Market doesn’t like uncertainty , it will digest negative news but won’t digest uncertainty and thats why punishes stocks which are unpredictable , AP has consistency and predictability of growth while Tata Steel is cyclical. ( One thing also need to know is debt level, as debt level in bad days matters a lot ), so comparing numbers won’t be a true comparison but comparing sectors and emotions too would also add value.
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Agree, pls respond with above to those who compared. My comment was that if someone compares, it makes me see even brighter side of the one being compared…
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Performance of Marcellus Little Champ Portfolio:
Source: Downside Protection > Upside Generation in Small Caps - Marcellus
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That Doesnt work. Coffee Can suggest we should have ROCE and Sales growth by 15% and 10% YoY, with setting the average there is a chance a high year of ROCE or sales Could take the avg above the level.
Hi Do you follow Coffee Can Concept.
I have prepared a list of Stocks for 2021 based on crunching data.
Do let me know your views on the same.
Thanks
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I am aware of this. However, screener.in does not have such a function where you can screen 10% YoY sales growth every year in the past decade, hence the screen I have made is an inaccurate proxy. We can use it as a starting point and then manually check every company for YoY sales growth and RoCE
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The problem here i see is for example. Search for Caplin Lab or Neogen Chem. These are not there in the screener but very well follow the CCP Methods.
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Just checked that a small cap IT company ‘Infobean Technologies ltd.’ is also a part of COFFEE CAN method for this year, based on formula of 10% sales growth and 15% roce yoy for 10 years !
The company has also spoken about doubling revenue every 2 years. Seems interesting.
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Can u share the coffee can stocks for this year and how did you find based on the criteria? Sales growth 10% every year (not cagr) and roce 15+
There seems to be no Asian Paints thread on ValuePickr, hence sharing this link here:
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Asian Paints has issued clarification on this - https://www.bseindia.com/xml-data/corpfiling/AttachHis/f476d9ba-4748-4c80-ad4f-81b41bef6ca6.pdf
Decent summary on the history of Asian Paints & its growth. (Since there’s no thread on Asian Paints, hence sharing it here)
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This Report published by InGovern, a corporate governance advisory firm, appears to be based
on incorrect facts and premise based on hearsay rather than any serious investigation. We believe
the following narrative will help build a clear and distinct picture of the robust and rigorous process
followed by the Company while dealing with related parties. We specifically, refute all the
allegations made by InGovern in this Report relating to the Company and its practices with all the
emphasis at our command.
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Have also added ‘sales growth 10 years’ and ‘sales growth’ to the screen. The link for the updated screen is Coffee Can Portfolio - Screener
Note: I am aware that the Coffee Can screen requires 10% sales growth and 15% RoCE every year in the last 10 years. However, screener.in does not have such a function where you can screen 10% YoY sales growth every year in the past decade, hence the screen I have made is an inaccurate proxy. We can use it as a starting point and then manually check every company for YoY sales growth and RoCE.
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Very powerful message, explained in simple words through real life example by Mr Ajay Bagga. Coffee can is the highest probability path for wealth creation but still 99% of participants in the market don’t follow it.
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The question I always have on Coffee Can portfolio’s (I myself have invested in a few of these stocks) is whether the idea is equally powerful now. Taking the example by Mr Bagga of Xerox, if the person had held on it for a few more decades than the worth would have again fallen drastically as the concept of Xeroxing goes away.
In our current world, technology changes very quickly. So, barring maybe some companies in some sectors like FMCG as an example, in every other case would the same companies keep profiting after a decade, 2 decades is the big question
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Absolutely. If they don’t, they were not Coffee Can to begin with !
Reminds me of the anecdotal conversation between a Market Guru and an Amateur Investor.
Market Guru: It is very easy to make money in the stock market. Buy a stock, hold it till it goes up a lot, then sell it.
Amateur Investor: But sir, what if it doesn’t go up?
Market Guru: Then don’t buy it !
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Idea of coffee can investing continues to remain equally powerful and technological changes have always been there. In my personal view, initial portfolio selection is extremely important in this approach.
Stock needs to be extraordinary on QGL parameters
Q - Quality of business, Quality of management (both on execution on integrity)
G - Growth potential of business, earnings and cash flow
L - Longevity of quality and growth
Its true that businesses witness S-curves, where growth is rapid in initial phase, followed by saturation. For coffee can stocks, preferred attribute is ability of create new S-curve, before older one saturates, by entering into a new related business/in new geography or through innovations. Alternatively, the business should be in early part of S-curve and saturation phase should be long away. IMHO, lots of industries are in early/mid phase of s-curve in India with big runway ahead. Also, many Indian companies have demonstrated ability to jump s-curves successfully.
If one has exposure in quality s-curve jumpers and businesses in initial phase of s-curve, long-term hold strategy has high probability of wealth creation. At the same time, few stocks will disappoint, despite utmost filtering. Portfolio diversification across sectors & stocks is required to safeguard against it.
WRT Xerox example, it is true that the company was disrupted after creating huge wealth. We do not know other constituents of the portfolio and weather any of them were able to compensate for the loss happening from this stock. In my personal view, if disruption or saturation is evident and it is also evident that the company is not able to create another S-curve, one should exit.
For example, we had a leading lubricant company in our family portfolio for more than 3 decades and the stock created decent wealth. While my father sold small portions many times for the personal requirements, decent quantity remined in the portfolio for a long time. Finally, when it was evident that the growth has saturated and the company has not been able to develop new business growth drivers, we made complete exit gradually in the last few years.
While I had churning of about 10-20% every year in my personal portfolio till last year as I was testing the stocks rigorously on QGL attributes and also improving on position sizing. Despite this, many of personal portfolio stocks have holding period of almost 8-10 years (started serious investing in 2009), with improved allocation in subsequent years. Some churn was also due to my inability to control myself. However, the churn phase is over and also self control has improved. I intend to hold the portfolio stocks for long term with target churn rate of less than 10% per annum. This is modified version of coffee can approach, lets see how it works.
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From what I understand, the book “Coffee Can Investing” suggests you to sell the portfolio after 10 years and begin again. Only if the company meets the criteria after 10 years will it still be included.
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can you tell me where to find the warren bufett’s letter to shareholders?