Some stuff I am reading this morning:
Another win for Narendra Modi-Maruti to shift carmaking to Gujarat (ET)
Hedge funds make wrong way commodity bets (Bloomberg)
Mukesh Ambani closer to achieving his gas pricing goals (Firstpost)
Tea Stocks may be a hot favorite(BusinessLine)
Is this the best stock market indicator ever? (AdvisorPerspectives)
Warren Buffett in his younger days followed a technique called coattailing
In this method, you usually follow an experienced investor into a stock.You assume that the experienced investor knows what he is doing and financial fireworks will commence shortly after the experienced investor enters the stock.
Are there such investors in the Indian equity scene that one can follow?
I believe there are.
Take for example, Dilipkumar Lakhi.
He is a very well known diamond exporter from Mumbai (see article). He is quite renowned for his shrewd stock picking prowess.He picked up Uflex very cheap in Dec 2009.(still owns around 4% assuming fully diluted)
Now he has picked up around 6.75 Lakh shares of Dhanbank around Rs.70.33 . (27/02/2012). Another related party Girdharilal Lekhi has picked up 5.4 Lakh shares around Rs.63.66 (23/02/2012)
Dhanbank faced a lot of turbulence recently due to the ouster of its CEO Amitabh Chaturvedi. Despite this ,the stock is up around 22% since then.Maybe Dilipbhai and the markets know something we don’t !!
Interesting reads for the weekend:
A fascinating portrayal: The rise of Narendra Modi
Arundhati Roy goes after Mukesh Ambani and everyone else (see link)
Is Ben Bernanke a villain or a hero ?(read here)
A great read for all traders/gamblers-The man who broke Atlantic City
The problem with Indian Railways – Tehelka
There was an interesting article in Mint today on Concor (see link).
The article states that increase in haulage charges has taken business away from Concor towards private roadway operators.Hence the company is facing headwinds.
Lets look at this company from Warren Buffett’s eyes:
1.Does this company have a significant moat?
The answer is Yes.This company is more or less a monopoly.Private operators who tried to enter this business got their heads handed to them on account of govt. regulations.
2.Are the macro trends in favor?
India will grow its international business as it grows.So will its domestic haulage.Not only the volume of business will grow, but also the value due to persistent inflation
The clincher is diesel prices.While short term, diesel prices may not be increased due to political compulsions, long term the laws of economics will prevail.As per the Parikh report (section 4.9), railways consume 1/4th the diesel per net tonne kilometre as trucks.This is a huge huge advantage
3.Does the company need additional equity capital to grow?
The track record of this company is outstanding.It is sitting on 2600 Crores Rupees net cash.The dilution of equity is neither needed nor wanted
4.Is the management competent and ethical?
As the management is government owned,this question is a tricky one.
5.Is the company’s prices regulated?
The finances of this company depends on the haulage charges of the Railways.It is possible that political compulsions may wreak havoc with Concor’s finances but the possibility is remote
6.Are the valuations attractive?
At 11 times estimated fiscal 2013, they are fair.
Conclusion:Warren Buffett would probably buy this stock and keep it forever !!
Some stuff that I am reading today morning: