Alpha Ideas

Had attended an Investor Meet yesterday.

Some learnings from the Meet:

• Look for headwinds and tailwinds…with the right tailwind, the entire sector can give multi-fold returns.Many sectors in India have given 25x-100x returns with the right tailwinds.On the other hand,when there are significant head-winds,wealth destruction happens
• Look at promoter hunger.“We are in the markets to make money, not give integrity certificates”.The perception of the Promoter being a chor or not changes with the share price.
• Look at opportunity size.If the size of the opportunity is big,a hungry promoter with good execution skills can make you buckets of money.On the other hand, if the market size itself is small, then its difficult for earnings and hence valuations to grow.
• “Chalane Wale, Chal Base” – don’t buy a stock, just because a big name/broker is buying it.Don’t have false expectations that these big names will make the stock price go up
• Watch out for story tellers-Some managements are master story tellers…watch their quarterly results carefully.If they don’t walk the talk, then exit.
• Watch out for the word “next”. If someone says, this is the next TCS, the next Page,the next L&T , the next….then a story is being told to you
• There are two types of people in the markets-“Jo paise gavake rota hain, jo paisa jeetke rota hain” i.e. investors have two regrets-regret of losses and the regret of booking profits too early.Always try to be in the second category. Leave money on the table, its impossible to get the very last dime
• Look for “insight information, not inside information”.More money has been lost on trading on inside information than anything else.On the other hand, after talking to management,trade etc, you get insights on the industry,sector,competition,emerging technologies etc, that can be very valuable
• “Be a shana, don’t be a dedh shana” -Be smart, but don’t be over smart.Avoid leverage,avoid selling quality to go for optically cheap stocks etc
• It’s an exciting time to be in India.As India grows from a $2.5 Trillion economy currently to $10 Trillion in next 20 years, more wealth will be created in India in the next 20 years as was created in the last 5000 years.Think about it.