Blog on Value Investing | Safal Niveshak

Annual Report Review: Ashok Leyland

In continuation of this series on annual report review, here is my review of the FY15 report of India’s leading commercial vehicle company, Ashok Leyland.

Click here to download the PDF review (9 MB file), or read it in the panel below.

If you wish to submit such reviews of annual reports, I would be happy to share the same with other tribe members. Just prepare them in the same format I am doing (make your notes on the report itself, scan them, convert to PDF file, and email to me).

It will be a good practice for you on how to read and analyze annual reports, plus the tribe will benefit. 🙂

Let me know your thoughts and questions on this review in the Comments section of this post…and also share any suggestion(s) you may have to make future reviews better and easier for your understanding.

Statutory Warning: This is NOT an investment advice to buy or sell shares. Please make your own decision, as blindly acting on anyone else’s research and opinions can be injurious to your wealth. I do not own the stock, but despite this, my analysis may be biased, and wrong. I have been wrong many times in the past. I am a registered Research Analyst as per SEBI (Research Analyst) Regulations, 2014 (Registration No. INH000000578).

Latticework of Mental Models: Do Something Bias

Note: This article first appeared in the March 2015 issue of our premium newsletter, Value Investing Almanack.

Do you remember Dr. Placebo and Mr. Irrational?

They teamed up for our discussion on Mean Reversion, but kind of disappeared after that.

Although Mr. Irrational did come back for Contrast Mis-Reaction but Dr. Placebo, who runs a thriving practice, has been finding it hard to take out time from his busy schedule. So this time I made him an irresistible offer. Vishal and I offered him a discount on Value Investing Almanack subscription, which he just couldn’t refuse.

As far as Mr. Irrational is concerned, he’s my buddy, almost like my alter ego. So he has to come when I ask.

Let’s enter Dr. Placebo’s clinic. He has this very interesting quote, uttered by famous scientist Blaise Pascal, displayed in the patient waiting area –

All of humanity’s problems stem from man’s inability to sit quietly in a room alone.

He hopes that his waiting patients learn something from this deep thought, but little does he realize that more than his patients, he is the one who needs to meditate over Pascal’s quote.

Announcing: Safal Niveshak Meetups

In his magnificent book, Think and Grow Rich, Napoleon Hill wrote –

No two minds ever come together without, thereby, creating a third, invisible, intangible force which may be likened to a third mind…When a group of individual brains are coordinated and function in harmony, the increased energy created through that alliance becomes available to every individual brain in the group.

In giving meaning to Mr. Hill’s idea, let me announce a new initiative from Safal Niveshak – Meetups @ Safal Niveshak – to bring the tribe members together, face-to-face, to channel the energy for a shared vision – simplifying the art of value investing and making it available to as many small investors as possible, around the country.

This idea is really simple – To meet regularly in small groups across cities in India…to learn and grow together in our investment journey.

Annual Report Review: Blue Star

In continuation of this series on reviewing annual reports, here is my review of the FY15 report of India’s leading air-conditioning and commercial refrigeration company, Blue Star.

Click here to download the PDF review (10 MB file), or read it in the panel below.

Please note that this review is just to help you dig deeper, in case you are interested to read and understand more of the reviewed company. Don’t treat this as an end to your quest for learning more about businesses and industries, and how to analyze them.

In fact, this is just the beginning. 🙂

Latticework of Mental Models: Tragedy Of Commons

I have never been bitten by a dog (by an unfriendly dog to be precise). However, there were few friendly ones who would chase me for fun. Well it was fun for them but as a kid I didn’t particularly enjoy that kind of sport much.

So when I moved into my current apartment community, housing nearly two thousand flats, it felt nostalgic because the campus had multiple patches of large open areas which meant it was a boon for dog owners (and heaven for their dogs).

Few years back, it wasn’t uncommon to see few fitness conscious dogs taking regular morning and evening walks (along with their disinterested owners) inside the apartment campus. But as the resident population grew, the population of pets followed suit. Pretty soon, it became a common practice for dogs to relieve themselves anywhere in the campus.

The pet owners perhaps assumed that cleaning was a responsibility of maintenance staff which resulted in a campus littered with dog poop everywhere. It was ironical that the mess was equally disturbing for all residents (including those offending dog owners) but it was quite logical, in absence of any specific laws about pet poop mis-management, for people to keep their houses clean and compromise with the common area.

I couldn’t help but marvel at Aristotle’s insight about this issue. He said –

What is common to many is taken least care of, for all men have greater regard for what is their own than for what they possess in common with others.

5 Things I Learned from Jeff Bezos on Business and Investing

It was 18 years back when Amazon, the world’s largest bookseller and one of the most successful Internet companies, got listed. The company’s IPO was unique for two reasons.

One, that was a period before the dawn of Internet businesses, and thus most investors and brick-and-mortar competitors were convinced the company was a joke – an “Internet bookseller” with “no barriers to entry”. Michael Porter’s framework said it would go bust quickly.

Then, Amazon’s founder and CEO Jeff Bezos was extremely frank with shareholders from the word go, which is truly unique in this world where CEOs hide more than they reveal.

So, in 1997, after the IPO, Bezos wrote an honest letter to shareholders in which he explained Amazon’s philosophy, which was (and is) quite different from the philosophies of most public companies.

Why different?

Because, unlike other public companies that were (and are) obsessed with meeting and beating short-term shareholder demands, Bezos’s game plan was (and is) focused on long-term investments and value creation.

Annual Report Review: Indian Hotels

In continuation of this series on reviewing annual reports, here is my review of the FY15 report of India’s largest hotel company, Indian Hotels.

Click here to download the PDF review (11 MB file), or read it in the panel below.

In fact, this is just the beginning. 🙂

Let me know your thoughts on this review in the Comments section of this post…and also share any suggestion(s) you may have to make future reviews better and easier for your understanding.

Latticework of Mental Models: Thermodynamics

The big idea that we are going to look at today is from the field of Physics and it’s called Thermodynamics. Before you get too scared of the big word let me assure you that we’re not going to be discussing any mind bending formulae here.

In fact, here a confession is in order.

The subject of Thermodynamics has fascinated me since my college days. And the fascination was mostly because it provoked more dread than excitement. Perhaps my bad karma from past life, call it Karma-dynamics, made sure that I barely got passing marks in any paper related to Thermodynamics.

So trust me, I won’t even make an attempt to go anywhere near complex equations.

The plan is to learn some basics and use that knowledge to gain useful insights that will help us make an educated guess about few interesting problems. What kind of problems? Here is one for starter –

Life 2.0: Sleep

Some of the greatest things, the greatest discoveries, have come about by serendipity. Let’s explore its magic here
A wise man once said, “Your future depends on your dreams.” to which a not-so-wise man replied, “So go to sleep”.

That’s an old joke but I believe that there may be some element of truth to it. After all if we spend a third of our lives sleeping, the nature must have a crucial design principle behind it.

I am sure everybody has experienced sleep deprival. Can you recall few such instances in your life? Let me help you – remember those all night movie marathons during college days? Or those night outs spent chatting with your buddies for hours together.

Well, not every night out is for fun. How about those do-or-die project deadlines with unlimited supply of pizzas and coffee but very limited supply of time and tolerance for mistakes?

The only common thread at the end of these kinds of events, apart from bloody red eyes and tired mind, is a burning desire to find a bed and just crash.

Ideally, you shouldn’t lose your sleep over harmful effects of sleep deprival (pun intended), unless it becomes a regular feature of your routine.

On 21st Oct. 2009, 42-year old Ranjan Das, CEO of SAP-Indian Subcontinent and the youngest CEO of an MNC in India, collapsed and died after suffering a massive heart attack. He had returned home after completing a workout at the gym.

Perhaps his body was not prepared to handle overexertion? Actually no! He was as fit as anybody could be at his age. He was very active in sports, was a fitness freak and a marathon runner. So why did an exceptionally active, athletic person succumb to heart attack at a relatively younger age.
[Read more…] about Life 2.0: Sleep

10 Useful Rules of Thumb for Your Personal Finances

I had written this post in February 2012. However, given a lot of reader emails on topics covered herein, I am re-posting it.

I use a few rules of thumb when it comes to how I manage my personal finances. Here are some rules of thumb that I practice for managing my own personal finances. I hope you will find some of these useful for your own purpose.

1. Rule of 72. The Rule of 72 states that you can divide the number 72 by whatever yield you are getting to see how long it would take for your investment to double.

For instance, if your fixed deposit earns an annual interest of 8%, it will take 9 years for your money to double (72/8).

2. The number one rule of saving money is: Pay yourself first. It’s very important to set aside your savings every month before you use the money for other things, including paying of bills. Always pay yourself before anything else.