Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Timing is important | GSK Consumer India – 10 years of negative returns

with 2 comments

Its primarily NOT doing that it more important in terms of timing rather than clockwork precision of sports. 

Discipline of not buying for months, years, decades unless the price is right instead of buying it at the lowest possible price.

GSK is 130 Billion USD company globally even bigger than Unilever in terms of market cap. It dominates product niches yet what did GSK Consumer return between 1999 – 2009 ? negative 25% as opposed to Sensex returns of 600%.



10 Years of no growth in share price

 10 Years of below average growth in earnings

4 years of mediocre growth

Since 2009, no wonders have been accomplished. A mediocre 18% CAGR of sales. Extreme shortage of ideas, desperation amongst investors led to PE rerating to 40 times earnings. EPS in the past 4 years has only doubled yet the stock returned 8 fold.

So, making abnormal amounts money has three possible dimensions, EPS growth, PE re-rating and a potentially favourable exchange rate. First two are almost a requirement.





Written by amitdipsite

December 22, 2013 at 12:57 am

Posted in Uncategorized

2 Responses

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  1. As usual, outstanding post! More than EPS growth, it seemed the P/E re-rating (for whatever reason) drives the highest factor in wealth generation. And that's probably the fundamentals of investing in low P/E, low P/B stocks.

    'Time in markets is more important than timing in markets' valid, considering this example?🙂

    Kiran

    December 22, 2013 at 5:48 pm

  2. Thanks🙂

    Timing or Time-in-the-markets, people (including myself) have a canny custom to twist past performance by citing few examples to suit one's hypothesis. I am certain we can come with examples of time-in-the-market trounces timing🙂

    —————————————————————————————-

    Amit Arora

    December 24, 2013 at 9:24 pm


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