Wednesday, 20 December 2017

Field Marshal Sam Manekshaw- On Leadership and Discipline

While going through the old readings, I found this incisive and witty speech of Field Marshal Manekshaw.
The speech continues to be as didactive and refreshing as it would have been 19 years back, when delivered. 

Sunday, 3 December 2017

Session at MDI- Corrigendum

A reader pointed out that the order of 5 steps in presentation and the internship note was different. In the presentation, the downside risks come before management while in the internship note, I have mentioned management before downside risks.

Thank you for pointing out. I uploaded an internship note which was written earlier. Sorry.

While thinking about the process over a period of time, I realized that the process would be more robust if I evaluate downside risks before I evaluate the management.

Revised internship note : Link

Saturday, 2 December 2017

Session at MDI

I had the privilege to speak at Bakshi Sir's class yesterday.
It was a quite an interactive session with the upcoming batch of value investors.

Please find the abridged presentation :   Link
Also, in conjunction find a note on the framework which I share with every batch of interns. It explains the same concepts as in the presentation:  Link

Saturday, 2 September 2017

The Art of Adding Weights

I strongly believe that adding weights at the appropriate places is the most important element in our lives, and more so in investing.

"Adding weights" means that in anything that we think about , there are always a few factors which carry most of the freight. If we are thinking about risks, there would be a few risks that would determine the beauty or lack of it in a business. If we think about opportunity size or tailwinds, again there would be a few factors which would determine which way the scale tilts. And the same goes with position sizing in the portfolio: a few positions where the investor has the strongest conviction (with minimal risk) will determine if the returns are better than average. I think the concept of adding weights is universally applicable in whichever field we operate or whatever decision we think about.

This is nothing new. It is just Pareto's principle described from a different view-point.

Our job as an investor is to carefully determine which factors should carry the maximum weight. Adding weights without careful consideration can make sure that the disadvantages also get out sized.  Looking at a good business but getting stuck with manager remuneration which is a few percentage points higher than average is a classic case of adding weight on the wrong side, in my view.

Like the game of fruit ninja, we should develop the art of quickly slicing away the factors which are benign or non-core. And then spend a large amount of time, attention and thinking power on factors that are the heaviest.

Thursday, 20 July 2017

Meeting Managements- Listen to Mr. Bakshi

Meeting the management has been a conundrum for investors. To meet or not depends on the individual style. There is no right or wrong answer.

But I think it is important to remember what Mr Bakshi said in 1982. 

Listen to this song :


Remember to replace the word "pyaar" with "bias". 

I have written name of Mr. Bakshi to attract attention to this post. But it is not Prof. Bakshi but the lyricist of the song, Mr. Anand Bakshi :-)

So, every time you walk in to meet any management , have this song on your lips and hopefully you will come out just fine.

Friday, 5 May 2017

Internship 2017-18 (List)

Hi Everyone,

First of all thank you for evincing interest in the internship and sending in your applications.

Replying and acknowledging the individual mails was not possible. However, I have taken due care that none of the mails remain unattended in the bulk /spam folder. 

I carefully went through each application and short listed the names. From the short list, I picked a draw of 10 names which are :

  1. Vishal Prasad
  2. Shyam Sunder R
  3. Harsh Gupta
  4. Gummadi Jaya Chandra
  5. Sameer Sawant
  6. Vikas Kasturi
  7. Niyas CV
  8. Anubhav Bhambri
  9. Ankush Raghuvanshi
  10. Midhun James
Best wishes,

Saturday, 8 April 2017

Value Investing- Internships 2017-18

Hi Everyone,

I intend to provide internships to interested candidates in the field of value investing for the year 2017-18.

Please find details about the same here : link.


Ankur Jain

Friday, 17 March 2017

​​97 everyday and counting ?

A casual conversation with a PSU bank officer a few days back highlighted the problem that the PSU banks are staring in their face. It's not NPAs. NPAs is a known devil. The other piece which goes unnoticed is the human resources, or rather the absence of them. The bank officer mentioned that around 120-125 employees are retiring every month from his bank and it is becoming almost impossible to drive business or even to maintain business.

PSU Banks have a market share of 75% of the total deposits and around 75% of the total advances. They have a large market share of an industry which is expected to grow at a rate of 15-20% per annum.

I checked about the problem of human resources at the PSU Banks.

As per a question answered by the Government of India in Rajya Sabha in March 2015, the total number of employees in PSU banks as on 31.12.2014 were 851,308. In an answer to another question during March 2015 in the Rajya Sabha, the Government submitted that around 25% of the employees of banks are expected to retire by 2020. This means that around 213,000 employees would retire during the period of 6 years (CY 2015- CY 2020). This is an average of 35,471 employees retiring every year or 97 employees retiring everyday (including Sunday) till 2020. RBI has termed 2010-2020 as the decade of retirement for the PSU banks.

A large number of these would be people having experience in the critical areas of project assessment, appraisal. Also, this number does not include people who would resign and move over to private organizations. Sure, the banks will try to fill up the ranks quickly but it is easier said than done. And the new joinees would lack the experience required to write loans and recover the ones already lent.

In the light of such a cocktail (large NPAs, weak balance sheets and absence of experienced people), it is very likely that public sector banks will cede large slices of market share to private players which includes private banks, small finance banks, MFIs, NBFCs, payment banks etc.

Disclaimer : No investment recommendation.

Wednesday, 1 March 2017

Infosys ​Limited - What happened to the ROCK STAR ?

" Many shall be restored that now are fallen and many shall fall that now are in honor. "
                                                                                                                                                     - Horace

The poster boy of Indian corporate , the rock star of 90s, the company that gave hopes and wings (and jobs) to millions of Indians is going through a rough patch. Allegations have been leveled against severance pay given to the ex-CFO and some other ex-associates. Concerns have been raised about the high compensation package offered to the CEO, questions have been raised about the conflicts of interest and high valuations paid for acquisitions. Founders have raised concerns about corporate governance practices at the company. 

I read the transcript of the press conference and the investor call arranged by Infoys. The board is a highly distinguished one and they have tried to substantially explain each and every concern. They have taken cognizance of the concerns , have promised and taken steps to further strengthen the governance processes. I found those explanations as pretty reasonable. Of course, there are calls for more transparency and everything to be disclosed in the public domain, I do not belong to that camp. In my view, the board is very capable and sometimes in the larger interest, we should leave it to the collective wisdom of the board to decide what and how much to disclose.

Am I concerned about Infosys ? I am not.

Just like the life of a human being, the life of a company also goes through its own set of ebbs and flows. People learn and evolve, businesses learn and evolve and companies learn and evolve. I very strongly believe that just like the rock star status of the Infosys didn't remain forever, this rough patch too will not remain forever. "This too shall pass."

Coming to the investing part. It makes a lot of sense to look at companies that are going through some kind of trouble- Infosys at the moment is certainly one of them. I thought about the business of Infosys in the following ways :

Do I understand the business of Infosys ? No, I don't.

I appreciate the stellar role that technology companies have played in the past and will continue to play in the future. But I am not able to understand the business dynamics of Infosys. It doesn't mean anything about the technology companies, it doesn't mean anything about Infosys, it just means that I don't understand the business of Infosys.

Does it mean I will not invest in any technology company ? No
I would like to keep an open mind . I think I somewhat understand the high entry barriers around the search business of Google, I appreciate the design and thinking capabilities of Apple etc. but I don't understand a whole lot of technology companies. I would be open to investing in technology companies which I think I understand.

What is the most important thing in investing ?


As Mr Buffett teaches, the most important thing in investing is to understand your own circle of competence and the boundaries of it. Another equally important thing is to cultivate the discipline to remain within that circle.


And Mr Tom Watson Sr. shared his formula for success :  
“I’m no genius. I’m smart in spots—but I stay around those spots.”
                                                                                                  - Tom Watson Sr., Founder of IBM

 What is the valuation of Infosys ?

Doesn't matter. If something is not worth doing, it's not worth doing well.

Since I don't understand the business of Infosys, I have decided to give it a pass. I hope and believe that Infosys will be able to tide over this crisis quickly and regain its iconic status again.

Disclaimer : This is not an investment recommendation to buy or sell any company named in this post. These are thoughts of a rambling mind.

Saturday, 18 February 2017

Are we becoming Information Obese?

Are we becoming Information Obese?

Physical Obesity- we are aware, we can see and some of us suffer from it.
Information Obesity- we are unaware, we can’t see but a large number of us suffer from it.

If we compare the two, there are a lot of similarities:
Physical Obesity
Information Obesity

Intake of food more than our body can process
Intake of information more than our mind can

Large portion of the food consumed is unhealthy
Large portion of the information consumed is
unhealthy or irrelevant
Leads to lack of physical stamina
Leads to lack of mental stamina (concentration)

The lack of concentration leads to poor quality of work that we do and more often than not, poor decisions. If we were to learn to control the flow of information, we would be able to cultivate focus. Our quality of decisions would improve because every single day, every single minute of it, we do one thing- we make decisions.

A few years back, I realized that I was always anxious and in some kind of a hurry. My mind was always clogged with things to do, ideas to work on and a seemingly unending list of stuff to read. It seemed as if my mind was on an invisible treadmill where the only objective was to finish one thing and hop on to the next. If happiness was a state of mind, then my mind was far removed from it. There was no time for the mind to soak in and relish the work at hand. I was reading a lot, listening a lot but had little time to think and virtually no time to think through.

It reminds me of a joke I had read: An auto driver was driving very fast. The passenger on the back seat cautioned the driver of the high speed and the possibility of an accident. The smart driver replied: “Don’t worry. I drive so fast that I have no time for an accident.” I found myself very much like the auto driver. I am going so fast that I have no time to think.

What I didn’t want?  My mind to be like a conveyor belt or an assembly line which has to continue working all the time.
What I did want? My mind to be well-irrigated with information but not inundated with it. I wanted to do a few things but do them well. And in order to do things well, the mind has to be tranquil not anxious.
I concluded that I was information obese and needed to go on an information diet.

The next task was to take corrective steps to rectify the situation and become better at attaining focus.
How do we check physical obesity? The first thing we do is to reduce the intake of food. So, the first thing in my battle against information bombardment was to slow down the incessant flow of information. What did I do?

  • To start with a clean slate, you need to first wipe the slate clean. I unsubscribed from all blogs, all newsletters, cancelled subscription of all magazines, newspapers etc. I was constantly reading about other people’s opinions but had to not time to figure out my own. This step was like “zero budgeting”, what the Brazilian private equity firm 3G does to its acquiring companies. 
  • Next, I cleaned my study room of the all the stuff which was not required and out of date. This included loads of books and piles of papers. Just like our body removes dead cells and the trees get rid of dead wood, I also needed to remove the old to make place for the new.

The next thing in overcoming physical obesity is to reduce the amount of junk food that we consume. In parlance of information obesity, I would call it junk information or noise. When I analyzed what I read or heard or watched, a large portion of that was not relevant to the work at hand. 

Over a period of time, I reduced my exposure to the information that I considered unnecessary. I picked up a few things to read. Now, I read a few things but do them consistently. And doing a few things consistently has helped me more in terms of my knowledge and understanding than before. The ‘less is more’ approach has worked beautifully.

The final step in becoming physically fit is to process the consumed food properly. For the mind, it would be to process the information with full concentration and focus that it needs. The crux of putting our mind into one single thing that we do can be found in this doha of Kabir Das Ji:
जिन खोजा, तिन पाईयां
गहरे पानी बैठ
(One who has sought has found. But only by diving deep.)

And it order to go to the depth of things, we have to focus.
How I was losing focus?

  • My first weakness was that I would start reading/ working on my computer and would end up drifting to things which might be unrelated to the work at hand. Like, listening to a Ted Talk is informative but it can be destructive if you are in the middle of something and become distracted due to that talk. I now, take print outs of whatever I wish to read and put my computer to rest. I have realized it has led to significant productivity gains, for me.
  • I stopped checking my phone and the stock prices incessantly. I removed the mail, google finance and most of the apps from my phone. They all suck our time and mental energy bit by bit every time we check them. The problem is not with the devices, the problem is with our compulsiveness to check them.
  • Another point of distraction was multi-tasking. In order to do multiple things at a given time, I ended up doing less number of things each with a poor quality output. So, I decided to work on a template where I forced myself to work on a given thing for an extended period of time without distractions. As Monk Dandapani (very informative videos available on YouTube) says in his talk “If we practice distraction 24/7/365, we become very good at it. Conversely, if we practice focus, over a long period of time, we can become good at that as well.”
  • I started picking one thing at a time and learning to give all my attention to it. I would pick up the second thing only once I am done with the first.

How do successful people do it?

When we read about successful people (yogis, investors, philanthropists, musicians, sports persons etc.), we will realize that successful people are minimalist. They are sparse in their wardrobe, they are sparse when they talk, they are sparse in how they spend and they are sparse in how they work. By limiting the amount of things that want their attention, they are able to conserve their precious attention to the few tasks that really matter. And once they decide what they wish to do, they are able to attend to the task with full force. All their eyes, mind, intellect and efforts are devoted to the task at hand.

Gaining focus is not easy, but it’s not difficult either if that becomes our deep driving desire.

Over a last few months, I met a couple of investors who shared their feeling of being anxious all the time and being overloaded with stuff. I shared my own experience with them and also thought of writing a post. So, if you feel you are distracted and want to gain focus, you need to find for yourself where you energies are dissipating and you need to plug those leaks.

Have I attained whatever level of focus I aspire to have? No, but I work to improve on that every day. And I have tasted short periods of deep focus. I can now say with 100% conviction that the taste of focus is so sweet and so enduring that everything else falls pale in comparison.

My mind is relaxed now and I enjoy whatever I do. Focus puts us in the zone and puts us in a sweet spot. I feel, focus is meditation in action.