tag:blogger.com,1999:blog-7004453.post7891167862882187656..comments2023-09-02T19:53:06.144+05:30Comments on Understanding and applying value investing principles: Coca-cola, Marico and dogsRohit Chauhanhttp://www.blogger.com/profile/00356455735241398199noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-7004453.post-5162505772168666042016-03-18T17:05:28.186+05:302016-03-18T17:05:28.186+05:30Hi Rohit,
Very instructive post. I have faced (an...Hi Rohit,<br /><br />Very instructive post. I have faced (and still face) this dilemma many times. Though, on the face of it, it may look simple to figure out the future growth prospects and categorize the holding among Coca Coal/Marico/Dog, I have realized that due to our "holdings", and strong biases come into play it becomes very difficult to do objective analysis of growth prospects. Instead of being rationale, we rationalize...and eventually end up in trouble. Hence my question is, how do you control this process? What pointers/parameters you look for to give you clues to categorize these companies appropriately?<br /><br />Regards<br />DhwanilDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-30546091271638425902016-02-16T00:52:40.552+05:302016-02-16T00:52:40.552+05:30I infact I feel your decision to sell in September...I infact I feel your decision to sell in September 2006 was rational because price at that point was not supported by required earnings growth. P/E had expanded to ~35x by September 2006 from 15x in 2000. Also, from 2009 onwards till 2016, it is more of P/E expansion than earnings growth. so my questions are - <br />a. Do you think your current logic is influenced by the price moment of the stock and not from the real earnings growth of company (2009-16)? Also, the 10x return is mainly because of equity run-up post Sept 2013 (Modi effect :) )<br />b. How much of your study has hindsight bias effect. If not, how should one go about differentiating between coco-cola & companies which have grown yoy for long term. <br /><br />Kindly do not consider my comments as negative. I am just trying to understand the process.Below is the historical pe multiple of marico. <br /><br />thanks,<br />Akhil<br /><br />Year P/E<br />2003 9.3x<br />2005 22x<br />2006 32x<br />2007 30x<br />2008 22x<br />2009 24x<br />2010 30x<br />2011 31x<br />2012 34x<br />2013 33x<br />2014 32x<br />2015 44x<br />2016 43x (till date)Akhil Parekhhttps://www.blogger.com/profile/02455534529209041626noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-61914008556218271012016-02-08T20:10:45.894+05:302016-02-08T20:10:45.894+05:30Actually this is a problem with all well run compa...Actually this is a problem with all well run companies. Reasons are not too hard to find. Once a large number of savvy investors understand the prospects of a well run company, they will bid up the valuations very high. Thereafter, for those valuations to be justified, earnings have to catch up, which is lagging in this case.<br /><br />A more recent example is of course Eicher Motors. It has had a fantastic run-up in the last 3-4 years. *NOW* when the earnings are growing extraordinarily, the stock will go nowhere for the NEXT 3-4 years from its current price!Ramanandnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-65870600262140439422016-02-08T09:02:23.592+05:302016-02-08T09:02:23.592+05:30Hi Rohit,
How do you look at future growth prospe...Hi Rohit,<br /><br />How do you look at future growth prospects and arrive at an upper bound for it ?? It would be great if you explain with some example<br /><br />Thanks,<br />AkshayAnonymoushttps://www.blogger.com/profile/08153623093187251466noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-77457368915287372472016-02-05T22:32:13.764+05:302016-02-05T22:32:13.764+05:30sir
Very good post as always ! Just one query. Wh...sir<br /><br />Very good post as always ! Just one query. What was your thought process while selling Marico ? I mean did you decide to sell because the stock had generated your desired return or you felt the business will not grow much now for a long time & hence sold the stock ?Anonymoushttps://www.blogger.com/profile/15703758292717880038noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-66823056781857731292016-02-05T12:57:57.451+05:302016-02-05T12:57:57.451+05:30Great analysis. Its basic stuff that many investor...Great analysis. Its basic stuff that many investors miss and therefore good to be reminded now and then. thank you!<br /><br />Am not sure if Coca-cola is the right example. It pays good dividends. The price graph adjusted for dividends may present a different picture.<br /><br />Regards,<br />Balaji.Balaji S Phttps://www.blogger.com/profile/12582869453050759486noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-76579752107655479602016-02-05T12:20:34.319+05:302016-02-05T12:20:34.319+05:30Hi Rohit,
You should have included Citi bank in e...Hi Rohit,<br /><br />You should have included Citi bank in example as well.....it was between 330 to 600 odd levels between 2000-2007.....and now it is at 50 levels...please do not assume that i want to place it under dog category<br /><br />regards<br />AnuragAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-7004453.post-41615857777071529392016-02-05T10:01:20.071+05:302016-02-05T10:01:20.071+05:30Good post, Rohit!Good post, Rohit!Samshttps://www.blogger.com/profile/13941457520640473102noreply@blogger.comtag:blogger.com,1999:blog-7004453.post-41781124513232733942016-02-05T00:33:51.461+05:302016-02-05T00:33:51.461+05:30This comment has been removed by the author.Rahulhttps://www.blogger.com/profile/11376414882386798288noreply@blogger.com