Friday, October 19, 2012

An update on stuff...

Hello to all! Well, I have finished torturing my students (my lectures are over) and now its time to concentrate more on torturing my readers! :-)
I have this habit of putting up brief updates at regular intervals, so here it goes..

Mr.Market has smiled upon most of us and I believe that all of our portfolios will be galloping for whatever reasons! Many of us will be secretly considering ourselves as amazing stock pickers and investors. However, very few acknowledge the role that luck plays in investing. The usual thought process of a lot of investors is that if profit is made, it was skill, while if loss is incurred, it was (bad) luck. Its a very convenient way of turning our confidence into over-confidence. I had earlier written on the topic of skill v/s luck in investing.
Well, a couple of people, Abhinav and Niren have recently started a blog about investing, with this as the central theme. While I haven't had the chance to interact with Abhinav extensively, Niren and I have been friends for more than a decade and we meet up everyday for a cuppa tea. He is someone I regard highly as an investor and is someone whose thoughts any keen investor should follow. Here is a link to their introductory post. (Yes, I am promoting my friend's blog.. yes, I think he is a very smart investor and brings a fresh, new approach to the, he did not ask me to do it...yes, I will make him pay for tea for at least a week!)

Well, after diverting from the topic of this post and trying to promote my friend's blog to the very few readers of my blog, lemme get back to business!!

I had written about NBCC a couple of months ago. My view on the stock as a long term holding is not very positive due to the reasons mentioned. However, it is expected that the revenue and profit booking of their commercial real estate project which I had mentioned could happen in the either Q2 or Q3 FY12. When this happens, it will result in an exceptionally amazing quarterly result and there could be a nice spike-up in the stock price. However, from the longer term point of view, my concerns still remain and in my view treating this as a 'compounding long term story' is quite risky. Treat this as a 2-3 quarter 'trade'!!

APW President AGM was attended by a friend of mine. No fresh information was obtained. In my view, due to the lethargy of the promoters, valuations which are not 'sitter' valuations, in a industry which is not exactly going through good times, one should not take a large position in this.

Sundaram Clayton demerger record date is over and the existing company has also been delisted for some period of time. I was not invested in this situation, but I intend to keep a watch on the scenario post-relisting.

DISA India has given decent returns and since I had disclosed that I was buying the stock, I should disclose that I still hold the entire position. I am not even thinking about the delisting angle and I am comfortable as long as I can see that the business is doing well and valuations are not over-the-top. People interested in DISA might find this article interesting. :-)

Ashiana Housing has gone through some interesting times. I absolutely adore the management. In my view, they are best-in-class. However, due to the change in accounting policy they have initiated, one should expect very lumpy earnings going forward. While that does not matter to me, it might matter to Mr.Market! However, two factors - lack of growth and the unwillingness to distribute healthy dividend inspite of having great cashflow - make me sit back and think on the stock unemotionally. While I do not think that the company will destroy wealth, I fear that the stock could deliver sub-par returns due to these factors.

Falcon Tyres is something I had found very interesting in a negative sense! I continue to track the stock with interest! Apna kuch lena-dena nahi hai, but still, complete interest! :-)

Well, that's all for now. I am looking at a few interesting new ideas..will update about them soon.

Cheers and happy investing!!

1) All the posts on this blog, including this one, are for educational and discussion purposes only.
2) I post articles on individual stocks as well as varied topics like behavioural finance, industry analysis etc. None of the material posted should be regarded as advice to buy/sell any stock. My articles are not recommendations to buy/sell individual stocks, and should not be construed as any form of investment advice.
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Dhwanil said...

Hi Niraj,

good updates about your views on some of the ideas discussed in previous posts. I very recently looked at Ashiana Housing and to say the least found it extremely interesting from number of aspects. It has differentiated business model, conservative accounting practice, good return ratios and very decent historical growth rate combined with large opportunity size. It is available at great valuation too.

I somehow feel that not distributing cash does make some sense considering the fact that even after not following "land bank" approach, inherent RE business is moderately asset heavy. Hence one need to conserve capital to build assets and then generate return on it (which they have done successfully for more than 10 years now). If they distribute cash to shareholders, they may face a situation where their growth may moderate or they may have to let go some interesting opportunities that may arise.

I am increasingly feeling confident investment attractiveness of Ashiana for longer term horizon.

Best Regards
Dhwanil Desai

Neeraj Marathe said...

Hey thnx Dhwanil for your view..

Anonymous said...

Hi Neeraj,

You mentioned about 'extreme cycle investing' in one of ur earlier comments. can u elaborate.


Neeraj Marathe said...

Hi Amit,
WEll, extreme cycle investing is not a properly defined term as far as i my view, one can look at it in 2 different ways..
1. Extreme cycles of the overall market as such: after every few years, one sees a perfect storm which hits the market out of nowhere, causing stock prices to crash to insane levels. this does not happen often, but does happen maybe coupla times in a decade. i know a few investors who are extremely passive in normal market conditions, who will be ok with sub-par returns in the normal market, but will wait for such insane crashes. at that time, they are ready with the money as well as their chosen list of stocks to buy and they buy big when no1 else is doing so..
2. Extreme cycles of an industry: this is more specific. there are industries which are extremely cyclical in nature. sugar is a good example, so are most of the metals. in bad times, when the industry reports record losses, Mr.Market extrapolates this as though the losses will continue for ever and brings down the stock prices to really really insane levels. this is a time for such investors to buy.
of course, this type of investing requires a very different mindset, ability to work with very limited information and lack of much clarity about the future. i personally do not do much stunts on this front, to be honest!
sorry for the long reply, but i hope i answered ur question somewhat..

Anonymous said...


Where is the PE wala write up? ;)


Neeraj Marathe said...

Well, its tooooo long a topic to post m'am..
will bore you about it on a 1-to-1 basis!

rapidriser said...


Any news on the APW President's de-listing offer. The postal ballot approving de-listing was completed on 30-Jan-2012. They will have to act upon it very soon if they do not wish to allow it to lapse.