Part 3
July 2013 and July 2016
The company has performed extraordinary, with management being right in catching the trend and executing it successfully. During this period you may have increased your allocation slightly or did something differently? Please tell us.
During this period, the inventory turnover though dropped slightly, but trade receivables days contracted substantially, while trade payables days increased substantially and margins improved.
The market seems to have appreciated the management capacity to execute again and again. This has increased their probability to execute in future.
The share price after risen massively till 2015 seems to have corrected by half till 2016. If at that time you believe the business is showing the right numbers, then it would have been amazing.
Conclusion:
Remember, this is a case study, it is just to see what are the possible alternatives that could have been done. If something similar arises in future.
Further, we would love to learn from you where we may have been wrong or you would have done things differently.
If you read valuepickr.com, discussion we’ll realise most people react to share price. However, don’t think us or anyone will be different it requires constant practice to separate the noise from real information, and sometimes share price is noise while other times it is information. Sometimes people ignore the past information of a company completely and sometimes overvalue the present/past. But we may suffer from same, it requires constant practice.
One super successful investment, requires a series of decisions with increasing probability of being right. We would love to hear from you what you would have done beyond 2016 to 2020. As a lot of things happened around that time. In 2017, the share price reached mania valuations? However, could it have been known before? Was it valuable? Should have the position being sold , considering the business kept on performing extraordinarily?
May we all Learn Together
Argha Investment Advisers 