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Don't Miss the Financial World's Most Anticipated Annual Event...

Apr 20, 2016

In this issue:
» India among top defence spenders in the world
» Micro, small & medium enterprises perform well
» ...and more!
0:00
Radhika Pandit, Managing Editor of ValuePro

Every die-hard rock 'n' roll fan has heard of Woodstock. In 1969, the Woodstock Music Festival was held over three days on a dairy farm in upstate New York. Promoted as 'three days of peace and music', the who's who of rock performed, attracting an audience of 400,000 people. That's massive. Indeed, it was a pivotal moment in music history.

Have there been any such popular events since that attracted that kind of an audience? Probably not anymore in music yet. But if you look beyond the music industry, we believe there is.

And it is in the unlikely field of finance. Indeed, Berkshire Hathaway's annual general meeting (AGM) has been called 'Woodstock for Capitalists'. It's the world's most anticipated shareholder meeting, with well over 35,000 shareholders from all over the world traveling to Omaha every year.

This year, the AGM will be held on April 30, 2016. There's a twist this year: It will be webcast live on Yahoo. This means that besides the shareholders who will actually travel to Omaha to hear Buffett speak, others who can't make it will still be able hear the Oracle of Omaha speak.

In short, the AGM will be accessible to a wider audience. So this year's event will be bigger than ever...maybe bigger than Woodstock.

Even if you cannot tune into the live webcast, fret not. The AGM isn't the only place to savour Buffett's wisdom. His annual letters to shareholders are perhaps even more anticipated than the AGM.

His latest 2015 letter was as good as any before, with Buffett touching on a variety of topics - from his four big investments, to the importance of productivity gains (especially in a country like the US), and his views on utility companies.

Whether one attends the AGM or reads the annual letters, it all boils down to putting Buffett's value investing principles into practice. Buffett essentially believes in investing in companies that have wide moats, sound management, and a clean balance sheet.

Now that Buffett has made clear his intention of a more global reach for the AGM, does it mean that he also wants his investments to be more international? Will he ever consider investing in India?

I do not know. But I do know that Buffett's investing principles are timeless. And even if he never invests in India, his approach to picking quality stocks can certainly be applied to Indian companies.

Indeed, that's exactly what my team and I do while picking stocks for the ValuePro portfolios. By using Buffett's approach, we have picked up quality stocks such as Hindustan Unilever, Container Corporation, and Cummins to name a few. And these have gone on to give impressive returns of 156.4%, 180.5%, and 153.6% respectively. So you see, his approach is every bit as relevant in the Indian context as well.

Will you be tuning in to the live webcast of Berkshire's annual general meeting? Let us know your comments or share your views in the Equitymaster Club.


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2:38 Chart of the day

The defence sector in India is a sunrise sector. India was among the top ten spenders on military expenditure in 2015, ahead of countries such as France, Japan and Germany. The total expenditure of $ 51.3 billion during the year constituted 3% of the global military expenditure. However, a significant share of the country's defence requirement is still imported. To encourage domestic production of defence equipment, as part of the initiative to boost manufacturing, the government has implemented a number of measures.

These include hike in foreign direct investment in the defence sector from 26% to 49%, streamlining in the defence industrial licensing, and rationalization of taxes and payment terms and steps to promote exports. Apart from this, the government has revived the defunct 'Make' procedure that was articulated in 2006 to promote growth of the private sector in the country's defence. Under the Make procedure, the government has already awarded a development contract for battlefield management system to a consortium of Larsen & Toubro (L&T) and Tata group. The government is contemplating to launch six to eight 'Make' projects every year.

Apart from this, for the first time the Defence Research and Development Organization (DRDO) has signed a technology transfer agreement with a private company, L&T, for the commercial production of Pilotless Target Aircraft. These developments have paved way for private sector companies to tap big-ticket deals in a sector that hitherto has been the exclusive domain for public sector undertakings and ordnance factories. While companies such as the Mahindra & Tata Groups, L&T have already been fortifying themselves in the past few years, even Reliance Infrastructure has been shifting its focus towards defence equipment manufacturing after it acquired Pipavav Defence last year.

India Among Top Defence Spenders in the World in 2015


3:46

India Inc. continues to remain in doldrums. Slowdown in demand, poor capacity utilisation and weak earnings have marred its financials. But amidst all this gloom, there is a glimmer of hope from an unexpected quarter. The MSME (micro, small and medium enterprise) sector consisting of unlisted, private companies has posted a healthy performance in FY15 despite facing structural drawbacks in terms of regulatory framework, lack of financing and poor skills.

The data released by the Reserve Bank of India on 2,37,398 non-government and non-financial companies shows that not only these companies managed to accelerate sales growth but maintain profit margins and increase shareholder's returns in FY15. It is heartening to see that these companies have dipped into their savings to grow without stretching their balance sheets that remain at healthy levels. The growing importance of the MSME sector is also reflected in the fact that bank and financial institutions have been increasingly focusing on this segment to tide over the slowdown in credit offtake from large corporates. Even the government and RBI have been taking steps to ease the working environment for the MSME segment. Going ahead, this segment will play a crucial role in powering India's growth engine.

4:17

22 April 2016 is coming close. By now you know that we will be celebrating our 20th anniversary. It is a time of ruminations and on this occasion we'd love to hear from you. In case you wish to share your experience with Equitymaster or read what some of our valued long time subscribers have to say about us, please do so here.

Here's what Digambar Kulkarni, an Equitymaster Wealth Alliance Member and a subscriber since 2002 from Pune, had to say about his experience with Equitymaster:

  • Equitymaster has been my guide in trading of shares since the last 20 years.
  • I find from my records in Transactions, that I made first purchase of shares online in 2004.
  • I purchased 50 shares of a Cement manufacturer on 25th of July 2005 and I sold on 13th March 2006, I made a profit of Rs 16,265! I felt very great!!! By clicking a mouse from the comfort of my HOME.
  • My Family my Friends and many who knew me felt I am a very cleaver guy!
  • Equitymaster has been my friend, philosopher and guide. It produced sufficient interest and provided guidance.
  • In this business of money making, many people come with vested interests. Equitymaster is not one of those! I made more money than I lost.
  • Now that I have retired, it has become an important intellectual activity to keep me occupied. If I don't make mistakes, I do make some money. And life goes on...
4:45

Indian markets had a rather volatile trading session today as the indices oscillated to either side of yesterday's close. At the time of writing, BSE Sensex was trading higher by around 6 points. Sectoral indices were trading mixed with stocks from the metal, consumer durables and power sectors leading the gains. The BSE Midcap and BSE Smallcap were also trading marginally higher.

4:55 Today's investment mantra

"Even the intelligent investor is likely to need considerable willpower to keep from following the crowd." - Benjamin Graham

This edition of The 5 Minute WrapUp is authored by Radhika Pandit (Research Analyst) and Madhu Gupta (Research Analyst).

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Equitymaster requests your view! Post a comment on "Don't Miss the Financial World's Most Anticipated Annual Event...". Click here!

1 Responses to "Don't Miss the Financial World's Most Anticipated Annual Event..."

Sanjay Saxena

Apr 21, 2016

Greetings!

Instead of showing triple digit returns for a few cherry picked stocks, can you please share the average annual returns of the ValuePro portfolio for the past 3, 5 and 7 years so that we can make a better judgement about its efficacy and also compare it to some best performing mutual funds over the same time frames.

Thanks.

Like (1)
  
Equitymaster requests your view! Post a comment on "Don't Miss the Financial World's Most Anticipated Annual Event...". Click here!
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