Month: February 2019

So far we’ve published updates on eight companies from our watch list. You can read about it here and here.

Below we have four more companies that we’re tracking closely. We have made notes from their quarterly updates and the analyst conference calls.

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Please click on the read more button for more details on each stock.

VIP Industries

VIP Industries Ltd is an Indian luggage maker which is the world’s second largest and Asia’s largest luggage maker. The company has more than 8,000 retail outlets across India and a network of retailers in 50 countries. VIP’s products are imported in numerous other countries. It acquired United Kingdom luggage brand Carlton in 2004. It also owns the Aristocrat and Skybags brands which are very popular in India.

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Ted Williams, one of the greatest baseball hitters in the history, also known as the “Splendid Splinter,” had a unique strategy. Like all worldclass performers, Williams studied the game intensively and devised a remarkable plan.

He broke down his strike zone into 77 baseball-sized “cells” and then meticulously charted his hit results across those cells. With this analysis he learned that his batting average was much better when he only went after pitches in his “sweet spot.”

So he would swing at only those balls that landed in his “sweet spot.” Of course, even with that knowledge, he couldn’t wait all day for the perfect pitch; if he let three strikes go by without swinging, he’d be called out.

Warren Buffett drew a very interesting analogy between Williams’ way of playing and how investing should be done.

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There are thousands of companies listed on the Indian stock market. I am sure it’s safe to say that each of those listed stocks has, at some point, hit price levels at which it would have proved to be two, three or ten bagger from its all time low.

Does it mean that all those stocks are missed opportunities because we never studied them?

Not really. As value investors and practitioners of rationality, we constantly remind ourselves that it’s foolhardy to chase ideas based only on their price movements.

We believe that the way to create long term wealth in the stock market is to keep our focus inside our circle of competence — an idea made popular by Warren Buffett. In his 1996 letter to shareholders, Buffett wrote —

What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.

At this stage there are about 40-50 listed companies that lie in our circle of competence. We have spent hours upon hours digging into the details of their financials, deciphering annual reports, and studying industry dynamics. This gives us reasonably sound understanding of these businesses and the industries they operate in.

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