GVK now has a problem. You would not get full clarity when you buy something very cheap. You have to monitor that stock, its macro developments. Now infrastructure as a theme I am very excited still, you know already there is shortage of bidders in the country in many segments. Many companies are already full with orders so this situation will create more margins for these companies.
Aarvee Denim Bulk Deal
I am a small guy so I can only buy small stocks in my personal account or in my family names. I am not rich and I do not like to be. I love to be a middle-class person and that is the best way to live. So, I buy small companies. We talked about
Aarvee Denim was a causal buying in my personal account a few days ago. I did not know that my name is going to come perhaps. It is a few lakh rupees at Rs 35 rupee a stock. I bought some one-and-a-half lakh shares. Even children in the market do it. Even the very small guys do it. It is not a big deal.
If you take the top 100 deals, it was one of the smallest deals in the market that day. But being a small company, this stock can go to zero also. They have some problems now.
When I was buying Emkay Global at Rs 45-50, nobody was comfortable. The potential for Emkay Global could be strong
I do not want to commit on that. We may find better opportunities because it is a changing India. As I always put that hash mark, it is a changing India. If you keep your eyes and ears open and there is no limit for opportunities and even though there are 5000-6000 companies, we have at least 2000 companies. Of all these 2,000 companies, maybe 500-600 companies can go 5 and 10 times in the next 10 years.
People were bullish on Kaya at Rs 1,500-2,000 level some time back. We never did anything. It came down to Rs 700 some time back, then we started buying in PMS understanding their current challenges. Indian operations are not making profits but it is a great brand, wonderful management. We can always trust them. At Rs 1700 crore-1800 crore market- cap, I found Kaya very interesting. So I went on buying. I am betting on the future potential of these companies. Right now it is not moving anywhere. It is at just above my average price.
The potential for Kaya is great
Archies is my bet, seems to be failing because I was betting on that the promoters may become more professional. But nothing seems to be happening. Promoters seem to be too comfortable. It is a fantastic brand. If I get the brand and the company I will make it a billion- dollar company in next 10 years time.
How would you pitch for Archies?
I hold personally some 2%, it is a small market cap now.
It is not a greeting cards company anymore. The young children seven-eight-year-old people know this brand -- Archies. That has got a value. If you can create a business model around it, it need not be greeting cards, it is not about greeting cards, they are into the gift products.
Their business model is also good. They are buying at something like Rs 20 from China, selling it at Rs 100 here. They can bring it down from 100 to 50, it will look cheap for people shopping. So there is a lot of potential. Even they have a online thing which is not well developed but potential to make it a huge company is there but it depends on the capability of the promoters, their attitude. Some promoters in India are worried that if they create wealth it will be shared with the minority shareholders so they do not create wealth. We have got such low end promoters. Some of them are changing already and others will be forced to change.
With Archies I almost failed. It did not move up. It was something I bet on a few years ago, it failed, I lost money in that. So when you pick 10 stocks with that kind of a theme and compromising with some grey areas or negatives, one or two of them could fail. That is a natural thing but out of the remaining eight, five of them will be multi baggers.
TCS, Infosys, Wipro and HCL Tech
See in the last two years, it is happening. The index has not gone up much and in the future also investors cannot bet on the Nifty and Sensex in a big way. We have major challenges over there. I recently I talked about TCS, Infosys, Wipro and HCL Tech. After five years, the market cap of these companies put together will be either today’s or below that and our FIIs luckily are holding on to all these kind of companies. These are the old stories. Smart people should not spend their time on these old stories. Look for the new stories coming up because India is giving that kind of an opportunity.
India’s top four IT companies will have the same market cap after five years provided they manage it very well. Otherwise it will go down by 50%. I am not talking bad about them. I am saying investors should look for multi baggers. And India a $2-trillion as an economy or a market cap is the ideal place still to bet for multi baggers. You have to take chances, sometimes you will fail.
Technique for finding multibagger stocks
While about identifying the sector, it happens. We need not talk about it, we did not really think about it. I always play like this though many people do not like it. Keep your eyes and ears open, this is the only way I can express that. There is no hard and fast rules in stock picking, you have to be flexible. If you are so rigid, I identify and make a top down and identify a few companies, a set of five companies and then you go for you filters, they are debt levels, you can have n-number of such things. So these all are worth only for the management students and CFA students, I am telling you for their exams.
I do not have any check list. These things evolve-- it happens in the subconscious mind.
A lot of people listening to you right now would be say there is a universe of 6000-7000stocks out there, largely to find a hidden gem you have to take a top down approach to identify a sector and then perhaps go scale it down to a stock, that is the typical approach, so what are your top three guidelines in scaling down?
Hidden gem stocks in India
India, as a theme is an amazing place to do stock picking. Here we are at a very special situation because of the disruptive world out there, many businesses and companies are dying out. It is the time to be very selective but it is a great opportunity at the same time. You have to know more than number crunching. There are 10000 people highly educated, CA, CFAs, and MBAs they are doing number crunching so I am telling it is going to be useless in some time. The big data analytics is going to take away all those jobs.
Nos of stocks in current PMS schemes?
A client of us typically owned 10 stocks and that is our standard since last 14 years.
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