MSTC won your twitter poll too right? Looking forward to this thread! When will you be putting your findings up?
Disclosure: Invested from 260 but looking to add once numbers start matching narrative. Looking forward to your thoughts to validate the thesis.
Full portfolio here Vineet Jain portfolio
Any plans for a thread on Indoco 
This is one of the most fascinating concept and people I have ever come across:
Do yourself a favor and watch and read these, please.
No plans yet for any new thread. Threads are only when I am very fascinated. Maybe one on etsy.
Yes but I lost interest in it. Itâs uninteresting & I put it in the too complex bucket.
Still makes one bleed through the nose.
35 min done ( allmost 3 more hours to go), This is quite complicated as of now, Very difficult to follow, May be once its finished i will have a better understanding. Anyways, what was the intend of sharing this?
Learning I generally consume for the sake of curiosity and learning
Valuations matter.
Pick any 3 cos of your choice with pe (calculated on normalized ttm basis no oneoffs) > 120
Iâll pick 3 which I feel will outperform.
We can see which set outperforms over the next 3 years.
Anyone interested ?
Iâll either be proved wrong & learn, or win the bet
My Picks
Letâs see & learn !!
My portfolio companies are pretty overvalued at present. Letâs see how they perform over 3 years.
Avenue Supermarts
Clean Science
Tata Consumer
I think it will not be the right way to compare. Industry dynamics may change the prospects of any stock any time. Your main point is that Stocks trading more than 120 PE will underperform, right ? I give you my pick i.e. Dmart. Expectation is minimum 20% CAGR for at least 10 years regardless of index movement, economic boom or recession. Exceptions - very high inflation and very high interest rates like 70s. You may find stocks which may give 30, 40% CAGR, I agree, but it does not negate the thesis that Dmart having high PE is still investment worthy if it gives 20% CAGR. Anyway, Dmart is the highest PE large cap.
It does. An investors only fidelity is to their own money and it seeks highest rates of returns. If an investor understands that dmart would only give 20% cagr and also understands another co would give 30% cagr, buying dmart is nothing short of sub-optimal capital allocation and doesnât make sense.
My 3 picks will outperform the set of overvalued names thrown by the public.
Racl
Mastek
IDFC first bank
What I intend to do on my side is to create an index of all names thrown which were indeed above 120 normalized pe and track that index versus my 3 picks.
Part of the reason I wanted to set up this friendly bet is that one of the easiest ways to learn something is to make an outlandish claim. People run from all 4 directions to dismiss that claim. And in doing so, end up teaching you something. 
heads I win, tails I learn a lot & thus I win bigger.
I agree with each and every word. Consider the points of consistency, longevity, no competitor, all big opportunity is for you only. These high quality companies grow quality profits consistently without any excuse like credit cycle, recession, logistic issues, RM prices, marketing and client issues.
These stocks increase like bond, almost linear graph, very safe when tide turns as they are in habit of time correction not price correctioon. Perfectly fit case to invest heavily, a large portion of portfolio for people having compounding mindset.
This is like high yeild bond.
Your candidates are
RACL - Cyclical, it is fully priced.
IDFC First - Struggling bank, totally unacceptable for compounding mindset people. It might be lottery ticket so it needs allocation like lottery ticket. Vaidynathan is the bet, people are not considering the time when he performed, it was 2010 onward so time was with him. It was the time when financial companies started performing all over the world after big and long mayhem. Can check screener the PE of Can Fin Homes and other finance companies, these businesses were available like free, at book value or below book. Anyway, finance is cyclical like auto and no consistency only roller coaster.
Mastek - Yes, it is promising having tailwind. I own it. Credit goes to you only to build conviction.
Mastek is common. Remaining two are cyclical so you have to consider full cycle to compare. Normally the length of full cycle is 12 years. Now this span is becoming shorter. Difficult to judge. I still feel Dmart is far better than these two cyclical bets, no roller coaster.
All possible analysis. Including % of 3 stock selections that beat my picks, beat, worst etc.
I thought you were going to choose from the >120 PE universe as well. Otherwise this looks like an uneven playing field for 120+ PE stocks? Not an apples to apples thing.
Hi Sahil,
I think we shouldnât look at it as âProfit maximizationâ only, we need to look at âRisk adjusted returnsâ instead. While a Titan may only give 20% return over 5 years compared to IDFC first bankâs 30%, we have to adjust it against the risk taken in the investment too.
In case of Titan, the group is running the show and while they may underperform, the risk of losing all my capital is very low. At the same time, if Mr. Vaidyanathan leaves IDFC bank today, the bank will loose 50% of its Market cap within a week.
In a nutshell, chasing returns without factoring in the risk is not a good exercise. If we are doing this exercise, better to put a barometer for âUnderlying Riskâ as well. We may take âBetaâ as a factor, but if someone else has a better option, we can go with that.
Disc: Invested in both Titan & IDFC first bank
Risk and return are not correlated, they are inversely correlated. The way I see it, titan is the high risk investment, not IDFC First. The sort of hefty valuation multiple youâre paying for a reasonably good company is the risk here.
IDFCâs key man risk is factored in at current valuations.
The Main risk lies in not understanding the business. As long as one has 20 years earnings visibility for titan (which i dont do), i suppose investing in titan makes sense. Exactly same investment can be risky for individual 1 and not be risky for individual 2 depending on their level of familiarity with the business.
Lot of negativity around IDFC first is due to the price performance. Please note down my words in bold letters. As paradoxical as it may sound, exactly the same company at 5x book value will appear squeaky clean and the perfect less-risky investment to everybody
The question of why this tends to happen is an interesting one. My hunch is, most people take price movement & valuation to be a proxy for quality which effectively ends up meaning that they subscribe to the efficient market hypothesis. If this were really the case, such an investorâs time is practically wasted on valuepickr and better spent doing index investing 
That, is precisely the purpose of the bet. I do not make a bet where I only have a random chance of winning. Yes, this is not an apple to apple comparison. Which is why i am surprised why everybody is jumping to take me up on that bet Nobody needs to do that though. Its a free country & society. If you find the bet unfair, dont take it up.
