Investing Behaviour

Value Investing, the Sanjay Bakshi Way – Part 4

Here’s the final part of my interview of Prof. Sanjay Bakshi. You can read the first three parts here – Part 1 | Part 2 | Part 3

Safal Niveshak: Can you draw down a series of steps and checklists – the process – you use to identify stocks to buy using the value investing route?

Prof. Bakshi: You need different checklists for different styles of investing.

If you are analysing a bankruptcy situation, the checklist you will use will obviously be different from the one when you are buying into a business on the basis of the skills of one person, like Ajay Piramal.

Buying into Piramal Healthcare was essentially a bet on the man’s ability to allocate capital. So to evaluate how likely he will do that in the future, your checklist must first examine how well he allocated capital in the past and also how did he treat his minority investors in the past.

Value Investing, the Sanjay Bakshi Way – Part 3

Here’s the third and penultimate part of my interview of Prof. Sanjay Bakshi. You can read the first two parts here – Part 1 | Part 2

Safal Niveshak: How can a small investor build up a “positive loop” that you talk about to increase his circle of competence, given the time, education or background constraints? How did you do this when you started out as a small investor yourself?

Prof. Bakshi: Buffett talks a lot about the idea of “circle of competence”. But what do we mean by the term?

I like to define it in a creative manner. Most of my students are engineers and have little or no accounting background. One way to think about circle of competence for them is to only specialise in engineering stocks. And students who are specialising in marketing may develop their circle of competence in FMCG stocks.

Creativity in defining your “circle of competence”
That’s the conventional way of thinking about circle of competence. There are other ways. For example, you may specialise in micro-caps. Some of my students are doing exactly that. They have no interest whatsoever in large cap stocks.

Value Investing, the Sanjay Bakshi Way – Part 2

First the bad news! The post below is still not the complete interview with Prof. Bakshi, as his answers, to my late realization, were more extensive than I think I’d heard (might be due to me having lost in the aura of meeting him). 🙂

So you will still have to wait for at least two more parts to get the complete transcript of the interview.

Now for the good news! The next 4,000 words are going to bring you great enlightenment in investing and human behaviour.

As I type, and type, and type the interview, I am getting newer ideas with each paragraph. And I hope the same for you as you read, and read, and read what’s written below.

So over to my second question of the interview with Prof. Sanjay Bakshi, and his answer to the same.

Value Investing, the Sanjay Bakshi Way – Part 1

I recently had the privilege of meeting one of the highly regarded professors in the field of value investing and behavioral finance, Prof. Sanjay Bakshi in New Delhi.

Safal Niveshak meets Prof. Sanjay Bakshi

Prof. Bakshi teaches MBA students (at MDI Gurgaon) two popular courses: “Behavioral Finance & Business Valuation” and “Financial Shenanigans & Governance”.

He is also the CEO of Tactica Capital Management, a boutique firm engaged in deep value investing.

It was like a dream come true for me, having met a guru who has been a great teacher in my investing pursuits over the past few years. So it was obvious for me to wait for Prof. Bakshi’s arrival with butterflies in my stomach.

8 Things I Wish I’d Known Before Starting as an Investor

I have been a stock market investor for the past nine years now, and have seen a respectable performance overall.

Why respectable? Because my investments have helped me at several key phases of my life, most important being the purchase of a house property and then repayment of the entire loan on the same within 5 years (though with some support from the family).

Then, apart from a solid support from my wife, I must thank my investments to have given me the necessary “guts” to quit my job and begin on this journey of independence, where all I work for is my passion – to help individual investors like you become independent and sensible in managing your own money.

So even after doing a respectable job as an investor, what could be the things that I still rue I’d learned before starting out nine years back?

An Honest Letter from Your Friendly Stock Market Analyst

Your Friendly Stock Market Analyst Dear Small & Irrelevant Investor,

You must be surprised to receive this letter from me – the ever-so-busy Stock Market Analyst working for your friendly, neighbourhood broker.

But you see I have been enjoying some free time these days because the markets are weak and people are not buying stocks, and thus not reading much of my recommendations.

So here I am, sparing some of my precious time writing to you. I am heart-broken reading all the maliciousness that is being spread these days about me, and my graceful profession.

I’ve even heard that there is this guy called Vishal Khandelwal who’s running this funny, charitable, new website called Safal Niveshak (sounds similar to “Suffer Niveshak”! Ha-Ha-Ha!) and is trying to throw a lot of s**t on my work…but I’ll handle that later in this letter.

I Regret…

Here is what a Safal Niveshak tribesman, Sanjeev Bhatia, wrote in the latest Facebook Jam last Saturday (sorry Sanjeev, but it’s your turn to claim the fame ;-))…

I have a particular Behavioral Problem. You recently wrote somewhere that pain of seeing your picks down 15% is more intense than pleasure of seeing your picks go up 15%. But in my case, it seems to be different. I am now seeing BHEL going up to 232 level, did not buy at 200 because my buy price was 180. Opto Circuit, my buy price was 140, it bounced back from 147 to 155…and with market going up and in strong upward momentum, it does not seem likely to come down soon although you can’t say that with certainty in this market. How to let go off this “being left out” syndrome?

What Sanjeev thought, and as I understood from his question, was that he was suffering from a “unique” behavioral problem – something like the “Alice in Wonderland Syndrome”, which is a neurological disorder that can effect a person’s perception.

But then, as I mentioned in the jam, and experienced investors would vouch for this, is that Sanjeev suffers from nothing more than a “common cold”, like most of us investors.

[Read more…] about I Regret…

Weapon of Mass ‘Temptation’ that Destroys Stock Market Investors

Have a look at this balance sheet…but first stop looking at the left side of the image. 🙂

Well, if you can’t read the numbers above and want to have a “better” look at the complete annual report of this company, click here to see…but please come back to this post soon! 😉

“Isn’t it an amazing annual report?” This is what an ex-colleague asked me showing this annual report sometime in 2009.

3 Big Risks in Value Investing – Part 1

“Who would join a Facebook chat around investing on a bright Saturday morning?” I asked myself while preparing for the latest session of Safal Niveshak’s Facebook Jam on June 9.

I opened the session for questions at 9 AM, but the first question came only at 9.16 AM. So my fears were coming true. But then, the speed at which people came in and the intensity at which the discussions progressed, it was an amazing feeling by the time the jam ended at 11 AM.

Click here to read the transcript of the jam. The next session will be held on coming Saturday, 16th June, between 9-11 AM.

Anyways, the reason I’m talking about the Facebook Jam is that this is one platform where I’ve encountered the best questions around investing over the past four weeks since it all started.

Like in the last session, one of the avid readers of The Safal Niveshak Post asked, “What are the risks involved in value investing?”

Opto Circuits, and Power of Story in Investing

Power of Story If you clicked on the headline expecting to read my view on Opto Circuits, I’m sorry to disappoint you because this post isn’t about that.

The reason I mention Opto Circuits here is because I have received several emails over the past few days requesting for my view on the stock.

Given the number of requests for this specific company, I would definitely work on the same and try to release a report soon via StockTalk. But what intrigues me is – Why are so many people suddenly talking about a small-size company called Opto Circuits?

What’s the story?

Well, that’s what I’m going to discuss today – investing and power of “the story”.