Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Wide Moat Investing in a Leaky Boat market

with 5 comments

I wrote six months back (March 2014) at 
http://multibaggersindia.blogspot.com/2014/03/replicate-and-imitate.html

that “I missed Nigeria (A mistake I hope to fix in coming weeks and months).” I’ve not been smart enough and yet to correct that blunder.

7UP Bottling (Pepsi Cola) at the time was 70 Nigerian Naira, in six months since then the latest price of 7UP is 162, these are high quality ideas where one can bet 10% of a large fund portfolio. In Calender 2014 the company has appreciated 128% as of date.


























Buffett, Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks”

 In this case the ‘chronically leaking boat’ for me is absence of worthy value stocks or growth stocks at the right price post an aggressive bull run resulting in a general over valued market.

Was reading a 1994 letter by Buffett addressed to Walter Schloss, just today, and another one in which he mentions that stocks can be at times worth NOT investing in at 40x PE under certain circumstances and one could wait on the sidelines (fixed income). He practised staying out of market for up to 4-6 years. These days, you can have consultants in tuxedo proudly claiming, how important it is to stay invested (as if you are a captain at the wheel and need to inspire the crew by example, or as an investor you need to lock in the capital in expensive equities to prove your loyalty to the country), you have to stay invested through thick and thin.

Investing in other depressed or reasonable markets is another perfect alternative to fixed income instruments. Despite tripling, 7UP Bottling Nigeria is available at 13 times annual earnings. Some more research is needed before committing to the idea, maybe the price would be up another 50% by the time I dilly dally.

Platinum

Reversion to mean is a powerful model.

Lowest cost producer of a commodity is a natural MOAT. One can easily buy top two of the leading Platinum producing companies, both of which are down 70% this year on back of strikes in Zimbabwe, aging mines and tumbling platinum prices. Two biggest producers globally are Anglo Platinum and Impala Platinum, both down 60-70% this year. Both are listed on one or more of OTC market, South African Exchange and Australian Exchange.

ANGLO PLATINUM

IMPALA HOLDING

http://metals.about.com/od/Top-10-Producers/tp/The-10-Biggest-Platinum-Producers.htm

Some more unknowns (that have nothing to do with quality of company but Government policies and regulations) prevent me to bet on platinum just yet.

The hunt is on before being submerged in a leaky boat (aka correction of 15-20%, a euphemism for loosing a lot of money very swiftly in an over valued market).


Disclosure: Vested interest in positions discussed. Views are personal notions and do not represent any organisation or company. I am not an investment adviser. Investment in stock market and currency market can (and many a times do) result in loss of principal capital.


http://www.elevendimension-funds.com

Written by amitdipsite

October 11, 2014 at 10:41 pm

Posted in Uncategorized

5 Responses

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  1. In a human’s entire lifetime, he needs very few good stocks to have a remarkable investing record. Thus, majority of the time he should simply reject stocks, day in and day out, whether ideas are average, good or quite attractive. Investment must be made in only glamorously gorgeous ideas, that too seldom. Once in a year or two in an idea. With this approach, it will be easy to spot 5-10-20 baggers. Thus, a mere 1 lac Rs of investment can be turned to 1.25 Crores with only three 5-baggers in a row.

    Amit Arora

    October 12, 2014 at 10:53 pm

  2. Buffett, “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks” can also read as, “energy channeled in finding value stocks in one overvalued market should instead be directed at another market or asset class”

    Amit Arora

    October 14, 2014 at 8:28 am

  3. If investing is entertaining, if it is fun, you're probably on wrong track. Good investing is boring – George Soros

    Investing should be more like watching a tree grow, or paint dry. If you want excitement, take 800$ and go to Las Vegas – Paul Samuelson

    “In investing, what is comfortable is rarely profitable.” – Robert Arnott

    “Financial peace isn't the acquisition of stuff. It's learning to live on less than you make, so you can give money back and have money to invest. You can't win until you do this.” – Dave Ramsey

    Amit Arora

    October 15, 2014 at 9:37 am

  4. Dear Amit, Please read article about GSK. Good time to buy I guess. Rights offer may pop up due to Capital necessary for Plant improvement or Parent buying will restart at premium (last time it failed)
    http://thecitizenng.com/company-review/glaxosmithkline-profit-may-drop-to-five-year-low/

    Karthikraja K

    October 16, 2014 at 3:38 pm

  5. amitji- your p.d.&o.b. iscrocking.also capriglobal now both are hold or buy?

    sayantan pal

    October 16, 2014 at 7:04 pm


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