Peter Cundill - Assorted

Cable and Wireless would have to be the investment where I had my head handed to me. To paint the picture, the dot-com bubble was over and the share price was plummeting. Market sentiment was against this company in particular, as well as the telecoms sector in general, so I started to get interested. My history has always been in buying securities when they’re unpopular. However, Cable and Wireless is an illustration of the fact that despite careful analysis and a strict adherence to Benjamin Graham’s value principles—a low share price, no debt, a huge amount of cash and profitable established networks— things can still go wrong, spectacularly so.

Any advice for regular investors? Pick some first-rate money managers with whom you feel comfortable because you have done your homework on them. Then stick with them. The mantra is patience, patience and more patience. Think long-term and remember that the big rewards accrue with compound annual rates of return - How to think long term?

Process

against dogma

The Samkhya, or cosmology, studies the process by which the universe develops, according to archetypes of an essentially  mathematical nature. The word samkhya means "measurable" or "numerable."
Yoga deals with human nature and the relationships between the physical, sensorial, intellectual, and spiritual aspects of the human being.
The Vaisheshika, or scientific method, studies the laws of the visible world.
Nyaya, or logic, deals with methods of reasoning and the means of proof.
The Purva Mimamsa studies rites and means of contact between the natural and supernatural worlds.
The Uttara Mimamsa, or metaphysics, deals with the nature of the divine and human spiritual destiny.
From the often-conflicting conclusions of their investigations, these approaches highlight the relative value of all knowledge and constitute a sure barrier against any kind of dogmatism.

Basant Maheshwari

http://www.ndtv.com/video/player/news/basant-maheshwari-on-the-art-of-value-investing/345376

Two buckets - Secular trends and Sentiment driven companies

• Secular trends - This time around affordable housing finance + housing as a theme
• Tons of companies including Gruh, Repco, Symphony, Kajaria, Cera etc
• Sentiment driven - Invested in Pantaloon Retail in the past
• Did not like the business model (agree) - High dilution + retail costs - Got lucky in a way

Two things to learn

• Hold secular companies for 20 years - Dont sell at 2 x or 3 x
• Concentration of holdings - at most 10 companies in the portfolio
• Hedge against crooks - RoEs in excess of 30% and consistent dividends (Vaibhav Global passes this filter)

Price points

• Page 350 - 15 to 20 x P/E - paid up a bit for a consumer oriented company
• Hawkins @ 350 - 10% Div. yield when he bought it
• Gruh Finance - INR 70 Must have bought at 16-20 P/E and 4 to 6 P/B; Again paid up a bit not too much but a bit
• Voltas - Cut his position short at 60% loss (cut the losers and let the winners run)

Acquisition Criteria - Buffett

- Large purchases ($ 75 MM)
- Demonstrated consistent earnings power
- Businesses earnings good returns on capital employed with very little debt
- Simple businesses
- Good management
- Good price:)

Inner Scorecard

 He would never, never, never forget this mistake. And there was a third lesson, which was about investing other people’s money. If he made a mistake, it might get somebody upset at him. So he didn’t want to have responsibility for anyone else’s money unless he was sure he could succeed

“The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard.

I learned that it pays to hang around with people better than you are, because you will float upward a little bit. And if you hang around with people that behave worse than you , pretty soon you’ll start sliding down the pole. It just works that way.”