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 -
Company
|
Invested in
|
Value in
Apr, 2016
|
HDFC Bank
|
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
|
Marico
|
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
|
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