Prof Sanjay Bakshi's Fav Stock Falls From Grace Even As ValuePickr Forum's Ominous Warning Rings True

1/26/2016
Prof Sanjay Bakshis Fav Stock Falls From Grace Even As ValuePickr Forums Ominous Warning Rings True
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Prof Sanjay Bakshis Fav Stock Falls From

Grace Even As ValuePickr Forums Ominous
Warning Rings True
Jan26th
2016
WrittenbyArjun
Rakesh Jhunjhunw
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ProfSanjayBakshisfavouritestockwhichsupposedlyhasanimpenetrablemoat
aroundithasfallenoffthecliff.Worse,theCompanyisbeinglikenedtoSatyamand
questionsarebeingraisedabouttheexistenceofahugeamountofcashonitsbooks.
Whatisthewayoutforitsbeleagueredinvestors?
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ProfSanjayBakshismasteryinstockinvestingtheorycannotbedisputed.
Heisastaunchbelieverinthetheorythatbuyingstockswithamoatora
competitiveedgewillbenefitinvestorsimmenselyinthelongrunevenif
theypayaheftypremiumforsuchstocks.
Sadly,theProfsstockpicksarenotlivinguptothehighexpectations
reposedinthem.AtleastthreeoftheProfsfavouritestocks,Kitex
Garments,VaibhavGlobalandAshianaHousing,arepresentlyreelingunder
poorperformanceandareclosetotheir52weeklows.
KitexGarmentsshockedeveryonetodaybyslumping13%onthebackof
poorQ3FY16results.Thestockhaslost35%injustthelastmonth.The
stocktouchedanalltimehighofRs.1070on6thJuly2015.AttheCMPof
Rs.473,thereisawhoppinglossof56%.
ItisnotablethattheProfwasuncharacteristicallybullishaboutthe
prospectsofKitexGarments.InanotetitledTheImportanceof
Unconventionality,theProfcameoutwithallgunsblazinginfavourof
KitexGarments.Hesaid:
AsgiganticcustomerslikeCarters,ToysRUs,Gerber,andTheChildrens
STOCKS TALK FORUM

Whythesestockadvisorsdontstart
mutualfundsiftheyaresoskilled?????
Ialwaysreadvariouspostsincluding
variousfightsandblamegameabout
variousadvisoryfirms..Ihaveone
questionifthesestockadvisoryservices
areasefficientandaccurateinstock
marketprediction,whytheydon'tstart
mutualfundsorwhydon'tstart
investmentcompnieslikeWarrentBuffet.
AsfarasclaimIread,whichmight[]
KitexGarmentsDoesstatedfuture
growthjustifyitshighvaluations?
Afteritwasmentionedthattextilesisa
goodsector,someonewasalsokind
enoughtomentionKitexGarments.
SincethenIhavestudiedtheirnumbers
andbusinessmodelanddetailson
managementintegrity.Theylooktobea
greatfirmwithaclearvisionandtrack
recordofexecution.Butitisquotingat
[]
WHICHISBESTBRANDEDAPPARELPLAY
TORIDEURBANCONSUMPTIONBOOM
http://rakesh-jhunjhunwala.in/prof-sanjay-bakshis-fav-stock-falls-from-grace-even-as-valuepickr-forums-ominous-warning-rings-true/?curator=alphaideas&utm
1/7
1/26/2016
PlacedivertmoreoftheirsourcingrequirementstoKitex,Iexpectthe
companysrevenuesandearningstogrowmanifoldoverthenextdecade.
..
Despiteitstinysize,thecompanyenjoyssignificantpoweroveritsmuch
largercustomerswhichisreflectedinimprovementinitsprofitabilityand
Presentmarketcrisiswillpassifnotin
daysthaninmonths,butweneedto
focuswhatafterthat?.Weneedtofocus
on1.3BillionIndianconsumersfor
Seculargrowthstories.Onewillbe
BrandedApparelPlay.Whatwillbebest
playinthiscategorytorideonurban
consumers??Canmembershelptofind
[]
workingcapitalsituation.EBITDAmarginshaveimprovedfrom16%in2008
to24%inFY14.Workingcapitalturnshaveimprovedfrom4xto11xover
thesameperiod.InFY14,Kitexdelivereda60%pretaxreturnonequity
withnonetdebt.
TheProfalsomadeitclearthatmorebuckscanbeharvestedfromKitex
Garmentsandthathehasnointentionofcashingout:Hewrote:
SUBSCRIBE TO NEWSLETTER
Enteryouremailaddress:
AsIwritethis,thecurrentmarketpriceisRs492pershare.Ihaveno
targetsellprice,andIhaventsoldasingleshare.Moreover,Ifeelgood
thatIinvestedinthisprosocial,andyethighlyprofitablebusinessa
combinationIabsolutelylove.
SUBSCRIBE
Unfortunately,theProfdidnotvoiceanyconcernsorriskfactorsaboutthe
stock.Instead,heraisedarhetoricalquestioninthenoteWhatcouldprove
mewronginthisinvestment?whichwassupposedtobeansweredbyhis
elitestudentsinclassandtowhichthemembersofthepublicwouldhave
noaccess.
ItisnotablethattheProfsunbridledbullishnessaboutKitexGarments
was/isinsharpcontrastwiththecautionexpressedbytheanalystsof
valuepickrforum.
Thevaluepickrforum,cofoundedbyDonaldFrancisandAyushMittal,
boastsofalargenumberofrazorsharpandknowledgeablemembers,each
ofwhomkeepsaredalerttoensurethatjunkyardstocksdontslipthrough
thetightcordon.
DonaldFrancisraisedthepertinentquestionwhetherKitexGarmentswas
reallythathotaninvestmentopportunitygiventhatWehavemany
businesseswhicharecapableofgrowing2025%CAGRfornext35years
wherewedonothavetheseissuestransparency,consistencyandstrong
visibilityfornext23years.
HealsoaskedWhatremainsinthepuzzleishowcomeKitexisdoing20%
EBITDAmarginswhenthenormis10%?isthissustainable?why?
HealsoexplainedthatThekeytoproperindepthresearchisnottotake
anythingforgranted.Andtoquestionanythingthatprimafaciedoesnot
addup
OthermemberssharedsimilarconcernsaboutKitexGarments.krishere
expressedhisworryaboutKitexsfunnymath.Hepointedoutthatthe
projectionsmadebytheMDdidntquiteaddup.
krisherealsovoicedwhathecalledarehismajorfiveconcernsabout
Kitex.
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kharbonProfSanjayBakshisFavStock
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DonaldalsoissuedaclearcutwarningtonoviceinvestorsthatWhat
doesntadduparebiggapsbetweenstatedandwhatseemstobethe
currentpicture.
DhirajDavehomedinonwhathecalledconcernsaboutmanagement
conduct,oneofwhichhadtodowithahugecashbalancewhichwas
mysteriouslynotearningmuchinterest.
2/7
1/26/2016
TheissueoftheallegedcashbalanceinKitexsbalancesheetcameupfor
frequentdiscussionwithseveralmembersexclaimingthatitisveryodd
thatthecashwasbeingallegedlyheldabroadinapparentcontraventionof
FEMAregulations.sumi00calleditsortofstupidbehaviourwhichledto
blowupofmanymidcapsbalancesheetsduringthelastcrisis.They
shouldhavetransferredtoIndiaandinvestedinmutualfundiftheyreally
wanttogethigherreturnsheopined.
varadharajanrwasalsoskeptical.Hecalleditillogicalthatacompany
wouldkeepRs.199croreinaninterestfreedeposit.Ifeelsomethingdoes
notadduphereheaddedinanominoustone.
PP1wasnotatallimpressedbyKitexGarments.Somebrokers,andothers
havebeenpumpingupthestock,Isuspect.hesaidandlateradded
bluntlyThereisnomoathere,Iamafraid.
varadharajanrpursuedtheissueofthecashbalancelikeabloodhoundI
havebeenonlyfocussedonthisoverthelasttwodaysandIamconvinced
thattheRs.200Cr.cashraisesseveralquestionshesaidandproceededto
raiseseveralredflags.varadharajanrwasboldenoughtolikenKitekwith
thescamtaintedSatyamtheRs.200Cr.cashisaphantomcookiejar.
SeemslikesatyamreduxthroughamergerwithKCL,(solikesatyam
maytasmerger),wipeoutthecashandkeeptheschemegoinghesaid.He
addedthathewasveryverynervousaboutKitexGarments.
AyushMittal,thecofounderoftheforumalsosentoutaclearwarning:
giventhepointsraisedandshortcomingsinthecompany,thisinvestment
callcangowrongsoeveryonepleasebecarefulanddoyourhomework
hesaid.
vivekbothraalsosoundedawarning:Cautionhere:Managmenthasnot
alwayswalkedthetalk,youcangothroughlastfiveyearsARtoverify
that.
Thespecterofthehugecashcausedsomuchconcernthatoneintrepid
memberevencalleduptheauditortodigmoreintothetruthofthe200
crorecash.Ofcourse,theauditorassuredhimthateverythingwashunky
dorythoughhewasdescribedasbeingverynervous.
ThecashissueraiseditsuglyheadagainduringtheQ2FY16results.The
managementsassertionthatitwaswaitingfortherupeetotouchRs.67to
adollarwasmockedandtermedasaredflag.Mgmtiscrazyoverthecash
issueIdoubttheCorporategovernanceofthecompanyabhishek90said
whilechiragjain1976calleditatotallyfoolishthingtodo.richdreamzwas
alsosuspiciousofthemanagementsreluctancetocomecleanontheissue
ofthecashbalance.
TherumorsthatsomethingisamisswithregardtothecashbalanceofRs.
200croregotsomecredencewhenBobyMichael,KiteksGeneralManager
(Finance)andChiefFinancialOfficerresignedwithimmediateeffecton7th
January2016.Rajesh_RvoicedtheconcernofeveryoneontheforumCFO
resignationeffectiveimmediatelydoesntseemright.Couldthisbemoreof
anonperformanceorpersonalityclashorsomefinancialmessupesp.
relatedto200crorescash?hepondered.
Meanwhile,beforethemanagementcouldofferanyclarificationonwhythe
CFOresignedintheabruptmanner,theQ3FY16resultshavebeen
announcedwhichcausedthestockpricetotank13%.
Somemembersatthevaluepickrforumwereopenlydistraughtattheirloss
whileotherskeptabraveface.KS16mournedthehugelossthathehad
3/7
1/26/2016
sufferedAllIcansayisthatfromhere,Iwillnevertakeanyconcallupdate
orguidanceinfacevalue.InIndia,anythinggoesandpeoplecantalk
anything,pullwooloveroneseyes,washtheirmouthandmoveon.he
wept.
ThepuntersatMMBwereequallydistraughtatthehugelossfacingthem.
Mrjacobcannotbetrustedanymoreperiod.Wearetakenforaride.
UnfortunatelyMrJacobtalkstoomuch.Heclaimedfullyearrevenueis
securedINR600cr.NowGODknowswhatwillhappen.Q4cannotbe
magicaltohaveINR250crrev.SothequestioningisDidhebullshitin
CNBCafterQ1resultsmossaddemandedtoknow.
Man111smeltaratinKitexGarmentsResignationofCFOandGMFinance
smellfoulinthecompany.Mostimportantisthecashflowisverymuch
interestinghesaid.
Now,thereisanimportantinvestinglessonembeddedintheKitex
Garmentsepisode.WehavetoseewhetherProfSanjayBakshiunravelsthe
lessonforussoonerorlater!
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investments,MidCap,Portfolio,scam,stockpicker
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8 Comments
kharb
January26,2016at8:36am|Permalink
WhlatiswrittenbyProfBakshthathepreachesvalue
investing,butmostoftimeIseehimasinvesterof
Duds.Anybodycangothroughmycommentsivariousarticlesand
stocktalktoseethat.Moreovermanyofsocalledexpertshavebeen
inagreementorhasbeenfatheroftheirDuds.Whichcanalsobeen
seeninvariouscomments.Withoutnaminganystockorexperts,many
ofthemsuddenlystartbuyingadudclaimingthattheyhavefounda
gem.PublicalsofollowedwithoutknowingthatmanyoftheseDudsare
rollingstonetillyesterday,whatvalueadditionmagiccanexpertputin
oldDudswhichhavebeenlyingdorment.Thereissimplegameplayed
withpermoters,buydudcheap,makeabeautifulandsexygriwthstory
anddumpittoinexperiencedandthosetypeinvesterswhoarein
searchofquickmoney.Stockmarketcannotgivequickmoneybut
seriouslongtermplayofaprox20%returninQualityfundamentaly
strongsectorleaderswithsomegrowthandpricingpower.Tome
manyofthenewmagiciansinStockmarketareFatherofDuds.
Reply
kharb
LatestmagicsectorfoundbyGuruwasrealestate,a
sectorknownfornotoriousfordestroyingandfooling
investersdirectlyinstockmarketandaswellinrealestate
investment,althoughasalwaysallbuildersarenotsameand
maybegood,butadiifcultgametofindoutamongmost.Kitex
garmentfutureperformancehasbeenquestionedbymein
variousformsincludingstocktalk.
Reply
Suvendu
DearKharb
IdontthinkProfBakshineedstobecalledas
fatherorinvestorofduds.Ibeenthroughseveralofhis
seminars,wontcallhimoutpartoftraditionalvalue
investingclub.Heisentitledtohiscontrarianviewwhile
tryingtodefinecompetitiveadvantage.
SayingthisIdoagree,eventodayIfeeluncomfortableto
someofstockpickingssuchasrealestate,overhyped
garmentscompany.Withsuchpoorbalancesheet
management,littleprotectioniwasntconvincedhow
valuationcancreateasustainablegrowthalone!
Reply
kharb
IdidnotsaidProfasfatherofDudsand
hasgreatrespecttoourProfGuru..But
simplysaidthatheadvocatedvalueinvesting,but
stunnedtoseehimasinvesterofDuds.Imaybe
wrongbutsorrytosaymanyofhisrecommendations
madetobelievemeso.Ishallbehappytobewrong
andwithGreatrespecttoProfsahebwishGoodluck
toinvestersinhisrecommendation.IwishProfSaheb
alsolookintosomebiggerMidcapsorlargecap
compnieswithauthenticmanagementsandtrust
worthynumbersforbenefitofinvesterslikeme.Any
waysorryforharshcomments.
Reply
5/7
1/26/2016
Reply
god
yes.bakshiisdkbose
Reply
Anitha
TodayitisKitex.Tomorrow!!!!Ashapuraintimate????
Reply
Harshad
January26,2016at12:11pm|Permalink
Mistakeskeepushuman
everyonehassomefailuresininvestinglife.
BMfaceditwithHawkins,nowProffacingitwithKitexandVaibhav
global.DamaniwithGati,
Onehastotakealladvisewithpinchofsalt,studyyourown,taken
whateverisgoodforyourfinancialhealth,leaveouttherest.
Someideasclick,somedont,itsindividualsstudyandopinion.
Investmentisajourney,makeprofits,makemistakesbutkeep
movingon..
Reply
kharb
January26,2016at12:17pm|Permalink
BacktoTop
AlthoughIamnofanofBM.Butheatleastdiscuss
qualitynames,butrecommendingevenatanycostis
hisfault.
Reply
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