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�.
Buffet likes to buy substantial stakes in "easily identifiable princes at toad-like prices". Some or all of these conditions could not be met in Indian markets so far, even though liberalisation was started in 1991. It is very unlikely that he has just not looked at India so far. Many of his US purchases were made after a very long wait-and-watch even though investment restrictions there are much more relaxed as compared to India. He is very cautious in his approach. Whether he is visiting India for investment or philanthropy, it is bound to have a much wider impact.
[QUOTE=LearningToFly] [QUOTE=yogishkamath]� Indian companies wipe the floor with Chinese ones when it comes to RoE.� �� Chinese companies return about 9-10% while Indian companies return about 21% on average.� �� That is why India keeps growing at 8-9% despite having only a 30% savings rate and relatively low levels of foreign investment while China has a 50% savings rate and massive amounts of foreign investment but still grows only about 1-2% faster.[/QUOTE]
I wasn't talking about growth rates, but of return on equity.
he will buy dish tv's of the world. he will buy into those stocks which are india centric else he can buy any other commodity stock worldwide.why come to india. his focus will be indian stocks with indian consumption and those global indian companies which can clearly give the golbal companies competition on low cost model.thats simple. dish tv etc pure indian play.compare them with same business in usa...ecostar etc etc...and see market cap difference.huge. sbi cant be replaced elsewhere in world.any co that can consume natral resources of india.telecom cant be replaced.some property stocks.could not be replaced.u cant import land .hence as income levels increase people will buy land costlier. these are basic themes.and with management by his side he can be better off.even parasnath can give and earn money to him,not us.titan can give money to rj not us.its because management is with them.
with that kind of money and looking at India as of now, why buy stocks? why not take venture capital mode in enterprising startups?
[QUOTE=vivekbhauka] he will buy dish tv's of the world.
he will buy into those stocks which are india centric else he can buy any other commodity stock worldwide.why come to india.
his focus will be indian stocks with indian consumption and those global indian companies which can clearly give the golbal companies competition on low cost model.thats simple.
dish tv etc pure indian play.compare them with same business in usa...ecostar etc etc...and see market cap difference.huge.
sbi cant be replaced elsewhere in world.any co that can consume natral resources of india.telecom cant be replaced.some property stocks.could not be replaced.u cant import land .hence as income levels increase people will buy land costlier.
these are basic themes.and with management by his side he can be better off.even parasnath can give and earn money to him,not us.titan can give money to rj not us.its because management is with them.[/QUOTE]
Buffett does not buy themes. EVER
[QUOTE=karn] with that kind of money and looking at India as of now, why buy stocks? why not take venture capital mode in enterprising startups?[/QUOTE]
Apart from the Chinese electric car company, Buffett has never invested in start-ups. It's not his style.
Buffett likes good solid companies with good cash flows available at low to moderate valuations.
We are too small. We don't allow FDI in hajaar sectors and where it's
allowed you still need RBIto be notified. Then we don't have capital
account convertibility. Sure, these exist in China as well, but China
was special for Buffett, who got out when things started getting hot.
And
then we have tough takeover laws. Do 15% and you need an open offer. If
the open offer fails, you're left owning some shares but not all (in
the US you HAVE to sell). Then there's lack of debt markets to
put/hedge money into, and you can't take the money out of the country.
Lastly the markets have only matured in the last 10 years. Maybe mostly the last five. The guy's 78, he takes that much time :)
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Warren Buffet to become insurance agent in
India
http://economictimes.indiatimes.com/personal-finance/insurance/insurance-news/Buffett-takes-agency-route-to-enter-Indian-insurance/articleshow/6072882.cms
Posted on:5/11/2010 10:07:35 AMshetty_it
Stock that WB could pick for investing in India
An article -as under
http://www.labnol.org/india/warren-buffet-investment-in-indian-stocks/6355/