2022 January

Tenets of Commodity Investing – Framework, Experience & Learnings

Posted by | Indian Markets, Industries, Investing Framework, Stocks | No Comments

In this post regarding investing in commodity businesses, I cover the following: Natural vs Processed Commodities, 10-pointer framework/takeaways based on our experience, How our stock-picking has evolved and current commodity positions in the portfolio.  We broadly divide the commodity universe into two categories – first is Natural Commodities (/Resources); these are nature’s gift to mankind. All one needs to do is just extract these and sell to the customers. Some examples of natural commodities include minerals like iron ore, coal, oil & gas, limestone, agricultural produce like tea leaves, green coffee, cotton, wood etc. Iron ore mining companies like NMDC or Sandur Manganese typically own their mines or have them on long-term lease. To dig out the iron ore, they hire mining operators and pay them on output basis (per …

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