tag:blogger.com,1999:blog-7004453.post6243182056740962171..comments2023-09-02T19:53:06.144+05:30Comments on Understanding and applying value investing principles: Value tradingRohit Chauhanhttp://www.blogger.com/profile/00356455735241398199noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-7004453.post-57660481497646061322012-10-10T19:20:37.868+05:302012-10-10T19:20:37.868+05:30@harmit
it reminds me of the post you shared back...@harmit<br /><br />it reminds me of the post you shared back in oct-11 about tata steel's liabilities. From investing point of view one wouldnt/shouldnt be keen on buying into a company with such a big pension plan exposure. however, from trading perspective one could have entered it given the hole in pension pot "tends" to grow over a longer time period. plus how many people would firstly identify that risk and secondly, stay away from the script given all the market chatter pressuring them to trade? so "maybe" it could have been a value trading opprotunity give it takes a while for market to bring such things to the fore!! Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-14549666770913483132012-10-08T13:20:15.162+05:302012-10-08T13:20:15.162+05:30Hi Rohit,
U have a nice blog, I recently came acr...Hi Rohit,<br /><br />U have a nice blog, I recently came across this and have enjoyed reading it.<br /><br />Ur investment ideas have lot of depth.<br /><br />Regarding Novartis, how do you see the recent Glivec court case coming? As far as I have been reading around it seems like a lot depends on this case result for Novartis future launches and investments in India. I have a lot of confidence in the Parent Novartis AG.Mega-pharmas like Novartis have the advantage of being able to afford some of the brightest scientists and the most cutting-edge oncology research money can buy. They are working on products of the future that will redefine the medical scenario.The race is who invents the future medicines first making these companies filthy rich. This is 1 of the most important factors giving me confidence about Novartis India. The de-listing buzz has also dettled down now in the price and the CMP will remain subdued until the court case is out I guess. How do u read about Novartis now, or have u found something else to replace novartis. Are you still holding it?Mokhtarhttps://www.blogger.com/profile/03576478960773365600noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-18662283062640954342012-09-30T10:38:42.014+05:302012-09-30T10:38:42.014+05:30The biggest risk with 'value trading' is o...The biggest risk with 'value trading' is of taking the 'value' out of it. It requires so much effort and diligence that one might easily get into sub-par ideas, especially in range-bound fairly-valued markets like ours as of now.<br /><br />I entered into stocks like IFCI, Reliance Capital early this year. Also made good profits but it was a pain nonetheless.<br /><br />Tried to do the same with Indraprastha Gas and Gujrat Gas later this year. Did not make anything though they were much better picks.<br /><br />Sold and feeling relieved that my portfolio is in better shape now. Though GGC going up 10% pained a lot, but that's another lesson - when you buy to make quick profit, you may also end up selling without making that profit (buy for non-value reason and sell for non-value reason).<br /><br />So it's always a choice between continuous activity and almost hands-off approach. Quantum LTE Mutual Fund does the former very well and I feel it's justified mainly for such entities only. Definitely not for individuals with other full-time assignments.Luckynoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-77524609393191825562012-09-29T04:29:59.989+05:302012-09-29T04:29:59.989+05:30Hi anil
first ...i need to post your comment you ...Hi anil<br /><br />first ...i need to post your comment you sent via email ...let me try to do that<br /><br />you have a point in focussing on the best ideas ..atleast for the core portfolio. however once in a while there are opportunistic investments which can be made...though part time investor should stay away as they dont have the time and energy to manage it<br /><br />on companies in slow decline, there are cases where even that works out if the management is taking cash out and giving it back to the shareholder<br /><br />in addition, in some cases, the price gets so cheap that the biz is almost for free..in such cases, you can buy it and wait for the market to reprice it.<br /><br />ofcourse all this is very time consuming ...a lot times just buy a good company and let it compound. less headacheRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-92115828236156233462012-09-29T04:18:19.749+05:302012-09-29T04:18:19.749+05:30Hi vidyanshu
long time ....good to see you back :...Hi vidyanshu<br /><br />long time ....good to see you back :)<br /><br />i have been exploring these kind of options and may be once i semi-retire and do this investment thingy full time will do it more<br /><br />for the time i have dabbled a bit in this and now kind of pulling back as it is too much work and not enough upside. however will keep doing oportunistic stuff like the globus spirit play once in a while ....but unlikely to be a serious component<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-66692617603967341132012-09-29T04:16:08.607+05:302012-09-29T04:16:08.607+05:30hi pradeep
well you can marry the two ..if you fin...hi pradeep<br />well you can marry the two ..if you find a industry which is moderately cyclical ...like capital goods industry. buy a very good company at bottom of the cycle and then hold it ...the inital return will from the bounce and long term return will be from the business itself<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-49763672369000327122012-09-29T04:14:53.038+05:302012-09-29T04:14:53.038+05:30Hi joseph
you hit the nail on the head. as my frie...Hi joseph<br />you hit the nail on the head. as my friend neeraj marathe has told me several times ...these are dirt cheap stocks you buy and wait till they become just about cheap, and then sell and move on<br /><br />personally, after doing this over time i am tiring of it. too much work and headache for a few % extra returns<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-26520813484869007062012-09-29T04:13:05.979+05:302012-09-29T04:13:05.979+05:30Hi anon
interest rate as a trigger is a very dicey...Hi anon<br />interest rate as a trigger is a very dicey variable to play. if you are confident of the interest rate drop ...buy long dated debt funds or directly 10 yr GSECs<br /><br />rgds<br />rohitRohit Chauhanhttps://www.blogger.com/profile/00356455735241398199noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-55978986237876077732012-09-28T14:15:27.866+05:302012-09-28T14:15:27.866+05:30Hi Rohit
Thanks for another good post. I realised ...Hi Rohit<br />Thanks for another good post. I realised the importance of short term investment (I prefer this term over value trading) after missing stocks like Manappuram Finance even when it was trading at P/BV multiple of 0.8x. The only thing which was stopping me was my belief that gold prices currently are in bubble stage. But I failed to realise that entire de-rating of stock was because of overblown concerns of RBI regulation and loan growth slowing down materially and secondly I do not like to invest in banks/NBFCs because of inherent leverage. <br />I agree with the overall theme of the post but disagree on one point that even stocks where intrinsic value is declining are fit for short term investment. I think any investment where one feels value is going to decline in future rather than rising, is not fit for investment at any price. In such cases one may get stuck in times of market crash. A better approach might be to invest in stocks 1) Which are not suited for long term investment as per one’s philosophy (for me it’s Commodity stocks, Banks, Pharma, Regulated sectors like power, fertilisers, etc) 2) Share price has currently taken huge beating because of overblown concerns 3)and stock is available is ultra-cheap valuation. <br />In summary I think it’s better to stick to value investing principles every time irrespective of tenure except in the case of special situations. <br />Anil Kumar Tulsiramhttps://www.blogger.com/profile/08957135865779188117noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-12635003627485915852012-09-28T11:11:56.458+05:302012-09-28T11:11:56.458+05:30Hi Rohit,
Long time, hope you are doing well. In ...Hi Rohit,<br /><br />Long time, hope you are doing well. In this context, I had read a good book - http://www.amazon.com/Active-Value-Investing-Range-Bound-Markets/dp/0470053151<br /><br />I find this somewhat akin to an arbitrage, which is what deep value investing themes are at the end of the day. I think Prof. Bakshi's thoughts on combining deep value investing with a catalyst, along with using technical indicators like moving averages and stochastics probably a better approach if one wants to do this kind of trading. Again, I know you are not very keen on the use of technical indicators, but in a Bayesian sense they can be used as an additional conditional probability step towards buying or selling...at least I am exploring these kind of thoughts.<br /><br />Do let me know if you have any insights.<br /><br />Best, Vidyanshu.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-22855423263498773902012-09-28T09:52:14.305+05:302012-09-28T09:52:14.305+05:30This is a great post. I actually have been thinkin...This is a great post. I actually have been thinking hard on this and trying to marry "the buy and hold" with this "catching the cycle" thing. I was unable to reconcile between the two. This post gives some kind of clarity on how to think about it.Pradeep Raghunathanhttp://valueinvestinginindia.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-47486637870035998372012-09-28T00:14:04.548+05:302012-09-28T00:14:04.548+05:30I should have added (in my previous post) that the...I should have added (in my previous post) that the intrinsic value will be on the decline if such a company (where NAV<EPV) is still focused on growth (a common curse for many such companies).<br /><br />Joseph Josephhttps://www.blogger.com/profile/12900869916761418314noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-60055855254495119812012-09-27T22:14:56.673+05:302012-09-27T22:14:56.673+05:30Rohit – In the Value Investing book authored by Pr...Rohit – In the Value Investing book authored by Prof Greenwald, he talks about buying companies at a discount to NAV whenever NAV < EPV. Now if you think about it, NAV will be less than EPV whenever return on capital < cost of capital. And if return on capital is less than cost of capital, the intrinsic value of such a company will be on the decline. At first it boggled my mind as to why anyone would buy a company (even if it be with a margin of safety) where the intrinsic value is on the decline. And the more I thought about it, I realized that the only way to play such a situation is to identify the triggers that will help close the gap between the current market price and the NAV and hope that the trigger plays out quickly. This is also a bit of an odd situation, because the longer you hold such a company, you have to revise your intrinsic value downwards every year....a very funny situation where intrinsic value goes down to meet market price. Just thought I’d mention this....your blog post on value trading bears some resemblance to this idea (in my mind).<br /><br />Joseph<br />Joseph <br />Josephhttps://www.blogger.com/profile/12900869916761418314noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-12841873836570377832012-09-27T19:13:06.690+05:302012-09-27T19:13:06.690+05:30I would like to add SREI as another trade. Interes...I would like to add SREI as another trade. Interest rate will start falling and rs will appreciating resulting into forex gain(at least no forex loss) and decreasing interest and increasing profit and EPSAnonymousnoreply@blogger.com