Latest Report on Our Watchlist Stocks

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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Updates on Four More Stocks

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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What’s Brewing in Our Watchlist

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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The Perpetuating Forces of The Capitalist Creed

How do you measure the size of an economy?

GDP, right?

By that measure, US is the biggest economy in the world today with GDP in excess of $20 trillion. That’s the total value of the goods and services the country produced in FY17. The churn out of that kind of produce was achieved on the foundation of $12 trillion of national debt.

It’s not surprising to anyone that largest economic powerhouse runs and grows on the engine fuelled by debt.

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The Rise of Investing Centaurs

Napoleon Bonaparte, the Emperor of France, is considered one of the greatest commanders in history, and his wars and campaigns are studied at military schools worldwide. But in 1809, he was defeated. Not in a war but in a game of chess. Bonaparte was a military leader, not a chess grandmaster so his defeat in chess shouldn’t have come as a surprise except that he lost against Mechanical Turk — an Automaton Chess Player.

Mechanical Turk was the brainchild of Wolfgang von Kempelen. The Turk won most of the games played during its demonstrations around Europe and the Americas for nearly 84 years, playing and defeating many challengers including statesmen Benjamin Franklin. Read More

How To Get Things Right

What could be the worst nightmare for the parents of a toddler?

In a small Austrian town in the Alps, a mother and father were strolling in the woods with their three-year-old daughter. The parents lost sight of the girl for a moment and that was all it took. She slipped into an icy fishpond. The parents frantically jumped in after her. But the pond was dark and it took them thirty minutes before they could find her at the pond bottom. Eight minutes later when the rescue team arrived, the girl’s condition wasn’t good. She was unresponsive with no pulse and no sign of breathing. Her pupils were dilated and unreactive to light, indicating cessation of brain function. She was gone.

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