Is Exacting a Buy Price Important for Long Term Investing?

At regular time intervals, I like to discuss selective questions from readers of this blog. Many times, I discuss randomly with no particular theme. It is usually based on either intriguing questions or inquisitive questions or just that I like the question. Now that markets have zoomed higher relative to last year, most of these questions have slowly drifted towards buying price. I give priority to respond to all questions that come from regular readers of my blog. I make sure I give them my best response. Others, I may or may not, depending upon if I have time to get to them or whether they are good questions.

Today, I am reproducing below three emails that follow the theme of “what is the buy price”. Continue reading rest of this article…

Venturing into Opportunistic Ideas and Portfolio

On rare occasions, I have mentioned about my opportunity portfolio. I have never discussed about so far on this blog. Over the years, I have not had any tangible traction on this aspect. My wife tells me that I have failed on this subject. She tells me, I am too slow or logical or methodical to understand what opportunity means. For opportunistic, I have to be like a “hawk” to pounce on it when it comes. Well, I accept her opinion. Why? Because have you ever won an argument with your wife?

When I say, not much traction, what I really mean is, I haven’t focused on it. I haven’t spent sufficient time on it. Opportunity is too wide a definition which could probably include deep value, market timing, downturns, de-listing, arbitrages, buyback offers, etc. In my early investing years, I played with market timing with not much success. Again, I could succeed in few trades here and there, but sustainability is an issue. In my investing philosophy, sustainability and consistency over long term is not negotiable. Continue reading rest of this article…

TIPBlog Portfolio Update: 1H 2010

UpdateThe 1H2010 can be summarized as return of optimism, in economy, in stock markets, stabilization of global economy, and fears about euro zone. As an individual investor, should I care about macro economics, or should I even worry about what happens to Greece or to euro currency? Ambani brothers patch up and there are stories its good for markets and business! To me, being stalwarts in India Business world, instead of setting an example, it was idiotic for them to even fight and drag each other into courts. These are good academic discussion, but I doubt it is going to help in your own portfolio. I am taking stock of my portfolio.

My last progress update was for year end 2009. This post summarizes TIPBlog portfolio update and measures progress for 1H 2010. Continue reading rest of this article…

Goals and Strategy: Source of Mess Up in Personal Portfolio

1133804_sign_success_and_failureAs a do-it-yourself investor, I enjoy the process of investing much more than finding my next company I will invest in. Admittedly, the process is much more challenging than finding the winning stocks. Yes, you read it right! Investing process is very difficult in many different contexts. Managing the portfolio requires wearing different types of hats. Sometimes you have act and behave like a leader, sometimes play the role of manager, and on many occasions you work like an employee.

Most of the investors spend a significant amount of time in looking at the quantitative part of the company analysis. We arrange data in different formats, different time scales, compare with analyst, check out google to see what others have to say, etc. In short, search and screen multiple stocks, collect data, and present observations and results. This is all about execution and is similar to what an employee will do. Is that really important?  Have you asked yourself:

  • Why this specific type of analysis?
  • How you determine earnings per share?
  • Is it only necessary to look at last one year or last three year or more?
  • Do you include dividends?
  • How do you decide multiples?
  • How do you decide value? Continue reading rest of this article…

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…