Why India is benefiting from lower global oil prices?
Energy occupies a large share of its CPI basket
@bibekdebroy pic.twitter.com/Sd1AflOnXW
— Uday Tharar (@udaytharar) March 17, 2015
Weight of energy in national CPI baskets
Berkshire Hathway's ACQUISITION CRITERIA
Source: http://www.berkshirehathaway.com/2000ar/acq.html
ACQUISITION CRITERIA
We are eager to hear from principals or their representatives about businesses that meet all of the following criteria:
- Large purchases (at least $50 million of before-tax earnings),
- Demonstrated consistent earning power (future projections are of no interest to us, nor are "turnaround" situations),
- Businesses earning good returns on equity while employing little or no debt,
- Management in place (we can't supply it),
- Simple businesses (if there's lots of technology, we won't understand it),
- An offering price (we don't want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown).
Criteria 2,3,5 &5 can be used by retain investors when choosing their investments into secondary markets
Middle managers acts a router will not longer require in IT industry
http://boomlive.in/middle-managers-act-routers-future-wipro-ceo-kurien/
Ethiraj: Are you also being self critical of your middle management?
Kurien: I think that’s true. It’s not middle management by itself and I wouldn’t define middle management very clearly. There’s middle management that really adds to technology and I think that’s fabulous to have. We absolutely need those guys. And those are people we really treasure.
There are other people who just manage people and that’s the game that you don’t want in the future. Because, having a person who sits as a router, routing traffic from one end to the other, communicating upward and managing downwards is not a function that you require long term. That particular skill set is not going to be required any more.
source: http://alphaideas.in/2015/02/16/alice-wonderland-valuations-indian-equities/
Overvalued stocks due to Fund managers are bullish and want to maintain NAV/AUM.
Consumer stocks: HUL, Colgate, Dabur, Nestle, Marico
Pharma stocks: >30 PE
MNCs: Blue Dart>110, Kenamental>90, GSK>60, Bosch >60x
Scarce/ Unique ideas: Just Dial > 80, Info Edge > 80, Jubililant Foodwork>70, Page > 70, Eicher > 60
The P/E (trailing twelve months) of Colgate has gone up from 34x in April 2014 to currently 48x. Similarly, Nestle from 42x to 53x, HUL from 33x to 44x, Dabur from 36x to 43x, Marico from 28x to 38x, etc. This is despite sales growth being slowest in the last many quarters for some of these companies (in some cases, up to eight quarters!). Similarly the P/E of some pharma companies have gone from mid-20x in April 2014 to mid-30x currently. The two other sectors which are captured by these institutions (partly overlapping with the two mentioned above) are MNCs and scarce/unique ideas. So, any MNC with a 75% parent holding is supposed to be a delisting candidate that justifies a ‘mu-maangi kimat’ for the tenderer (Blue Dart > 115x, 3M 90x, Kennametal 90x, Glaxo Pharma 60x, Bosch 60x). Scarce concepts in the listed space also command mind-boggling valuations (Just Dial 80x, Info Edge 80x, Jubilant Foodworks 75x, Page Industries 70x, Eicher Motors 60x etc.).
Overvalued stocks due to Fund managers are bullish and want to maintain NAV/AUM.
Consumer stocks: HUL, Colgate, Dabur, Nestle, Marico
Pharma stocks: >30 PE
MNCs: Blue Dart>110, Kenamental>90, GSK>60, Bosch >60x
Scarce/ Unique ideas: Just Dial > 80, Info Edge > 80, Jubililant Foodwork>70, Page > 70, Eicher > 60
The P/E (trailing twelve months) of Colgate has gone up from 34x in April 2014 to currently 48x. Similarly, Nestle from 42x to 53x, HUL from 33x to 44x, Dabur from 36x to 43x, Marico from 28x to 38x, etc. This is despite sales growth being slowest in the last many quarters for some of these companies (in some cases, up to eight quarters!). Similarly the P/E of some pharma companies have gone from mid-20x in April 2014 to mid-30x currently. The two other sectors which are captured by these institutions (partly overlapping with the two mentioned above) are MNCs and scarce/unique ideas. So, any MNC with a 75% parent holding is supposed to be a delisting candidate that justifies a ‘mu-maangi kimat’ for the tenderer (Blue Dart > 115x, 3M 90x, Kennametal 90x, Glaxo Pharma 60x, Bosch 60x). Scarce concepts in the listed space also command mind-boggling valuations (Just Dial 80x, Info Edge 80x, Jubilant Foodworks 75x, Page Industries 70x, Eicher Motors 60x etc.).
8 Fascinating Reads
Indonesians surveyed by Galpaya told her that they didn't use the Internet. But in focus groups, they would talk enthusiastically about how much time they spent on Facebook. Galpaya, a researcher (and now CEO) with LIRNEasia, a think tank, called Rohan Samarajiva, her boss at the time, to tell him what she had discovered. "It seemed that in their minds, the Internet did not exist; only Facebook," he concluded.
The problem
Here's a great summary of healthcare costs in America by Steven Brill:
Here's a great summary of healthcare costs in America by Steven Brill:
Priorities
Most big drug companies spend more on advertising than they do on research and development:
Most big drug companies spend more on advertising than they do on research and development:
Odds of success
Ben Carlson writes about one way to beat the market: concentrated portfolios:
Ben Carlson writes about one way to beat the market: concentrated portfolios:
Portfolio manager and author Robert Hagstrom performed a study that looked at 12,000 randomly generated portfolios from a universe of 1,200 stocks. He broke the portfolio up by the number of holdings so they looked as follows:
- 3,000 portfolios containing 250 stocks.
- 3,000 portfolios containing 100 stocks.
- 3,000 portfolios containing 50 stocks.
- 3,000 portfolios containing 15 stocks.
... Now take a look at the outperformance rates by portfolio size:
- Out of 3,000 250-stock portfolios, 63 beat the market (2% of portfolios).
- Out of 3,000 100-stock portfolios, 337 beat the market (11% of portfolios).
- Out of 3,000 50-stock portfolios, 549 beat the market (18% of portfolios).
- Out of 3,000 15-stock portfolios, 808 beat the market (27% of portfolios).
Personal life
More companies are moving from casual Fridays to no-work Fridays:
More companies are moving from casual Fridays to no-work Fridays:
That's exactly how founder and chief executive Ryan Carson, 37, has been working since 2005. These days, on Fridays, he gets his two young sons off to school and spends the day hanging out with his wife, Gill. "It's like dating again. We go to coffee shops. We read books together. I really feel like I'm involved in my kids' lives and my wife's life," Carson said. "This schedule has been absolutely life-changing for me. I can't imagine anything more valuable."
Just the facts
Josh Brown writes a great list of facts in America. Here are a few:
Josh Brown writes a great list of facts in America. Here are a few:
The US economy has now added more than a million net new jobs over the last three months. This was the best 90 days' worth of hiring since 1997.More jobs were created in 2014 than during any year since 1999.759,000 people just joined the labor force and there was no post-holiday seasonal decline – it may be that temporary workers are sticking.Average hourly wages rose .5% in January.The cost of living has only risen .8% over the last year while wage growth has outstripped it, rising by 2.2%.21 of 50 states put through minimum wage hikes, including populous ones like NY, FL and NJ.
Doing it right
Ronald Read left a surprise for those who knew him:
Ronald Read left a surprise for those who knew him:
His khaki denim jacket was held together with a safety pin and his flannel shirt was so old, someone once paid for his breakfast at Friendly's."The man ahead of him had paid for him," Rowell said, "Based on what he looked like and how he dressed."Perhaps that's why the man known for his extreme frugality and scruffy appearance decided in the years before his death that he'd do a little giving of his own."The estate of Robert Read made its first distributions to Brattleboro Memorial Hospital and the Brooks Library in the amounts of $4.8 million and $1.2 million," Read's attorney said in a press release.
Wisdom
Here's a great take on loss aversion from Andre Agassi, tweeted by Ben Carlson:
Here's a great take on loss aversion from Andre Agassi, tweeted by Ben Carlson:
Have a good weekend.
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