I have seen plenty of Buffettology on Twitter and in other places over the past few years. Its time to clear the air and understand that there wasn't one but 3 different Warren Buffett's that existed throughout his career 📚📚
Time for a thread: 3 Different Buffett's 🧵🧵🧵
One of the biggest mistakes that you as an investor can make is to forget the basic and the most important mental model an investor can have: Numeracy. Being fluent with numbers and respecting the context in which Buffett made his returns.
At the beginning of his career, let's call this Warren Buffett 1 i.e. Between 1957-1968. This was the time when he was working with small sums of money. He was extremely valuation conscious and guess what. How many stocks did he buy and sell between this period?
Let's Understand why Narrative is important in investing and how to create a Thesis that can help you to hold a stock in spite of the market environments
Time for a thread with international and Indian examples, Please retweet so that everyone can benefit 🧵🧵🧵🧵
The world we see and defined is given meaning by the words we choose to use. In short, the world is what we make of it. Something similar applies to creating a thesis before investing in a stock. Your thesis is what makes you hold a stock thick and through in spite of bull/bear
Example 1: Amazon- In May 1997, Amazon became a publically listed business. The target price set by analysts was $18 per share. It finished its first day at $23 per share. (So much for targets). In 1999, in the middle of the tech bubble. Same stock was trading at $100 per share.
SOIC Book Reviews: Dhandho Investor in the Indian Context 🇮🇳🇮🇳
Link to the video 🔗:
Scenarios that often lead to a depressed stock price, Low risk and high uncertainty where often deep value opportunities are available 🚪
Before investing you should ask these questions to yourself otherwise you might enter the Chakravyuh but won't be able to exit like Abhimanyu. Both power of focus and circle of competence are key learnings from this episode 🏹
Markets reward businesses that display the ability to diversify into adjacencies while at the same time maintaining their return ratios.Signals expanding size of opportunity and managements ability to identify more profit pools
Time for a thread with examples 🧵
Astralpoly🚰 isn't just a pipes company anymore. It is a water solutions provider dealing in Adhesives, Tanks, Valves, and Pipes. Homework for everyone: check the CFO compounding of the last decade
Divis Labs💊-again another API Champion which is entering Contrast Media API's which a very concentrated segment. They believe they have the process chemistry advantage over here as well!
In the business world, the rearview mirror is always clearer than the windshield. Be forward-looking as an investor. Read everything about the industry, peers, new products, new methods of distribution, etc.
My go-to resources📝📝
5)Magazines like contract pharma, chemical weekly, Forbes, Outlook Business, etc
6)Better to know as much before you are investing. Only annual reports won't cut in today's investing world due to the increasing amount of change that is taking place
7)Read about international
players as much as possible. Looking at what has happened in the international industry can you give you some insight what can happen in the Indian industry :)
The key to it all is consistency- just read for 90mins a day for the next 3 years. The only way to get ahead is reading
Gujarat Ambuja exports limited🌽 fell from a peak mutliple of 30 to 10 times. As the maize prices rose due to fall Armyworm infestations etc from Rs14-15 to Rs 24-25 . Since Gael entered into Fixed contracts and is partly a commoditized player, margins fell
In the maize segment to low single digits. They have consistently made a 15% Roce in this business for the last decade. This was part 1 of the cycle, when the markets perception changed from Growth PE to a steady state mutliple as business experienced headwinds
Part 2- nearly 10% of the industry capacity collapsed as they couldn't bear the hike in RM prices. In terms of competitive scenario, competitive intensity just lessened. Yet it was being valued below 10 times due to uncertainty in the short run.
“To be able to take advantage of such divergences, you have to think in a way that departs from the consensus; you have to think different and better. This goal can be described as second-level thinking or variant perception”
- Howard Marks
Difference in interpretation, just think of it this way. Suppose you’re a Japanese MNC, availing discovery services from Syngene (first tentacle), the molecule subsequently progresses to the second stage i.e. the development (2nd tentacle). The MNC is very lucky and the molecule
Is commercialised. Syngene helps you in manufacturing too (3rd tentacle). Low cost acts as another tentacle as average salary of an Indian scientist is $60,000 vs $250,000 in Usa. You help in cutting costs by 40-50%. The rest of the tentacles help in supplementing the platform