Lessons from the week (24 Sep 2023)
The superpower of insights, trust needed in funding & turning 1 crore to 1000 crores
Everyone has access to information. But very few can take out insights. And without insight you don't have success.
Information is now available to everybody. Not just professional investors. What you and I are trying to do is translate that information into insight. For example - everybody in the country could read the last ten years Bajaj Finance annual reports, listen to Rajiv Jains quarterly conference calls, visit a Croma store or Vijay store and see a Bajaj Finance desk at operation... everybody could do that.
99% of the people will come back and say "Bajaj Finance is an NBFC and it lends to people who want to buy consumer durables. Therefore given that it makes an ROE of 25% and an ROA of 4%, it should trade at a price-to-book of 4x." That's the conclusion 99% of investors will reach.
But basis the same information, the same store visits, 1 out of 100 investors will say "Bajaj Finance is actually not a non-bank lender. It's a tech company. It is the largest user of Sales Force in the world. It employs more electrical engineers and computer scientists than any other firm in India. It potentially has a bigger data repository on affluent Indians than any other firm. And basis these intangible assets, Bajaj Finance is actually not an expensive company. It is actually a very cheap company at current valuations.
So that's the role of creativity. The same information is available to everybody. Basis your and mine reading, training, upbringing and intuition, we are able to translate information into insight.
Obviously the way my colleagues and I do it we will get it wrong sometimes and get it right sometimes. If we get it more right than wrong, we will be alright. But without that final burst of creativity, without that spark of imagination, it is impossible to go from information to insight. And if we don't have insight, you can't make money in any aspect of life. It's not just investing.
Without creativity you don't have insight. Without insight you don't have success.
I love learning from Saurabh because he communicates insights in a clear, easy to understand manner. He is an excellent story teller who is able to put across his point in a memorable way. This five minute explanation on the difference between information and insight caught my attention. It made me think about insights I have because of the experience I have accumulated and the work I do. And it has made me confident to back these insights with conviction. The majority of people will come to the same conclusions in time, but the ones who will benefit disproportionality are the ones who will not sit on the sidelines but put skin in the game and act on what they know to be true.
*Saurabh Mukherjea on the importance of insight in success
I trust you. That is all that matters.
Seagull wrote a check for $50,000.
Conrad Hilton - "but Seagal I don't have any security to offer."
Seagul - "I didn't ask for any did I? I trust you. That's all that matters."
In August 1925, the 14 story Dallas Hilton opens.
All the brands we know today needed funding, whether it was a loan from the bank or an innovative solution like leasing the property and then using the lease as collateral to build the hotel, which is how Hilton built his first hotels. You need others to support your vision. And to get others to trust you, you need to have a vision worth supporting and a character worth backing.
*Hilton vs Marriott: Business Wars
Asian Paints has compounded investors money 2400x in 40 years
Asian Paints compounding by decade:
10x in 10 years
100x in 20 years
1000x is 30 years
2400x in 40 years
This is the largest compounder in Indian history. It is a technology company pretending to be a paint company.
Paint is a $10 billion industry, half of which is with Asian Paints. Home Decor is a $50 billion industry which is fragmented. And Asian Paints has entered it now.
I heard three talks from Saurabh this week. This story is from one of them. Can you imagine investing 1 crore in Asian Paints 30 years ago? It would be worth 1000 crores today. But here is the thing, the odds that Asian Paints will continue to compound at this rate and turn your 1 crore into 1000 crores, 30 years from now, is fairly high. There are 20 companies that make 80% of India's profits. Many smart investors are using insights like these to win disproportionately.
*Saurabh Mukherjea Live
Harsh Batra
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