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Great not Big

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Many companies (and people) choose to be great not Big.







Source: Small Giants

Written by amitdipsite

August 6, 2017 at 10:40 am

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Vigil Health Solutions | Canadian small cap

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About 50%+ of the current portfolio of the www.elevendimension-funds.com that I manage is currently invested in software businesses outside India that are very high return on equity, and that in my opinion have good prospects. Its just a serendipity that it is in software, year and a half back the global portfolio was tilted towards Bangladesh MNCs.

There is one company that I had an eye on and had been on the fence for the past few weeks/months but did not finally pull the trigger. The growth was reasonable, ~20%, price was also Ok, quite Ok 10-11 PE multiple, despite the run up/quadrupling in the recent 12 months from 20 cents to 80 cents. Just had another look after two weeks, the price is now 1.22 dollars or six fold up. In the UK too I recently ended up buying a company after it was up six fold in the recent 12 month period.

The company Vigil Health Solutions is in the business of setting up software, camera, reporting, innovative technology for Senior Living / retirement villages. This model is second order beneficiary of global aging population.

While building retirement village is a multi year, multi decade capex intensive business (like Ashiana Housing India, Ryman Health care New Zealand, Summerset New Zealand etc. ), this is a direct beneficiary with low upfront investment. Think pressure cookers selling in the shops, and not investment into supermarkets.

The business is truly boring unlike the e-Wallets, Fintech, where 160 IQ from MIT to IIT is applying their grey cells. The business has a strong annuity component.

Meanwhile I am choosing to give it a pass, because I don’t think it will grow above 15% in terms of revenue growth. Mind you I thought the same would happen to Capilano Honey in Australia, which ended up being a 10 bagger in the next two years.

https://lifeandequities.wordpress.com/2015/06/13/continues-to-ooze-sweet/

http://multibaggersindia.blogspot.com/2013/09/roe.html

 

May have some more steam despite being a six bagger.

MCAP is 20 Million CAD

http://www.vigil.com/

Vigil

 

Disclosure: Have vested interest in the 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

August 6, 2017 at 9:22 am

Posted in Uncategorized

Money quotes

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People say money is not the key to happiness, but I always figured if you had enough money, you can have a key made.

Money doesn’t buy happiness, but I’d rather cry in a Lamborghini.

Why didn’t the man report his stolen credit card? The thief was spending less then his wife.

College is the opposite of kidnapping. They demand $100,000 from you or they’ll send your kid back.

The light at the end of the tunnel has been turned off due to budget cuts.

33.6 percent of all statistics are made up on the spot.

Bills travel through the mail at twice the speed of cheques.

Eagles may soar, but rats don’t get sucked into jet engines.

Few women admit their age. Few men act theirs.

For every action, there is an equal and opposite criticism.

For Sale: Parachute. Only used once, never opened, small stain.

Friends may come and go, but enemies tend to accumulate.

Hard work has a future payoff. Laziness pays off now.

I am not a vegetarian because I love animals. I am a vegetarian because I hate plants.

Oh Lord, give me patience, and GIVE IT TO ME NOW!

Support bacteria, they’re the only culture some people have.

I saw a sign that said “Watch for children” and I thought, “That sounds like a fair trade”.

Three years ago I came to Mumbai without 10 Rs in my pocket. Now I’ve got 10 Rs in my pocket.

Money isn’t everything but it sure keeps you in touch with your children.

I’m currently boycotting any company that sells items I can’t afford.

Is everything expensive, or I’m just poor?

My wife donates money to the homeless and I donate money to the topless.

I thought I wanted a career, turns out I just wanted paychecks.

 

Written by amitdipsite

August 5, 2017 at 9:20 am

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Cola is long dead, but not the drinks

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Buffett preached concentration, his followers will slay for a focussed portfolio and rip apart anyone preaching wide diversification, but Buffett himself has moved on to a 100+ portfolio of companies, in fact more into controlled companies space.

Then he publicly claimed to not understand high tech companies, yet ended up buying BYO battery tech, IBM, Apple anyway.

The 40 year ban on airlines was also removed as Berkshire made investments in airlines too. What next ? Bitcoins ?

Munger preached gulps of soda for Cola-cola (which has been a dud stock despite 50 acquisitions over the past 16 years [a very long term period for any human being]) because Soda was a no-go), instead a companies like Monster Beverages returned 100 baggers because the money was not in Cola or Soda but energy drinks for the next 20 years post 2000. Coca cola ended up buying  Monster Beverages for few billions dollars.

Monster isn’t even listed in the list of brands acquired or built by coca cola. If not for the acquisitions, the returns would have been negative for a 20 year period from Coca Cola.

https://en.wikipedia.org/wiki/List_of_Coca-Cola_brands

It turns out that using your own brain does not have a substitute.

If you get indoctrinated into Cola, Wrigleys, Hanes and Paints, i.e. safe stodgy old school safe companies then you block your mind from opportunities that may be otherwise be a screaming buy.

An example is this British company called Fever Tree Drinks. One hell of a performer. I am not to be blamed for not buying because I only noticed is in the recent couple of months. The stock has delivered 12 bags  in 3 years from 1.7 GBP to 22 GBP in three years.

 

fevertree

Its not all a case of PE expansion but breakneck growth of above 60% CAGR in revenues and profits.

fevertree2.PNG

 

fevertree3

And the question is, which part of the world is it not growing?

fevertree4

Its a founder led company and has premium mixer brand for restaurants. ROE is above 40%, stock has been re-rated.  Talk about a hockey stick curve.

growth

 

Lesson is simple: Reading books may lull you into false sense of security. Followers beware, use your own brain. If there is a business that has been praised by the likes of Buffett, Munger or Lynch and has been written in 10,000 blog posts, then that business is more often than not, NOT investment worthy because of the valuation eg: restaurants, fast foods, paint companies, fmcgs etc. In fact ugly businesses such as funeral homes or cemeteries are also hard to find at bargain price because of the above cited reasons, and because these businesses were written about in the book One Up On Wall Street. There was one funeral business that I found in Botswana, Africa in cemetery called FSG Group at 12 times earnings, but it was delisted by a Russian businessman and owner in 2015 http://www.sundaystandard.info/fsg-delist-stock-exchange

 

Disclosure: Have vested interest in the 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

August 2, 2017 at 12:42 pm

Posted in Uncategorized

Demonetisation dud

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I was quite vocal in November 2016 about the bad move that Modi took. In fact, I was a lone voice and many many people (99.8%) people from salaried, investing, value investing, tax paying class appreciated the move. In fact people wrote off finance companies, not that far back just 32 weekends back 🙂

You can see my entire commentary for November 2016 here

https://lifeandequities.wordpress.com/2016/11/

Surprisingly, despite the faux pas or a major blunder, Modi’s popularity is intact and he may likely come to power again in the center. I don’t like him for few reasons and I appreciate him for many others. The same way I don’t admire people worshipping fallible human beings and holding them on pedestal. The work should speak more than the laudability of personality. And in terms of work no Government in 70+ years in Delhi has done for the Government schools what AAP Govt. has done for Delhi schools. We are shallow and hypocrites and worship personalities, we talk about helping the poor, and that we may give them a million dollars once we have 200 million dollars, and something along those lines, then we get lost and admire some PM fasting for 6 days. WTF big deal ordinary people fast for 15-20 days on water who are unwell in alternate therapies. In short we consider and coloured fox as the messenger from Heaven, or worship the wrong Gods of politics, money and personalities. Then we massage our own ego by being compassionate capitalists or providing risk capital in stock market to deserving entrepreneurs.

Finally, the Finance Minister has admitted the Demon was a dud. Source: Business Today. So, both these guys, including PM ended up with the karma of murders and inconvenience. The rich got off by paying 10% cut on their money and channeling it into banks via lower income class.

Demon1

The cartoon below is from 1978 from R K Laxman, not 2016.

demonetisation

One good thing that has come out of it for already wealthy people who invest in shares, is that the operational cost for finance companies is further permanently coming down by mobile/e-wallets. Blessing in disguise for the rich.

Written by amitdipsite

August 1, 2017 at 7:39 pm

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Quantum computer explained

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Exponential as a concept is not easily grasped by our brain under most circumstances. All these small improvements can cause major changes to our industry and society. 

Written by amitdipsite

July 31, 2017 at 7:35 pm

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Two themes for investment 

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NBFC in India which were thought to die a gradual death as the cost of funds for banks is lower. 

It so happens that Niche finance needs are trumping the cost of funds arbitrage. 


The second is the niche IT security companies. Because software besides being very useful is also out of control due to lack of regulations on professional level and technical domain. Right now there isn’t direct loss of life, not much, unlike drugs, hence no regulation. Loopholes in software are used to embezzle millions of dollars, espionage, impacting selection of US president etc. 
See this: https://en.m.wikipedia.org/wiki/Bangladesh_Bank_robbery


If we have software enabled and network connected medical products like insulin, kidney dialysis, artificial heart, autonomous cars, and they are hacked on a mass scale, which is a matter of time then a reverse black swan will play out for IT security companies. It is already beginning to happen in many areas. 
Right now the reliance is on coarse grained tools like anti virus, host intrusion detection and prevention, public key infrastructure and cryptography, file manipulation, all these being reactive measures. Software as designed today is super unsafe. 
Happy investing. 

Written by amitdipsite

July 30, 2017 at 7:39 am

Posted in Uncategorized