Yes you are right…What I mean by silent cash machine is,
what Peter Lynch and Peter Thiel mentioned in their books.
the managements who do not appear in media frequently and gradually build competitive strengths.What makes TCS,INFY to be cash machines is their competitive advantage.And how this competitive advantage is build ?
giving example…
Lets say the 1st project it made in 5 years…2nd one it can make in 3 years…3rd project it can make in 2 years…4th project it can make in 6 months…they just need to re-assemble the code…a simple example…what small companies need 3 years ,it can provide in 6 months…this creates a moat…and provides a pricing power and in turn provides the ability to retain high margins.
Only good margin is not sufficient to make money…the ability to retain the margin always (in terms of pricing power) is what required to make money.You just need to catch a silent cash machine in perfect price.
What I missed in ITC is…I had not able to realize that even if its cigarette volumes go down ,still it can increase margin and deliver more profits with less volume.Because customer goes and pulls cigarette from shop.What I learned from Peter Lynch is we can make money when FII/DIIs are away from a good stock and no body is discussing the stock.
Example-If you can get colgate in 6% dividind yield and 2-3 times price to book value ,would that be a good buy…?
I missed such chances in …Because I have purchased in small quantity.
ITC over last year 3 years,
Nestle …during maggi crisis ,
Infosys… ,Salil Parekh’s personal trips, whistleblower letter.
Private banks in NPA crisis …in 2015 I think
But I learned my lesson recently I purchased
I was holding ITC since last 3 years
Recently I purchased IDFC first bank,Quick Heal,Oracle Financial Services Software,Nucleus Software Exports, HUL …
I need some cash cows in my portfolio …they will throw cash and I will buy other growth engines with the cash I get from the cows.
I do not like companies buying IPL teams(Reliance) and buying airlines and hotels(Tata investment corporation)
I gave my 100% of learnings and tried to control my brain while evaluating the above businesses…Lets see what happens…
I will draft in detail my psychology about judging a business…need some time to draft
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