Thursday, April 6, 2017

The Unusual Billionaires - Not an Unusual Book

I had expected the book to provide some deep insight into how big mutual fund money -managers select on fantastic businesses. It disappoints in that regard (or perhaps stock selection isn’t that complicated if you keep in mind a few things). Saurabh Mukherjea (the author), has shortlisted the companies who have performed consistently based on two metrics – ROCE and ROE.

He found 9 companies fitting the bill and has dedicated whole chapters to 8 of them except for ITC. By the end it sounds repetitive and it seems like a templated version i.e sort of a MBA assignment with the following subheadings – background, how it fits the author’s guru’s theory IBAS (Innovation, Brand, Architecture and Strategic Assets).

The book highlights that, in short, there are same factors at work for any brand’s success –
i.)             Focus on core business
ii.)           Deepening its competitive moats
iii.)     Top notch board with independent directors to provide valuable knowledge and guidance & without much interference from the promoters

One good thing is that book outlines how companies’ setup their operations safe-guarding themselves from disruptions/strikes, logistics problems. While talking of the Page Industries, it is mentioned that the company hired more female workers as it reduced chances of strikes and disruption in work (unsure if there’s statistical evidence to that). Also, companies’ view workers after-work hours with suspicion that they might unionize and strengthen themselves. So they divided them into four colours like they do in schools as encourage sports, cultural competitions. (Capitalism providing distractions to the masses, anyone? ;-))

However, I didn’t appreciate a few anecdotes which were not impactful enough.
At one place, the author lauded HDFC bank for having a great culture as it had a crèche for the employees’ children at its headquarters. To me, it sounded a bit rich that out of 2805 branches in only one location they provided this facility and it was assumed a testament to the company culture!
Also, there are a few typos here and there.

The gist of the book can be found in this Peter Thiel’s quote:
What distinguishes investment winners is the willingness to dig deeper, search more widely and keep an open mind to all ideas.

Via the book -
Invested in
Value in Apr, 2016
Re 1 in March 1995
Rs 134
Astral Poly
Re 1 in March 2007
Rs 36
Asian Paints
Re 1 in Jan 1991
Rs 299
Berger Paints
Re 1 in Apr 1994
Rs 212
Re 1 in May 1996
Rs 117
Axis Bank
Re 1 in May 1998
Rs 128
Page Industries
Re 1 in March 2007
Rs 34