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The Capacity to Suffer is Finally Showing Results
Oct 23, 2019

Our super investor- Rajeev Thakkar of PPFAS mutual fund recently tweaked his investing approach.

He included the 'capacity to suffer' as one of the qualities to look for.

He mentions:

  • Many a decision by the managements of the companies in our investee companies may be wealth accretive in the long run and may depress current reported earnings. We will try and not penalise such decisions and look through the current reported earnings to try and understand true long-term cash flows/value.

There you have it.

This month's recommendation is one such example.

Just look at the improving operating (EBIT) margin and return ratio (ROCE) of the segment which was the reason for the pain.

In the last 10 years, the segment's revenue grew at 15% CAGR.

Its EBIT margin sharply swung from -10% in FY10 to 3% FY19. Similarly, the ROCE improved sharply during this period.

Going forward, we believe, this segment holds huge potential for value creation.

We will publish the detailed stock recommendation report tomorrow, 24 October.

Data Source: ACE Equity

This Chart Of The Day was published in The 5 Minute WrapUp - Stock Recommendation Alert: A High-Quality Bluechip with a Unique Capacity to Endure Short Term Pain for Long Term Gain

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