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Identifying Multibaggers
The Equity Desk Forum :Market Strategies :Identifying Multibaggers

Topic: TheEquityDesk Report Card June 2010

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shivkumar
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Posted: 05/Jul/2010 at 6:37pm

Blue Star, Thermax and Voltas are also infra plays. Their consumer biz is negligible.

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prabhakarkudva
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Posted: 05/Jul/2010 at 6:46pm

I dont know much about Thermax but Bluestar and Voltas are proxy consumer plays.They serve the companies that serve the consumers.

Take your chances and keep them in a box until a quieter time.

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basant
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Posted: 05/Jul/2010 at 7:36pm

First to respond .. Smile

Going forward will we see addition of more " consumer companies " in this list ?
Are Companies from Ted XI still available at discount or are becoming fairly valued ?

Yes, fastest finger first! The answer is yes, I am heavily biased on consumer companies right now both in talk and also in walk!

whats your view on Dish TV

It is an avoid. I was wrong in my initial assessment but am sure that a bad management in a good/mediocre business can only provide a result that can't beat the grade of the people who manage the business.

Basant,

The gain/loss% column would have been more accurate if calculated on CAGR basis.

Good suggestion. can anyone suggest how it is done in Excel?

Dear Mr Basanth Kunar :

The stocks recommended in the latest Report Card are as back as 2006 and are already quoting high. Wat do you suggest? Are we supposed to buy at these levels? Please advise.

Haven't the earnings and fundamentals moved with the price? If they have then we should not get anchored on historic prices.I'd rather buy a five bagger whose earnings have moved up six times then a two bagger whose earnings have gone up less then two times.

Voltamp and Thermax which are more core sector (infra) plays. Basant, Any view on these two?

One of the better ways to play the infra space.

Edited by basant - 05/Jul/2010 at 7:37pm

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nikhil090
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Posted: 05/Jul/2010 at 11:03pm

How do we know whether it is too high to buy OR is this decision personal?

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gauravsinghal2
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Posted: 05/Jul/2010 at 12:17pm

Basant,

The gain/loss% column would have been more accurate if calculated on CAGR basis.

Good suggestion. can anyone suggest how it is done in Excel?

well when I saw the comparisons, i immediately caught the error in representation. % comparisons only make a good sense when they are on annualized basis.

The formula is CAGR in %= {[ ((Final money)/(Initial Money))^(1/time in years) ]*100}-100

Suppose the sum has become 10 times in 3.6 years, then 10^(1/3.6) is 1.297, i.e. the money has become 1.297 times every year, ie 29.7% Annual Return.

If 20% return in 7 months, then (1.2)^(12/7)= 1.367, i.e. 36.7 CAGR.

This formula can be arrived at using very simple maths, and generally CFA level-1 courses have plenty of such practice problems.

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basant
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Posted: 05/Jul/2010 at 7:30am

A Texas BA II Plus calculator (which I frequently use and which is recommended for Int. CFA ) does the job pretty well but there was some function on Excel which did it that is what I wanted to know.

I just wanted an easy way out instead of plugging in those numbers which is taught in secondary school in any case. P*(1+ r/100) to the power of n.

Edited by basant - 05/Jul/2010 at 7:32am

'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

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shivkumar
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Posted: 05/Jul/2010 at 10:16am

I use this link to calculate

http://www.investopedia.com/calculator/CAGR.aspx

As for Excel, I tried to pull down data from livemint.com but somehow the figures in the column keep changing every few weeks!

Edited by shivkumar - 05/Jul/2010 at 10:18am

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rpradeephere
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Posted: 06/Jul/2010 at 12:31pm

I did some minor analysis. Findings as follows:

CAGR return vs Sensex return in same period for the stocks. Please note that companies in which one has invested for less than 1 year may not show a realistic assessment of the CAGR. Case in point is Zydus wellness.

Company
           TED CAGR return     Sensex CAGR return
Zydus Wellness        147%                   -3%
Voltamp                123%                   52%
Hawkins Cooker         90%                   11%
Page Industries         38%                    0%
Blue Star         36%                   10%
Titan Industries    34%                   12%
Yes Bank            33%                   11%
HDFC Bank         29%                   15%
HDFC,                 24%                   13%
Thermax                  4%                    8%
Voltas                 -4%                   -2%

However the above does not make much sense in isolation. I did another analysis which is simply the portfolio returns or the IRR. I assumed we would have invested 100,000 Rs in each stock recommended on the recommended date and Rs 100,000 in the market. The returns generated in that case are:

TED Portfolio: 43%
Sensex return: 11%

This would be a better way of comparing.If we had invested 1L in each stock and sensex on the date of reco, we would have invested totally 11L. This would have become 34L in TED portfolio and 15L in Sensex. This does not highlight the time value of money aspect since we would have invested each lakh in different times, but crudely gives an idea of how much we would have invested and how much we would have got out of it vis-a-vis the sensex.

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