Reads: Infy Warns, Sun Pharma Alerts, New Zealand Raises, Bull Market EndGame

No Comments » Written on March 13th, 2014 by
Categories: Readings

In News:

Infy says it might not make as much money as it thought. Revenues at lower end of guidance, clients aren’t spending. Stock down 8%. (SmartInvestor)

Sun Pharma sees the FDA put an import alert on the Karkhadi plant and the stock’s down 3.5%. (Economic Times) Wonder why it’s singled out in this fall - mentioned in the FDA report are: Ranbaxy (all plants), Aurobindo Pharma (1 plant, stock is up!), Wockhardt (2 plants).

New Zealand is the first developed country to raise rates (Bloomberg)

Mutual funds find it difficult to oppose the Maruti Suzuki Gujarat plant but still ask Maruti to park excess cash in its debt schemes (Investors are idiots)

How to tell when the bull market is turning bear (LiveMint)

Reads: Synchronized Tightening, Buffett Letter, Marketing Amortization and more

No Comments » Written on March 3rd, 2014 by
Categories: Readings

Think before you buy with a credit card: The taxman will track individual spends. (SmartInvestor)

Buffett’s annual letter to investors. A lot of stuff there I don’t agree with, in the sense that it’s not the only way to invest. But it’s made him a substantial amount of money, and good for him! As usual though, great investing letter. Remember, read what Buffett says, but don’t bullshit yourself that it applies to anything beyond just that; unnecessarily broad usage of statements like “don’t lose money” have lost people more money than dear old Noida Toll Bridge. Do what works for you.

Professor Bakshi talks about the relative unattractiveness of Relaxo footwear after it went up nearly 65% in about six months when he first pitched that it’s a cool company. The Bakshi Effect? Can’t underestimate the power on a low volume stock!

(Note: I went through the analysis and wasn’t very confident about amortizing ad spends over three years. That’s very dangerous territory for me - amortising marketing spends is what gets EVERYONE in trouble because there is hardly any evidence that marketing in year x has an impact in year x+3 if there is no spend in years x+1 and x+2! If you ignore that and do the same calculations, you get a roughly 3x return, a 12.5% potential return for the 10 year risk of making incorrect assumptions. But nice momentum on that stock!)

Maruti Suzuki shares have been falling after it tried to convince investors that getting cars made in a factory owned entirely by one promoter, Suzuki, was a good thing. My view: It is a good thing if there is no evil in this world, but there is.

The emerging world is making a huge mistake by contracting monetary policy at the same time, says Ambrose Evans-Pritchard. (HT @goyal_ash) Synchronised Tightening (sounds like an Olympic sport) is okay for a country in isolation, but a hugely negative thing when done in coordination, he says. I still think it’s a better thing for emerging markets than runaway inflation, which is the fire to Synchonised Tightening’s frying pan, if you will please excuse the idiom abuse.

Reads: Hawala Premiums, Chinese Taper, Airtel Loses, Don’t Go To Jail

Comments Off Written on February 20th, 2014 by
Categories: Readings

Hawala premiums for gold smuggling are up to 4%, says Business Standard.

Bad Housing Starts data in the US? No, says Calculated Risk; it’s the cold weather and higher prices.

Why I didn’t go to jail, writes Ben Horowitz, on doing the right thing instead of doing what other people are doing.

China’s flash PMI for Feb falls to 48.3, a seven month low and takes European stocks with it.

Bharti Airtel loses appeal in case to Econet Wireless in Nigeria, has to pay $3 billion to Econet which was wrongfully denied its shareholding in the company acquired by Airtel from Zain. Airtel has to pay to acquire Econet’s minority shareholding, and this is the third setback in the case (which has seen unfavourable judgements from an international tribunal and then two lower courts in Nigeria). Share’s fallen to Rs. 298.

Whatsapp founder was once on food stamps. (Business Insider)

China wants to fund 30% of India’s $1 trillion infra investment. That’s probably their diversification strategy as they have just cut their US Treasury holdings exposure by $47 billion. (The “Chinese Taper”) Oh, we should let them. If they invest money in our roads, they’re hardly likely to bomb them.

Reads: Killing BitCoin, More Taper, Bad Debts in India

Comments Off Written on February 12th, 2014 by
Categories: Readings
Check out Capital Mind Premium! Take a 30-day Free Trial.

The Glitch that will kill Bitcoin (Bloomberg).

Bad jobs report won’t change the Taper (CNBC)

Government Jugaad: Asking RBI to pay interim dividend to meet fiscal targets (Livemint)

What Indian regulators are getting wrong (Business Standard)

Tata Housing Screws Low Cost Housing Flat Buyers (Alphaideas) Or, why you should not buy under-construction properties, Tata Housing Edition.

The Bad Debt Problem exacerbates in many Indian banks (Livemint)

No more 26% cap on lending rates for Microfinance companies (ET)

SEBI: Brokers must use multiple trading software in case one vendor goes bust (ET) Seems to target FT which has been in trouble lately and owns more than 50% of the broking technology space.

Reads: Dropping EM Currencies, Of Mad US Housing, Apple Drops 8%, Aam Aadmi Airline Regulation

6 comments Written on January 28th, 2014 by
Categories: Readings

Via @palmerandrew: Chart of EM Currencies:

Embedded image permalink

51 million iPhones, 26 million iPads, in one darn quarter. But Apple’s $13 billion earnings was a tad lower than the previous year, and lower than street estimates (which nowadays are a bigger thing than reality, it seems). The stock is down 8% in after-market trade as a consequence.


Parag Parikh on why closed ended funds are becoming seriously popular:

For simplicity's sake, let's ignore the regulatory slabs for expense ratios and assume a fund can charge 2.5% as expenses per year. Say for instance a fund is closed end for 5 years, it can have 12.5% as expenses. The AMC of such a fund would offer anywhere between 7 to 8% to the distributors. Their job is to get an investor who would be locked in for 5 years. And for getting that money for five years the distributor is rewarded with an upfront commission. This has got the distributors active. Imagine getting paid for 5 years work today itself. They will sell anything to anybody.


The Government will sell wheat in the open market, says Hindu Business Line.

The State-run Food Corporation of India (FCI) had recently entered into an agreement with NCDEX Spot Exchange (NSPOT) to sell wheat in the open market.

“The first of the e-auction of wheat was successfully carried out on January 25, 2014 in Delhi and Hyderabad,” NSPOT said in a statement.


Chinese data is suspect again, says Bloomberg. Ooh.

Hong Kong’s December imports from China fell 1.9 percent from a year earlier to HK$176 billion ($22.7 billion), the city’s statistics department said yesterday. That compares with $38.5 billion in exports to Hong Kong reported earlier this month by China’s customs administration, up 2.3 percent, based on data compiled by Bloomberg.


Bloomberg reports that they’re stalling Air Asia using a 1937 law that allows the regulator to call for, in Aam Aadmi Party style, public opinion on whether we need another airline:

India’s aviation regulator invoked a a provision under its Aircraft Rules 1937, for the first time, asking for public feedback on an application by an airline to start services in the country. That delayed plans for AirAsia, which had aimed to start operations by the end of December and offer free tickets for some seats.


New York Times on the insanity that happened in the US housing market. Come a few years, and we’ll write this about India.

The story of 12204 Backus Drive is in many ways the story of the American housing market: first anodyne, then ruinous, then resilient. It is peopled with losers and villains, lucky winners and a young couple hoping for, but not counting on, good fortune. This house’s value peaked at $540,000, plunged to $215,000, and rapidly convalesced until, last year, it sold for an amount that might be considered auspicious.


No faith in India, actions of Indian retail investors show (WSJ). Confusing the DII numbers for MF? Or is this reality?

From the start of September through Friday, Indian mutual funds, a proxy for the behavior of individual investors, unloaded $1.6 billion of shares, representing an acceleration of selling from earlier in the year, according to data from the Securities and Exchange Board of India.


Finally, someone listens. Mish reports that Europe is dumbing its silly Global Warming and Climate Protection Goals. I believe that humans are not responsible for more than a very tiny amount of the warming out there and we’re not really warmer than the past, and that some scientists are motivated more by hatred of big-oil and the funding they get from creating the fear. This drives into very bad conclusions, and I’m glad Europe’s getting the picture.

At the request of Commission President José Manuel Barroso, EU member states are no longer to receive specific guidelines for the development of renewable energy. The stated aim of increasing the share of green energy across the EU to up to 27 percent will hold. But how seriously countries tackle this project will no longer be regulated within the plan.

Real Estate: Builders Not Delivering, High Unsold Inventory and Then, Defaults

12 comments Written on September 23rd, 2013 by
Categories: Defaults, Readings, RealEstate

In real estate, for you on a Monday, is not good news. They aren’t finishing their projects, says Mansi Taneja at Business Standard.

Till July this year, of the committed supply of 406,539 housing units, only 143,838 had been completed, according to data from real estate research firm PropEquity. That comes to 35.38 per cent — just a tad more than a third.

In Gurgaon, the committed supply was 22,571. But till July, only 7,645 units, or 33.9 per cent had been delivered by developers. In Noida, of the 36,847 units promised, only 7,672, or 20.8 per cent, were delivered. Mumbai fared a little better, delivering 7,990 of the 18,725 promised units — 42.7 per cent. Pune also scored much better than the National Capital Region (NCR)by delivering 26,376 of the 59,766 units committed (44.1 per cent).

This means they took money and haven’t delivered their projects yet. While they blame many factors for the slowdown in finishing it, they seem to simply have run out of money. And since the only way to get money without doing any work is to announce a project and have greedy real estate investors rush for “pre-launch” payments, they just announce new projects while not delivering on the old ones.

And meanwhile, the amount of “unsold inventory” - that is, stuff they’ve built and not sold - are at new highs of Rs. 58,000 cr.

Of the Rs 58,000-crore pile-up, DLF, India’s largest real estate developer, accounted for almost a third. As of March-end, the Delhi-based company reported an inventory worth Rs 17,600 crore, 18 per cent more than that two years earlier. The company’s consolidated net sales declined from Rs 9,561 crore to Rs 7,773 crore during this period. Following DLF is HDIL, which reported an inventory of Rs 12,043 crore at the end of March this year, more than six times its net sales last financial year.

Third on the list is Indiabulls Real Estate, with an unsold inventory worth Rs 5,111 crore, nearly four times its 2012-13 net sales.

This is not going to be good. Defaults have started. Orbit Corp defaulted on Rs. 96 cr. of loans from LIC Housing Finance:

The housing Finance company has classified the account as a non-performing asset and served a recovery notice to the developer known for its premium south and central Mumbai developments. Through a public notice on Monday,LIC Housing Finance also restrained the developer from creating any third-party rights on over 2.40 lakh sq ft across three of its projects that were mortgaged for securing the loan along with hypothecated receivables from seven of its luxury projects.

As has Hiranandani on a 76 cr. Tata Capital Loan in July:

According to the petition reviewed by ET, the developer defaulted on loan obligations from December 2012 and is now liable to pay 82.6 crore, including an annual interest of 18.5%. It adds that Hiranandani Palace Gardens had applied for a 100-crore term loan that was sanctioned in July 2011. Of this, Tata Capital had disbursed 76 crore

The defaults are starting. The inventory is going up. Prices are starting to come down. We’re seeing the beginning of India’s largest real estate train wreck, in 0.25x speed.

Readings: Greece Broke, Slumdogs Into Millionaires

Comments Off Written on June 7th, 2012 by
Categories: Readings

The Prospectus For Silicon Valley’s Next Hot Tech IPO (which sounds like most Indian IPOs)

Greece Warns of Going Broke as Tax Proceeds Dry Up (NYT)

Nearly 6.5 Million Linked Account Passwords Posted Online (PCW)

And in that vein, Jeff Atwood Makes Your Gmail Hacker Proof (Read Now) 

Turning Slumdogs Into Millionaires: Of Pabrai’s Focussed Charity in India (Forbes)

How To Keep Your Financial Advisor Honest (CBS). I wonder if this will work in India.

When the Fake @jhunjhunwala met the real one (Sruthijith at ET)

Readings: Buying India Abroad, Spain, Fed and Jelly Donuts

Comments Off Written on June 1st, 2012 by
Categories: Readings

Ajah Shah on the moving of trading of Indian instruments outside Indian shores.

The CEO of SGX wakes up in the morning and thinks about competing with NSE. The CEO of NSE wakes up in the morning and thinks of an array of weird things.

I’m not all in agreement – Nifty futures have more OI in Singapore for other reasons also: they
trade longer, they can be traded in the night, and they are US dollar These factors are quite important now as suddenly RBI will do a policy change in non-market hours, or some company will release results
post-market etc. Secondly, you have the SGX Nifty + NSE Nifty + Rupee arb. But the post does apply – it appears that trading Indian instruments is better done outside India.

David Einhorn on Fed’s Jelly Donut Policy.

The promise to keep rates low invites procrastination. Why should anyone make a marginal decision to borrow and spend or build today, knowing that low-cost financing will still be available through the end of 2014?

‘Mish’ Shedlock : Hyperbolic selloff coming on Spain?

Oh, see at Zerohedge, a GS research note on Spain seeing over Euro 15 bn of deposits moving out of the country in April.

Ritholtz on Perenially Wrong Bottom Callers, listing mainstream news editors calling the bottom of the housing slump since, well, 2006. Incredible post. And then, he’s heading directly against Bill McBride of Calculated Risk who has said in February that the Housing Bottom is Here. While yes, data is seriously lagged, it’s kinda difficult to call a bottom on anything while the European mega-crisis is close to exploding. I’m with Ritholtz in that prices need to from too high to too low before they careen back to normal.

Readings: TMC Madness, Goldman Sucks, Reliance GRMs

Comments Off Written on March 14th, 2012 by
Categories: Readings
  • Railways Minister Dinesh Trivedi announces a hike in raild prices, and immediately Mamata Bannerjee, head of the Trinamool Congress (TMC) opposes it. The funny part: Dinesh Trivedi is a member of the TMC.
  • Why I am leaving Goldman Sachs: Greg Smith says the culture of helping customers is gone. If you read Traders, Guns and Money by Satyajit Das, it went a long time ago. No one now expects your bank to think in your favour.
  • Jet Airways NOT in financial distress, says Naresh Goyal, Chairman. Don’t believe any news till it has been officially denied.
  • Wipro’s founders were selling 3.5 crore shares (1.4% of the company) at a floor price of Rs. 418, which seems to have got only 71% subscribed. This auction thing will soon be replaced with promoters selling in the open market and then saying, oh, we sold it off.
  • Reliance has some GRM worries, says Deepak Singh
  • Chinese stocks fall 2.5% as Wen Jiabao says that home prices are still too high and curbs on them will continue.
  • And a phenomenal own-goal in Israel: