Stock Story IV

Price of this share is almost half of the cash balance in its books.
It has a twenty years history.
It built itself from nowhere to being the fifth largest in the sector by acquiring assets /companies, some at distress.
When the sector was enjoying rich valuations it sold off to a MNC and is now sitting on more than 10,000 Crores on its balance sheet.
When the world is facing the problem of leverage and excess debt, here is a company with surplus cash, awaiting opportunity to invest in assets in distress.
Markets presently dislike the company because it sold off / does not know where to invest /is investing in unrelated areas.
But is this not the goal of all investing, sell at peak and buy at distress levels.
When market-men are obsessed by minute by minute tickers,
When bulls become bears in hours if not in days.
Here is a company which buys nourishes and sells businesses and awaits opportunities
In the mean while it also makes money for its investors.
Would you be a investor?

Is it the end of Pharma growth story?

Now a days, I have lot of rush in my clinic!

I see more MR's (Medical representatives) than patients.
While the  patient load has not gone down ( Thanks God!);
The number of MR's has increased drastically, what with so many new companies in the market, selling the same drugs. Remembering symptoms of rare syndromes is a easier task, then remembering the different brand names of the same drugs.

This observation about the fierce competition in the domestic market along with other indicators like:
1. Two major Pharma promoters ( Ranbaxy and Piramal) cashing out.
2. No new drugs to copy by process patent
3. Difficulties faced by Indian firms to launch Generic versions of off patent drugs in the Western market, that too after spending a fortune on legal fees.
4. Prolonged recession in the West coupled with reduced Medicaid spending.

It makes me wonder if it is the end of growth of Indian pharma.

Do they deserve the rich 20+ P/E valuations.?

While I may be skeptic about Indian Pharma;
Health care delivery sector may be a different game!

Will Shale end Globalization?




    There is growing euphoria over America’s energy future. Energy experts around the globe have been claiming that the US will gain energy independence in the next eight years. Optimists have even gone on to claim that America’s energy independence will lead to global energy independence. The primary basis for the first of these two claims is a series of technological breakthroughs, the most important of which is the application of what is called shale gas technology to extract oil from rock. Experts and journalists are so impressed by this technological breakthrough that they have credited it for lowering US dependence on imported oil by a quarter from 60% of the country’s overall oil consumption a few years ago to 46% in the current year.
 Oil forecasts have been notoriously slippery; we hope that the current forecasts on US energy independence are based on firmer grounds. Experts claim that within the next eight years, shale reserves in the US will produce three million barrels a day and oil sands production in Canada will double from 1.5 to 3 million barrels per day. If these projections turn true, US may not have to import oil from outside the western hemisphere. Both these sources of oil are, however, unconventional and, therefore, expensive. Production is slow and has environmental consequences. For instance, horizontal drilling and hydraulic fracturing is known to affect underground water. Thus, while energy independence is a temping goal and there are more long-term sources of oil available in the western hemisphere, whether it is economic to produce oil from these sources after adjusting for environmental costs will be an important factor that will determine the exploitation of these sources.
If the shale gas and tar oil predictions do come true, what will be the consequences?
One it will be the end of Globalization and US dominance as it exists today.
Imperialism and the most recent ‘War against terror’ are excuses to obtain resources, raw material and energy security.
With domestic availability of energy security, US will have no incentive to 'Wage a war' in search of elusive weapons of mass destruction. There will be an end of the unemployment problem in US. There will be resurgence of Manufacturing in US, which had moved to China under Globalization.But the work force will have to be retrained for new industries.
The future industries of US will be:
11.     E & P: Exploration and Production of Oil and Gas from Shale.
22.     Environment conservation Industry; to counter the hazards of E &P
33.     Plastic and Petrochemical Industry, to utilize the byproducts of refining.

No wonder India's Reliance Industries is beading frantically for the shale assets.

Stock story III : Bride and its suitors.

This stock is a bride to be, famous for its Hospitality.
She has two suitors.
One is a Stalker (Hostile?)
Another is Arranged (White Knight?)
Both Suitors have equal stake.
The average cost of the stake of the Arranged suitor is at twice the current market price.
One or the other suitor is bound to stake claim of the Bride!
When? SEBI recently modified the ‘Take over’ regulation. The revised regulation includes a change in the trigger for an open offer from 15% to 25% With SEBI issuing the notification on Friday 23/09/2011, of the revised takeover code, and the revised code being applicable 30 days from the date of notification,
expect action on this counter from November 2011.
Can you benefit?

Era of Wilderness: Predicting the future with History

Inspirations:
1. Bible, The Exodus, Moses and the Wilderness: Moses is a man with a calling on his life. God chose him to lead the Israelites out of Egypt and take them to the Promised Land. Through a series of events the Israelites are eventually freed to leave Egypt under Moses’ command. The people, though, are troublesome. They have been used to being slaves, and don’t know what freedom is. They don’t like Moses leading them, and demonstrate that they are a "rebellious house". So rebellious that God even threatens to wipe them out. Moses intercedes on the nation’s behalf and God relents. Rather than trusting God, a major rift develops between God and the Israelites. This proceeds to make God mad, and rather than supporting the nation, condemns them to 40 years wandering around in the desert. The 40-year wilderness experience that God put the Israelites through is something that He does to some of his own. Every one of the Israelites 20 years and older flunked this test. As a result, they were not allowed to enter into the Promised Land and every one of them died out in the desert.
2. The World is flat by Thomas Friedman: Writing about Globalization in his book ‘The world is flat’ Friedman argues that the forces that flattened the world began when the “Walls” came down and the ‘Windows’ went up. According to him the Berlin Wall fell on 11/9 (November 9, 1989). The fall of the Berlin Wall on 11/9/89 unleashed forces that ultimately liberated the Soviet Empire. The cold war had been the struggle between two economic systems, Capitalism and Communism, and with the fall of the wall, there was only one system left, that of free market oriented governance.
3. Quote: George Santayana who in his book, Reason in Common Sense, The Life of Reason, Vol.1, wrote Those who cannot remember the past (History) are condemned to repeat it."
4. History does not belong to us, we belong to it. Hans-Georg Gadamer, Truth and Method, p. 276, what experience and history teach is this — that nations and governments have never learned anything from history, or acted upon any lessons they might have drawn from it.

Disclaimer: I am a trained Medical Professional. I am still not sure if I am fully qualified to deal with issues pertaining to Medical Profession, forget about giving opinions on Economics, Sociology & Geopolitics. Hence what I write / think are my own personal views, to be read by the readers at their own risk with dollops of salt and....pepper.

What an Irony, a wonderful coincidence of dates, in order of reverse. While the fall of the Berlin wall on 11/9 ushered in Globalization and Growth of the world economy. The collapse of the Twin towers on 9/11 brought about “The war against Terror” and took the Global economy into the grip of Recession. Not in the wildest imagination was it anticipated that a single incident, even though by all accounts a cataclysmic event, would cast such a deep and widespread impact on the international stage.
      When George bush took over as president from Bill Clinton in 2001, the American budget was running in a surplus of $236 billion. The 9/11 attacks and Washington’s response to it have crippled the US economy.” The US made some economic choices that led to the deterioration of its own economy. Scissors outlines them thus — US monetary stimulus in response to the expected economic impact of the 9/11 attacks lasted far too long. President Bush implemented an expansionary fiscal policy when a war should have necessitated cutbacks elsewhere which did not happen. At the end of the decade, America was withdrawing from Iraq without the confidence that it would stabilize in the way it was intended. Al-Qaida and Taliban are being led from Pakistan, which means that even with a 2014 withdrawal deadline, there is no certainty that victory is in sight. Meanwhile, the US economy is in shambles, its politics is in a worse logjam and its public debt is at $14 trillion. The Census Bureau’s annual report 2010 states that the ranks of America’s poor has swelled to almost 1 in 6 people(15.1%), reaching a new high as long term unemployment left millions struggling and out of work. There is no doubt that the financial crisis and its aftermath have adversely dampened employment prospects, especially in the developed world. But according to the Economist, what is all the more worrying is the unemployment in the youth population. One in five under-25 year old in the European Union (EU) labour force is unemployed. In America over 18% of under-25s are jobless. Longer stretches of unemployment makes it that much harder for securing jobs down the years. This means that the unemployed are forced to undersell themselves. Over a period of time, this translates into lower salaries and experience. There are also undesirable psychological and emotional consequences of long stretches of unemployment with the link between youth unemployment and crime.
       War is directly linked to the economic fate of mankind. Undermine the economy and you will create the next Hitler. Destroy an economy and someone like Hitler can rise to power very easily. If everyone is fat and happy, they will elect to ignore drastic change preferring not to rock the boat.
     The ‘Green buck’ emission (Quantitative Easing, in simple terms, printing Dollars), by the US Federal Reserve, lead to booming commodity prices and inflation all around the world. Inflation (high prices of day to day consumption items) along with unemployment triggered social unrest across the globe, be it the Arab Spring in Egypt, Tunisia, Syria or Libya or the Riots in London. The support received from the middle class for the ‘August Kranti 2.0’, in India, may be partly attributed to it.
              The ‘Cold war’ era (Capitalism v/s Communism) which began with the end of World War II and the rise of ‘Baby Boomers’ (Generation post WWII) ended with the fall off the Berlin wall. With the collapse of the Twin Towers we have entered a new era, the era of ‘War against Terror’. Contrary to the claims, in real sense, it is a War between ‘Western ideology’ and ‘Islam’.
If we can draw lessons from History and project the future, the conclusions will be:
1. Wilderness: A long drawn out process, a decade has passed three more to go. During this period the Western world will pay for the excesses it committed in the recent past.There will be fracturing of the ' American Dream ' and rise of the 'Boomerang generation' !
2. Capitalism: Compelled by Social pressures ‘Unipolar’ Capitalism will change to ‘Inclusive’ Capitalism.
3. Islam: End of Wahabi /Jihadi form of Islam and rise of a modern moderate Islam. A complete change from Jihad to ijtithad (independent thinking)

 I may not last the Era of Wilderness, but would my children enjoy the Promised Land?

Stock story II : Fly along with.

An Indian software company, specific vertical to aviation industry.
Now an MNC after take over by a industry giant.
Best under a Billion according to Forbes Asia.
Acquired more than 34% shares by open offer, when SEBI rules required 20% offer.
Open offer price was more than double the present share price.
Aviation sector is the fastest growing sector of the Indian economy.
Whether Airlines make profit or not, Service providers to these sector will have boom time.
Identify these future Multi-Bagger.