There are two ways we can find winning stocks. The first is to find stocks that are already recognized as quality businesses and to hold on to them for years to come. These stocks enjoy high ROE and the effect of compounding enables us to reap bumper gains.
This is a relatively simple method of finding winning stocks. The Prof has explained this technique in detail in his talk and also his piece.
The second method, which requires a high level of expertise, is to find stocks that are “mispriced” in relation to their intrinsic value. The mispricing could be due to a variety of reasons.
This technique requires us to be a contrarian with high levels of conviction in the stock.
Prof. Sanjay Bakshi, in his piece “7 patterns of market mispricing quality businesses”, has given seven broad “patterns of inefficiency” which leads to the mispricing of stocks. One of the patterns is the market’s inability to appreciate the probable future value of higher quality businesses with very long runways. Another is the market’s inability to spot an emerging moat that is growing slowly over time. A third is the market’s inability to forgive an entrepreneur who has committed grievous mistakes in the past. There are four other patterns given.
Unfortunately, at the end of the dissertation, the Prof does not give any examples of what he means on the ground that he does not “want to talk my book”.
However, my guess is that each of the Prof’s favourite stocks such as Ashiana Housing, Vaibhav Global, Kitex Garments etc will qualify as “mispriced” stocks because they satisfy pattern no. 1 i.e. they are “quality businesses” with “very long runways” and higher “future value”.
If you can think of any other stocks that will qualify as “mispriced” on any of the seven paramters, do share it.
Vardhman Acrylics
international travel house
Any specific choice for Vardhman Acrylics…please highlight its Good points…
Seems intetesting but please share your views..
Thanks…!!!
Reputed promoters.
zero debt
started paying dividend
healthy cash
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Guru Vaachal,
I have been following you on MMB… What level would you recommend RSS ?
Or should one wait for the 5% circuit filters to be lifted…
Cheers!
George
George,
I usually avoid the words BUY or SELL but RS Software is a strict BUY for long term.
Q1 may be better and as per management M&A will take place around Q2.
probably Q4 of current FY will be much better than Q4 of previous FY.
Last point, “Because of its intense dislike of conglomerates, the market’s inability to treat as exceptions, the great capital allocators who create well-managed, and highly profitable diversified conglomerates over time. ”
he is alluding to the “Piramal Enterprise”
Suven. How does an establishment breakout. Build a portfolio of knowledge. Patents, then tell the world we want to manufacture. Get ready, start….
Future consumer enterprises is the one with emerging most, at the same time ppl not valuing much due to past future group performance. FCEL has the chain being built up from farm to the end consumer. Any thoughts?
Time technoplast
JK Tyres
Redington
Trigyn technogy high roe low debt
Trigyn is also a good one.
Lloyds Electronics
The next multibagger is Lloyd Electric
I feel the blog owners should not give much write up of these value investors. becoz innocent and novice get addicted and they just buy…
i have noticed all these valuinvestors at the end indirectly talk of their holding or their books .. marketing and promotion is their goal and to reap money
one of the top guys here talking only of value investment and fundamenals with strict parameters went ahead cooly and gave GRANULES to his sheeps !! sucha gud shepherd he is …. where is moat or coat or bla bla big words they talk to silence others..
this fellow frequently in channels saying next bull run in housing fianance reason
he hiked his fees to 1 lac and repco and gruh should get supernatural returns for the existing subsribers to renew
regret that no disclaimers at the end or at the beginning that the analyst has given calls at this price or that price…
again making public fools and they making money
another anlyst who was recommended by SB has given a funda buy on lumax lights or auto and in two months he gave sell call .. cool
reason he expected suprjit to offer a higher price…
but that reasoning was there in the report earlier sent… ( e& oe ifit was there )
same vaibhav global personality
What is your view on Hindustan Tin Works?