Saturday, 18 July 2015

Valuepickr Meet 2015: Few Learnings from my investment journey & Articulation of My Investment Philosophy

Valuepickr has been instrumental in instilling some key learning and investment approaches in my brief investment journey. I am sure, most of you must have heard about the wonderful work that this forum is doing leveraging the power of collaboration and sharing  that not only helps in evaluating an investment idea but also provides highly distilled and yet enormously effective investment frameworks (capital allocation/dissecting the business quality/slotting the business in right category/ capturing the intangibles) for all kind of investor weather amateur or accomplished!  Like me, thousands of investors, have gained immensely from this forum. Donald, Ayush, Hitesh ..the founding members of this forum have been guiding force for the forum and have been cornerstone of success of this wonderful idea.  So, if you have not yet explored it for your benefit, I strongly recommend it to you to do it now, if you are a serious investor who believes in fundamental investing.  

This year Valuepickr completed 5 years of its existence. On that occasion, a meet of the selected forum members were organized at Goa. Around 20 members were invited to attend the meet. I was very lucky and previleged to be part of that meet. Each member was asked to make a presentation on 

1) Key learnings from his/her investment journey 
2) Broad investment approach of each member. 

I am sharing both the presentation here with a small pre-amble on each one of them

1) Key learnings: In the presentation I have  focused on few patterns that I have come across that has worked for me. These patterns are the starting point and not the end points. When I see these patterns, I get interested into the idea, and explore it further. I also, deep down, know that in the past, these patterns have resulted in multi-fold gains and hence if I am able to get it right, I can generate superior returns on my investment. However, the caveat here is that, these patterns alone are not sufficient. To make an investment decision, in addition to these patterns, the basic sanity check criteria must be met i.e high business quality, strong balance sheet, decent management quality, respectable return ratios and compelling valuations. I have also highlighted few "traps" that one may fall into, if one is not careful enough...

Method in Madness!: Few Insights from my brief Investment Journey

 2) Investment Philosophy and approach: The organizers had done an excellent job by preparing  a set of questions relating to one's investment approach that provided a framework for making the presentation. The questions were very intelligently designed and were probing enough to force one to sit back and reflect! I am sure each one of the participant would have to really dwell onto his journey to come out with answers to those questions. The whole experience of going through that process of finding the answer to the questions was extremely enriching. To me it was like articulating the "abstract" idea sitting deep down somewhere in my mind. However, it is important to recognize that at the end of the day, it is "my" philosophy and may not be applicable or effective to any one of you!  Each one of you will have "your own" investment philosophy that you are comfortable with and that works perfectly fine for you. Precisely, that is where the beauty lies. In this, there is no "right" or "wrong" philosophy only something that works well and something that does not work so well. Also, as the time passes and one goes through various cycles, the investment philosophy evolves...The striking thing to me, during these sessions, was that despite of significant divergence in approach, there were common tenets that bound us together!


Please feel free to share your views and comments. I will be happy to receive them.

Disclaimer: I am not a registered research analyst as prescribed by SEBI guidelines and any discussion about a particular investment idea shall not be construed as investment recommendation. This is simply articulation of my personal views. Readers shall do their own due diligence and/or seek advise from profession investment advisor before making an investment decision.

4 comments:

  1. Hi dhwanil
    great presentation. good mental models

    rgds
    rohit

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    Replies
    1. Hi Rohit,

      Thanks for the compliments. Coming from some one like you, it gives lot of encouragement.

      Best Regards
      Dhwanil Desai

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  2. Hi Dhawnil,

    Excellent presentations, I loved clarity of your thoughts :)
    I was really hooked on your theme - The challengers had a question in terms of a Challenger gaining market share, Most of the examples you have shared - Had a lot of unorganized players serving the market as well. In such situations at least I have found that pin point actual market share is more of an guesstimate instead of being precise
    In such how do you arrive that company has actually market share - Is it your interaction with Management / Reporting in AR / Channel checks ?
    Once you have arrived how to reconcile that this is not because of overall increase in pie but because of shift of market share from a player A and B ?

    Once again - Thanks for sharing your wonderful work!

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    Replies
    1. Hi Tankrich,

      Thanks for the feedback. In terms of ascertaining the increased market share, for all the examples that I have mentioned, each one of them had reported/disclosed the market share information either in their AR or in their concalls/investor presentation. However, in many industries, the market share estimation is not done by any industry body/market research company. Hence, the numbers may be off the mark here and there. However, one will get reasonably good idea about the same directionally. Another, crude method, to understand this phenomena is checking the growth rate of the company (over a definite time horizon) vis a vis the industry growth rate. If the company is outgrowing the industry by a large margin, it clearly indicates market share gain (say the organized sanitaryware industry has been growing at 15% while Cera has been growing at 30% over 5 years suggest that company may be gaining market share from competitors)

      Hope this helps.

      Best Regards
      Dhwanil Desai

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