Some people may find this offensive
Day: November 26, 2014
Modern Education
Bharat Shah’s Investment Philosophy
Source:Anil Kumar Tulsiram
The reality is that too many large borrowers see the lender, typically a bank, as holding not a senior debt claim that overrides all other claims when the borrower gets into trouble, but a claim junior to his equity claim. In much of the globe, when a large borrower defaults, he is contrite and desperate to show that the lender should continue to trust him with management of the enterprise. In India, too many large borrowers insist on their divine right to stay in control despite their unwillingness to put in new money. The firm and its many workers, as well as past bank loans, are the hostages in this game of chicken — the promoter threatens to run the enterprise into the ground unless the government, banks, and regulators make the concessions that are necessary to keep it alive. And if the enterprise regains health, the promoter retains all the upside, forgetting the help he got from the government or the banks – after all, banks should be happy they got some of their money back! No wonder government ministers worry about a country where we have many sick companies but no “sick” promoters.-said Raghuram Rajan
Linkfest:November 26,2014
Some stuff I am reading today morning:
Arun Jaitley set to corner Rajan over rate cut (FE)
South Indian Bank scraps QIP due to falling valuations (ET)
Equity income funds:What’s in it for you? (Mint)
Govt accepts proposal to ban sale of loose cigarettes (FirstBiz)
P-Note Investor=Foreign Portfolio Investor? (MenakaDoshi)
How to select the best health insurance policy in India (GoodMoneying)
Misconceptions of the Nifty PE (FreeFinCal)
The Slumdog Millionaire Effect (Subramoney)
The case for the profitability factor in your portfolio (Monevator)
The road to Zimbabwe is paved with Central Banker’s good intentions (DailyReckoning)