I attended the conference for first time and I was utterly overwhelmed on day 0 itself by the diversity, skill set and hard work of the group. I thought I was good tracking 20-25 stories but then there are people who have studied/researched everything and in much greater detail. It dawned on me that time is the only real edge I have in the world of investing.
Now coming to guests, two things that stood out for me from Kenneth Andrade’s talks were ->
- There is a method to madness in extracting idea from macro trends, in playing cycles and it can be done for handsome rewards
- Based on his talk and interviews, he still buys undervalued businesses and is unwilling to pay a lot
Other than this, his one-liners stood out for me. Some of them are listed below ->
- Small caps tend to remain small, very few businesses come out of that
- When only one company makes money in industry, then industry is at the bottom of the cycle
- Value does not remain value when growth comes along, when growth does not come in, it is a value trap
- To track cycles, look at supply and not at demand
Vinay Parikh was present with us for most of the conference and one or two things that stood out for me are ->
It is very important to have structure around your investing - why you are buying something, when you will sell, capital allocation etc. Without structure, you will not understand areas of improvement. Having structure will help you manage emotions in both bull and bear cycles. One of his investment criteria is companies with institutionalized decision making process.
- Another thing was very long holding periods e.g. I think he has been holding Nestle for 15+ years. It has made me think that whether I have such businesses in my portfolio and more importantly temperament to hold these businesses through their struggles and triumphs.
Manoj Dua was another street smart investor who was present with us for the part of the conference. One thing that stood out for me from him was - when the business provides clear visibility of future, the stock price will move first followed by sales and them margin. e.g. Real Estate stocks in last one year. Another important learning I found was that - for some sectors demand will not vanish but will only be deferred. e.g. housing and sugar.
Apart from these, some learning from individual members during numerous discussion were also very rewarding. They are listed below ->
I was privileged to stay with Ayush bhai during the duration of the conference and pick his brains. One of the most important lesson I learned from him was - We all have theories about the company. When that theory is challenged by disconcerting numbers quarter after quarter, it is time to act - both on the upside and downside.
Another thing that impressed me was - how fiercely open minded Ayush bhai is w.r.t. promoters of the company, other investors etc. He is willing to give very long rope to promoters if he believes he has found some insight into business. From big investors to small investors (like me), he is very open to listen for ideas, insights etc.
His presentation on diversified portfolio approach for investing was so persuasive that, almost for a day, I was tempted to switch to diversified approach (I haven’t because I do not have bandwidth to track so many businesses).
I spent a lot of time with Anant bhai at conference and some of the awesome things I learned are as follows ->
His presentation on better banking is one the most impressive presentation I have come across. It has helped me a great deal to better my understanding of financial companies. Some of the points are as below.
- Banks lending to NBFCs/MFIs is actually stupid, who controls underwriting in these cases?
- Due to leverage and lending as above, snowballing effect is quite common in financial companies.
- Market share is a not a good metric at all to look at for financial companies.
- Banking business models tend to reward short term gain over long term pain. The legacy and reputation of promoters, institutions is an important parameter for banks.
Also he along with @tirumal figured out the end of bull run in pharma one year ahead of everyone else. I found it to be most impressive and his advice on avoiding group think in VP kind of setup is one of the best leanings for me.
I thought that I did a very good job of reading 15-20 books a year for someone with full time day job. And then I came across dada who beat me to it hands down. I would not mention the number of books he reads every year but that number is just mind boggling.
I was sitting with 50% cash prior to VP Goa meet and I was feeling that the current rally was similar to one in 2007. Dada and Anant bhai corrected this conclusion with correct conclusion that current rally is more close to 2004. One of the most important indication of the bubble is the rise in the debt of private companies. Since India is going through deleveraging cycle, we are looking at a correction and not the bursting of the bubble. This discussion has started thought process for me to look for more evidence and possibility of deploying capital with caution.
Although I did not spend a lot of time with Dhwanil bhai, his presentation on art of selling and investment checklist was very good.
I had my own checklist which I felt was pretty decent but Dhwanil bhai’s checklist was much more evolved. His understanding of business quality and business structure is on another plane altogether. Understanding business quality and identifying great businesses has emerged as an area of improvement for me based on his presentations.
It was an absolute privilege to spend time with Hitesh bhai and his concise remarks are a mine of gold.
Few of them are ->
- Even amidst all this learning, you figure out what works for you and your style and only absorb these bits. (First year ke baad maine style change kiya and fir muze laga ye main kya kar raha hoon?)
- If a stock does not respond to good news or bad news, it is usually sign of top or bottom in the story.
- There is life beyond investing and try to enjoy it. (Hitesh bhai is an avid swimmer and it was good to get some swimming tips as well )
Other than this, clustering presentation from Nirav was very good. I found clustering to be a very powerful idea in all walks of life but especially in investing. Good or bad things tend to happen in clusters for businesses.
Sandeep bhai’s presentation on finding data and connecting dots from various sources was very very good.
Tirumal sir was another concise character and some of his Hyderabadi one liners over breakfast were very impactful.
- Ye kya desk research karate ji, jara ground pe aao ji?
- Kya hota market rally hua to, crash aaya to - invest karo ji, dekho kya hota?
- MFI/NBFC me kuch bhi ho ra, careful raho
His presentation on pharma was one of the very best.
Apart from this, one of the most important change that has happened in my process was to not look at companies in isolation. I was doing that before and I realized it is important to research the width before going deep into one company.
Whenever one is checking capex, look at capex across industry. e.g. It was very clear that everybody in pharma industry was increasing capex. It was sure sign of slowdown to come. Look at profit margins, supply, growth across the industry. Also environmental clearance reports can be a source of great insights.
These are some of the notes. Other than the names above, I learned quite a lot from other participants as well. It was a truly amazing experience.