SA Research Desk

Three Forms of Value Investing

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While there are various styles of investing, we can categorize them under three key heads: Special Situations (Arbitrage): Open offers, rights issue, mergers would all fall under this category. One is betting on a specific corporate action with well-defined timelines and aim to make a certain return independent of what happens to the company’s fundamentals or market sentiment. Typically aim is to beat fixed income return while not taking any material risk. Holding period ranges between few days to few months. Re-investment risk is high as one has to keep looking for new opportunities which also involves sitting on cash in between. (Suggested Reading: You Can Be A Stock Market Genius By Joel Greenblatt) Statistical Bargains: These are average businesses which are available very cheap – below liquidation value/cash, at …

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Forget market-caps, here’s how we classify stocks

Posted by | Food for thought, Investing Framework | No Comments

Mega-Caps, Large-Caps, Mid-Caps, Small-Caps, Micro-Caps, Nano-Caps… As if the business analysis wasn’t complicated enough, we have divided the universe based on size as well. But does size really matter? The answer will be a big yes if you are running a mutual fund, or some other regulated fund like a pension fund, which has to 1). Comply with SEBI guideline and stick to fund mandate by investing in the universe of stocks which comply with that and 2). Ensure enough liquidity so as to be able to enter and exit with minimal impact cost. But the same isn’t true for individual investors and in fact is their biggest advantage (See Jatin Khemani’s presentation on ‘Individual Investor’s Real Edge – TIA 28th Jan 2017’). Generally speaking, large caps have been around for …

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Anti-Fragile – 20 Companies that are century-old

Posted by | Food for thought, Investing Framework | One Comment

We should prefer investing in businesses that are hard to kill. But how do we assess that? In 1950s average life cycle of a business was around 80 years, today it is less than 20 years. Clearly, entrepreneurship is more like a deadly roller coaster than just a smooth sail. Disruption has always been prevalent but what has changed is the speed and complexity with which things get disrupted. Whenever one talks about disruption, one has to bring up anti-fragility and how important it is to have in a business. Such a business has the potential not just to survive the test of times but thrive in chaos. Businesses that have a very little rate of change, low dependence on suppliers/government and are run conservatively have a higher chance of …

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[Video] Stock Idea Presentation at TIA’s 20:20 Ideas Summit by Jatin Khemani – 20th Oct, Chennai

Posted by | Investing Framework, Investor Meetup, Stocks | No Comments

A Stock Idea presentation delivered at TIA’s 20:20 Ideas Summit at GRT Grand, Chennai on 20th October 2018 by Jatin Khemani, CEO & Founder of Stalwart Advisors: Presentation (Video):   Presentation (Slides): FREE Access to Initiating Coverage Report & AGM Note on this stock idea on Guest Dashboard https://investor.stalwartvalue.com/ First-time visitors need to register to log in to the dashboard. For any queries or feedback, please write to us at support@stalwartvalue.com Disclaimer: This is not a recommendation to Buy/Sell. Read complete  disclaimer here .

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[Video] ‘The Art of Selling Stocks’ Presentation at IC 2018, Goa by Jatin Khemani

Posted by | Food for thought, Investing Framework, Stocks | No Comments

Jatin Khemani, CEO of Stalwart Advisors presented on ‘The Art of Selling Stocks‘ at Investors Carnival, Goa, 4-8th October 2018. Having a sound exit strategy is crucial to protect gains for value investors. This presentation covers Stalwart Advisors’ framework developed over the years through own mistakes as well as vicarious learning along with numerous case studies to help investors understand the nuances better. The conference was covered by BloombergQuint. The video of the talk along with slides can be accessed below: Link to Video: The Art of Selling Stocks Presentation Slides:  

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Are We In A Bear Market?

Posted by | Food for thought, Indian Markets, Investing Framework, Stocks | 2 Comments

You might be feeling it’s an odd title given CNX Nifty (which consists of India’s top 50 companies) is merely 3.7% below its all-time high of 11,171, hit in Jan 2018. Median drop in Nifty 50 Stocks from their 52-week high though is 17%, but the index is holding up thanks to a few heavyweights like HDFC Duo & Reliance hitting lifetime highs. But what about broader markets? Following is some eye-popping performance data about the 1,584 stocks listed on BSE with a market capitalization of more than Rs 100 Cr. as on 25th June 2018: Fall from 52-week high  (Source: Ace Equity, Stalwart Advisors Research) No. of Stocks >= 60% 106 50% – 59% 175 40% – 49% 289 30% – 39% 359 20% – 29% 336 The median fall for these …

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[Video] Presentation on Wind Energy Revival & Proxies for Investors

Posted by | Industries, Investing Framework, Scuttlebutt, Stocks | No Comments

Presentation by Jatin Khemani, Founder & CEO, Stalwart Advisors on Wind Energy Revival & Proxies Presentation (Video): Notes to Video: 00:00 Introduction 00:40 Wind Energy – Journey 01:20 FY18 Regime Change 05:30 Old Regime Vs New 09:15 Coal Vs Solar Vs Wind 10:00 Visibility for FY19 12:50 India’s Energy Target 2022 14:20 Key Concerns 18:40 Q4FY18 Turning Point? 19:30 Proxies for Investors 20:58 Disclosures Presentation (Slides): For any queries or feedback, please write to us at support@stalwartvalue.com

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Investing Mantra for Large-Caps – Go Contrarian (Case Study)

Posted by | Investing Framework, Stocks | One Comment

Until a few years ago, there were 100s of hidden gems/emerging companies available at throw-away valuation, however, since the beginning of this bull market in mid-2013, all those low hanging fruits got slowly taken out. As always pendulum did not stop in the center rather went to other extreme re-rating emerging companies to astronomical levels (~2x of their larger peers). There is a difference between a great business and a great investment- no matter how attractive a business may appear, as investors, we have to be cognizant of the price we are paying for it. Every market cycle teaches the same lesson to new investors, whether it was those who bought Technology, Media and Telecom (TMT) stocks in 2000 or Infra in 2007. Realizing this we also started exploring large caps …

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[Video] Thematic Research on Pollution & Actionable Investment Ideas

Posted by | Industries, Investor Meetup, Scuttlebutt, Stocks | No Comments

Presentation made by Jatin Khemani, Founder of Stalwart Advisors, during a conference organized by ‘Strictly Invest’ a group of around 150 passionate investors on 13th January 2018 in Mumbai’s Orchid Hotel. Presentation (Video): Notes to Video: 00:00 Introduction 01:00 Sneak peek in 2030 04:20 Pollution – A silent killer 05:40 Environmental Kuznets Curve 07:40 Sources of Air Pollution 09:20 New Emission Norms for India’s Thermal Power 11:00 Size of the Opportunity 12:45 List of companies to benefit 13:30 Top bet – GE Power India 15:20 Risk & Concerns 17:30 Other Proxies – Respirators & Masks 19:15 Other Proxies – Air Purifiers 20:15 Other Proxies – Pharma & Healthcare 20:40 Plants at Rescue 26:00 Disclaimers Presentation (Slides): FREE Access to research report on GE Power India & Scuttlebutt Note on Power …

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‘Growth Investing’ Vs ‘Growth Revival’ – Which style to follow?

Posted by | Indian Markets, Investing Framework, Stocks | 3 Comments

Style 1: Growth Investing Growth stocks are companies which are consistently and predictably growing at supernormal rates and given the visibility in their earnings trajectory, the market keeps re-rating them to levels which look obscenely high when one looks at price-earnings multiple of trailing twelve months. But proponents of this approach chose to ignore trailing multiple and, considering growth potential, feel comfortable with multiple it would be at two or three years out. Assume Stock X trades at Rs 100 and earned Re 1 per share in FY17 implying a price to earnings ratio of 100 times. If earnings grow at 40% CAGR the forward price to earnings would keep contracting as follows:  FY17A FY18E FY19E FY20E FY21E FY22E EPS @ 40% CAGR 1 1.40 1.96 2.74 3.84 5.37 Price-Earning …

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