ready to learn. As we are a small team, a good person to work with is the most important criteria.- Able to analyse businesses and do deep-dive into company financials statements and perform valuations.- Able to interact with company management /investor relations to understand the company strategy. - Conduct primary research (e.g. channel checks, dealer interactions, exploring expert networks etc)- Ability to explain thoughts clearly through writing- Able to prepare excellent PowerPoint presentations and Microsoft Word reports.- Possessing strong analytical skills and a good understanding of finance and accounting concepts.- Excellent with MS Excel, preferably wit..
                 

Weekend Reading

12 days ago  
Business / Blogs/ Abhishek Basumallick Blog  
Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week. I especially try to not post Corona related articles as that is all one gets to read in all traditional media.   If you like the collection this consider forwarding it to someone who you think will appreciate.Corporate rivalry takes down the internet in a whole country Can one person take down a whole country? Surely, Daniel Kaye, a hacker, has proven this. The attack against Liberia began in October 2016. More than a half-million security cameras around the world tried to connect to a handful of servers used by Lonestar Cell MTN, a local mobile phone operator, and Lonestar’s network was overwhelmed. Internet access for its 1.5 million customers slowed to a crawl, then stopped. This attack was done by Mr. Kaye. And he was hired by Avishai “Avi” Marziano, Cellcom’s chief executive officer to take on Lonestar. In 2015, Kaye and Marzia..
                 

The Story Drives the Stock

20 days ago  
Business / Blogs/ Abhishek Basumallick Blog  
Stocks and markets move on three things:1) Earnings2) Liquidity3) NarrativeYou get a multibagger when all three are in alignment and in your favour.Most fundamental investors focus on the earnings. Most technical analysts focus on the liquidity (price, volume). Very few focus on the narrative. If you look back, markets and individual stocks are always built around "stories". The dotcom boom was based on the story of the rise of ecommerce. Then in India we had the infrastructure story, the "Indian decade" story, the BRICS story, "the Modi rally". And the list goes on. Same thing has happened in individual stocks and sectors. The IT story, the consumption story, the Pharma story, the Chemicals story, the agri story, the intelligent fanatic story. People call it by difficult names - "megatrends" or "long cycles". But at the end of the day, it is nothing but a story we tell ourselves. If the earnings and liquidity fits the story line, you get a self-perpetuating story!! Then..
                 

Using a Regime Filter

one month ago  
Business / Blogs/ Abhishek Basumallick Blog  
A regime filter or a market regime filter is a tool to help us conceptually understand the kind of market we are in. As a systematic investor, we can increase our odds of success by adding a regime filter to our arsenal. It tells us, based on how we have defined it if we are in a bull market or a bear market. We would think differently about market risk in different market scenarios.A simple example of a regime filter is using the 200 day moving average. If the index of your choice is above the 200 day moving average, then you define it as a bull market and below it as a bear market. You can design your portfolio strategy to hold full allocations in stocks if you are in a bull market and 50% allocated in a bear market.So, with that basic logic you can start constructing a slightly more realistic and slightly more nuanced regime filter.First, define the market conditions you want to address – superbull, bull, bear, superbear. The reason for doing that is you want to ..
                 

Asking the Right Questions

one month ago  
Business / Blogs/ Abhishek Basumallick Blog  
I am a continuous learner. One reason I gravitated towards the stock market was because it gave me a platform to use the learning that I continuously absorbed from all around me a productive and remunerative outcome. It has also helped me in being humble because I keep making mistakes. This is a big difference from academic learning where people tend to learn to get a degree and prove their competence.Unfortunately, the world is probabilistic and most often than not, we have to face up to the fact that we may not know as much as we thought we did. The markets keep reminding us that our knowledge is never complete and we need to question our learning and inferences all the time.When we start to learn, most follow a standard process progressive elaboration - of understanding the basics and then going deeper into individual facets. That is what I used to do for the most part of my life. That is how we have been taught in school. But I am following a system that has started working much be..
                 

Thoughts on Markets

3 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
Tussle between Bulls and BearsCurrently, there is a boxing match going on between liquidity & low-interest rates on one hand and business and economic uncertainty on the other. In March, round one had gone to uncertainty and in April, in round two, liquidity won. So, right now, round wise we are 1-1 but uncertainty had struck heavier blows and has more points (the market is down more than up)!  Just to understand the liquidity situation, let’s look at what is happening around the world. US: $5 trillion stimulus package announced. Roughly, 25% of GDP. UK: GBP 500 billion stimulus package announced. Roughly, 25% of GDP. Eurozone: Euro 3.2 trillion stimulus package announced. Roughly, 24% of GDP. US: Yen 108 trillion stimulus package announced. Roughly, 20% of GDP. So, both sides are strong and it is not very clear who will win the next few rounds.  The central banks glob..
                 

What is changing in the business world with the coronavirus?

5 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
Just wanted to note down some thoughts on the possible impacts of the current Coronavirus pandemic and the resultant global market crash. I am not an economist, neither a political analyst but merely an observer of human and system behaviour.Supply chain optimisation likely to incorporate redundancy and failoverThe current global supply chain is optimised based on cost and time. That is manufacturers tend to get their components or parts built in places where it is cheapest t produce and ships it to the factories just-in-time. With a large-scale pandemic like situation, which comes right on the heels of US-China trade war, large (and small) corporates will rethink their supply chain and dependency on China. They will now need to build in inventory costs as the supply chain would need to factor in redundancy and supply disruption constraints. This will, in turn, increase the cost structures and reduce margins. Some industries, like electronics, which ran of wafer-thin margins, may find ..
                 

Education of an Investor

8 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
In the last webinar I conducted for the members of Intelsense advisory, there was a question on what should one read to start off and become a better investor. I took some time and have identified some books, courses, magazine, newspapers that can help you in learning more about investing. I have categorized them so that you can pick and choose. Of all the books I have read over the years, these are the ones I have found useful and have read most of them more than once. The list is big. But do not get overwhelmed by it. Remember, this is not school homework you need to finish in a timebound manner. Go through them slowly but methodically. I have found that reading every day for a fixed period, say 30 mins, at a fixed time, makes it easier to form and stick to the reading habit. Also, importantly, do not feel compelled to complete a book. If you do not like a book or feel it is not adding much value to you, feel free to skim through or put it down all together and mo..
                 

Shared Some Thoughts on ET Now.

9 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Weekly Reading: Some Interesting Stuff

10 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
1) The new marathon record, which was not a marathon!!Like the moon landing, Kipchoge’s run was a technical achievement that required unprecedented planning and support. In fact, it was so heavily engineered that his new time will not count as a world record. Kipchoge ran the fastest time ever over the marathon distance, but for heated reasons that get at the heart of the sport, he did not run a marathon.To sustain this blistering pace, Kipchoge ran under conditions that had been painstakingly and exclusively arranged to push him beyond the two-hour barrier. Challenge was not a race by any strict definition: It was simply Kipchoge, joined by a rotating phalanx of pacesetters, rocketing along the pavement against the clock.https://www.theatlantic.com/health/archive/2019/10/kipchoges-sub-two-hour-marathon-how-legitimate-it/599974/2) We are nearing the endgame for PE funded non-businesses burning cashConsumer tech companies, along with their venture-capital backers, help fund th..
                 

Understading the US and China trade war

11 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
Firstly, let me be upfront and admit that my knowledge about history and geopolitics is very rudimentary. However, I am fascinated by models and try to learn about how to view things and events from multiple perspectives. I am fascinated by the drama of the “US-China Trade War” and enjoy the edge-of-the-seat theatrics created by President Trump’s daily tweets!I am trying to understand the US-China Trade War in the context of “The Thucydides Trap”. Thucydides was a Greek historian who explained that when a rising power causes fear in an established power it escalates toward war. Thucydides wrote: "What made war inevitable was the growth of Athenian power and the fear which this caused in Sparta."Nearly all such contests have ended badly, often for both nations. A team led by Graham Allison at the Harvard Belfer Center for Science and International Affairs has concluded after analyzing the historical record. In 12 of 16 cases over the past 500 years, the result w..
                 

Be Careful of Moats

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Weekly Reading: Some Interesting Reading

one year 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

one year 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..
                 

Tata Global Beverages

2 years 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

3 years 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

3 years 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

3 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..
                 

FAQ answers for Hitpicks - the technofunda advisory

one month ago  
Business / Blogs/ Abhishek Basumallick Blog  
I have been receiving a number of questions on our new Technofunda initiative - Hitpicks. Here are some points that should answer most of the commonly asked questions.All communication will be on email.It is a long-only strategy. All the ideas recommended would be BUY recommendations but if and when we spot an opportunity of a breakdown/reversal in any stock we would bring it to your notice only as a possibility and not as a recommendation.The companies recommended will be companies with decent fundamentals and high liquidity.  The time frame for the given trade will be clearly mentioned along with the recommendation. e.g short term means few days to few weeks, medium-term means few weeks to few months and long term for a few months to more than that. Ideal allocation to technofunda trading in the overall portfolio should not exceed 30-40% of total portfolio value. One can gradually begin with smaller sums and get enough confidence to bet higher amounts gradually. &..
                 

Using Stop Loss in Investing

4 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
Should you have a stop loss if you are an investor? That is the question I have have been trying to answer for myself. I have been dabbling with various quant systems and obviously stop losses is a part of the thought process in any trading system.Stop loss is a simple yet extremely powerful concept. It can protect you from major catastrophes that can completely erode your portfolio to protect a large part of gains made (when used as protective stops). It is part of the "money management" or "allocation" strategy followed in trading systems.Money management is perhaps one of the most important things that I learnt while studying quant systems. And I find that not knowing it was stupid. Every investor MUST know about money management and adapt it to their own investing style. More on money management later.There are only 2 types of stocks - trending and mean-reverting. Trending stocks are those that follow a trend (it keeps going up or down over time - since we are usually all long..
                 

Interaction on ET Now

6 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Weekend Reading - Some interesting stuff

9 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
1) The economic future of negative interest ratesA great article on how negative interest rates are affecting global economy.Denmark was the first country to adopt negative interest rates (July 2012), but it was Japan, which had been wrestling with the fallout from the twin forces of an aging population and a credit bubble since 1989, that became the petri dish in which financial alchemy was tested. Quantitative and Qualitative Easing (QQE) followed, allowing the Bank of Japan (BoJ) to buy corporate bonds and even equities. Negative–interest rate policy followed in January 2016.For finance ministries, zero interest rates on government bonds are a blessing and a curse. For the first time in history, they can raise capital for nothing or even receive an interest payment for their trouble. The effect that an artificially low interest rate has on an economy is pernicious. Asset markets are supported, and it raises the point at which they clear, but it also reduces the need for compani..
                 

The Quality Conundrum

9 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
This note is more to myself and for other small investors. Last few years, I have had the opportunity to interact with a very large number of small investors and have seen first hand atleast a thousand different portfolios. This note is more to reassert to me the importance of looking for quality first and price thereafter.People are deriding quality companies and saying that quality is in a bubble. But let’s take a step back and ask what is quality? Is it defined only by high PE stocks? Does quality exist in midcaps and small caps or is only large/mega-cap companies’ quality? Can quality exist in companies whose stocks are cheap? Are all expensive stocks good quality businesses?Secondly, why is there a premium to perceived quality companies today? Or conversely, why have small & mid-cap stocks corrected so much? Are they all poor quality? Some of the reasons that I think of are as follows:Failure of companies, including in large and famous corporates – Zee, NCLT casesGovernance de..
                 

Good Times Ahead (I hope!!)

10 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
Below is the note I sent to the subscribers of the Intelsense equity advisory earlier today.Today was a momentous day for Indian markets. Not only did we see a huge upmove, we also saw a complete U-turn in policy stance. The government had been projecting a very aggressive tax stance during the budget and after it. I think the realization that the economy was really in big trouble had not sunk in. Today's announcements of reduced corporate taxes come as a relief to me simply because this is the first real "action" the government has taken. I am ignoring the small tinkering with minor policies over the last few weeks as inconsequential. The action is really big and bold. Cutting peak tax rates for corporates this drastically is HUGE. It signals that the government is willing to bite the bullet, take the pain of much higher fiscal deficit to spur growth. Some of the larger corporates were paying upwards of 33%-35% and a reduction to 25% means a 33% reduction in their tax outflows. Thi..
                 

Investing is an active game

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Cornelius Vanderbilt, known to his contemporaries as the Commodore, was once the richest man in the world. He started his life at the bottom and worked his way up. His business empire started with one passenger boat and he went on to own a large steamboat business. Later he diversified into the railroad business and owned the New York Central Railroad by 1867. He passed away in 1877, leaving more than $100 million, which was more than the money that was held by the US Treasury at that time). His last words to his family were, ''Keep the money together.''  Even today, there is the Grand Central Terminal, a Vanderbilt building still standing in New York City that carries the legacy of the great businessman.Interestingly, within a period of 50 years, one of the direct descendants died bankrupt. The history of the Vanderbilt family is extremely instructive at many levels.Other than the obvious reasons of prudence in managing costs and expenses and living within one's means, you also l..
                 

Resources to Learn Equity Valuation

one year 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..
                 

ET Article - Focus on your stocks

one year 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

one year 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

2 years 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..
                 

Weekly Reading - Some interesting stuff

2 years 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

3 years 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

3 years 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

3 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Sagar Cement - August Despatches

3 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

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Introducing Hitpicks - our new technofunda advisory

one month ago  
Business / Blogs/ Abhishek Basumallick Blog  
It brings me great pleasure to bring to the fore an old friendship and collaboration between Hitesh Bhai (that's what I and most people I know call Hitesh Patel). He is the person who enthused me to learn technical analysis which opened the doors of quantitative investing. I also realized that blending technical and quantitative with fundamentals adds superpowers to regular BHP (buy-hold-pray) investing.My own results improved significantly after meeting Hitesh Bhai. I also ventured into exploring other investing styles, which I think has helped tremendously in expanding my horizons.The new offering - "Hitpicks" - is focused on technicals with a technofunda approach with a short-to-medium timeframe.There may be some confusion for investors on which plan should they chose for a subscription. I have already received a few emails with an hour of announcing the new plan on twitter. So, here are a few pointers to help decide.1. Intelsense Long Term Advisory is for those who are long te..
                 

The Index Fund Bubble

4 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
The global order for investment management firms has changed in the last 5 years. Index investing now more or less accounts for 20-40% of the global capital deployed whether through index funds, ETFs or index-hugging funds. Since an index does not have a cash allocation, there is no buffer when it starts going down. While going up, it feeds into the frenzy and the index constituents get more than their fair share of capital flows. And no one complains. When the tide reverses, the exact opposite happens. Stocks fall because they have fallen a lot. A virtuous cycle turns into a vicious cycle.This is what we are seeing now. The way it possibly ends is when other investors (discretionary/quant/alpha-oriented funds) decide that some factor they are tracking (could be valuations, could be any other metric like volatility, global macro, relative strength, overbought/oversold indicators etc) is now in their comfort zone and start buying. The other possibility is that large investors will ..
                 

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The Man Who Solved the Market by Gregory Zuckerman - My Highlights

8 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
I completed the book the week it was out in India. I have been following (reading about, listening to, watching) Jim Simons and a few others over the last two years that I have personally started learning and experimenting with quant systems. (Planning to start writing about my learnings on quant systems, more so that I can understand them better while trying to write).Simons has always been an enigma and I was certain that the book would not reveal any information which was not known earlier by the public but only supply anecdotes of his personal life. I was more or less right. There are practically no details of his trading system. But then again this book was probably not meant to. Overall, it was a great read. I would urge investors to read it, just to get a perspective of how a quant's view of investing is different from that of others.The highlights are below. The bold markup is mine to highlight points I found interesting.A former math professor, Simons is arguably the most succ..
                 

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Thoughts on the auto industry slowdown - 12 Sep 2019

9 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

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Weekly Reading - Some Interesting Stuff

9 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
1) Studying English may be a better career option than science / engineeringThere’s no denying that the typical computer science major makes more money shortly after graduation than the typical English major.Contrary to popular belief, English majors ages 25 to 29 had a lower unemployment rate in 2017 than math and computer science majors.That early STEM pay premium also fades quickly, according to research from Harvard. After about a decade, STEM majors start exiting their job fields as their skills are no longer the latest and greatest. In contrast, many humanities majors work their way to high-earning management positions. By middle age, average pay looks very similar across many majors.www.washingtonpost.com/business/2019/10/19/worlds-top-economists-just-made-case-why-we-still-need-english-majors/2) Amazon starts making private label alcoholAmazon is adding to its own-label product line with its first spirit brand in the U.K. called Tovess Gin. Amazon has been expand..
                 

Weekend Reading - Some Interesting Stuff

11 months ago  
Business / Blogs/ Abhishek Basumallick Blog  
1) Chronic stress is starting to centre stage in diseases According to the Health and Safety Executive (HSE) of the United Kingdom, stress, depression or anxiety accounted for 57% of all “sick days” in 2017/2018. The mind’s rising leverage over productivity is prompting interest in what might be impeding its performance. The focus has fallen on stress.http://www.bbc.com/future/story/20190813-burnout-anxiety-stress-proof-relief2) Earphones (buds / pods) are making you go deaf … slowlyHearing loss isn’t just the stuff of senior citizens: 1 in 5 teens will experience hearing loss — a rate that’s 30% higher than it was 20 years ago. At maximum volume, earbuds and AirPods can be as loud as 110 decibels, which is the equivalent of someone shouting directly into your ear. According to the CDC, being exposed to 85 decibels over a prolonged period, or repeatedly, puts you at risk of hearing damage. If you’re listening to your earbuds at the maximum volume of 110 decibels, yo..
                 

Weekend Reading: Some Interesting Stuff

one year ago  
Business / Blogs/ Abhishek Basumallick Blog  
Interesting fact - In China, under pressure from the government, video game publisher Tencent limited playing time for its most popular game, Honour of Kings, to two hours per day for players under 18 and one hour per day for players under 12.https://stanfordmag.org/contents/this-is-your-brain-onIn Beijing, it’s often cheaper to have food delivered than to get it yourself. Ordering from a local restaurant’s roast duck dish for 20 yuan ($2.99), is about 80 percent less than it costs at the restaurent, via delivery app Meituan.Alibaba and its various subsidiaries dominate the country’s online retail market for physical goods, but Meituan is leading the way in services. Its app has 600,000 delivery people serving 400 million customers a year in 2,800 cities.Alibaba is betting it can undercut Meituan to death. Both companies are spending billions in an escalating war of subsidies that is helping people get a "free-lunch"!!https://www.bloomberg.com/features/2019-meituan-china-delivery-empir..
                 

Weekly Reading - Some Interesting Reading

one year 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..
                 

Book Review: Phil Fisher - Common Stocks and Uncommon Profits

one year 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

2 years 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

2 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Himadri Chemicals - A play on Li-Ion Battery

2 years 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

3 years 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

3 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

3 years ago  
Business / Blogs/ Abhishek Basumallick Blog  
                 

Weekend Musings

3 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..