Sajal Kapoor Profile picture
Tweets/RTs ≠ Recommendations. Conservative investor with focus on management and ⭕️ of competence. Industry Structure | Risk | Compliance | MBA Finance
Vikas B Jain Profile picture Ranjit Kumar Chordia Profile picture Rakshit Bhadana Profile picture Harsimran Singh Profile picture kanna Profile picture 26 added to My Authors
24 Jun
@Vivek_Investor Averaging up or down doesn't really matter as long as my judgement on these 7 pillars + the margin of safety is largely correct. Typically, average-up if business value is compounding faster than the price (Syngene IPO 125/-, but subsequent average-up); Average-down if "Yes" 👇
@Vivek_Investor Getting the call on management completely or partially wrong been a repeat mistake (Morepen – 20Y back, Kopran – 2014). Full exit is very likely if I discover A BIG -ve (e.g. management integrity or really terrible capital allocation – so if Dabur moves into Textiles or cement).
@Vivek_Investor However, biggest mistake been selling way too early which I’ve corrected to some extent, thanks to the 'expensive' lessons. HDFC Bank in late 90s was a high PE stock and a doubler for me – was happy to take 100% gains and walked away leaving a multiple of 100 on the table! [1/2]
Read 4 tweets
29 May
Pidilite and Asian Paints are already there!!

Can US do to China what they did with USSR (disintegrate the dragon)? That will lead to a strategic shift as Chinese Govt. is supporting local industry in an unfair manner...

[1/n]
Speciality Chemicals/API like Pharma/Biotech is a very heretrogenous space - the "pack" would never move like a commodity sector. But here is an interesting data point...when TMT boom died in Y2K - many tier 2 players got obliterated! - Penta, DSQ, Siverline, Global Tele++

[2/n]
When the Infra/Reality boom ended in 2007 - many tier 1 and tier 2 were "buried deep inside" - Lanco, GVK, JP Associates, GMR, Unitech++++

When Pharma boom ended in 2015 - none of the tier 2 got obliterated (Ajanta, Natco++). Tells you about the Sector Economics!!

[3/n]
Read 4 tweets
13 Mar
#Syngene order got executed at 9:15 🇮🇳

Conviction | CDMO has a very long runway and Syngene is the only such player from 🇮🇳
Looking at the Twitter and Watsapp " claims " - everyone bought everything at the lower circuit! I wasn't so lucky :)

Remember - over the 10-20Y period it's the brilliance of the business and management that compounds capital and NOT the market timing. Give time to them.......
“Waiting for the bottom is folly. What, then, should be the investor’s criteria? The answer’s simple: if something’s cheap – based on the relationship between price and intrinsic value – you should buy, and if it cheapens further, you should buy more.” - Howard Marks
Read 4 tweets
20 Dec 19
My 15 small and mid sized pharma for 15Y

⚠️~5 can go bust (0)

No trading. No questions. Your money. Your conviction. Your due diligence!

Albert David
DCAL
FDC
Indoco
JB Pharma
Jubilant Life
Laurus
Natco
Neuland
RPG Life
SeQuent
SMS Pharma
Solara
Strides
Syngene

| Pharma 💉💊
Quite a few DMs around the warning " ⚠️~5 can go bust (0) "

If you want to be super safe - just avoid those names with the toxic combo of Debt + Pledge

Eris Life was not mentioned above, and may well be considered. I obviously hold from Sep'19.

| Small Pharma Long-term Lock
Overwhelmed by the number of comments - shall broadly elaborate my thoughts on each business listed above

What/why like?
Entry, average price & holding period?

Everything's just an opinion. Reserve the right to be wrong.

Blindly cloning someone is the worst possible strategy!
Read 9 tweets
28 Oct 19
No page 3 investor has printed invitation cards – “please clone my stock idea at any price”. It’s the stupid " wanna get rich quick " speculator that lives under a solid hallucination that they are the best investors on the planet. They need to get rid of this mental illness. [1]
Investors @LuckyInvest_AK , Dolly Khanna, RJ, Ramesh Damani, @shyamsek, @hiddengemsindia, RK Damani to name a few – also do a lot of charity.

They don’t want you to clone their trades. It’s the media / blogs / websites that create that perception and hype.

Avoid cloning 🚩

[2]
@LuckyInvest_AK @shyamsek @hiddengemsindia I am also a retail investor and I get the same news flow.

What do I do❓I use that news flow to my advantage❗️

I never ask for stock tips. I don’t clone stock ideas.

✅ I do clone good thinking / analysis / process / learning.

Independent and contrarian thinking helps.

[3]
Read 5 tweets
4 Sep 19
Like bamboo cultivation, the results of strategy & capital allocation are intertwined and outcome may not be known for few years. This is particularly true for biologics, life sciences innovator companies.

Having said that - few basics for good & bad capital allocation are:
{1}
Bad capital allocator:

👉 Extrapolating good times or peak economic cycle to continue longer-than-average

👉 Ambitious debt-funded Capex at peak cycle

👉 Incremental ROCE lower than existing ROCE

👉 Unrelated diversification having no connection with existing business

{2}
In certain FMCGs - outright disruption's unlikely but substitutes & competitive intensity in on the rise!

Think in terms of ROCE trend line...is ~70% ROCE going to stay around the 60-80% range over the next decade or will we likely see a ~30% ROCE in 2030 (that's big drop!)

{3}
Read 6 tweets
16 Jul 19
On this auspicious day of #GuruPurnima, happy to share an easy to read and an exceptionally worthwhile investment. I plan to make a thread that will hopefully help us invest and live better. Thank you @awealthofcs 🙏🏻
Experience has taught me that less is always more when making investment decisions. Simplicity trumps complexity. Conventional gives you much better odds than exotic. A long-term process is more important than short-term outcomes.
And perspective goes much further than tactics. Tactics are useless to investors in a matter of days—sometimes in a matter of hours. But perspective is something that stays with the investor for a lifetime. It allows you to adapt to the changing market and economic landscape.
Read 14 tweets
20 Jun 19
Given where Indian small caps are today, this book is a very reasonable investment. Go for it 👍🏻
Best time to look for a multi-bagger is around the time when masses start to find the word 'multi-bagger' as disgusting. This masterpiece from @chriswmayer is inspired by Thomas Phelps's "100 to 1 in the Stock Market" and is an addition to that with more recent data. #100BAGGERS
“Bear market smoke gets in one’s eyes,” he said, and it blinds us to buying opportunities if we are too intent on market timing. [1]
Read 14 tweets
15 May 19
I have a 'wall-of-shame' built in an agonising manner over 25Y.

Those who know me personally or been with me here, have seen the tweets tagged as #uv_lessons which are basically my own bruises and cuts.

'Why I Failed' thread on this experience should help us all (me included).
#IPO craze of mid-90s made me experience the 80:20 rule

> 80% IPOs were 'lipstick on the pig' (bad businesses, numbers were window dressed)🚨
< 20% IPOs were good businesses at a fair price (#HDFCBank)

Sold good ones to "book profit", but kept hugging the junk ones #uv_lessons
Been tracking this biz for long, and fully exited in 2017 (purely valuation call in a volatile space); re-entered last year after 66% drop, as risk/reward was favourable; stock slipped another 15% and I added some more! (my thesis: same biz getting cheaper and I had cash).

[A]
Read 13 tweets
18 Apr 19
Investors know that the high-quality #FMCG companies are over-valued ⛳️

Yet they prefer to sit tight due to the quality of earnings, low maintenance CapEx and working capital, sustainably high cash-flows, high incremental ROCE and (still) a very long growth runway ahead! 👍

[1]
Growth drivers galore! World's poorest people are in volumes; a fast-growing market segment; untapped buying power!

Note: only 3 #FMCG categories are almost fully penetrated - bath soaps, detergents and matchsticks. Everything else offers good long-term (>5 years) growth!

[2]
Innovative and progressive #FMCG players are continuously discovering new solutions like single-serve packages for dozens of underpenetrated categories (e.g. hand sanitizers, home insecticides).

Across EMs we find these single-use products dangling at the tiny storefronts.

[3]
Read 7 tweets
5 Feb 19
There are only 2 sources of sustainable profits - a) sector attractiveness and b) durable moats!
Horizontal Integration (related, NOT mindless diversification) must therefore be directed towards deep-value creation. Michael Porter has refined these into "3 essential tests"
[1/n]
1. The Attractiveness Test: which warrants that the sectors selected for related diversification must be "structurally attractive" or if not currently attractive, must have the capability to be made attractive over time (not every sector can be made attractive!)

[2/n]
2. The Cost-of-Entry Test: This is where innovation, economies-of-learnings & prudent corporate governance (scarce resorce as we know now!!) comes into play!

The cost-of-entry must not capitalise all the future profits. Otherwise the game is over even before it starts 😉

[3/n]
Read 6 tweets
27 Oct 18
Pharma sector will get disrupted in the next 3-5 years❗️

Investors having material exposure must evaluate each story on the basis of 3 key parameters - IP Strategy, Physical & Social Technologies.

Above 3 will define the “future fitness” of the company you have exposure to❗️
Social Technologies in the context of Pharma are the capabilities around regulatory / legal systems; healthcare delivery systems in an environment friendly and economical / affordable manner so that the health benefits are realised by 99% of ‘not so rich’ global population!
Physical Technologies and IP are blended together to leverage not just the Green Chemistry, the Nanotechnology and Biotechnology but also the data / information integrity, secure documentation / regulatory filings and sustainable manufacturing technology!!
Read 13 tweets
18 Oct 18
The degree of competition in any sector is largely determined by “Threat-of-Entry”

Greater the threat, the worst it is for incumbents in that sector!!

An attractive space for Investors (and Management) is one where new competition is forced to overcome Durable Barricades!!
There are few clear-cut pointers to figure out such hurdles 👇

- Scale & Experience ?

- Regulatory / Legislative barriers ?

- Exclusive access to a resource or distribution channel ?

- Nature or extent of EXPECTED retaliation from incumbents ?

- Brand / Patented Technology ?
Incumbents may have access to some proprietary technology that gives them a clear cost or quality advantage not available to new entrants (or where new entrants would have to 💰💰💰in R&D)

Popular brands that have been around for decades!! – Dettol, Johnnie Walker, Fevicol etc
Read 5 tweets
15 Oct 18
“When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.” – Warren Buffett

Aim to formulate a thread on Sector - Attractiveness & Repulsiveness!
#uv_sectors
Michael Porter’s 5 forces that shape the Industry’s Structure:

1.Competitive Intensity (Rivalry)

2.Bargaining power of Firms relative to their Suppliers and Buyers

3.Threat of new Entrants

4.Threat of Substitutes

5.Value of product / services to Buyers / Customers
Few Sectors in the “Organized” space have transformed from being Oligopolistic to Hypercompetitive (or Jurassic as I prefer to call them 😊).

Jurassic pockets with near-perfect competition are:

- Great for consumers 🙌
- Unappealing for investors 💣 (e.g. branded Air Coolers)
Read 5 tweets
23 Aug 18
Heads or Tails ! 💰💰
Scenario#1 or Scenario#2 ! 💰💰
#crams #cro #cdmo

Across Animal, Agro / Crop and Human Pharma, Biotech
#ActecLifesciences
#DishmanCarbogen
#DivisLabs
#Hikal
#JubilantLifesciences
#LaurusLabs
#Neuland
#PIIndustries
#PiramalPharma
#SuvenLifesciences
#Syngene
#CRAMS is like an ‘auto ancillary’ partnering with OEMs (life sciences innovators) and helping customer’s science and intellectual property via their cross-customer learnings and scale.

Extending this thread to spell out few key differentiators for high quality #CDMO #CMO #CSM
1.Partnership mindset – best lab-to-market innovations are those that are developed via global partnerships where innovator and supplier teams collaborate. Innovator gets the necessary knowledge and commercial-scale production from #CDMO #CSM #CMO #CRAMS #CRO
Read 11 tweets
31 Mar 18
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.
(1/5)
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
(3/5)
Read 6 tweets