Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Two out of Three in Bangladesh

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You are faced with choice in every field, which one of the three parameters to compromise on. This is called the triple constraint problem, in the project management its cost, schedule and scope.

In equities if the three parameters that you tend to think most often are growth, ROE and P/E multiple, choose the first two. If the growth is attainable for may years, maintaining the high return on equity, disregard the high P/E multiple ( I don’t mean pay 200 or 700 P/E either).

I made some money in Bangladesh in 2014 and 2015 but the returns in the previous two years have been none. I stayed out during this period from that country, which has not been a mistake.The dynamics are very interesting of that country.

If you remember ~5-7 years back Indian stocks were touted as the ROE in the country was high relative to China 20% vs 10%. Where ever the capital is scare and hidden productivity improvement potential is high, equity investors will make a killing.

After studying Bangladesh market again, in terms of macros, the remittance are not looking that bright (I do spend time looking at macros, more than 5 minutes a year unlike Peter Lynch or Buffett), but the micro is now again looking interesting in Bangladesh. There is a pattern to the wonderful companies

Two examples:

First: Marico Bangladesh is a killer company, Marico India ROE is 27% whereas Marico Bangladesh ROE is 82% !!! Marico Bangladesh dividend payout ratio is 100% !!! PE multiple is inexpensive 22 times earnings, i.e. dividend yield of 5%. The growth has slowed in the the recent 2 years but the company is going gangbusters in terms of introducing new products and making inroads into new channels.

Second: Bata Bangladesh has real estate assets more than its market cap. ROE is 30%, PE multiple is 17, Debt Free, pays 32 BDT dividend on 1000 BDT share price (3% dividend yield), growth was ~20% but has slowed back to 10%, which could pick up again.

Beginning to salivate again over Bangladesh after a year or two of haitus. There are a dozen more solid companies in that country which could make one rich over time with “little to no stress per dollar invested, and more returns per unit of time spent in tracking positions”. That time can be 15 minutes per annum, looking at Balance Sheet, P&L and Cash Flows per annum.

When you invest in a debt free company where owners have 80% or more skin in the game, and you think about your returns from the company, you can be assured that the company is also thinking about your investment as their interests are aligned. You can find companies in Bangladesh with more than 90% holding by promoters (no such regulatory requirement to pare stake down to 75% as in India).

 

All the best and good luck.

Disclosure: Vested interest in companies mentioned. Views are personal notions and do not represent any organisation or company. Investment in stock market can (and many a times do) result in loss of principal capital.

http://www.elevendimension-funds.com

 

 

Written by amitdipsite

April 30, 2017 at 12:55 am

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Baloney of Beliefs

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1/3rd of the world believes in re-incarnation and that the human being is perpetually reborn, next 1/3rd believes in a single life and then an eternal heaven/hell and the other 1/3rd agnostic, unconcerned etc.

Wanted to highlight how useless the beliefs can be, if they stay as beliefs but not further progressed by rigorous self-experimentation, analysis, tyre kicking and some more. Until the goal of personal tangible experience is attempted, its better to be in the last third of the category. Its more dangerous to believe in something and and then do nothing about proving/disproving it.

In short, its better to be a non believer than replay mp3 player of someone’s scriptures.

1/3rd that believes in eternal birth and death

This group has not thought much and perhaps want to simply take birth in better circumstances in the next life. Perhaps this group is likely born in hindu/buddhist country and merely believes what the people of the land has been passing on to each other. This group would want to make sacrifices in the present in the hope of better life in the future heaven etc. This group does not understand that after 1000, 1 million, 1 trillion human births perhaps the soul is sick of experiencing the world of matter in a certain way, and it rather do something else. So, taking birth perpetually as human being in better and more comfortable circumstances is not the end goal.

1/3rd that believes in a single life and then eternal heaven or hell

This group also has not thought much, no manifestation is permanent. Imagine a heaven and listening to beethoven in your heaven for 208 trillion human year, you’ll be sick pretty soon with the same scenery and the music. Imagine a person A who murdered few people mercilessly, as per the beliefs of this group, the person A would be damned to Eternal hell. Now imagine I meet person A in hell after he has been serving the prison sentence for 85 million billion trillion years and I ask him, what he did to be in hell this long, he’d be scratching his head to recall what he did to be there for the past 85 million billion trillion years and yet needs to be there many times longer, oops eternally.

1/3rd that is agnostic / unconcerned

In this group people know more about what they know and would rather believe in proven experiments. This group calls itself rational but does not fully appreciate that there is nothing called matter, its all an illusion anyway, yet it waits for the mainstream science to prove by the instruments that which cannot be instrumented and is the origin of mind itself.

Moral: Better to be a non-believer than wishy-washy believer, latter group can be more harmful.

Written by amitdipsite

April 25, 2017 at 6:39 am

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Interesting phenomenon in the fasting month in Bangladesh

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Written by amitdipsite

April 24, 2017 at 7:46 am

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Facetious quotes

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A stockbroker urged me to buy a stock that would triple its value every year. I told him, “At my age, I don’t even buy green bananas.”

Please God, let me prove that winning the lottery won’t spoil me.

Money doesn’t make you happy. I now have $500 million but I was just as happy when I had $480 million. – Arnold Schwarzenegger

The economy depends about as much on economists as the weather does on weather forecasters.

If at first you don’t succeed . . . so much for skydiving.

How is it one careless match can start a forest fire, but it takes a whole box to start a campfire?

How is it that one accidental rape in a bollywood movie results in conception, yet months of planning by the couples does not ?

My mother never saw the irony in calling me a son-of-a-bitch. – Jack Nicholson

Some cause happiness wherever they go; others, whenever they go. – Oscar Wilde

I couldn’t repair your brakes, so I made your horn louder.

I intend to live forever. So far, so good.

We’ve all heard that a million monkeys banging on a million typewriters will eventually reproduce the entire works of Shakespeare. Now, thanks to the Internet, we know this is not true.

Why didn’t Noah swat those two mosquitoes?

When you go into court you are putting your fate into the hands of twelve people who weren’t smart enough to get out of jury duty.

Those people who think they know everything are a great annoyance to those of us who do.

Intaxication: Euphoria at getting a refund from the Income Tax Office/IRS, which lasts until you realize it was your money to start with.

Written by amitdipsite

April 16, 2017 at 10:18 am

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Suggested reading for Indian stocks

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The shelf life of some of the reports that MOSL has written is quite good, years to decades, so I recommend reading those thematic reports such as:

Value Migration thematic report (100 page but worth reading cover to cover)

Yet to read other thematic ones like Telecom, Light Electrical, GST, Capital Goods, Financials etc.

Meanwhile the stocks are hitting new highs and now India looks good from top-down (2000 USD to 40,000 USD per capita potential perspective) and not so much bottoms-up, but certainly there will be few multibaggers now and then. Which 50 would they be out of 6000 listed companies, the PE ratios indicate that its a case of looking through rose coloured tinted glasses, or falling in love with the ugliest girl. Eg: Gruh Home Finance deemed to be the most valued company (P/B or P/E) due to its pedigree, potential/market opportunity has been put to shame by a rather B/C grade company at 100 P/E multiple SRG Housing Finance (both BSE listed).

I did not have any special skill other than noticing 100% CAR in Akme Star Housing and P/E of ~13, and clean promoters, in November 2016, since then in the recent 120 days, the stock has tripled from 20 Rs to 60 Rs.

So, in my opinion, currently Top-Down is attractive but Bottoms-Up is ugly 🙂

top_down

Top down is good

bottoms_up

Not so the Bottoms-up

Disclosure: Invested in companies mentioned. Views are personal notions and do not represent any organisation or company. Investment in stock market can (and many a times do) result in loss of principal capital.

http://www.elevendimension-funds.com

Written by amitdipsite

April 14, 2017 at 12:23 am

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Drawdowns encore

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Not that buy-and-hold always works, but even if when it does, more than half the times it asks you to be calm through the stomach churning volatility.

See the Apple and Amazon drawdowns mentioned here and at numerous other places

https://lifeandequities.wordpress.com/2016/11/25/no-pain-no-gain/

I have been holding Muthoot Capital for over five years, and below are the lows and highs over the previous five years.

65 – 261 – 131 – 330 – 202 – 360

This stock has fallen ~50% more than twice in just five years. In fact, after kissing 261 on the 23rd of October 2014, it not only collapsed by 50%, but took another two years until October 2016 to regain lost ground and made a new high at ~330. Only when the investors sighed a relief, it collapsed once again to 202, post demonetization.

So, the conclusion is that finance stocks are more volatile, and sometimes it pays to go into hibernation as far as the stock prices are concerned and focus on paying attention (including making money) to other things.

Written by amitdipsite

April 11, 2017 at 9:40 am

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Now I see 21% ROE for Nifty projection

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It’s based on MOSL believing in 10%+ GDP growth for India in a completely separate report from, but from the same brokerage house. Sustained 21% ROE is not possible without new breakthroughs in fundamental science, or Govt mandating everybody to have 5 children.

Written by amitdipsite

April 10, 2017 at 2:19 am

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