The Ashiana Housing Lecture Revisited

I had earlier blogged about Ashiana Housing and this lecture on 21 December, 2013.

Varun Gupta, who is Wholetime Director at Ashiana Housing delivered this lecture to my students at MDI on 31 December, 2013.

Finally I got the time today to upload the edited lecture video on YouTube. I have spliced the lecture video into 25 segments. You can view the playlist here.

Before Varun delivered the lecture, students saw two videos. These were:

The lecture was organized with the help of my ex-student and colleague, Arpit Ranka. Thanks Arpit!

Note: I am long Ashiana Housing and hence you should assume I am positively biased in its favor.

END

Interview with Safal Niveshak

I did another interview with Vishal Khandelwal of Safal Niveshak. You can get it from here.

END

The Final Relaxo Lecture

My BFBV course @ MDI got over in January 2014. One of the highlights of the course was a live case on Relaxo Footwear, a company in which I am invested. The case was initiated at the beginning of the course.

On 15 September 2013, I posted a mail (The Relaxo Cinderella Project) to my students about the company. At the time, the stock price of the company was Rs 144 (on a 5:1 split adjusted basis).

Then, on 22 September 2013, my friend Ravi Purohit and I gave a joint lecture on the company (The Relaxo Lecture) in which we explained our investment thesis. At the time, the stock was quoting at Rs 150. Finally, I spoke about the company again in my class on 10 January 2014. By that time, Relaxo’s stock price had increased to Rs 224.

As I write this, it now stands at Rs 254. In this note, I am reproducing from my memory what I spoke on my 10 January class with some updated thoughts on the subject.

You can find the transcript here.

Alternate Link: https://db.tt/DSMrwoLm

END

Mohnish Pabrai Lecture @ MDI

Mohnish Pabrai delivered an excellent talk to my BFBV students on 26 December, 2013. You can watch the video from:

The two videos displayed during Mohnish’s talk can be viewed from:

Take a Shot at BFBV End Term Exam

Here is the BFBV end term exam administered in early December 2013. Students had been provied with extensive information on two companies beforehand which can be downloaded from here.

You’re welcome to post your answers here. I may not be able to give one-to-one feedback to everyone, however.

BFBV ENDTERM EXAM

OPEN BOOK

TIME:150 MINUTES

 SHRIRAM TRANSPORT FINANCE (60 marks)

Based on the information supplied to you earlier about this company, answer the following questions. Assume market interest rates to be 10% p.a.

  1. Provide quantitative evidence supporting the presence of a moat in this business. (5 marks)
  2. Prepare a table depicting per share book value of this business over time including book value as on 30 September 2013. (5 marks)
  3. Prepare a table depicting the relationship between growth in the company’s net worth and market capitalization over time. (5 marks)
  4. Describe the competitive landscape (who does the company compete with, and how strong is the company as compared to its competitors) of this company. (5 marks)
  5. What has been the dividend payout policy of the company over the years? Do you agree with this policy? Why or why not? (5 marks)
  6. What is the current price/book value ratio of the stock based on book value as of 30 September 2013 and how does that ratio compare with year end price/book value ratios over the last several years? (5 marks)
  7. List and explain the multiple sources of this company’s competitive advantage over its existing and potential competitors. (15 marks)
  8. Describe the credit risk management practices of the company. (15 marks)

SYMPHONY LIMITED (50 marks)

Based on the information supplied to you earlier about this company, answer the following questions. Assume market interest rates to be 10% p.a.

  1. Provide quantitative evidence supporting the presence of a moat in this business. (5 marks)
  2. What is the core ROCE of this business (pre-tax operating cash flows on operating assets)? (5 marks)
  3. Prepare a table depicting the relationship between the company’s revenues, earnings and market capitalization over time (5 marks)
  4. What is the current market value of the company’s business (market cap less non operating assets) as compared to its recent earnings? (5 marks)
  5. List and explain the multiple sources of this company’s competitive advantage over its existing and potential competitors. (15 marks)
  6. Describe, with quantitative evidence, the evolution of this business from bankruptcy to prosperity. What key lessons has the management claimed to have learnt from this experience? (15 marks)

 OTHER QUESTIONS (30 marks)

  1. List and explain the multiple sources of Thomas Cook India Limited’s competitive advantage over its existing and potential competitors in the wholesale forex business. (10 marks)
  2. List and explain the multiple sources of Relaxo Footwear’s competitive advantage over its existing and potential competitors. (10 marks)
  3. Explain the difference between book value and intrinsic value as explained by Warren Buffett in “A Few Lessons for Investors and Managers From Warren E. Buffett by Peter Bevelin” (10 marks)

Disclosure: Long on all four companies mentioned above.

The Unreasonable Man

Arvind Kejriwal

Arvind Kejriwal

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw

A few months ago, he was carried away to the prison by Delhi Police. In two days he will be Delhi’s Chief Minister.

Kejriwal Getting Carried Away

Kejriwal Getting Carried Away

I always find it instructive to pick up a good topical book which helps me understand what’s going on right now. And so, to understand the Kejriwal Phenomenon, I picked up David and Goliath: Underdogs, Misfits, and the Art of Battling Giants by Malcom Gladwell.

A few passages I highlighted in reveal that Kejriwal The Underdog, represents a pattern.

“He was an underdog and a misfit, and that gave him the freedom to try things no one else even dreamt of.”

“Much of what we consider valuable in our world arises out of these kinds of lopsided conflicts, because the act of facing overwhelming odds produces greatness and beauty… We consistently get these kinds of conflicts wrong. We misread them. We misinterpret them. Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness.”

“Suppose you were to total up all the wars over the past two hundred years that occurred between very large and very small countries. Let’s say that one side has to be at least ten times larger in population and armed might than the other. How often do you think the bigger side wins? Most of us, I think, would put that number at close to 100 percent. A tenfold difference is a lot. But the actual answer may surprise you. When the political scientist Ivan Arreguín-Toft did the calculation a few years ago, what he came up with was 71.5 percent. Just under a third of the time, the weaker country wins.”

 “T. E. Lawrence could triumph because he was the farthest thing from a proper British Army officer. He did not graduate with honors from the top English military academy. He was an archaeologist by trade who wrote dreamy prose. He wore sandals and full Bedouin dress when he went to see his military superiors. He spoke Arabic like a native, and handled a camel as if he had been riding one all his life. He didn’t care what people in the military establishment thought about his “untrained rabble” because he had little invested in the military establishment. And then there’s David. He must have known that duels with Philistines were supposed to proceed formally, with the crossing of swords. But he was a shepherd, which in ancient times was one of the lowliest of all professions. He had no stake in the finer points of military ritual. We spend a lot of time thinking about the ways that prestige and resources and belonging to elite institutions make us better off. We don’t spend enough time thinking about the ways in which those kinds of material advantages limit our options.”

“Why has there been so much misunderstanding around that day in the Valley of Elah On one level, the duel reveals the folly of our assumptions about power. The reason King Saul is skeptical of David’s chances is that David is small and Goliath is large. Saul thinks of power in terms of physical might. He doesn’t appreciate that power can come in other forms as well—in breaking rules, in substituting speed and surprise for strength. Saul is not alone in making this mistake. In the pages that follow, I’m going to argue that we continue to make that error today…”

“For some reason, this is a very difficult lesson for us to learn. We have, I think, a very rigid and limited definition of what an advantage is. We think of things as helpful that actually aren’t and think of other things as unhelpful that in reality leave us stronger and wiser. Part One of David and Goliath is an attempt to explore the consequences of that error. When we see the giant, why do we automatically assume the battle is his for the winning?”

“What the Israelites saw, from high on the ridge, was an intimidating giant. In reality, the very thing that gave the giant his size was also the source of his greatest weakness. There is an important lesson in that for battles with all kinds of giants. The powerful and the strong are not always what they seem.”

“Courage is not something that you already have that makes you brave when the tough times start. Courage is what you earn when you’ve been through the tough times and you discover they aren’t so tough after all.”

END

The Ashiana Housing Lecture

I had sent this to my BFBV students on 23 September when the stock was quoting at Rs 204 on a pre-split (5 for 1) basis.

Alternate Link: https://db.tt/MPJ8Qzdr

Unfortunately, the lecture could not take place as scheduled on 27 September. It is now scheduled to take place on 31 December.

Note: I am long Ashiana Housing and hence you should assume I am positively biased in its favor.

Why I Bought Thomas Cook

thomas-cook-logo

Lecture delivered at MDI yesterday based on work done as of July 2013.

Alternate link.

Thanks.

Note: I am long Thomas Cook, and hence you should assume I am biased in its favor.

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