Pitt Bull's Marty Schwartz Interview 2015

Must Watch Q&A session with Pitt Bull's author Marty Schwartz. The 70 years old legendary trader who was featured in the first edition of Market Wizards by Jack Schwager shares tons of wisdom and some key strategies he employed in 80's and 90's and how his trading styles have evolved with the advent of algo trading and HFTs. A bit lengthy interview but worth a watch.

Government of India Divestment Plan FY 2015 - 2016

Stocks to watch where Govt. of India has decided to divest minority stake in the fiscal year 2015-16. ONGC and IOC are among the biggest divestment candidates and are expected to fetch more than 20k crores. 

In total govt has set the target of little over Rs.46000 crores through minority stake sale of listed companies.While divestment in IOC could be little easy as the stock has been hitting life time high, thanks to the falling crude prices, but a 5% sale in ONGC appears difficult as the stock is hitting 52 week lows, thanks again to the falling crude prices.

Among the lot ONGC and Nalco appears very attractively valued at 280 and 38 bucks as on 25th July 2015 for investment purpose with at least 2 years horizon. 

Indian Companies that benefits from fall in crude oil price

60 percent fall in past one year and more than 10% fall in past one week, India being a huge energy importer benefits immensely from the crude oil price collapse. Also there are many sectors and companies withing those sectors that benefits hugely from the fall in crude oil prices. For example Paints industry is a direct beneficiary and Asian Paints in particular with very strong brand positioning. Following is the sector wise analysis on who is going to be benefited the most.

Top 10 crude oil producers in World - 10 Years chart

One magnificent chart that shows the year wise production of top 10 global crude oil producing countries for any year starting 2004 to 2014.

# Crude oil production of top 3 producing countries v.i.z U.S, Saudi Arabia and Russia is up 1.5 million barrels per day in 2014 vs 2013.

Private Sector Banks: 2014 & 2015 results at a glance

Thirteen Private sector banks reported Rs. 37,361 crores of Net Profit for the financial year ended 31st March 2015 against Rs. 31,680 crores of profit reported in the year ended 31st march 2014.

5 Reasons why LIC could say no to the Cairn Vedanta merger

1. LIC till 31st March had little over 1.5% stake in Vedanta Ltd while over 9% stake in Cairn India. If there is more value in Vedanta Ltd than Cairn India then why LIC stake in Vedanta is just over one and half percent. Also the logic of tax overhang on Cairn India for low valuation is meaningless as if the court ruling is in favor of CBDT, it is Vedanta which will have to shell out the tax and penalty amount which will be huge setback considering it's already stretched balance sheet. 

2. LIC had over 11% stake in Hindalco till 31st March 2015 and has recently increased it's stake in the company by 2% to 13%. As we all know Hindalco and Vedanta are somewhat similar company with majority of revenue coming from Aluminium and copper refining. Its must be observed that LIC is preferring Hindalco vs Vedanta for obvious reason. If the merger go through LIC would eventually have very high exposure to metals sector as it's stake in Vedanta Ltd will be go over 6%.

3. LIC currently receives around 150 crores of dividend out of it's investment in cairn India while post merger it's dividend income from swapped shares will reduce to around 70 crores per annum with relatively increased risk as Vedanta has very high amount of debt and Cairn India is a cash rich company.

Minority Shareholders against Cairn India - Vedanta Merger

The relentless fall in Cairn India share prices since past couple of months in-spite of handsome recovery in crude oil smells fishy and hints at share price rigging to benefit the Anil Agarwal group so that the residual 40% public stake in Cairn India can be swapped with least number of Vedanta Ltd shares. Cairn India being the only pure crude oil private player listed in India, existing public shareholders can benefit in no way with this reverse merger and is intended to benefit only the Vedanta group.

In an article titles "Cairn India Stock Analysis", it was really surprising how Cairn India is trading at ridiculous valuations and available at only 4 years of cash flow. Crude oil outlook will also improve in couple of years and hence long term shareholders should defeat this merger. As per SEBI act on M&A of listed companies, a minimum of 2/3rd of public shareholders approval is required. LIC and Cairn Energy PLC holds around 20% while rest is being held by MFs and public. If you are against the merger please vote below and share your comments.

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Cairn India Stock Analysis

Share price of Cairn India has been relentlessly falling since past 10 months and made fresh 52 week low on 12th May 2015. The stock is down more than 48% from it's 52 week high and is trading at very attractive valuation (The stock trading at roughly 37000 crores mkt cap and the company as 17000 crores of cash as on 31st March 2015). Clearly irrational exuberance is playing here on downside and investors are dumping shares on fear and panic. But a closer look at the overall health of the company and it's valuation standing vis-a-vis global peers presents a compelling opportunity for medium to long term investors. Before comparing it's valuation against a large U.S based shale oil producer, some of the key points that go in favor for investing in the company at current price of Rs.198.

15 Stock Investment Tips from Rakesh Jhunjhunwala

1. Always go against tide. Buy when others are selling and sell when others are buying. 

2. If you believe in the growth prospects of a company, invest in the stock and give it sufficient time. 

3. Be an optimist. Pessimistic investors always lose money in stock markets. 

4. Greedy investors will never make money in stock markets. Book profits after reaching your target price. 

5. Never put your hard earned money without proper research. Never invest according to “Stock tips”. 

BOI vs BOB vs PNB - Which PSB to buy?

A brief comparison of India's 2nd tier public sector banks (Bank of India, Bank of Baroda, Punjab National Bank) on parameters of total business, NPAs, restructured loans, profitability, return on equity and valuation reveals that Bank of India is trading at cheapest valuation among the lot in-spite of being largest in terms of global credit and holds promising upside potential in 2 years time-frame.

Model Portfolio: Annual Performance Review - 2015

Having started "Amit Agarwal Model Equity Portfolio" on 21st March 2013, primarily to educate investors on stock selection, diversification (risk management) & portfolio management, the practice completes it's 2nd year of existence and has come a long way in terms of popularity and acceptance among small investors/ traders/ students. 

The detailed performance review of the portfolio at market value as on 21st March 2015 is given below:

Portfolio Update - March 2015

Booked profits in couple of names and allocated the released capital to average some of the existing one and also bought couple of new scrips. The net portfolio at cost stands increased to little over Rs. 2.02 lakhs. 

The model portfolio will complete it's 2nd year on 21st March and we will gauge the performance of the portfolio at market value on that date. 

In case you are on the blog for the first time, we started the model portfolio exercise (the first of its kind in India) on 21st March 2013 with a sum of Rs.1 lakh in order to help small investors in understanding the stock selection and portfolio diversification. Also many investors follow this model portfolio closely and buy and sell stocks based on the portfolio action.

Stock Exchange explained for layman

A 3 minute video tutorial to explain the working of a typical stock exchange. If you are a beginner and want to understand what is a share, how it's traded and what role do stock exchanges play in functioning of stock market then the following video tutorial can be quite helpful. 

Stock Investing Wisdom from India's top Investors

Rakesh Jhunjhunwala, Ramesh Damani, Sujoy Bhattacharya, Ramdeo Agarwal and some of the India's most successful equity investors have learned from the likes of Benjamin Graham, Warren Buffett, Peter Lynch and have applied that knowledge in Indian Stock Markets for creating significant amount of wealth for themselves. 

Following article published in Forbes India features 20 of the most successful investors sharing their investing philosophy and success formula. 

Investing in what you understand, spotting price value mismatch during panic & euphoria, playing for the long term and sticking to quality companies & management are some of the common points mentioned by each of them.

Is America responsible for crude oil fall?

50 percent crash in crude oil in matter of just 6 months has shaken entire world and had left economies such as Russia, Venezuela and other oil dependent countries in shambles. Analysts are puzzled whether the fall is due to the slowdown in world economic growth or is it because we are producing more oil than we can consume. As per the following Bloomberg info-graphic, it seems that later is the more likely case as the world largest consumer of oil is producing more oil today than it produced in last 30 years coupled with falling oil consumption.

Peter Lynch Interview on How to Pick Stocks

In this exclusive video published by Fidelity investments in 2012, Peter Lynch, the author of hugely popular and bestseller book, "One up on wall street", has shared his philosophy and process of picking stocks and building portfolio that can outperform markets by a wide margin. 

As part of his role at Fidelity Investments, he managed the Magellan Fund between 1977 and 1990 averaging a 29% return, making it the best 20-year return of any mutual fund over the period. About an hour long video is full of valuable lessons from one of world's most successful stock picker.

The Teen Wolf of Wall Street

Mohammed Islam, a 17 year old high school student, has made $72 million playing stock markets. The kid from Queens has achieved all this by trading stocks on his lunch breaks, New York magazine reports in its 15th Dec issue.

Islam considers Paul Tudor Jones as his guru and is targeting a billion dollar by the end of next year. He hopes to start a hedge fund after he turns 18. 

Portfolio Update - Dec 2014

As expected market fell sharply in 2nd week of Dec 2014 and is down around 5% from the peak. Lot of quality stocks are down more than 10% since then. As we were expecting correction and had significant cash in our portfolio we are utilizing this opportunity for adding some quality names in our model portfolio.

You can check the updated portfolio here: Amit Agarwal Stock Portfolio

Top 5 Reasons to Avoid ITC Stock

After Tuesday's (26th Nov) fall of more than 5% on huge volumes, the stock of ITC rose marginally on Wednesday (27th Nov) amid brokerage upgrades and their justification that the decision to ban loose cigarettes cannot be practically implemented and thus will have negligible to marginal impact on ITC earnings. However, it appears to be something fishy about the brokerage upgrades which immediately came after the stock took a big plunge. Most of the big mutual funds and FIIs have ITC among their top holdings and fall in price certainly affects their performance specially when there is a an year end round the corner when their YoY performance is measured. 

It is very clear that govt. is trying everything to curb the consumption of tobacco in the country and would go to any extent to curtail it. Here are the 5 reasons you should avoid ITC for the time being.

Top 20 books on Stock Market Investing

At InvestorZclub many popular eBooks and PDFs related, to finance, investment and personal development, has been shared which readers can either read online or download for free. Some of these books such as "The intelligent Investor", "The Richest Man in Babylon", "Rich Dad Poor Dad" etc were the best sellers of their time.  

Below is the list of 20 most popular eBooks (by views) and pdfs reviewed and shared on the blog.

1. The Intelligent Investor by Benjamin Graham

2. Warren Buffet Secrets eBook

3. Financial Crisis of 1914

Where is the bottom for crude oil?

If the given image is of any indication brent crude oil might bottom out at 75-80 range as many of the major crude oil producing countries will fall into chaos and will try everything to support crude prices. 

If oil prices bottom out in this range many of the Indian and international producers such as Cairn India, ONGC, BP, Conco Phillips will provide good stock price appreciation from current levels in medium to long term.

Globally, the weaker oil price means more money in the hands of consumers. World oil exports averaged about 40m barrels a day last year; a $30 drop in the oil price, which is roughly the fall in the Brent benchmark since June, would transfer more than $400bn from oil exporters to consumers if oil prices stay at current levels for a year. This is very good news for FMCG, Autos, Airlines and many other industries that depend on oil and it's by products .

One country to watch out very closely is Venezuela as it needs roughly $160 a barrel to balance it's budget. At half of that price it might be forced to default on it's debt repayment. This event could trigger short term panic in equity markets for the fear of cascading effect on other vulnerable countries.

Top 5 articles on InvestorZclub in 2014

1) Amit Agarwal Model Portfolio - A real time hypothetical portfolio which has outperformed some of the best mutual funds in India. It is one of the most shared and viewed article since the start of this blog and in 2014.

2) Buy Bharti Airtel at every decline - One of the highest conviction idea that was published under Investment Ideas category at 290 bucks in Feb 2014. 

3) Do's and Don't of Investing in IPOs - 6 timeless wisdom before you take a look at any IPO issue and how greater fool theory ruin the chase for IPOs.

4) Indian Stock Market Outlook 2014 - Published on 1st Jan 2014, the article witnessed lot of views and appreciation from InvestorZclub readers and subscribers. 

5) 3 Mistakes that taught me the golden rules of Investing - Published on 23rd Jan it is second most read article on this blog in 2014.

Reliance Industries: Do not buy on dips

If you have listened to the crap analysts on business news channel who were recommending Reliance Industries to be bought at every dip, you have many reasons to worry now. Here are some of them:

1. Very low Gas price hike than anticipated: Analysts were almost sure that gas prices will be hiked to $8.4 per MMBTU and Reliance Industries will make a killing even though it could not fulfill its commitment of producing agreed amount of gas every year. Now the govt has finally hiked the price but far lower that what was discounted in the stock price to just $5.6 per MMBTU. 

2. No benefit of gas price hike to RIL: However small a price hike of more than 30% is positive though less positive than what was anticipated. But what's severely worrying for Reliance Industries is that govt. has denied the benefit of even this price rise to the company. It will have to continue to sell gas at the rate of $4.2 per MMBTU untill the shortfall is delivered.

Consequence of chasing stock prices: The live example

When stock prices move people become impatient both on upside as well as  downside. After 16th may people went crazy and bought whatever they can feeling they should not get left out. The consistent rising prices created perfect trap which sucked in most people. Today some of those junk names are down 50 - 60% from their June 2014 high.

In a post titled "Stocks to avoid under BJP govt." two stocks were specifically highlighted in bold that must have been avoided. But euphoria was so high that those stocks went up significantly over next 1 month. People were excited and still bought those stocks at higher levels without understanding the consequences. Today one of that stock is down 35% from it's level on 16th may and 50% from it's June 2014 high, while the other stocks is flat since 16th may but down 40% from June high.

You can check that post here

Moral: Never chase a running or falling stock price. List 5 solid reasons why you are buying or selling a particular stock. By this practice alone you will be ahead of many stock market pundits on street and achieve superior results. It must be remembered that succeeding in investing or trading doesen't require MBA degree in  finance. People with reasonable knowledge but with very high self discipline and control over emotions are likely to achieve much better result than people with MBA & Phds with fickle psychology and emotions. 

TCS - An IT Company or an Employment Agency?

Well I have not been a big fan of IT companies in India whether it's about working for them or investing in their stocks for long term. The recent run up in stock prices of TCS, HCL Tech, Tech Mahindra and other IT staffing companies has only increased my worries as they are being perceived as technology companies and getting valuations accordingly.

TCS is now valued at around $90 billion in market value and is trading at a PE of 21 times FY-16 EPS. If one believes that TCS is an innovative technology company like Apple, Oracle or Google then the valuations are justified but what PE would you apply to an employment agency who has just grown at the rate of growth in number of employees in the company. With employee billing arbitrage gradually getting narrowed due to very high wage inflation in India and less than 2% wage inflation in western world the margins will gradually decrease over next 10 years on this business model. 

Steel Authority of India Ltd (SAIL) Stock Analysis

When I look at Steel Authority of India Limited (SAIL) stock with 2 to 3 years investment horizon, it appears to be very attractive at current price (CMP as on 25th Sep 2015: Rs.68). Just consider the following points.

1. SAIL steel capacity is expected to reach around 21.5 million tonnes by March 2017 from capacity of around 13.3 million tonnes as on March 2012. As on March 2014, it had crude steel production capacity of approx. 16 million tonnes.

2. Considering the modest replacement cost of 65000 per tonne, the replacement cost for entire company comes to around Rs. 1.4 lakh crores (1,40,000 crores) against the current market value of around Rs. 29,000 crores.

3. Considering the net debt level of Rs. 45000 crores by March 2017, if one purchase the stock today at roughly 70 bucks, he will be paying an enterprise value of 74000 crores (almost half of SAIL's March 2017 replacement cost).

Portfolio Update - Sep 2014

The supreme court judgement on coal blocks along with weak global cues lead to massive selling in select stocks thereby presenting an opportunity to invest in those names incrementally at attractive valuations. 

Our model portfolio which has been sitting on lot of cash since past couple of months are now filled with lot of stocks along with some cash to utilize in case there is further fall in the market.

Companies and Coal blocks affected by Supreme Court order for cancellation

In the landmark judgement of Supreme Court to cancel 214 of the 218 coal blocks alloted since 1992, there are some big names who are going to be affected severly. Baring NTPC, SAIL & RPower the verdict is negative for all the public - private companies. 

Among the lot the most affected were Jindal Steel and Power, Jaiprakash power Limited, Hindalco, CESC, Usha Martin as their operational coal blocks have been cancelled. Beside that many non-operational coal blocks were also cancelled which had already seen significant amount of investments by the holding companies such as Mahan Coal block of Hindalco Industries.

Following is the list of major operational and non-operational coal blocks that were cancelled and the company which will be subsequently affected.

India Outperforms Major World Stock Markets

India is clearly standing out on the global map as far as the performance of major stock markets in the world are concerned. Key benchmark index SENSEX has outperformed all the major world indices by wide margin and is up more than 36% in 12 months. The second best performing market was Italy which went up 22% in the same period. 

The world's biggest market U.S went up 12% in last one year while the worst performing market among the pack was Russia for obvious reasons. Russian MICEX is up just 1% since September 2013.

Amit Agarwal Portfolio Update

Booking profits in stocks bought in September. Added only one stock as on 2nd Sep for the relative performance issue. In general there is hardly any bargain available for sizable position building. Please check the updated portfolio for details: Amit Agarwal Stock Portfolio

SENSEX Valuation expensive on FY-16 EPS

Indian Stock Market has delivered exceptional return since the start of the calendar 2014 and rightly so based on expected lines. We got historical political mandate in May 2014 and the global liquidity situation has been very benign since then. But without proper consolidation and time correction (if not price correction) market is increasingly getting vulnerable for sudden sharp knocks.

Valuation is no longer attractive and good quality companies are trading at historically high valuation. Like I have always said, Market is a pendulum which keeps swinging back and forth between the state of overvaluation & undervaluation and never stay at fair valuation (center) for long. Right now markets are stretching towards the overvaluation. The more it stretches in that direction, sharper will be the retrenchment.

Want to succeed in investing? - Stop believing in God

Why only investing, if you want to succeed in anything you should stop relying on God for outcomes. Whether God exist or not, that's a controversial question but personally I started doing much better in all respect when I stopped praying for outcomes. 

My mother spends 4 hrs in prayer and since childhood I was also a strong believer in God and thought whatever is happening to me is because what god or fate has decided for me until one morning in 2000 when I went up at 4 A.M in the morning, just before my IIT entrance exam, for  a hawan (as suggested by my mother) to crack the exam. No wonder I couldn't secure even last rank in the prelim itself. Inside I knew I was not prepared and asked for support of god to help me pass the exam. I was blamed that without preparation even God doesen't help. I thought if I am fully prepared then why should I  ask the support of God. It's like asking  for wheel chair when your legs are absolutely fine.

When I started Investing in Stocks, my Mother started suggesting me the stones to wear, the days I should trade and above all the days I should not trade at all. I was even recommended stocks to buy based on my favorable stars. Though I occasionally followed her tip in the beginning out of self doubt but I was increasingly getting convinced that stocks in long terms move on fundamentals and in short term based on sentiments. 

New stocks in model Portfolio - July 2014

After sitting on 100% cash, utilizing the sharp knock in the prices of couple of stocks to add to the portfolio as on 25th July 2014. 

Please check the latest model portfolio for the update.

Model Portfolio Update - July 2014

Started this Equity portfolio on 21st March 2013 with Rs. 1,00,000 of capital. As on 23rd July sold of all the residual holdings in the portfolio for profit and sitting on 100% cash of Rs. 1,63,520which will be deployed on any weakness in the market.

Please check here for update on recent activities in the portfolio. If you want to get updates on the activities happening in the model portfolio please subscribe to our facebook and email updates.

Financial Freedom: 8 costly mistakes you must avoid

A recent guide emailed to me by Robert Kiyosaki re-validated some of my beliefs that I had when I hated to be an employee and wanted to be on my own. Following are the 8 most common beliefs (or rather mis-beliefs) that people have, as far as financial freedom is concerned, and which is what doing the exact opposite - holding them back.

1. Higher Education   = Success
2. Getting a job solves all financial problems
3. Work Hard to get richer
4. Live below your means
5. Save Money and become rich.
6. Your house is an asset.
7. Get out of debt
8. Invest Diversely in the long term

For details on each of the above dilemmas and how you can overcome them, download the ebook from the following link: 

5 Stocks that are under buy radar of Bank of America Merrill Lynch

Since the election outcome, Bank of America Merrill Lynch has recommended buy rating on following stocks with 1 year investment horizon.

Voltas Ltd.

The brokerage house in its report dated 18th June 2014 has recommended a buy rating on the company with target price of Rs.282 in 1 year time frame. They expect sharply higher earnings per share (EPS). Branded AC unit turning profitable is biggest positive for the stock. Mechanical, Electrical & Public Health (MEP) turnaround and better mix will boost margins. Valuations are cheaper than peers and its historical peak.

Do's and Don'ts of Investing in IPOs

Worldwide, IPO markets are often viewed as a lottery, wherein successful allottees are able to sell their holdings at a huge premium on listing. While this went well till 2008, this arbitrage has faded over time at least in India.

Post 1992 the promoters are free to price their offering as per the market demand, which resulted in promoters realizing the maximum value of the issuance. Unlike secondary market, primary market is a promoter to investor transaction where like any other business the seller tries to realize maximum value by adopting all sorts of strategy. Reliance Power was hugely subscribed and then was a huge failure because the company had nothing on ground but the promoters through their Investment bankers tried very hard to sell the future value at an exorbitantly high price. The stock is still languishing below it's IPO price. 

However it's not that always bad to go for an IPO provided you approach them as investments rather than lotteries. One should always consider following points before going in for an IPO:

Top Ten Universities of America - Specialization and Tuition Fees

The best among the best. Here is the list of top 10 universities of America with their specialization, Location, Undergraduate enrollment numbers (approx.) and approximate tuition fees.

http://www.capmaa.org/2014/09/top-10-universities-of-america.html

This stock could generate 10% return in a week

In this super boiling market where people are busy scouting for stock that can pop up 10% or even 20% in a day, and why not this has been the trend since past one week, it is very lethal to buy stocks for ultra short term but expecting superb gains. On repeated requests from my readers, clients and friends, though I stay away from the concept of buying stock for a week or so, I think people can put their bet on Punjab Sind Bank at Rs.63 for last week of this month (26th to 30th). 

Few quick reasons for why this stock...

1. Public sector banks are flavor of the month and even elephants (SBI, BOB)  are dancing with 10%, 20% moves in a single day. SBI, having market value of over 2 lakh crores is up 90% from it's low of Rs.1450. PSB is just 67% from it's low till date. Union bank, OBC, BOB, PNB, Indian Bank are up anywhere between 120 - 200% from it's 52 week low.

Stocks to Avoid in BJP govt. regime

With BJP having full majority at the center, there are many themes in the stock markets to play for an upside such as PSU Banks, Road Infra, Power and capital goods etc. which are expected to do well over time. But not all stocks are good for investment under NDA regime and careful selection is important as if you are in those names you might be in for a serious disappointment. Two such names that comes at the top of my head are DLF and Jindal Steel and power. 

Naveen Jindal the promoter of JSPL is already being charged under coal scam and he has lost his MP seat from congress in 2014 Lok Sabh Election. Valuation wise the stock trades at hefty valuation on EV to EBIDTA basis compared to Tata Steel and JSW steel. With debt rising every year and the power of the promoter to compromise system gone, JSPL as a company has tough times ahead. So avoid this stock completely.