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Sunday, December 19, 2010

Black Hawk Down

I have been travelling across South India since the last 25 days......on the way from Coimbatore to Madurai on a balmy evening between alternate groves of coconut orchards and paddy fields I saw two pairs of sparrow hawks with their typical hovering high in the sky minutes before striking a bandicoot or mouse hidden in the crops.

The sightings have energised me...of all India's magnificent birds hardly few outside the naturalists are aware of the various hawks found in India and now alas on the verge of extinction.What magnificent predators,the peregrine,sparrowhawk,brahminy kite,fishing eagle...

No less than the corporate or stock market predators,but the sightings made all the discomforts of somuch travelling worth its while.I did also meet a scientist going to Nandankanan Zoo in Orissa who was an expert on captive breeding.

I am sure there will come a time when specific companies dealing in animal research will need funding and the necessity of reaching the public through stock exchanges.

The future generations need to know what this Earth once was....and I just don't mean the Tiger...!!

Thursday, November 25, 2010

Recap-excellent returns and some bullseyes!

Of all the things said by me:-

Sujana Tower gave an 65% return
SKS Micro touched the rate on the downside as I had mentioned and questioned the ratiionale of investing in this sector
Am sure my views will be borne out on GM IPO
Artillery shelling on the Korean border was a black swan event,maybe some North Korean general asking for food for his soldiers?
The Irish bent a knee to ask for a bailout
Despite all I still dont sense any panic in the markets nor a heavy dose of pessimism that's required for markets to go up from current levels.
I watched "The Social Network",I think Food Security & drinking water will be big issues in the coming future and a bottle of evian might just be more priceless than you think
India need to innovate and science needs to move out of college labs...

Thursday, November 11, 2010

Currencies,forex,cars and food

Just rambling thoughts in a world that ocillates between hope and despair.Is the dollar getting weak or strong?Will Ireland go the Greek way?Will emerging markets move up further...

The only hope is not to hope for hope.Buy 10 year bonds at 8% and hope that the inflation stays moves below 5% and you might be in bond heaven.Or buy quality stories that can grow.

I do not predict how technologies will change over the next decade but I do know that as per our biology our need for food and drink will not change,a walmart,dunkin donuts or Burger King will be required to satiate the urge for "comfort food".

Hindlever,ITC in foods
Bhel,Larsen&Toubro in capital goods
Powergrid,Power Finance Corporation for a power hungry India
Apollo Tyres as all those millions of marutis,hondas,nissans,GMs cant run on air!yet!

Multi bagger smallcaps I shall discuss later as I am confused on the plethora of options available.If a 10% correction happens then is the time to do your value investing.

Thursday, November 4, 2010

US Automobile segment

If I were a US investor with a medium sized risk appetite I would be buying Ford@$15 and subscribing to the expected issue of GM.

My primary reason is that demand will turn and rather than wait before every tom and harry starts seeing the pattern one can take a calculated risk.

Secondary reason is that the US auto cos education is complete.Its a lesson they learnt in the mid 1980s from the Hondas,Nissans,Suzukis.The behemoth SUVs have been replaced(not completely) with smaller more fuel efficient variants that are begining to compete successfuly in the crowded Asian markets.

I want to own an American car and I feel so do a few other non-believers like me!!With the existing marketing muscle and leaner,cost saving cars there are a few million ready consumers waiting...

Tuesday, November 2, 2010

Discovery of India...?

A Nation where a pizza is guaranteened to reach in 30 minutes but not an ambulance or police
    Where you can get a car loan at 5% but an educational loan at 12%
       where rice costs Rs40 a kg but a mobile phone SIM card is absolutely free
          where people worship Goddess Durga as feminine deity but kill their girl childs
             where the government awards 3 crores to an Olympics shooter
                but pays just 1 lac to a soldier killed defending his country
                 
But I am sure that these anomalies will belong to a past that our country will shed as its done in so many things and we can truly be proud of our Nation!!

Monday, November 1, 2010

Portfolio Buy - Hindusthan National Glass(expected returns 100%)

Reccomend buy (INE725E01016)Hindusthan National Glass@250-270  in longter portfolio if so wished with a near term(1 year) target of Rs 550.
 

Friday, October 29, 2010

High Returns - Recomend BUY on UTV Software

Reccomended accumulate between 550-570 for a target of Rs 1000 by April 2011(approx 6 months).

Wednesday, October 27, 2010

Why Micro Finance?Why not Banks and some other arguments...

There has been huge noise generated over the management changes in SKS Microfinance started by Mr Vikram Akula.Does it deserve all the attention - from the media as well as investors?

Sadly I think this business model would be great as a non profit venture as envisioned by Mohammad Yunus who fructified the concept through his Grameen Bank which means the Village Bank.The moment profit comes into the picture all kinds of sharks(and Gordon gekkos) get into that " picture" which then goes from something of a Rembrandt to a bad copy of Dali.Some other Micro Fin cos that are eyeing an IPO are Ujjivan Finance founded by another ex-Citibanker.

As an investor I would rather prefer Banks who have a track record,starting from the mammoth State Bank of India,ICICI Bank to the smallcaps - Dhanlaxmi,Vijaya,Karnataka Bank.

We know the business they are in and they dont lend so that someone can buy a goat and pay interest on that!

It is sad that even today approx  84% of Indians still burn wood or coal for their cooking needs.In the coming years with the lesser dependence on fossill fuel a change to LPG or other cleaner fuels will become mandatory.Everest Kanto Cyclinders(EKC),CMP:133,P/E:34,EPS:3.9(as of 31/03/2010) and a market cap of Rupees 14 million is well poised and is a BUY at current levels with target price of 200 by April 2011.One can hold it in the long term portfolio if required.

Micro finance as a sector is critical for the rural poor of India to come out of their financial dependence,BUT Micro Finance Companies that simply look at the bottomline are not required!

Having travelled and lived in villages I know the importance of a single goat,I have seen tigers and leopards being beaten to death by enraged villagers when their cattle were attacked(but thats another story),its economic value is significant and I hope that our systems allow funding to percolate down to all levels of Indian Society.

Monday, October 25, 2010

Empathetic Economics?

Apropos to C K Prahalad for writing,"Value at the Bottom of the Pyramid".So too Amartya Sen for getting the Nobel Prize on economic value chain for the poor.Of all the funny acronyms used by us in India the most contradictory is "BPL-Below Poverty Line".At last count unofficially 32% of the Indian population of 1 billion was BPL!And thats not counting Nepal,Pakistan,Burma...

The global economy has become a paradigm in itself and its got beyond regulations.In the 1970s when the CIA and KGB were facing off in such places at Angola,Zambia,Congo,Mozambique etc buyng of puppet dictators and the US corporates buying them off for their mineral wealth I suppose  no one wondered on how one day it would shape the world geo-politic.

Gone is the "Cold War","Iron Curtain","USSR" but the behemoth system thats replaced it is all the more frightening due to its faceless,invisible quality.How do you fight currency swaps?junk bonds?rogue traders?

Getting Main Street to live with Wall Street aint so easy Mr Obama!

Thursday, October 21, 2010

My Own Boswell

Dana Gioia,bringing poetry to the world of business.Long have I thought of marrying the creative world with business but fell into the same straitjacket as so many others who join the ranks of the newly employed with dreams of doing something,anything new.

After a few years its back to the safety of the tried and tested methods!Do read the following article

http://knowledge.wharton.upenn.edu/article.cfm?articleid=1745

Thank god that there are a few others who think alike.

14th Century lessons still relevant in 21st Century...

That he which hath no stomach to this fight,
Let him depart; his passport shall be made
And crowns for convoy put into his purse:
We would not die in that man's company
That fears his fellowship to die with us...
Old men forget: yet all shall be forgot,
But he'll remember with advantages
What feats he did that day: then shall our names
Familiar in his mouth as household words
Harry the King, Bedford and Exeter,
Warwick and Talbot, Salisbury and Gloucester,
Be in their flowing cups freshly remember'd.
This story shall the good man teach his son
And Crispin Crispian shall ne'er go by,
From this day to the ending of the world,
But we in it shall be remember'd;
We few, we happy few, we band of brothers;
For he today that shed his blood with me
Shall be my brother."

Thursday, October 14, 2010

Another Multibagger Reccomendion

Buy Koutons Retail at Rs 122 with the view of  getting a 100% return on it in approximately 2 months.It is in the garment retail and export business and at present valuations far below its intrinsic stock value of around Rs 300.PE is 4.23,EPS 26.77 and RoE 164.29

Recommended Buy at current market price.

Wednesday, October 13, 2010

Hot Streak...

The equity markets are on  roll and every punter in every shop is making some money.The madness is still not contagious and hence allows me to a little fearful(even though i am not paid to be so!).

A repeat of 2004 Homeland Investment Act 2004 in the US,when tax rates were temporarily reduced from 35% to 5.25% would lead to a trillions of $ of unrepatriated profits back to the US.Asset prices there are already at record lows and so far no cherry picking has been visible.

Imagine the gush of money that could vamosh from all the emerging markets and quickly and where would it leave all those investors who are rushing to catch the gravy train?India is lucky to have a huge consumption driven economy and the billion strong population would be a handy fallback.

What guts me is the as yet small number of startups and the lack of entrepreneurial streak in my fellow Indians,the bureacrasy,the redtape all the old misnomers still await the unwary.Before I started this blog I had taken a bet with a treasury head of a Bank I shall not name that the Rupee wouldn't fall below 50 versus $ and we turned the corner from 49.30 when Europe threatened a collapse.I  still remain a Rupee Bull!

Tuesday, October 12, 2010

My stocks have given a 25% average return in 2 months

Winning aint everything,its the only thing - Vince Lombardi
The stocks  I have reccomended have given 25% net returns in 2 months.

Tata Sponge recco @335 now 381
Supreme Ind recco @645 now 830

Value investors can continue to hold these in their portfolio,read earlier blogs for the target price.

Thursday, October 7, 2010

Ne Hao

I seem to be turning into a full time China watcher but I feel honour bound to share the insights of an analyst friend of mine who says that in the previous 6 months wages have risen by almost 25-30% in China.And food inflation is running almost 250 basis points higher than the official figure.

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle-Sun Tzu

The Chinese Mandarins know the enemy but not themselves is my closest guess.Media bans or Mr Buffet's confidence in the country will not lessen the angst of those carted out in cattle trucks before the Beijing Olympics or those farmers who lost crops in the Sept floods or even the Uigher resistance.Tibet style cleansing will probably not work any more.The world will be more culturally sensitive and the Green brigade is growing stronger by the day,I tended to agree with Michael Crichton's ideas in "State of Fear" but the chinese disregard for the environment is callous to the point of insanity.

By 2015 I see a huge social and cultural change in China,question is will it be painful?violent?revolutionary?intense or orderly?How will the investors be able to get a RoE or how much?How will it affect India,Europe or the USA?Srebenica frightens me...and i have no answers.

Tuesday, October 5, 2010

Asian Initiative

There is something called the Khlong Saen Saep Express Boat  on the Khlong Saen Saep in bangkok which in effect is nothing more than a sewer.But due do Thai initiative its been transformed into a transportation system by boat that takes you to the heart of Bangkok in 20 minutes versus almost an hour and half by car.The day,night,floating markets have transformed it into centre of cloth manufacturing and I found better cotton there than in India,supposedly the manufacturer of the best quality cotton.

It is but a singular example of how commerce has taken root in what was once a mere village two decades ago.The Thai markets need a closer look and I feel the vibes that come from being friends with the Chinese,Taiwanese as well as the Myanmarese(Burma) which is a market thatz has close to five billion consumers!India is trading at 19X PE and that makes me uncomfortable.Russia is too complex,Hongkong too unpredictable,a slightly less volatile situation should see the Thai markets give alpha returns.

P.S.Tried to meet Mr Marc Faber but apparently he was not in residence.

Tuesday, September 21, 2010

The Heart of India

I was travelling in the rural hinterland of Souther India last week,the fields were a deep shade of green with a new crop of rice,the coconut trees were heavy with fruit,even the roads were drivable,the people did not look sullen and i realised that contra to what I thought the heart of India has made progress albeit a lil slower than expected.

That set me thinking...the farming heartland is still the final frontier to delivering goods and services and companies viz.ITC have started E-Choupals(a concept I shall explain later) etc ,even the Government is looking to make this sizable community of voters get on their favourable side,SO,the firms that manufacture tractors,pipes for irrigation have a ready market...??Mahindra&Mahindra,Jain Irrigation,Welspun Corp...the list of such specialists is long,unfashionable but a worthy investment for the future...

Wednesday, September 15, 2010

Chinese Riddle

Many years ago I was in Sikkim at the Indo-China border at Nathula and commented on the dilapidated condition of the roads on what was once the famous Silk Route from the Tajik borders to India,a senior army officer stunned me by saying that the roads had been kept in such condition intentionally in case the Chinese invaded,blowing up one road would prevent them from reaching the Gangetic plains and thence to Calcutta.

Why i mention this story is the constant feeling that the dragon's sabre rattling with Taiwan,the muzzling of Tibet as well as Yahoo-Google story shows a multi dimension to the Chinese approach to business,diplomacy and war.How can any analyst predict what they will do next?

Stories aboud of rivers full of industrial waste....workers without basic wages herded into ghettos etc Look at the crooked lanes of old Shangai but offcourse the "gwai-loh" are not allowed to visit.All said I am a great fan of Chinese perceverence,hardwork and their desire to control the environment in which they live.

But give me the Indian democrasy anyday with its bumbling,confused,multicoloured rainbow of cultures,communities and ideas!My family is from the Punjab,I was born in Calcutta and I am currently sitting in Chennai(Madras).Guess i should stick to the country I (think) I understand.

Monday, September 13, 2010

VC "Super Angels":Filling a funding Gap or killing the next Google

I was reading this interesting article,which I have chiosen as a headline,it made me think why the visisonary leaders of India's top tech firms aint rushing to buy or invest in US cos that could make a difference to telecom,computing,transactional banking in the future.

The Hubris that pervaded the US behemoths in the last decade and led to the charge of Chindia is creating an uncannily similar mindset.The capital costs of investment are low especially in the 'original' silicon valley and if one goes by the patents being issued  and the engineers rushing for US visas it looks like staying thataways for some time.

Are our management "gurus" looking so far ahead that they are in danger of missing the immediate present...!!If some Hedge Fund out in the financial galactic system is listening....look homeward!!

Those whoo bought Supreme Ind can rejoice with a 10% monthly return,the target of 1000 remains.

Monday, September 6, 2010

Value Buy

Cmp Rs.335


FV-10 Book Value Rs.272 TTM (Trailing twelve month) EPS=61 P/E-5.48

TATASPONG-Total production capacity of 390,000 TPA from 3 kilns, self sufficient in power with own captive power plants - producing 26 MW of power from 2 power plants. Power plant, produces electricity from the waste heat of exit gases keeps the environment free of thermal pollution and the company earns carbon credits and company make profit by selling additional power. Company has secure source of raw material with Iron Ore & Dolomite sourced from TATASTEEL mine, quality of iron ore is up to 65% Fe content and Company has been allotted own Coal block making it fully integrated player and operated @ average capacity utilization level of 88%

Saturday, September 4, 2010

Contra Bets

This week I bet on the markets moving up and was glad(a little relieved really) that things went as predicted although "prediction" is at the best of times an unreliable tool to depend on.

Supreme Ind,current market price Rs630($14),a dominant player in the plastic goods industry looks good for investing with a 6 month view and a price target of Rs1000($22)...that works out to a 60% return.

Data points from the US and European markets are swaying between euphoria and despair and in the course of the next couple of months it would be interesting to see which way they go.The respectable Indian analysts who lit up television screens in 2008-09 with their predictions of gloom and doom are begining to resurface and it makes me believe that the rally might just have some more steam left.Cheers to another week coming up...

Tuesday, August 31, 2010

Episode KP and some...

Today I had an interesting experience....an old client/investor withdrew his money because i bought Nifty 50 calls in his account although the "whole world knew" that the market was going to fall.For your information the Indian markets recovered after tanking in the morning.

Two lessons,even old lions aint immune from assumption and this market has an infinite capacity to surprise!Difficult in such time to resist the urge to rub the client's nose in the "I told you so" synodrome but all it succeeds in doing i driving him into an even more irritating defence.

Another incident,another client who had held a particular stock(OMDC) for 16years,bought for Rupees twenty thousand,relisted on the BSE for rupees twenty two thousand each driven to rupees forty four thousand per share.Advised sell the client's greediness made him hold and his networth fell from rupees 12 million to rupees 8 million from last friday to today,tuesday as its been on a selling freeze!

Sometimes the difference between the stockmarket and the Zoo aint apparent...!!

Sunday, August 29, 2010

How the US an Europe can benefit by outsourcing from India

From an early age we learn to compete,you know limited resources and unlimited competition..our schoolkids carry the heaviest load of books to school,they do maths from the time they are 3yrs old and the scary thing is that the Chinese are just doing it earlier.The "coolies"mentality got them into the 21st century and they just dont want to let go.

In the next 5years India will be needing psychiatrists,stress coaches,relaxation experts and all of you out there in the West will get the opportunity for $100 an hour sessions as India will not know how to handle the stress.So a huge opportunity to outsource and reverse the "callcentre" process from the west into India...!!

Those who came and joined the :Hare Krishna" movement will now see Indian techies moving to the US,UK,Europe to rest,recuperate or find solace and the Swiss Alps or the Italian lakes will be the new Himalayas...

Tuesday, August 24, 2010

Swastika

The symbol of piety to millions of the Hindu faith ,a hated symbol of racial segregation to others,that is the feeling amoungst investors in the India of 2010. Despite the chaotic democracy there is a lot of promise in the physical and mental resources of The Indian.The secret of why we are and how we are will be told at a later stage.I am a member of the "Indian Middleclass" which till long was supposed to be a myth.