Archive for the ‘From other blogs’ Category.

 

Prof bakshi had posted a quiz to his students. You can find the answer to his question in the comments section. I have posted on the same company earlier.

In addition you may find my response in the comments section too. There are several other answers from others in the comments section such as VST, wyeth, divyashakti granite etc. Some of the ideas sound pretty interesting and I would be looking at them closely.

My suggestion – if you are interested in value investing, read prof bakshi’s posts ,articles and interviews. There is a lot you can learn from him.

As an aside – i am reading a book : seeking wisdom – from darwin to munger. This book has been recommended by charlie munger himself. I dont remember the exact comment, but it seems he liked the book so much he bought a copy of this book for all his friends and relatives. He also said that if there are more books like this, he could bankrupt gifting them. I am not sure of the authenticity of the comment. But after reading 60 odd pages, i can tell you that this is a great book, especially if you are looking at developing a latticework of mental models. For those you who may not know charlie munger, he is the vice chairman of berkshire hathaway and a long term partner of warren buffett.

 
 

I found these two investment ideas on the blog ‘Indian equity guru’.

http://equityguru.blogspot.com/2006/12/stock-idea-srf-polymers.html
http://equityguru.blogspot.com/2006/11/stock-idea-maharastra-scooters.html

Both the ideas are of holding companies. For ex: SRF polmers has a substaintial holdings of SRF. As a result if you add the value of the business to the value of holdings, the company is selling at a substantial discount to intrinsic value.

One can make a similar case for Balmer lawrie limited and BMIL. Actually I would not be surprised if there are several such stocks available. I find such ideas interesting and cannot argue against the basic logic. What I cannot get my arms around is how will the value get unlocked? There seems to be no catalyst in sight as the holding company is a means for the promoter to exercise control. As a result the holdings may never get sold. What will unlock the value then in such cases?

Somehow these ideas seem to have a mirage like quality. You can see the value out there, but may never gain from it (unless there is an underlying catalyst to unlock the value)

 
 

Found this posting Victor Niederhoffer’s blog on competition. I agree competition is good for society / consumer , but bad for an investor. I would prefer a company which is close to a unregulated monopoly ( a toll bridge as buffett says )

Competition, by Victor Niederhoffer:
Competition in its many aspects — markets, trees, companies, old heartedness, protection of consumers, romance — is the main force responsible for our high standard of living. It brings out the best in us and provides the consumer with the price and quality he wants. James Lorie, along with Franklin Fisher, was one of the chief consultants for IBM in the antitrust action against it in the 1970s. I came across this quote by Fisher vis a vis the similarities to the Microsoft case:
Every practice that the government complained of had to due basically with the offering of better products or lower prices. The government did not understand that that is the way competition works.
He then goes on to show how IBM had developed a better and smaller disk and the government complained it was a predatory device.
If only the public were educated to realize that there is always someone waiting around to provide a product at a more attractive price or quality or time or convenience, then so much wasted envy and loss would be averted.