Once invested it's your duty to look for Anti Thesis pointers/disconfirming evidence. Don't get caught up in echo chambers. Investing is lonely because of this

Why Indoco Remedies looks Interesting and why FY22-24 growth is likely to be stellar here?

Time for a thread🧵🧵🧵🧵

(Source for ophthalmics data:Nirmal Bang and rest is own work)

Looking at the incremental opportunity in Ophthalmics:-

Market size is not attractive for the Large Generic companies but for someone like Indoco which has a smalll base in exports business

As per the USFDA’s orange book, for Ophthalmic suspension drugs, only 3 out of 17 molecules have an active patent. Among the 14 molecules that are patent expired, 8 molecules are yet to see generic
competition.

Even for the one’s which have seen generic competition, the competitive intensity is very low and there is space for an additional entrant.. Entrenched players like Novartis, Bausch & Lomb and Abbvie have dominated this market with legacy products for decades.

Indoco Remedies and Sun Pharma are the only Indian generic manufacturers to have successfully won approvals for generic version of Ophthalmic suspensions in the US market. Indoco Remedies has recently launched generic version of Azopt (brinozolamide)

Let's Understand why Narrative is important in investing and how to create a Thesis that can help you to hold a stock in spite of the market environments

Time for a thread with international and Indian examples, Please retweet so that everyone can benefit 🧵🧵🧵🧵

The world we see and defined is given meaning by the words we choose to use. In short, the world is what we make of it. Something similar applies to creating a thesis before investing in a stock. Your thesis is what makes you hold a stock thick and through in spite of bull/bear

Example 1: Amazon- In May 1997, Amazon became a publically listed business. The target price set by analysts was $18 per share. It finished its first day at $23 per share. (So much for targets). In 1999, in the middle of the tech bubble. Same stock was trading at $100 per share.

Analysts were giving targets of $300 per share. However, after the collapse of the bubble many internet businesses went bust, but Amazon survived in spite of a 78% drop from 1999 highs. As we all know, Price changes perception. Same analysts started claiming it was massively

overpriced and claimed its days were "numbered". By the end of 2002, it was trading at 90times cash flow (so much for multiples to account for future)

@moatandvalue @sahil_vi @itsTarH 1. Healthcare
2. Cdmo/crams in Pharma and agro
3. Spechem
4. Music streaming
5. Building material
6. Exchanges
7. Ecommerce Businessess
8. Financialization
9. Niche Manufacturing due to cost arbitrage
10.Certain Auto anc cos with tie ups
11. Insurance space
12. Animal health

@sahil_vi @itsTarH 13. Cybersecurity cos abroad. Not in India.
14. Digital transformation: digital is an overused word though.
15. Biotechnology: emerging theme. Waiting for it to play out.
16. Green energy: some players already benefitting

Some points for Canfin Homes bulls to ponder upon:

1. It has been on the block twice in the last 5 years. Why didn't anyone buy?

2. If it gets sold, would the liabilities side stability remain?

3. Is it granular enough or only limited to Tier 2 cities unlike Aavas which is in

Tier 3 and Tier 4 and is able to print abnormal ROAs.

4. NIMs are okay-ish for a HFC. ROA is good at 2%+

5. ROE is 19%, because it is leveraged almost 9x.

My view remains- it isn't granular enough to escape competition from Banks like SBI and ICICI etc. Thus we see a lower

growth rate. Why not HDFC ltd over this in that scenario if you are settling for a lower growth rate and also taking the risk of competition and company being sold. Its likely to be a compounder and not a fast grower. Adjust expectations accordingly.

Disc: not invested in both^

The Art of asking smart questions | When do you really graduate as an investor?

Time for a thread🧵🧵🧵🧵🧵

Retweet for Max reach!!

You graduate as an investor when you start asking things like the quality of revenue, incremental quality of earnings and the competitive landscape. Eg:- One API player will grow earnings because of shortage in market for those

APIs but the other one which will grow because of being the lowest cost producer. The markets often give higher Valuations to the latter player.

Another example that comes to mind is Balkrishna Industries vs other tyre players.🚜🚜

Given the fact that it is the lowest cost producer and has the highest margins. It always gets a premium to the other players in the tyre space. Whether at peak or at trough.

One more example is that of APL Apollo, same business got low valuations during the last cycle and collapsed by 50%+ when their EBITDA per tonne reduced. In this cycle, the value added proportion has increased.

Key Learnings from one of the best Investing Letters that I have read this year from @rohitchauhan

Time for a thread with SOIC Key Takeaways 🧵🧵🧵🧵

First Key Learning:

The first is the importance of getting the trend and its timing right. No business does well in isolation, it is a part of a much bigger trend. For eg:In sectors like API/CDMO/Chemicals, many businesses have created wealth. As they are going through tailwinds

Thus,It becomes important to identify long-term trends like manufacturing, Financialization of saving, or Formalization of sector (think PVC/CPVC Pipes) and to be patient. Long-term trends keep offering opportunities. Just think about it- if its truly long term, then the

Opportunity will exist for a long period of time no?

Second Key Learning:

Look at Valuation in a broader context and not in isolation. When a sector catches fancy of the markets, and earnings growth is strong in the entire sector. Most of the time, markets start discounting

the earnings and reward the business with a high multiple. As long as the trend holds and management is executing, one should hold the stock and be tolerant of higher valuations 💯💯💯

"When an industry's underlying economics are crumbling, talented management may slow the rate of decline. Eventually, though, eroding fundamentals will overwhelm managerial brilliance."-Warren Buffett

Things I learned from back tests:

1) Value works. It really doesn't matter what the metric is.
2) Bad balance sheets are fine until there's a 2008.
3) Ignoring valuation works until there is a 2000.
4) There isn't a an all-equity portfolio that will resist a 2008/73-74.

I also found a bunch of strategies that delivered 20% CAGR's and at some point had a catastrophic drawdown. Also found strategies that seemed 'safe' with hyper CAGR's like 20%+ that stopped working the moment I invested in them. If it sounds too good to be true, it probably is.

Ben Graham's "The Intelligent Investor" is a horrible book if you're using it purely for the quant formulas in today's Markets, but probably THE BEST BOOK if you're interested in learning about the core investing concepts, and eternal truths about the Markets & its participants.

Below are few of my fav quotes organized by topic.

1⃣ Discipline

2⃣ Investing vs Speculation

3⃣ Mr. Market

4⃣ Bear Markets