Despite contrasting investment philosophies ….
Porinju Veliyath is known to be a man for the masses while Prof Sanjay Bakshi, the authority on value investing, is a man for the classes. While the former appeals to the hoi polloi, the latter appeals to the cognoscenti.
The two stalwarts are known to have opposing views on stocks. While Porinju has a soft corner for troubled stocks with dubious corporate governance standards quoting at rock-bottom valuations, the Prof does not touch a stock which does not pass his stringent tests of quality.
While the Prof continues to be a stickler for high quality, Porinju has relaxed his stance a bit. He is now veering around to the view that there is merit in buying blue chip stocks with pristine credentials. I have conducted an in-depth analysis of the circumstances which have led to a change in Porinju’s stance.
…. Multibagger stocks galore
The remarkable aspect is that despite their contrasting views on stocks, both stalwarts have snared several multibagger stocks in the course of their illustrious careers and generated great fortune for themselves and their band of loyal followers.
Latest stock pick of Billionaire Narayana Murthy
In an earlier piece, I drew attention to the fact that Narayana Murthy, the visionary founder of Infosys, the blue chip tech behemoth, has taken a fancy for Wonderla Holidays, the small-cap (Rs. 2250 crore) stock which is engaged in running amusement parks across the Country.
I pointed out that Catamaran Management Services, Murthy’s investment arm, had scooped up a chunk of 437,539 shares of Wonderla Holidays at Rs. 386.50 per share.
I opined that this is a significant development because Narayana Murthy is highly revered for his astute understanding of business and corporate matters. Murthy is also an astute investor in his own right with several multibagger stock picks to his credit.
Hike in stake by Narayana Murthy
Narayana Murthy has bought a further chunk of 127,765 shares of Wonderla and taken the holding of Catamaran to 5,65,304 shares as of 30th September 2016.
Prof Sanjay Bakshi follows Narayana Murthy’s illustrious footsteps
Now, the significant development is that Valuequest India Moat Fund Ltd, Prof Sanjay Bakshi’s PMS fund, has bought a treasure trove of 9,29,039 shares of Wonderla Holidays in the July to September 2016 quarter.
The investment is worth Rs. 37 crore at the CMP of Rs. 398.
The Prof’s acquisition of such a significant stake in Wonderla Holidays confirms the initial hypothesis that the Company is investment-worthy owing to its top-quality management, high RoE, “moat” and reasonable valuations.
It is notable that the Prof has a bigger stake in Wonderla than that of Narayana Murthy.
Clean chit by Porinju Veliyath
Porinju has also heaped rich praise on Wonderla Holidays. He called it “very high quality” and “excellent balance sheet company”. He emphasized that the Company has “ a fantastic business model”.
Research reports by experts on why Wonderla Holidays may be “Next Walt Disney”
In my earlier piece, I have meticulously drawn attention to the research reports of leading experts such as Stalwart Advisors, Sharekhan, Axis Capital on why Wonderla Holidays is a good investment opportunity.
ICICI-Direct has now joined the long list of experts and recommended a buy of Wonderla Holidays. The rationale is as follows:
“Unmatched leadership in domestic amusement industry; maintain BUY
Although in the near term, footfalls at Kochi and Bengaluru have been impacted by higher realisation, we believe the price hike will be absorbed in the coming quarters. In addition, healthy monsoons, an improving macro environment, addition of new rides and new park at Hyderabad will lead to robust growth in footfalls in coming years. Apart from this, the company’s focus on increasing non ticket revenues is expected to drive margins. Further, we believe that leadership in the amusement industry, healthy balance sheet (0.3x D/E vs. 1.46x for Adlabs), strong cash flow generation and revenue & EBITDA CAGR of 30.7% and 37.5%, respectively, in FY16-18E demands premium valuations. We have arrived at a DCF based target price of Rs. 460.”
Axis Direct has also issued a crisp report on the stock in which a buy recommendation is given on the basis that “A sustainable business model, run by excellent management, generating cash flows for growth, with high RoE and moderate valuation is a perfect recipe for portfolio investment”.
The good luck charm of the three eminent stock market experts is likely to make Axis Direct’s words of wisdom come true namely that a sustainable business model, run by excellent management, generating cash flows for growth, with high RoE and moderate valuation makes Wonderla a perfect recipe for portfolio investment!