December 31, 2013
Happy New Year Wishes
December 25, 2013
Sell Torrent Pharma
I had earliest posted about torrent pharmaceuticals here and initiated a small position. One of the exist criteria mentioned in that post was the balance sheet getting weaker and exposing the company to leverage risks. Recently the company has acquired the some of the brands from Elder Pharma for domestic and Bangaladesh market. Company is paying around 2000cr towards this transaction. Based on what I read in some of the reports the company is paying around 5X sales and this seems to be an expensive acquisition to me.
Hits and Misses of 2013
This year has been a mix bag of kind. While most of the portfolio stocks performed
well this year, there were some losers which had significant impact on the
portfolio level due to position sizing.
Key to portfolio performance is concentration and position sizing. Going forward, I would be consolidating my
positions and making it a bit more concentrated. Key fact that comes out is , while most of
the well-known and big stocks of the market has not performed with the
exception of TCS, it is those mid caps that have not been discovered by the market
yet are those that outperformed. Going
forward, that is going to be my policy.
Hits and misses are purely derived based on the price
performance from 01 Jan 2013 until the end of Year as of 25-Dec-2013. This
does not include stocks that have been exited during the year. For stocks that were included into the
portfolio during the year, the return is from the date the stock was first
bought. Such stocks are marked with a *
. Stocks that had bonus or splits have
been adjusted for their price.
December 15, 2013
Investment Checklist - Part2
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| Courtesy 1shots/freedigitalphotos.net |
In my previous post on Checklists here, I provided an overview on the checklists and the benefits of using them. In this part, I have listed the checklists I follow while analyzing a security for potential investment. As I mentioned, every investor may have a long or small checklist based on their need and its more of an individual preference. Indian companies are notorious for corporate governance and one needs to be very diligent in their evaluation exercise. As I mentioned before, it is the safety of the investment and its downside that is more important than the upside. Our idea is to reduce the errors of commission than committing errors of omission.
Investment Checklist - Part 1
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| Picture courtesy 1shots/freedigitalpohotos.net |
Checklists are basically tasks/checks that are jotted down in orderly way to make sure that all the items mentioned have been done or covered. Checklists are used for managing very complex systems or procedures where things are not left to the memory of the person that is executing the task or following the procedure. Checklists are very commonly used by pilots while flying aircraft and now checklists are slowly being used by health care industry as well during surgical procedures as well as in ICUs. Checklists have not only helped in saving many human lives but also has helped in cutting down cost and improving quality.
Open Ended Questions to Management
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| Picture Courtesy pakorn / freedigitalphotos.net |
While reading the Investment Checklist written by Michael Shearn, I came across an interesting list of open ended questions that can be asked to the management of a business. He recommends asking open ended questions to the management than asking close ended ones as open ended ones tend to give more insight about how the manager takes decisions. Also he recommends that hypothetical questions should be avoided as they do not guarantee how the manager will actually act when such situation come.
December 8, 2013
Useful Links for Business Analysis
I found this useful link from investopedia to understand some the industries and their metrics.
Key Metrics on 25 Industries by Forbes
This is a very useful slide presentation provided by Forbes on metrics on 25 industries. While this may not list all the metrics, they could be useful to analyze where the company you analyze stands with respect to the industry.
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