Thread by @unseenvalue

Humongous shareholder wealth is generated when industry attractiveness & competitive advantage join forces. However, it’s the sustainable competitive advantage (moat) rather than sector fancy that plays a bigger part in superior profitability & long-term wealth generation.
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PASSING PAIN – fundamentally strong businesses in out-of-favour sector. Few Examples (strictly NO recommendation): Differentiated Technology focusing on disruptive themes (e.g. Digitization, IoT, EV) | Niche CRAMS, Biopharma, Biosimilars | Strong NBFCs - #BajajFinance #PEL (2/5)

DURABLE TRIUMP – True ‘blue-chips’ having established, strong entry-barriers through the development and deployment of resources and capabilities. Examples: #KotakBank #HDFCBank #Maruti #AsianPaints #HUL #HDFC #ABB having strong return ratios and cash flows
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TRANSIENT SUCCESS – These are typical ‘Rain Frogs’
Cyclicals, Commodity Chemicals, Sugar, Metals, Paper, Building materials (#VisakaIndustries #EverestIndustries)
Caution: Don’t overstay your welcome here! If you miss an exit, the next one way be few years away 😊
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LASTING PROBLEM – these are worse than ‘dead companies walking’ – broken businesses and / or balance sheets beyond repair;
Chemical Pharma having generic products past their ‘sell by’ dates! #PSUBanks , Gems and Jewels stocks, even Education sector stocks etc.
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Timing is everything in Commodity / Cyclical stocks!

You have to TIME TWICE - both Entry & Exit!!

That can't be process-driven; You miss an exit and next one will be a few years away!

Low/no debt high-quality stock – we have to be right JUST ONCE (buying at the right price!)