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basant
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Posted: 21/Jul/2007 at 2:45pm |
Originally posted by Voyager
Hi Basant,
Well written! For new readers of the book where it’s been published, it’d be a good read. However, for any visitor/member of this forum, it’s just another day of consolidating jointly-held beliefs.
More than your writing, I’d rather compliment you on the temperament & energy with which you lead this forum. Hope that spirit continues! (There is enough & more intelligence on the earth – it’s these two, which are scarce)
Taking off from your article, one thing that I’d like to pose to the group is whether the composition of TED-XI lives upto that. Many of the TED-XI stocks have turned out to be multibaggers in the last four year ride of Sensex from 4K-odd to 15K. Over this period, an addition of 10K points has actually multiplied the index by almost 4 times. Going forward, one might hypothesise the same absolute gain in the index, but the multiple factor is surely questionable. In that background, some of the stocks will perhaps not multiply as well as they’ve done in the past. The TED-XI composition is perhaps a balanced one, for a >25% returns without undue risk.
Would it make sense to identify a set of new ‘structural change’ stocks that will multiply with GDP growths of 10% & index movement to 25K in 3-4 years time? The forum favourites in this context are Pantaloon, TV18 & NW18, but is there a possibility of even these stocks multiplying by 20 times in the next 5 years? The question to ponder is whether these stocks are ‘discovered’ ones with healthy market caps or would they still classify as ‘hidden gems’. Despite regular updations on TED-XI, is there a point of considering another list of fab-5 stocks with mkt cap less than 200 crs (by applying all the same principles as have been done to select the XI)? Yes indeed, this one would be more roller-coaster, but if built on the Patel-Pabrai principle (Head-I-win, Tails-I-don’t-lose-much), it could create significant value.
Probably the forum favourites already are such stocks – simply because structural changes are long lasting phenomenon & not short lived fads - and hence will continue to multiply wealth at an inorganic rate. However, it always, always, pays to explore alternate views continuously so as to void thought inertia!
Anways, good luck to all of you. All of you on the forum understand markets & stocks better than me & perhaps more than 99% of people. It’s always nice to read the views of top percentile of thought leaders in any domain! |
Indeed it is more of a problem and less of a challenge looking for multibaggers. I have purposely given less relevance to challenge because many times we dilute existing and stable ideas in the in the quest for new ones.
If we look around the new businesses (in addition to the ones that we actually discuss on this forum) are online gaming, internet, restaurants, entertainment parks or theme parks,event management businesses, specialised advertising companies like WPP etc.
There could be several others but while trying to identify a new business I look for those ideas which have been proved scalable in other parts of the world.
Going forward we may not have the luxory of getting 50 baggers because:
a) General market sentiment where the promoter does not sell cheap
b) Availability of easy debt which is a prohibitory force in equity dilution
c) The Private Equity Industry restraints IPO's of quality companies.
d) The bigger houses (Reliance, AV Birla) have become wise to the potential of new businesses so while online gaming ccould be big there is no way to own a stake in zapak.com.
I think that as an investor I have scaled down my expectations from the market because we would not enjoy the luxory of PE rerating in any of the stocks that are identified today.
Take a small instance of ENIL. It trades at a PE of more then 40 times so the gains can come only from a EPS expansion. In 2003 Pantaloon traded at a PE of 8 times and it is a 63 bagger for me till date. But out of that a good 10 times has come because of EPS expansion and about 6 times because of PE expansion.
Had there been no PE expansion Pantaloon inspite of its rocket growth could have grown only 10 times in price.
Going forward we would have only EPS expansion in stocks so the returns get affected to that extent. Occassionally we would have a 30 bagger but not something that many of us would be able to predict with some degree of accuracy.
Edited by basant - 21/Jul/2007 at 2:53pm
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'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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monu_duggad
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Posted: 21/Jul/2007 at 2:52pm |
Great stuff ...keep it up basantji...fundoo article with nice clarity of thought...
when were u on cnbc and ndtv ?....long back kya ?....dint know....wht all u discussed with mitali then ;)
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If you think you can,You Can
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nil_money
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Posted: 21/Jul/2007 at 4:48pm |
basantji u r just awesome .....
there is so much of maturity and clearity of thought in ur posts ...
I thanks god 4 getting to read ur thoughts on this awesome forum...
keep rocking
Thanks,
Nilesh
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Ajith
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Posted: 21/Jul/2007 at 6:20pm |
I think,Mr. Basant you are,on this thread, touching upon the most crucial elements for those in the business of identifying multibaggers.
Right now we are indeed in an era of high PE for high growth unlike in earlier years like ,even 2004.Neverthless one must hold on where explosive growth is expected and this is really a fantastic forum to look beyond stated numbers to identify multibaggers.
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Ajith
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catcall
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Posted: 21/Jul/2007 at 9:44pm |
COngratulations on the excellent write up, Basantji. Just one thought on this issue... I feel that alongwith the new emerging ideas mentioned by you, the Power sector leaders would continue to give multibagger performance, simply on the basis of the heavy power shortfall that the country is likely to see in the face of strong indusrial growth.. the idea may sound a bit old fashioned when compared to Media and Telecom, but would see the same growth visiblity in the years to come.. What Say you???
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There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing!
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BubbleVision
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Posted: 21/Jul/2007 at 9:56pm |
CatCall...........With your fantastic back ground in the sector you mentioned, I would like to ask you that what specifically are you referring too. Power Utilities .....Or Power & Capital Goods!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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kulman
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Posted: 21/Jul/2007 at 9:57pm |
....heavy power shortfall that the country is likely to see in the face of strong indusrial growth.. the idea may sound a bit old fashioned when compared to Media and Telecom.........
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TV set, Dish antenna, Mobile Charging sab ke liye Power toh chaahiye!!
On a serious note, CatCall would you be specific in Power Sector: generation, transmission, equipment manufacturers, turnkey contractors, alternate energy (wind/solar/nuclear)?
Edited by kulman - 21/Jul/2007 at 9:58pm
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Life can only be understood backwards—but it must be lived forwards
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BubbleVision
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Posted: 21/Jul/2007 at 10:03pm |
Wow Kulman.......
Modifying a bit of the Old saying.....
Great minds differ while Fools think alike.........LOL
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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