When Howard Marks, one of the greatest investment thinkers of our time, dispenses wisdom, you will find the intelligentsia vying with one another to pay him their compliments on how great his wisdom is.
However, few amongst the intelligentsia are able to connect the theoretical wisdom of Howards Marks to practical real-life stock picking.
Here, I must compliment myself because though I am not amongst the intelligentsia, I was able to connect Howard Marks classic advice that a stock quoting at a 52-week low is actually a “risk-free” and “safe” stock and that investors should dive into it without a care in the World – with the status of Tata Motors, the blue chip behemoth of the venerable Tata group.
Tata Motors had witnessed relentless selling and had plunged to a 52-week low of Rs. 285 on 28.09.2015 over fears that the slowdown in China would spell doom for its JLR business.
Applying Howard Marks’ wisdom, a blue chip stock quoting at a 52-week low is a no-brainer buy, I theorized.
Luckily, there were a few amongst the intelligentsia who were of the same view.
Shruti Aggarwal of seekingalpha.com was very plain in her advice: “Tata Motors Is Extremely Undervalued And Has Potential For 100%+ Gains” she said in words that even the dullest of novice investors could understand.
Rajat Sharma of Sana Securities also rushed in to advice that Tata Motors is a “screaming buy”. He emphasized that there was no fundamental reason for Tata Motors to trade at distress levels and that the only reason for its woes was “aggressive selling by traders”.
Today, less than four weeks after the mayhem happened, Tata Motors stands tall at Rs. 383, giving gains of 34% to all those who listened to the sensible advice and acted on it.
If you have missed the bus, there is no reason to despair because Tata Motors is still a “fantastic buy” according to CA Rudramurthy of Vachana Investments. He explained that “Tata Motors has given a huge upmove from levels of Rs 280 and it even touched levels of Rs 385-390 easily. Now again stock is giving us small retracement and it is a fantastic buy even at current levels or even for a slight dip to levels of Rs 355-360”.
Similar advice has been offered by other leading experts like Shubham Agarwal of Motilal Oswal Securities and Gaurang Shah of Geojit BNP Paribas.
Hopefully, the rest of the intelligentsia will take a cue from the episode to connect the wisdom of great thinkers with practical real-life examples instead of just mouthing meaningless platitudes!
I agree that Tata motors is still a buy ,but I had even agreed very strongly when Tata motors was discussed previously by Arjun here itself at lower prices and lot of persons surely might have benefited from that article .So Arjun and his team need special thanks from all of us for that timely article.
Hello kharab, I truly agree with you. Does DCB bank can be align to same theory. It is also at 52week low with no bad fundamentals. They also discarded their plan of opening 150 branches.
I had no plan to discuss DCB .But since you have asked the pointed question to me,my answer is that DCB was aggrissivly priced earlier due to large no of positive recommendations.Many reputed analysts has now sell or exit call on this and aggressive expansion has been cited the reason.But my personal view is that I don’t find any reason for panic even if management has gone with earlier plan.Even now they are firm in expansion plan but time frame has been increased to 2 years..If management feel that expansion is answer to coming competion from new comers like from two new bank, few small and payment Banks.I feel management know their job better than me or even some of analysist who are pretending to be judge.Even former SBI chairman has said that heat of new Banks will be felt by bigger Banks also.But bigger Banks stocks has not reacted to statement because such statements affects smaller stocks more as knee jurk reaction of smaller invester can affect price movement .In my view DCB is now fairly priced . Bank performance and management has done nothing wrong to be punished like that.I am keeping faith in management and believe they know their job.This situation might have strenghten management mission to succeed and I hope with their increased determination better future is ahead for DCB.But all Doom drumers of DCB are experienced in market and big name ,so can not be taken lightl,But I would like to remain invested like rock to see who is right and who are wrong.