It is utter contempt to even attempt picking holes in anything that Warren Buffett does but I could not resist myself from putting in a few thoughts relating to the great man�s vision for India that Indian will live better � 20 years hence.
First everyone knows that Indians will live better then what they are in 2030. Any attempt to quantify this statement would be boringly repetitive. But Mr. Buffett took about 20 years to predict what Indian would be in 2030. A man of his class and repute should have had his predictions the moment India opened its gates of liberalization in 1991 so here we go, no points for that prediction.
Secondly it is bizarre to see why he needs one year prior notice to be in India He can come through his private jet which he has named �The indefensible�. He can use that and be in this country of snake charmers as it was known a few generations earlier. Well, these days we have charmed the richest men from the Forbes list is a giant step for the Investing community but only a small one for India.
But why does he need to be In India to invest. From all the history he had invested in quite a few companies without being to the point of operation so the India trip is more for the formality then for the analysis.
Indian journalists, brokerages, analysts and research houses should realize that anyone coming to India is doing no favor to us. They are coming here for their returns and the opportunity that India presents. We do not need anyone�s mark of approval to discover ourselves. Indians have already discovered themselves. It is now the turn of the world to discover India.
Now to the question, what stocks will Buffett buy in India? Insurance, Banks, Consumers the list is limited and conceivable but what may be good for Buffett may not be good for the average Indian investor. Why?
Firstly the Warren through his company Berkshire would intend to invest at least US $ 5 billion in India if that investment is to make any (meaningful) difference to his overall returns.
With that kind of a corpus he would look at the top 100 names a few that come to mind are the HDFC twins (after all Deepak Parekh has modeled HDFC on the lines of Berkshire), an operating company that goes into Insurance with an Indian partner. I doubt if he would buy the existing insurance companies because he has his own standards of risk, Indian TV stations are a highly fragmented property and newspapers might just be living on its edge over the next 20 years so that is ruled out, most of the world class consumer companies that exist in India are subsidiaries of their US or European parents so that is not exclusive material either, credit rating agencies less said the better.
Buffett likes buying cheap so it might just happen that he buys absolutely nothing from the secondary market and concentrates on how he can get his operating business going. That helps India in the long run but who cares about the long run these days.
Personally I feel that we should be proud that at least when it came to investing in India Indians were ahead of the man who has been amongst the top 3 in terms of individual wealth. Whether the process of discovery for Indians about their own stock market was by default (regulations prevent them from investing abroad) or by design is inconsequential.
As for Buffett he took longer to invest in India because when he could have bought a company in Israel he could have identified a few outstanding businesses in India but as they say �Better late then never�.
How this argument (WB v/s RJ) will help/educate anyone here?
bihisello, if nobody has made comparisons between them TEDians can do that !!! and on which forum other than this one about buffet and during all these hullaboo about his coming to India ?
[QUOTE=chimak10] [QUOTE=LearningToFly]
Hmmm...... I did read somewhere that RJ rate of return is around 50% CAGR. He started out with 5000 Rs. now he is worth around a billion dollar worth so you can calculate it.
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Having spent a little time studying Buffett, I can safely say that he has clearly articulated many times why he has not invested in India so far. Buffett works differently. He buys on his terms not on someone else's term. He has his mental checklist on what his expectations are from a company and its management and there are few companies in India that satisfy those criteria. Not to mention the hazaar red tape and bottlenecks from the government side. For example: Buffett wanted to have his own insurance operation in India, but government rules do not allow that.
My brother worked in investment banking and one friend works in commodities with an MNC while another was with a credit rating agency - all in India. There are enough horror stories there that you don't get to hear of. No one wants to lose business so they allow a lot of things pushed under the carpet that individual investors don't get to hear of. On corporate transparency our home grown companies are mostly the PITS.
Lastly, this does not mean that other legendary value investors do not invest in India. Ruane, Cunniff, Goldfarb does and they are the folks that Buffett asked the investors in his partnerships to invest with when he wound his partnerships up.
Comparing RJ and WB is like comparing apples and oranges.
[QUOTE=chaudhuris] On corporate transparency our home grown companies are mostly the PITS. [/QUOTE]
whats PITS ?
With all due respect,I think RJ is a Black Swan His success is a combination of opportunity,luck and knowledge/skill coming together at the same time.That just means that although we can try to emulate his skills by constant practice and experience in the markets we might not be able to emulate the end result that is RJ.
Posted on:5/5/2010 4:32:28 AMkohinoorpai
Dear Sir,
At last some harsh truth about people visiting India to fill their pockets but posing to do us a bloody service by thier visits.You see lots of interviews of CEOs stating that their investment in India is proof of their Commitment to india. Bloody jokers come here to make money and talk of comittment to the country. Who do they think they are fooling.When will we Indians get over the White Man Gospel Truth syndrome.
If Buffet was the wise man they claim he is then how come he has no business in the worlds fastest durable economy.
Thanks for your honest views on Buffet the White Man