Cheviot Company – Good Value or Value Trap or Cigar Butt Opportunity?

Jute_cheviotCheviot Company Ltd, is a manufacturer of jute yarn and fabrics. It focuses in the niche segment of high value added products such as Fine Jute Yarn, Hessian Sacking, and Industrial Fabrics. Most recently, it has concentrated in selling its products in export market. This business unit is part of Kanoria group (a.ka. Cheviot Group).

One of the readers pointed me to this company. The factors that got my attention in Cheviot were sustained positive cash flow, continued profitability as a jute manufacturer, and dividends. It was pretty surprise for me to find that Cheviot has positive cash flow in an industry that is in perennial loss or runs on continued regulatory stimulus. Is that an indication of quality of management? Let us find out.

Trend Analysis

The whole reason for any business to exist is to generate sales revenue and make more profits. At a minimum, the parameters listed below should have continuously increasing trends. All the data below is from 2000 to 2010. Continue reading rest of this article…

ABB Buyout Offer – What Should I Do?

ABB group, the parent company of ABB India, made a public offer to increase its stake in ABB India. The company wants to increase its stake from approximately 52% to 75%. The buy price being offered is Rs 900 per share (34% premium to May 14 closing price). As per the annoucement, the reason for increasing the stake is “facilitate the long-term development of ABB’s business in India”.

Investors like me, who are investing for long term and practice buy-and-hold philosophy, need to put these types of corporate events under the lens. Buy-and-hold in real life is not blindly holding any stock forever. What it means is; one should continue to hold the stocks as long as it is meeting portfolio objectives. And the investor has an expectation that it will continue down the path.

I have owned ABB shares since 2005. I believe this buyout offer is significant event. I should evaluate if it makes sense for me to continue holding shares in this company. Continue reading rest of this article…

TIPBlog Forum on Facebook

facebook-iconWhat happens when it becomes difficult to digg out companies at a price that we want to pay? It either requires more work to digg through, or we just take a breather, or you slack off. Many folks just do something else. In my case, I am continuing to digg, and going through the bunch of emails from readers. In addition, I am also trying to reduce some junk on the blog.

In the month of March 2010, I have been having a problem of spam on my blog. It had become a nuisance. I was just one click away to close the comments sections. To me, that was not a good idea. Closing comments on a blog is not a solution. The reason I write is to generate some discussion to see what readers have to say. The introduction of “adding two numbers” did not help. I added Akismet on this blog. The plot below shows the number of spam messages that that I get on this blog. The average number of spam per day exceeds 50. Occasionally, there are 100+ spams in a day. Yes, it is frustrating. Akismet does help block some of the spam. But I do realize that I do not have any control over it. Continue reading rest of this article…

BONDs Provide Solid Foundation in Investment Portfolio

Thirteen years ago, when I graduated and started working, my dad had couple of suggestions. Papa ne kaha, “dekho beta, you have graduated and will be earning on your own”, he continued, “you have to develop your own thinking and your own future. We have mentored you enough, now you are on your own”. [At that point in time, I did not realize what he meant by this. Anyways] He also said, “meri sirf do baat yaad rakhna”. And following are those two words.

  1. You will earn a lot of money in your life. You will not be alone. Everybody does it. The important thing for you would be to figure how to keep it. Samajh rahe ho. Keep it, and not let it go waste.
  2. Never forget my generation’s government bonds. They are wealth builder.

As it always happens, I have never made an effort to follow my dad’s advice. But now when I look back, I realize that sub-consciously, I have followed both of his recommendations. Continue reading rest of this article…