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What I Learnt from Colm O’ Shea

Colm O’ Shea runs one of the largest hedge funds in the world COMAC Capital.

What I learnt from him: How to place stop losses 

From his interview in the Book The Hedge Fund Wizards

First, you decide where you are wrong. That determines where the stop level should be.

Then you work out how much you are willing to lose on the idea.

Last, you divide the amount you’re willing to lose by the per-contract loss to the stop point, and that determines your position size.

The most common error I see is that people do it backwards.

They start with position size. Then they know their pain threshold, and that determines where they place their stop.

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What I Learnt from Mr. Suresh Shetty

Mr. Suresh Shetty was the first CFO of Hero Motocorp.

He used his domain expertise of the auto industry to invest in the auto and auto ancillaries space.

Now his stake in Motherson Sumi alone is worth around Rs.550 Crores

What I learnt from him:

Use your domain knowledge not only to do your job well but also invest

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What I learnt from Raamdeo Agrawal

Raamdeo Agrawal is the Chairman of Motilal Asset Management Company and a well known investor.

What I learnt from him: Great investors speak to other great investors about their investments

From Raamdeo Agrawal’s interview:

We did buy 5% of initially of Berkshire Hathaway initially .

The amount was small but still it was $10-15 million.

I spent one full day researching Berkshire Hathaway as an investment then I changed my role and I actually did the research

 I went and met a guy who is one of the largest holders with $3-$4 billion worth of Berkshire Hathaway stocks.

His job is only to take care of Berkshire Hathaway 24×7.

Saturday, Sunday you will get appointment to talk to him.

 I went and met with him with a help of a friend and then we discussed and we figured out that best possible growth rates cannot be more than 8-10% if you are lucky.

Then I said the gap is too much for me and so I must not put my money and then we withdraw that.

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Trading Advice:What Soros taught me

Hat Tip Trading Cards

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What I learnt from Ramesh Damani

This post is in continuation of my What I Learnt From Series (see here)

Ramesh Damani is a well known Indian equity investor and has been investing in the Indian markets for decades.

What I learnt from him:When you are supremely confident of a stock, back up the truck on it

In an interview he says,”The biggest failure of my life is in the inability to dream big .In the late 1990s, Ramesh Damani was supremely confident about the prospects of two stocks: McDowell (now United Spirits) and Bharat Electronics. He knew that there was such a gigantic and profitable market for liquor in India that McDowell would do very well. Yet McDowell was quoting at such beggarly valuations that you could have bought the entire company at a market capitalisation of only Rs. 200 crores. The same was the story with Bharat Electronics, the blue chip PSU, which held the rights to all multi-billion dollar defence deals.

Ramesh Damani says he had the means to buy 10% of the equity capital of both companies. If he had done that, then, at today’s market capitalisation in excess of Rs. 50,000 crore for both companies, he would have been worth Rs. 5,000 crore. “I would have had to do nothing else. Just two stocks would have made me a Forbes billionaire” he exclaimed. “You will never get seriously rich by buying 2,000 or 10,000 shares. When you get a seriously attractive opportunity, back up the truck with the stock” he advises.