tag:blogger.com,1999:blog-7004453.post2878629093389005264..comments2023-09-02T19:53:06.144+05:30Comments on Understanding and applying value investing principles: Cash - good or bad ?Rohit Chauhanhttp://www.blogger.com/profile/00356455735241398199noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-7004453.post-88327621733814064092009-01-23T05:32:00.000+05:302009-01-23T05:32:00.000+05:30hi vici read in the AR that cash was held in mauri...hi vic<BR/>i read in the AR that cash was held in mauritius with a foriegn bank ..though i dont remember the name of the bank<BR/>regards<BR/>rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-31757668658157508912009-01-23T02:02:00.000+05:302009-01-23T02:02:00.000+05:30Hi Rohit,Great post and thanks for the article fro...Hi Rohit,<BR/><BR/>Great post and thanks for the article from Prof Bakshi, I read it with a great interest.<BR/><BR/>All the "details of these foreign banks" where the cash is held for some of the companies like HTMT Global etc, is this info mentioned in the ARs or balancesheets?<BR/><BR/>Thanks,<BR/><BR/>VikasVikas Ranahttps://www.blogger.com/profile/05508406035178681504noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-510212945258033962009-01-21T22:41:00.000+05:302009-01-21T22:41:00.000+05:30anon2it is a fairly dry book ..not entertaining .....anon2<BR/>it is a fairly dry book ..not entertaining ..but a great book to learn value investing from the master himself<BR/><BR/>regards<BR/>rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-9224911629839574752009-01-21T22:40:00.000+05:302009-01-21T22:40:00.000+05:30Hi tarkeshwaryou highlighted exactly the dilemma i...Hi tarkeshwar<BR/>you highlighted exactly the dilemma i am facing. there is no 'proof' that there is fraud in the company.<BR/>however it is not a comfortable position till we get a more disclosure.<BR/>in case of management, one has to go by a subjective analysis and gut feel. as a result i am looking at reducing my holding and percieved risk if not exiting completely.<BR/>regarding returning cash - i agree it would too much to expect with any company in india to return.<BR/>in addition HTMT is growing well and can use the cash to do some decent accquisition.Rohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-65651869547703172822009-01-21T22:30:00.000+05:302009-01-21T22:30:00.000+05:30hi domnikalmost all investors are suffering from t...hi domnik<BR/>almost all investors are suffering from the 'cat on hot tin roof' syndrome. we are now scared of cold tin roof too.<BR/>one cannot pronounce a company guilty unless proven otherwise<BR/>In the AR the cash seems to be held with scheduled banks, this cash is tying up with the interest income. In addition the management (CEO and others) does not own the company and are mostly employees ..so they do not have a strong incentive to commit such a fraud.<BR/>we also have to look at the incentive to commit a multi-year fraud. that may not be the case here<BR/><BR/>regards<BR/>rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-40321781399628939612009-01-21T20:55:00.000+05:302009-01-21T20:55:00.000+05:30Re: HTMT CFO statement.Maybe the guy is talking ab...Re: HTMT CFO statement.<BR/>Maybe the guy is talking about consulting legal team on PwC issue, not on specifics of cash. He is talking about two things in that line.<BR/><BR/>And HTMT's money was from sale of stake in Hutch, not from profit (which was fudged as in case of satyam). Does not that make it less likely that the amount is fake.<BR/><BR/> There is a possibility that the cash could be siphoned off. That brings back the qus of trust in management, without which no investment is safe.<BR/><BR/>Re: Prof Bakshi that most of the idle cash in books should be distributed as dividend to shareholders. That's a Grahamites' delight scenario but far from reality. No company has that good corp governance to do that, at least in India.Tarkeshwarhttps://www.blogger.com/profile/10426943577535790998noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-7468459514114214272009-01-21T19:55:00.000+05:302009-01-21T19:55:00.000+05:30Hi Rohit,Thanks. I have bought a copy of the Intel...Hi Rohit,<BR/><BR/>Thanks. I have bought a copy of the Intelligent Investor and found it a very good read. Now, I am wondering whether I should pick up the book on security analysis too and which is why the question. I scouted around in the internet and found people saying the 1951 edition is the best. There is one edition which is 2008, but people do not seem to be favorably disposed towards it. I see your blog and understand you are a big follower of Graham/Buffet..I will go by your recommendation and pick up a copy of 1951. Hopefully, it will turn out worth the spend. Bon Apetit.<BR/><BR/>Regards.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-40862253180206378512009-01-21T12:02:00.000+05:302009-01-21T12:02:00.000+05:30hi rohit,nice post, any thoughts on Denso India an...hi rohit,<BR/>nice post, any thoughts on Denso India and where the company's cash is parked. The antecedents of the company are exceptional - with stakes by Maruti and Denso Japan - but it does trade below cash levels and the whole satyam episode makes me nervous<BR/>regards<BR/>dominkAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-22527930458665704292009-01-21T10:02:00.000+05:302009-01-21T10:02:00.000+05:30Hi anon2you are asking someone who is a complete d...Hi anon2<BR/>you are asking someone who is a complete devotee of graham and buffett :)<BR/>i bought the first edition 9 years ago and have read it 3-4 times till date..and plan to do every alternate year <BR/>i think the later editions are equally good and you can pick any ..i have not seen them personally<BR/><BR/>regards<BR/>rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-12914196485623986012009-01-21T10:00:00.000+05:302009-01-21T10:00:00.000+05:30hi sachinaftek case is stark ..and i can tell you ...hi sachin<BR/>aftek case is stark ..and i can tell you there are several more such cases. A lot of these cases are not so blatant, but a reading of the AR can reveal that. satyam's case is more complex ..the accounts do not show outright fraud ..atleast not to the extent which came out.<BR/>there is definitely more than meets the eye. there could be fudging and siphoning of the funds too<BR/><BR/>regards<BR/>rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-46331446092481310472009-01-21T09:58:00.000+05:302009-01-21T09:58:00.000+05:30hi anonymousagree with you point. i have always lo...hi anonymous<BR/>agree with you point. i have always looked at managment quality and accounting details in the past. i have always paid attention to the 'notes to the account' and other footnotes. however i have not looked at the accounts with a critical eye, trying to tie the numbers and see if something is fishy. plan to do that in more depth.<BR/>although we can learn from the experience of others, nothing beats your experience. you remember for a long time. <BR/>finally fraud like that of satyam is very diffcult to figure from the statement where the cash itself is falsified.<BR/>the only clue were news items and rumors around the management and their past actions. i have not paid too much attention to that in the past, but have kind of avoided stock with such 'rumors'. reason was my experience with ssi and not listening to these rumors<BR/><BR/>regards<BR/>rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-74190469715732129272009-01-20T23:19:00.000+05:302009-01-20T23:19:00.000+05:30Dear Rohit,There are several editions of Security ...Dear Rohit,<BR/><BR/>There are several editions of Security Analysis. First of all is it an important book to read? Second, which edition would be worthwhile? I cannot afford to buy all of them :)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-87972320269972141502009-01-20T22:00:00.000+05:302009-01-20T22:00:00.000+05:30Nice and informative post from you as always. Coin...Nice and informative post from you as always. Coincidentally, Aftek was in my radar at about the same time, it was in yours. My reasons for rejecting it was purely instinctive. I felt there was something very wrong about this company but was not able to pinpoint. I followed your link to your earlier Aftek post and found a lot of valuable analysis out there by you as well as one of the comments (RaviAranke) to that post.<BR/><BR/>Returning back to Satyam, assuming there actually was cash lying out there in those banks, siphoning off that cash would leave a lot of dirty debit entries in those accounts. It would leave Raju's "confession" as a bigger fraud than the story of fictitious cash in balance sheet. Wouldn't he rather go absconding before making this false confession?<BR/><BR/>Clearly, the mystery is just beginning to unfold but in a non-transparent environment, I am really not sure whether the suspense will ever get revealed. With so many politician and respected people's involvements, I think there is too much at stake. So it might turn out like a Hitchcock thriller seen only uptil the intermission.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-58221881147132994002009-01-20T11:48:00.000+05:302009-01-20T11:48:00.000+05:30Dear Rohit, Again a nice post. It's really a c...Dear Rohit, Again a nice post. It's really a concern for our faith and believe on the publicely available sources about the company financials. Now I am gradually understanding the importantce of accounting experinces to make better investment decisions along with the search for management credentials & integrity before taking any investment decsion for a particular company. Unfortunately I had a small exposure to Satyam and now I am trapped with that. Anyway I have learned a very good lesson the hard way. However it would have better if I could understand the electric fence quote of Munger earlier.Anonymousnoreply@blogger.com