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VP CHINTAN BAITHAK GOA 2018 : Experience Sharing

Request all top contributors to share their experience of Top Contributor’s meet at GOA.

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VP Chintan Baithak Goa this year was held on 26-29 July 2018.

The main attraction this year was thematic presentation on various topics including those on

  1. Structural changes in small finance bank space.
  2. Structural changes in Chemicals space,
  3. Structural Changes in Fintech space
  4. Structural changes in Digital content space.

Besides these we had two guests who illuminated and enlightened us with their knowledge and interaction in the form of Prof Bakshi and Sumeet Nagar.

Prof Bakshi as usual was in top form and imparted his views on antifragility in business, management interaction, Changing minds and investing mindsets. The talk was more interactive with views expressed by most participants.

Sumeet Nagar talked about his style of investing especially the small cap space and remaining invested for long periods of time after doing a lot of due diligence and management interaction.

Besides there was a lot of individual presentations and discussions offline between participants and groups of participants and even between guests and participants.

The resort this time was top notch - Alila Diwa in Goa.

Those guys who have their presentations ready can load them up or create individual threads on the same and other VP guys can continue to share their experiences here on this thread.

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Everyone prepared a presentation on one of three topics (A strong business, lessons learned in last one year, investment strategy). I prepared a presentation on investment strategy and tools that I use, most of it is already shared elsewhere on VP.

Here is the presentation.

Investment Process.ppt (1.1 MB)

Brief outline of the process as discussed at the meet:

  1. I generally start with a visual screener to screen stocks and generate ideas.
  2. Using this screener, I build white lists of companies that I like and understand.
  3. I collect key non-financial data like capacity, production, order book etc in a google sheet . Few other members contribute as well.
  4. Using the information collected, I value the company using my valuation model.
  5. I use a set of price multiple charts to see how market has valued the company historically.
  6. Outcome of valuation model is expected return over next 3-5 years. I build virtual portfolios of stocks with highest (risk adjusted) expected return. Real portfolio is periodically aligned with one of the virtual portfolios.
  7. Using a set of macro indicators, decide % of net worth to be invested in equities. Rest is parked in liquid debt funds.

Personally, I found discussions around lessons learned most useful. Almost everyone learns from their own mistakes so it is always enlightening to learn about other people’s mistakes. That’s lot easier than committing the same mistakes and learn the hard way.

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Hi all,

It was a great learning experience to go through all the discussions and presentations.

As described by @hitesh2710 bhai and @Yogesh_s each person made individual presentations on the lines of either - strongest businesses they know or their learnings in the last 1 year. Over and above that small groups made presentations on varied themes. The two guests conducted masterclasses which were for me personally insightful.

Some of the folks in their individual presentations covered businesses which are well documented on the forum and others shared their mistakes which they have made. The group presentations were very well researched and covered shifts in specific industries namely - Insurance, Small Finance Bank, Digital Media/Content, Fintech, Chemicals.

There were additional discussions around learnings from some prominent investors and also sessions on the lines of investing in one’s health.

The Sumeet Nagar session was excellent for me personally. It has made me reorient and put a definitive process into my investing journey and made me determined to tug harder into researching with my limited time. Something which Yogesh and his approach additionally cemented in my mind. The energy levels of the whole group to learn and share was humongous. Prof Bakshi made us think hard on fragility of businesses.

I loved the pieces of investing advice I received from @basumallick da and @jitenp bhai and the chats with @vivek_mashrani, @spatel and @Mridul. The presentations by @rupeshtatiya , @Anant , @suru27 on insurance was brilliant. I took down all the names of all books suggested by Sandeep K! Saurabh and Abhishek da scared us with the automated or the data centric way of investing.

I will share our group’s presentation on the fintech space in an appropriate thread.

Special thanks to Sandeep K for valuing the contribution we all are making to this community. Hope to give back much more than what we learn.

Regards
Deepak

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“Perfect!” - that is the most appropriate word that comes to mind to describe this year’s conference.

First, the location of the conference - Alila Diwa was superb & even the conference room had good scenic view.

The build-up to the conference was nicely set-up by an excellent interview by Tony Deden. It is an excellent interview & comes highly recommended. Everyone is highly encouraged to go through it.

Then VP core team came up with an excellent agenda - industry group presentations & individual presentations with one of the 3 themes - the strongest business I know, material things I learned in last 1 year & investment strategy that works for me. This forced the presenters to not look at things in isolation but look at them industry wide. Also you are forced to think about “strengths” in the businesses. This was a good exercise in our investing journey to get to the next level.
The industry presentations from all the participants were excellent. There were some very interesting presentations from the newcomers. The ability of a lot of these folks to deal with large amount of data is amazing (& scary at the same time).

Both the guests, Prof. Bakshi & Sumeet Nagar were very gracious & stayed with us throughout day they were present. It was an excellent learning experience in this time spent with them.

For me personally, I got to stay with our very own @desaidhwanil & the 1:1 discussions were very helpful. Also given the market environments, the discussions around the mistakes committed was also very helpful. Only in years like these, one understands the flaws in the process.

Few things that I learned from various people in no particular order ->

  • Information is becoming commodity, it’s ability to find insights that matter.
  • When repeated lapses occur in your thesis, it is time to change your mind irrespective of price action. A thing that happened with a lot of us was, we know about the -ve point but price did not react to it & we did not take any action.
  • It is not important to have a lot of width in the investment candidates but it is important to be thorough in your process for the businesses you are investing in. It is much better to have long list of omissions & very short list of commissions.
  • In judging management/business, few important things to look for are - who does the management blame in bad times? are they taking decisions to reduce fragility in the business? Ability to suffer today to create long term competitive advantage is a very important trait!
  • It is okay if one does not know all the nitty gritties & every minute details of the business you are invested in. It is much more rewarding to get the structural change right & stay invested in such businesses for many many years The valuation in such businesses should not or will not become a factor once you understand the change.

Finally, what makes VP such a wonderful platform is meritocracy in the selection process & civility in discussions.

Cheers,
Rupesh

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Dear All,

First of all I would like to thank core VP team for giving me opportunity to attend this meet. Also, the selection of place was amazing with full of energy, particularly the green view from the conference room.

I was overwhelmed by passion, energy and hard work each participant had put in. This was “Power packed accelerated learning” for me. So many investing dimensions, in-depth sector analysis and learning from each individual’s style, strategy and most importantly mistakes. This was the best vicarious form of learning that I had.

First day started with individual business presentations where I had presented on theme of “Strongest Business I like” >> Business I like…pdf (2.6 MB). Got lot of insightful and thought provoking questions on this from @basumallick, @Anant and Prof Sanjay Bakshi.

The days started early morning at 7 AM at Swimming Pool and discussion starts from there itself (in a rather relaxed way I would say :slight_smile: The formal sessions went sometime till 12 AM at night and then followed by informal poolside discussion till 2 AM…followed by late night discussion with my room-mate @dd1474 till 3 AM…only to wake up next morning at 7 AM for swimming…and still I would say everyone demonstrated same level of passion and enthusiasm. It was very very unique and thoroughly enriching learning experience.

As always, Prof Sanjay Bakshi was having multi-disciplinary learning pack to all of us with various topics ranging from thinking in terms of fragility of businesses, unit economics, valuation, margin of safety, long term thinking, learning from mistakes, manipulation of financial statements and many other areas around investing.

Thoroughly enjoyed session from our guest Sumeet Nagar on investing framework, identifying moats, sticking to process, investment analysis etc.

Presentations of sector themes were very in-depth, covered various aspects and thoroughly researched.

I learnt lot about media sector from @desaidhwanil and team. Many insights and business economics covered ranging from content, platform and consumer perspective.

Another one on chemical sector from Ankit and team was eye-opener for me. Many areas of interesting change in dynamics of the industries which were structural trends were highlighted. Similarly, presentation on insurance sector was really amazing.

Fintech presentation by @deevee was again very unique and in-depth covering industry trends, various platforms and their strategies.

I was really amazed by humbleness of all the participants and their willingness to learn and admit their mistakes during their investment journey.

I learnt not only about investing but on analytics from @suru27, evolving thinking and strategies from @basumallick, keeping calm from @hitesh2710, long term thinking from @spatel, enjoying peaceful life and focus on health from Sandeep Kapadia, thinking about risks from @jitenp, how to keep holding great businesses from Dheeraj bhai, being brutal in process from Yogesh bhai. The list can go on and on…now the onus is on me to imbibe these and implement best of the best from these great minds in my daily life and thought process.

Although it was intense, we took some time to go to beach (to remind us that we were in Goa :slight_smile:) where I was fortunate to have long discussions with @ayushmit during the walk and get lot of vicarious learning. Similarly was fortunate to discuss investment process with Sandeep Kapadia during our way back to airport and at waiting room.

Overall, it was wonderful, unique and extremely enriching learning experience for me. Hopefully I added some value to the group. Looking forward for this next year as well by contributing more and more to this thriving VP community.

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It was my 1st VP annual meet and all I can say is “Ye dil maange more”. First of all, thanks to VP for considering me eligible enough to contribute to this event and a big applause to @desaidhwanil @ayushmit @hitesh2710 and other members who put lot of effort in planning and organizing end to end event from all aspects to make it a success.

As folks have covered the content, structure and coverage of meet, I would not repeat and add my learning and experience. It was great to see a group of people who may be very different in their investment styles but all willing to learn from each other.

I was second to reach to venue after Sandeep bhai. Had an interesting conversation over lunch and got to know his investment journey since beginning and there was so much to learn from his experience not only on stocks but health, the way to think and much more. During the event, various investment styles were covered in individual presentations including @Yogesh_s quantitative approach (I am a big fan of his writing on VP), @jitenp bhai’s approach on cyclic businesses (could get a chance to clear some of doubts I had while watching him on TV :slightly_smiling_face:), @zygo23554 Kedar’s approach and learning with some very interesting behavioral thesis on investment (his thread on investment checklists is very interesting and one must check). @basumallick and I had our individual presentation on kind of similar lines and his presentation gave me lot of ideas to experiment and keep me busy for a good time. I must say that I was amazed by his openness to learn and experiment from fundamentals to trying to learn technical to experiment with quantitative models. There were exhaustive sector presentations and was amazed by effort put on building them, for example, understanding netflix business model while studying media and entertainment sector. @deevee is the man from Fintech and helped us to get lot of clarity on who, what, why, how and when of Fintech

I got to share room with @pratyushmittal and I was surprised to know that he is a CA turned coder :slight_smile: Our discussions went till late night post group sessions on topics related to use of technology, automation and visualization. Was super impressed by his ability to pick a new tool and create value out of it. We as investment community are blessed to have him and he presented new interesting functionalities of screener.in. Also, had very helpful one on one discussions with @dd1474 and @jitenp bhai

This event was special for me as I got to meet 2 interesting personalities whom I have admired from last few years. First is our own @hitesh2710 bhai whose posts I started reading from TED days and since then I was impressed. The other being Sumeet Nagar as I am a huge fan of Malabar capital (Amansa and Cartica being other two) and it was great to learn from him on how to do deeper and differentiated research. Prof session was a very engaging one with variety of interactive thoughts on fragility of business.

Oh yes, we did some after work fun with Antakshari competition. @basumallick and @dd1474 were true champs leading from front for their teams :slight_smile:

Thank you all for giving this opportunity and bearing with my questions in a tight scheduled event :slight_smile:. Will try my level best to keep contributing in more valuable manner.

I am attaching my personal presentation which is kind of mix of journey, learning and experiments with analytics and investment Investment Journey and Key Learnings Kumar Saurabh.pptx (2.4 MB)

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It was a superb meet. Am really amazed at the detailed work each of the participants did on their presentations. Prof sahab and Sumeet were simply superb.

We also reflected a lot on mistakes, which I think are an integral part of investing. Learning from mistakes, minimizing them and making the smaller, is what my philosophy is.

Must thank @ayushmit @basumallick @desaidhwanil @dd1474 @hitesh2710 for inviting me for this meet.

Am amazed at the work Anant, Saurabh, Rupesh, Yogesh, Deepak, Vivek, Sandeep Patel and all others do.

Sandeepbhai stressed on importance of health and that was a very good session.

Also, saw the much gentler side of @manish962 bhai.

Overall, it were 4 days well spent. I came back with lot of learnings and more bonding.

Once again, thanks for making me a part of this meet.

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It sounds ironic but I got the exact opposite impression at the meet. I learned that screener is not going to be free anymore (it’s a surprise to me that it was free for so long) so information is actually becoming privileged rather than a commodity. I agree that information is everywhere so raw information is a commodity but the same information in a curated and downloadable format is privileged.

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The standard for VP Chintak Baithak is your contribution to the forum. If you end up in top 20-25 bracket, you will be invited. So start contributing to the forum from now on. The whole experience is shared on the VP forum and so you are not left out as we try to bring everyone on the same page by sharing the entire learning of Goa meet on the forum. Sharing helps us to get critical feedbacks and that helps in moving up the knowledge curve.

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Thank you for sharing experience. Even though, many of us are not eligible for the meet but it is helpful that experience is shared generously. The standard for the invitation to the Meet is also helping us in a way that more and more persons contribute to the forum in a meaningful way.

Special thanks to @manish962 bhai for starting this thread. In general also, his dedication to keeping this forum clean and most useful is great and hence, much respect for him.

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@Yogesh_s Thank you very much for sharing your experience and presentation. Can you elaborate more on Select 50, Select 20, Focus 10 and Focus 5 of your portfolio construction in your Investment Process presentation.

My noting points from the meeting:

Disclosure: There might be communication errors from my side which reader shall take note while going through this message. The mention of name of companies does not indicate any work done by me or other members. We have taken cases to understand concept about change in industry/business, rather than investment as investment decision involve a critical element of valuation which is very subjective and also person specific. None of the name mentioned aims to provide investment advice to investors. It is more to understand business prospect and changes which would drive sales/profit growth of business.

Mulibase Company analysis:
Daman based Dow chemical subsidiary. Started operations in 1991. The product mainly used on automobile. The numbers are showing significantly improvement. R&D and regulation on enhanced safety in automobile would continue to be key growth driver for the company. Valuation is stretched and efforts were more to understand business and changes in the company, rather than investment. ROE improved from 15% in FY14 to 23% in FY18. Sales growth in last 5 years has been Compounded Annual Growth Rate (CAGR) 19.2% p.a. with Net profit CAGR of 39% p.a. during last 5 years. PE ratio has also increased from nearly 12 times in March 2014 to more than 40 times as on March 31 2018.

Thyrocare:
The company is attempting to develop a competitive advantage through very efficient cost structure. In order to get scale advantage, it has tied up with one of the global leader in healthcare diagnostic equipment provider. The equipment provider gives lowest cost of test to the company, which is in turn passing on to the end-user/BTB customer. As results, it has more than 70% market share in India for particular test. The equipment provider is assured of large scale of operations and hence provides best cost to Thyrocare. Further, despite lower realisation, the margin for Thyrocare is around 2 times of the next player on same test. Price charge by Thyrocare for that test is around 1/4th of the same charged by second best players. Despite pricing at 25% of peer, Thyrocare still generate double operating margin. This is was an example considered as operating leverage of business.
The company is also trying to utilise cash flow generated from the business to develop some more business which can drive growth in future like PET-CT scan business. Only time would confirm whether company would be successful in its approach or not.

There was a session on data analytics, which suggested new development in this area. Reading of annual report, usage of text in conference call and text, Sentiment analysis score and adapting same. There was also a discussion about insider buying and success of same in long term. There was a view that in 2008, there was good amount of purchase by cyclical companies insiders. However, it took almost 3-5 years for most of the companies to reach 2008 prices. The primary reason could be optimism of management and also probably, the bias of management about their ability to predict cycle.

@basumallick shared his learning on buy and hold versus trading in cyclical. As always, simplified investment decision in four basic questions: When to Buy, When to Buy, How much to buy and last but not least, when to sell?

Then there was a session about how to get maximum out of life from the limited time. Investment journey full of stress/tension. However, increased level of stress also affects mental ability to take correct decision. There were stepped involved Stoicism and other field, starting from Negative Visualisation (like lost of person with whom you are closest and disappear from your life). When one practices negative visualisation, it assists him in two ways. First to realise importance of their relationship and hence spending more time on that relationship which is was generally aim of the life. Second, in very unfortunate incidence of low probability event materializing, the individual mind is better prepared to face situation.

Second part was to focus on critical elements like Time, Health and Happiness rather than only money/wealth.

Third part dealt with how to improve once health. Health improvement with control on diet and proper exercise can assist one to live longer in general, healthier in particular, life which cannot be measured in monetary terms. This was something I personally find most important learning from the meet and trying to implement myself.

Day 2 begin with excellent presentation on Specialty chemical. The industry is undergoing structural change due to China environment action. The reduce supply from China has opened a big opportunity of selected Indian players. However, one needs to also be aware about “environment arbitrage” being played by Indian player and how long this factor would continue to drive growth. While China may also resume supply in medium term with shifting capacity in less developed/thinly populated area (or neighbor country like Magnolia), it would now with higher cost of effluent treatment which give competitive advantage to India players and hence provide tailwind to industry in medium to long term.

Second session was followed by cyclical investment and importance of timely (rather early) exit being the most critical decision in cyclical investing then any other decision.

Third session learning from last year by one participant. The most important point was to understand whether ship of sailing through rough weather or ship is sinking. If it is first case, it might make sense to hold the investment, but if it second, then only option is to jump out. Further, in much microcap company, while one have come to conclusion to jump, it would still not be possible to exit from investment due to very limited liquidity on the counter. A typical “Abhimanyu” moment for retail investment. Hence, one needs to take point in consideration while investing in small cap/nano cap investing,

This followed with discussion on investing and behaviour aspect specifically about changing mind after one has invested in the company. It is typically difficult to change the investment in context of new adverse information coming on the company. The denial of the information could be due to endowment effect (for instance Sequoia Fund denied any issue in Valiant pharma probably due to 90% profit coming from this one investment). While changing mind in investment may need to change in business or people (although qualitative aspect but simple to act) or may be due to change in price (the quantitative factor but difficult to act). There was also a discussion on Fragility and video shared by @rupeshtatiya on previous message in the thread.

Then there was discussion about understanding industry life cycle and risk at various stages. This was also improved with applied understanding of venture funding, in a technology business, the success of business improvement significantly after it has crossed a particular stage. On the bell curve, typically, there is big gap after commencement of business for failure. Most of the business which jump and survive this phase, would benefit from the higher acceptability/adapatality/network effect which would drive the growth of the company. That would be followed with normal decline of industry/company as new technology/product emerges.

In addition to these, there were industry specific presentations in break as suggested by Hiteshbhai which shall be shared on individual threads. It was really a great experience for me to be member to this meet. I would not mention any name as would be resulting in almost 30 names. I have learned from each of members and thank everyone for contributing to my investment journey.

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Hi Yogesh,

Screener.in is an indispensable part of investment process & we have to thank founders for providing it for free for a decade.

My point was around the larger trend & its acceleration -

  • We have some people on this platform who are investing since late 90s & it seems Capital Markets was the only magazine in those days from where you can get some information. Today, we have data/ratios/trends available from multiple websites very easily.
  • Further guys like yourself, @suru27 , @pratyushmittal are very good at handling large amounts of data & using automation/machine learning/data mining to extract any mispricings etc.
  • There used to be a time when one can read annual reports of the smaller companies & have some edge. Nowadays, summary of annual reports, highlighted paragraphs are available on VP, WhatsApp etc. within a week’s time. I am sure the day is not far when machine learning algorithms would be written & perfected to find patterns, insights from annual reports without any human intervention.
  • With researchbyte.com, stockadda etc. - conference call recordings are available to thousands of investors. Some of the large companies provide audio recordings, transcript of the conference call on their website. Several forwards with highlighted images from conference calls, AGMs are very commonplace.

I feel what is more important is mental/psychological framework to process this information & ability to think about critical questions - is this structural change?, ability to judge management, is there long runaway to growth, ability to hold on to good businesses through fluctuations etc. are becoming more & more important.

There used to be a time when one could have information advantage on some stories etc. & make a lot of money but that edge is reducing every passing day.

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I have been to all VP meets and I can definitely say that this was the best one. A big thanks to the core team for deciding upon an amazing venue and inviting some of the best minds, Prof. Bakshi and Sumeet Nagar.
Sumeet’s session for me on how to analyze a business for me was a standout session. @deevee presentation on fintech clearly opened me up to look at a sector hitherto I had no knowledge of, it will become a reference point for sure whenever I look into the fintech sector. Finally the VP meets are also about making friends, friends who are great investors, friends who can guide you and friends who are there for you in difficult times (which comes quite regularly in investing).

The one big learning for me and where I have to improve is to start looking at unit economics i.e to foresee how unit economics will play out once a certain scale is reached. This can be a much better matrix too look at instead of purely thinking in terms of operating leverage which gives a rather crude view.

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Also, please share your key learning from Prof. Bakshi and Mr Sumeet Nagar.

There is no doubt that screener is an invaluable source of information. It the only public source I know that gives information that is useful for someone interested in long term investing.

Just a few years ago information was hard to come by, then it became easy and now it is hard to get away from. We are bombarded with tweet like bits and pieces of information and it is too difficult to make anything out of it. It is easy to miss the forest for the trees.

Most of the information is focused on short term data that may or may not turn out to be of any significance in the long term. In fact, even after processing large volumes of data available publicly, what I found most useful is the key data for a company that is not available in corporate databases and has to be curated from all these available sources. I don’t see how some AI or machine learning can do this. And seriously, we continue to miss warning signs that are in front of us so I do not see how machine learning can help with that.

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If it not proprietary…can u please share Google sheet

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Please can you share the names of the books you as suggested by Sandeep K.

thank you,
Mandeep

This was the 4th year we had the VP Annual Meet. The standard keeps going up each year. Personally for me, I missed @Donald during the meet. Hope he is there next year. His enthusiasm and prodding on working harder on a stock story has always egged me on in the last 8-10 years.

This year Prof Bakshi and Sumeet Nagar (Malabar Investments) were the special guests. Special thanks to them for spending so much time with us and sharing their experiences.

Every year, we have some new faces who make the cut. And every year, when I hear their presentations, I feel that I need to work harder to keep pace with them. This year was no different!

I personally was very impressed by Sumeet Nagar’s deliberate and thoughtful process of business evaluation and stock selection. It has encouraged me to do a lot more deeper work than I used to do earlier.

As usual, learning from the fellow VP members has always been the greatest. When you have stalwarts like @hitesh2710, @ayushmit, @Anant, @desaidhwanil, @dd1474, Sandeep Kapadia and others all in one place, talking about businesses all the time, then i is par for the course that you will absorb a lot of different styles of investing. All the new entrants are great in their respective areas and helped me explore completely new facets of investing. @vivek_mashrani, @suru27 with their ability to look at numbers at a big scale, @jitenp with his on the gorund feel for cyclicals and overall market sense, @deevee with his domain knowledge on fintech and @rupeshtatiya with his uncanny skill of adhering to his process to generate alpha in an overall down year for most.

I try to learn something new every year. This year, I spent some time exploring technical analysis and quantitative investing to increase my breadth of knowledge.

Attached is my presentation.VP Goa 2018 v4.pdf (2.0 MB)

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