I have been meaning to capture the next phase of refinement for our Capital Allocation Framework based on our learnings from 2011 onwards. It’s a tough ask! Several of you have egged me on to try and put together our incremental learnings in a way that is meaningful and useful for the community.
Ever since that fateful discussion and consequent starting of the ValuePickr Public Portfolio and Scorecard, we have been sticking our neck out! We made certain choices consciously on the way dropping some and adding some in our combined (ValuePickr) wisdom of the moment.
Fortunately, most of the calls seem to have worked out. Valuations have got much stronger over the years where we continued to advise BUY/HOLD. Fortunately again, most of the EXIT decisions also seemed to be right (Suprajit Engineering being the notable exception, as it has continued to grow reasonably), in hindsight.
So there is some method to the madness after all - to the ART side of Valuation/Allocation. However getting a real HANG of this sometimes takes a full investing lifetime. We all know some guys who are pretty good at this, and we realise some of us are not so good at this. Some guys are good at getting-in early and equally good at jumping-out early :-). And then there are some who after taking the call, are very very good at sitting-tight!!
Remarkably, all of us have had access to almost the complete information-set (on individual businesses) in good time, and direct and/or email access to the best of the lot at ValuePickr, yet actions taken have been different (even by the veterans).
It is indeed difficult to imbibe the ART of Valuation!! That does not mean we can’t speed up the process for everyone! We believe we can! This thread is about trying to capture some of the essentials from our experience of the last 3 years…so newbies/learners can make a reasonably good headstart, and us practitioners can attempt becoming more refined at the ART form.
Making bold to start this new thread on the ART of Valuation (provokingly titled) - setting high expectations and inviting the risk of falling flat in delivery - but hey, we have always liked to stick our necks out - challenge and be challenged - in our bid to become more refined investors.