Once again, accept my sincere thanks for sharing Mittal & Co’s thought process, which is truly remarkable and inspiring! The amount of hard work that you have been putting up and truckload of ideas that you have been closely examining and than capitalizing on way ahead of others through focus on “small” yet vital details that makes perfect logical sense is nothing short of exceptional. Donald, has very aptly, named you the “idea generator” for the forum.
From my personal interaction with Ayush, I second what Abhishek is saying. I have yet to find a idea which Ayush has not examined. Most likely, he, already, would have invested in it since long (or sometimes invested and then exited too!). And to top it up, he would narrate the business story and model in 5 minutes with key triggers, what excites him and where the risks may lie.
I have learnt a great deal from you, and there is still a long way to go for me…
Thanks a lot for the presentation Ayush. Very useful.
Your point on the small caps having very large volumes as compared to the market cap and free float is a very incisive observation.
There are a number of stocks these days which are displaying this attribute and number of these stocks are also being discussed on Valuepikr. I hope that the members are displaying adequate caution when dabbling in these stocks.
@crazymama We continue to look out for mispriced bets, stocks which can double quickly Its from these stocks that we get high quality big winners. Usually you don’t get insights right at the beginning, it takes time to understand things and develop comfort.
@rajpanda I’m still somewhere in middle. Having committed huge mistakes of selling early or not allocating properly, getting to learn and respect high quality companies irrespective of high valuations. I used to be really afraid when my stocks used to go above 20 PE…but on reading several articles of Prof. Bakshi and experiencing it myself, I’m trying to improve on this part.
@varun_kejriwal - I might still not be able to buy stocks at 20 PE+ (until growth rate and clarity is very high) but I might be better placed to hold on.
Good to see you taking so much of interest on several threads and trying to learn and value add
Good question Yes, type b is tougher - often the interest comes at a point where there is nothing much to loose i.e… if the recent nos are to get repeated then you could have a big winner and if they don’t then the downside shouldn’t be much. And then we try to look for clues and connect the dots to find the reasons behind the change in performance - at times the same could be in the management commentary in annual report, industry insight or feedback from fellow investors. Also, the industry nature matters - so you would not like to get interested quickly in a volatile/commodity industry. Often the confidence comes when the co repeats the performance 2-3 times and makes you sit up and do more work.
Earlier, we used to look at results of whole lot of companies and slowly one build models and preferences or that you start having a rough idea about several cos and so you can pick and choose quickly after few years.
Ayush - Many thanks for the revert. Would love to reiterate that this work is great for everyone else as it helps us study the thought process and aptitude behind the work which you do.
Your reply also reinforces one very important lesson which many masters have emphasized over a period of time - the virtue of patience. An example - you do a lot of work on company X, you fall in love with the model and management of X and your impulse is to immediately buy X. What you are propagating here is that one needs to be patient / watch it for some time and over a period of time build more confidence in the business model. Come to think of it, a classic example could be Avanti Feeds. At the first look, it looks like a really risky business. Its over a period of time that you and other fantastic posters on this forum have developed a deeper understanding of what mitigates those risks and help you gain conviction in the business.
It also teaches me that investing is not a one day or a one year business where one can read up all the books in the world and try and learn about all possible business. With various scenarios and models which you talk of being built over a period of time, hats off for doing all of this at such a young age (I believe you are in your 20s)
GRP - the co had all the excellent things one looks out for - like - they were and still are leaders in reclaimed rubber industry (India’s biggest player and globally 3rd biggest), the promoters are excellent (highly qualified, passionate and honest), fantastic past track record (since 2000 the co grew consistently @ 25% CAGR with about 18% OPM and 30% ROCE). But several things went wrong and today the company is struggling on the financial performance. I think it didn’t work due to the change in competitive landscape (perhaps the entry barriers were not strong).
Arex - what we find interesting here is the cash earnings generated by the company (they provide a very high depreciation). And when we had bought it was providing a high dividend yield…so there was nothing to loose. The negative is that the business doesn’t seem scalable.
We have automated several things at www.screener.in by which tracking of companies becomes easy One should create a watchlist for his companies and he will get the updates. Similarly one can create screens and get email alerts
Personally, my short coming is that I don’t write much but somehow its there on my mind. But as I’m getting older, I also tend to forget and have started preparing notes
Not that I can always make it out but usually the movements have to be logical - i.e… if the company has posted good results or some positive development has happened then its natural for stock to go in upper circuit. So you have to think and co-relate.
@desaidhwanil thanks for the kind words. I quite get inspired by the crisp analysis that you do. Lots to learn from you.
Well done Ayush and thanks a lot to you and your team for your kind contribution. Screener is indeed a very special gift to new investors like me , was keen to know any link where some queries regarding working on screener filters could be discussed, pls send the link for such forum or page, thanks once again.
Ayush an excellent compilation by you.
But as I am new to the stock market I would like to know how you get to know about the companies in which you want to research further.
For ex There are 5000 companies and how we will know that there is any company like Avanti feeds whose business is on downside or Hester in which there are robust profits .
Do you start with some sector or here them in news or listen from somebody ?
Example : Fiber web India ltd.
I would also like to bring notice of one more stock ( fiberweb India ) in which the managment commentary if anybody would have correlated with the actual nos /announcements would have bagged a six bagger in 15 months.
In this company the management have multiple times stated /infact made a announcement that there is turnaround in the business of the company and there is good demand .
Management was very Vocal in terms of getting orders and future growth which may create some doubts but when you correlate with the nos…the doubts are cleared
Personally could identify in screeer only when promoters substantially increased their stake in Q1 (16-17)
I also observed the announcements early and made good money. Of late it appears that the promoters are pumping up the stock. Same news is reported repeatedly. More disturbing is making a positive anouncement and simultaneously dumping their stock in the market. This can be observed from the recent announcement on 24th July and promoters selling on 25th , 26th and 27th.
No, I don’t use DCF etc. Usually its more of approx calculation in mind. When the valuations are cheap and a company is growing…one doesn’t has to think too much. Thought is more on the risk side or figuring out what the long term opportunity is or what is the specialty of this company.
I appreciate your query…i myself struggle with the same. Very broadly cheapness can be classified in two forms:
On statistical numbers:
You find a company which has been posting good results (with growth etc) and is available at single digit PE multiple or early double digit PE. Now as one can see that the market is not discounting too much into future, so the job is to understand the story…why is the stock not getting due valuation…is it cyclical, is it commodity…what are the risk to the earnings. While doing work if you find contra points which point towards superior products etc and chances of sustained growth and better earnings then it becomes attractive.
On qualitative insights:
When one finds a good company with big opportunity and is able to do in-depth work wherein one can say with a lot of confidence about the reasons for superior and sustenance for same. In such cases one can pay premium valuations depending on the future potential.
Its from these stocks that we get high quality big winners. Usually you don’t get insights right at the beginning, it takes time to understand things and develop comfort.
