Valuable Investment Lessons from Deepak Venkatesh's Presentation
Explore insights on investment lessons learnt, wealth creation strategies, governing philosophy, and more from Deepak Venkatesh's enlightening presentation. Discover the importance of risk management, uncertainty in investments, and specific case studies like Oriental Carbon & Chemicals Ltd.
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Presentation Transcript
7 L essons L earnt S o F ar G oa J uly 2 01 8 @ deepakvenkatesh Disclaimer: Content provided in this presentation is only the personal views of the presenter. No affiliation to any organization be considered.
A L ittle B ackground Investment for Wealth Creation Unfortunately at present its is for: o SuppressingGambling Urges o & to not hurt my portfolio with unnecessary tinkering Trading for Income Generation 2012 1996 2009 Got Married Discovered equity markets through my father. First business shortlists: HP & APC Sold entire portfolio Internship with Bulge Bracket I Bank Chanced upon Intelligent Investor Not my cup of tea 2008 2010 Till Present MBA Lehman Crash on Birthday Bought first stock: Booked 90%+ loss So many books so little time Traded naked options: Lost 80% monthly salary Zero tolerance for mistakes of commission
G overning P hilosophy: Its a R isky B usiness after all T his is how R isk is written in C hinese. It s better to be out of the market and hope you were in that to be in the market and wish you were out - D on t recall who said this O nly R ule: C apital P rotection > C apital A ppreciation C urrent P hase of Investing J ourney: C apital C reation but not at the cost of increased risk of potential loss Second syllable Ji means a point from where things can change from
L esson 1 : M y H eisenbergs Investment U ncertainty P rinciple The principle states that the position and the velocity of an object cannot both be measured exactly, at the same time, even in theory. The very concepts of exact position and exact velocity together, in fact, have no meaning in nature. even in theory. The very concepts of quality and value together, in fact, have no meaning in nature. The principle states that the quality and the value of a business cannot both be determined simultaneously, at the same time, - Twisted Investment Uncertainty Principle - Britannica o What I understand I wish I knew: o Management Intention o Moats Better o When I am biased o To be more patient No compromises on: o Debt o CFO o Top Line Core Business Growth o ROIC o What I can follow o What I can foresee !
L esson 1 : C ase O riental C arbon & C hemicals L td. Further, high technology barrier coupled with exhaustive approval processes of tyre manufacturers acts as a deterrent for entry of new manufacturers. - 2016 AR - 2018 AR - 2017 AR Management has estimated for multiple years that growth in industry is ~3-4% But good quality IS demand has grown approx. 1.5-2.0x its statement Companies Composition Insoluble Sulphur Demand OCCL Polymeric Sulphur Classifications Eastman Rhombic Sulphur Naphthenic Polymeric Binder Silica Eastman: Regions available 140.0% Regular Oil Treated (OT) OT 10 OT 10 81-91 4-7 8-12 0 0 Europe, Middle East & Africa, North America OCCL: PE vs ROIC & Growth 120.0% Regular Oil Treated (OT) No Product OT 20 70-77 4-7 18-22 0 0 ROIC 100.0% Regular Oil Treated (OT) 40% OT 33 OT 33 65-69 4-7 31-35 0 0 Asia Pacific, Europe, Middle East & Africa, Latin America, North America 45% 20.00 80.0% Special Grade 40% No Product 90 90-98 2-10 0 0 0 18.00 60.0% OT High Stability (HS) 20% 30% 35% 16.00 OT 10 HS OT 10 HS 81-91 4-7 8-12 0 0 Probably global 22% 30% 40.0% OT High Stability (HS) 10% 14.00 21% 15% 25% OT 20 HS OT 20 HS 70-77 4-7 18-22 0 0 Probably global 12.00 20.0% OT High Stability (HS) 10% 20% 10.00 No Product OT 33 HS 65-69 4-7 31-35 0 0 15% 0.0% 8.00 0% Global Good Quality OT 20 HD China 72-77 Amercia+Europe 4-6 India 10% Special OT with Binder OT 20 HD 19-22 1-2 5% 0 Asia Pacific, Europe, Middle East & Africa, Latin America, North America 6.00 Special OT with Silica -10% 2017 to 2018 Growth No Product OT 25 AS Management Expected Growth 65-69 4-7 23.5-26.5 0 6.5-9.5 4.00 0% 2.00 Special OT with Silica -20% OT 33 AS 2012 No Product 2013 ~33 0 Europe, Middle East & Africa -5% 2011 2014 2015 2016 2017 -10% - 2011 2012 2013 2014 2015 2016 2017 NOCIL 5% 6% 2% 5% 12% 18% 21% ROIC 38% 27% 19% 22% 21% 24% 22% OCCL 38% 27% 19% 22% 21% 24% 22% Growth 31% -4% 6% 32% 2% 11% -1% PCarbon 12% 13% -4% -18% 0% 2% 10% PE 2.88 3.50 3.05 3.95 8.79 10.44 18.25 Apollo 18% 9% 12% 18% 19% 18% 15%
L esson 2 : W hat I know I cant D o o Gmax = R o Find multibaggers at nascent stage - I don t aim to be a great stock picker either o Ignore the non ignorable Management calming investors on stock price 1st Feb ~25% 1st Jun ~100% Company underplaying an issue Consistent low PE/valuation given by Mr. Market Limited market/growth potential no matter how attractive the business
L esson 3 : W hat I should D o o Be Cognizant - M y math teacher o Be Humble o Be Rational
L esson 5 : D ynamic C apital A llocation Valuation Returns Debt Debt Equity Equity Equity High Valuations 7% 50% Risk Free Rate? Debt Debt Low Valuations Equity Income Income December 2017 January 2018
L esson 7 : T rading O ptions - W ait for opportune but definitive moments
C losing T houghts G et L ucky
Thank you .and questions please
