Warren Buffet

Why we bought Garware-Wall Ropes?

Posted by | Business Models, Investing Framework, Scuttlebutt, Stocks | 3 Comments

“Invest in businesses that buy commodities and sell brands” is a powerful idea for long-term investing propagated by Warren Buffet. This lends business the ability to pass on higher raw material cost without losing unit volumes and retain some benefits in times of softer raw material prices. (a.k.a. pricing power) As per Prof. Sanjay Bakshi, an attractive hunting ground for mis-priced companies is often where Mr. Market is valuing some businesses as commodity, perhaps because they belong to sectors which are labeled “commodity” for example textiles, whereas in reality some of these might have carved out a niche for themselves enjoying a strong pricing power (think Ambika Cotton) In 2015 we got lucky when we spotted both these elements to be present in a business called ‘Garware-Wall Ropes’, a Pune based technical textile giant. …

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