Source: Mint
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Infosys: Back to Square One
Source: Mint
Source: Mint
I must bring an interesting observation I have been having for some time to your notice.
India is likely to witness shortage of quality investable companies in the future.
The seeds were sown few years back with the scrapping of press note, allowance of 100% FDI in most of the sectors, buy back by listed MNCs and regulatory arbitrage available to do buy back rather than paying dividend.
Moreover, in many cases Initial Public Offers are from companies that have been, private equity funded leaving less room for upside for secondary market players.
All these factors are compounding the valuation for high quality companies to stratospheric height, leaving less room for error, if forecasted earnings are not met.
Moreover, my observation is that in many areas, MNC with technological edge, global relationship, brand, superior business processes have an edge, emerging as leaders or have gained dominant markets share in respective field.
Many such, not represented in the listed equity universe of India.
The classic example is the compressor industry, where the world technological leader is not listed anymore.
This sets us in dilemma of how to invest in an excellent business, which is not listed, or invest in a second rung, average business as proxy play.
Therefore, relative value trade, pitting one company against another without a deep dig, is not going to yield sustainable return.
Such scenario also reinforces, hold on to the good companies you have discovered rather attempting to find new gem.
Some stuff I am reading today morning:
Cabinet clears listing for 11 PSUs (Mint)
Motilal Oswal: 3 Multi-bagger ideas for next one year (ET)
Indus-Bharti Infratel-World’s biggest tower company? (Quint)
Money deluge for MFs (BL)
Equity NFOs pick up as markets rally (BS)
The $90 Billion investor who wants to fire Wall Street (BusinessWeek)
How a crisis led to the formation of BSE (Mostly Economics)
Read with caution when there’s money at stake (Barry)
The 2017 Case for Gold (DR)
What’s wrong with dividends? (Monevator)
The Book-Dream Big by Cristiane Correa- is about the richest man in Brazil Jorge Paulo Lemann and his remarkable story of entrepreneurship.
Jorge Paulo Lemann started an investment bank called Banco Garantia.He ran it very successfully based on 3 principles-Learn from the best worldwide,meritocracy and incentives.
He harnessed the “super power of incentives” to create the biggest investment bank in Brazil and later sold it to Credit Suissee for $675 Million.
As an investment banker, he started taking over companies and formed a receipe for success which works something like this:
His 3G Capital used this approach to create the largest brewer in the world-InBrev.Some of his other famous acquisitions are Heinz, Burger King etc
The book is full of characters,anecdotes,events etc from the Brazilian business world which may sound arcane to us Indians.
But some of the lessons I learnt (or relearnt)in this book are :
Three examples from the Indian context came to my mind, while reading this book:
Do buy this book to get an international perspective of a great business mind
Hat Tip: Sunil Jain