Saturday, October 25, 2008

Indian Corporates Update = I.C.U

Things got a little rough this friday.

Patient long Term Investors got a bit worried.. in fact Luddic Research has long laughed straight into the face of anyone who introduced himself (don't see many chicks in this game) as a long term investor.. so geddafuggoutt been the standard response followed by uncontrolled mirth whenever some pompous (and always bearing a loss on his investments) schmuckturd announced he was not worried.. it will recover.. he is in it for the long term.. fundamentals are still strong..

.. but even we were getting tired of laughing at these dull, pitiful fools and finally the Gurkha watchman downstairs was given strict orders not to let any long term investors in.. one grows sick of same old.. and these dullards could drive the Dalai Lama homicidal.

So, as I was saying these (formerly) amazing long term clairvoyants' simple minds got a little jolt in terms of faith and most promptly lined up at their favorite temples and deities' feet for a frenetic chanting session with bleets for mercy between every shloka.. O' mighty protector.. why this great test you put me through.. you know I suffer.. give me just one chance to breakeven.. I will never play the markets.. never watch cnbc.. never average down.. O' Lord.. just this time.. OK.. atleast give me a little bounce to exit least this much?

But what brought this sorry state about? Luddic Research points out to a deep underlying white man conspiracy to undermine the growing BRIC and especially the quickly emerging, brown global clout.
This became even more worrying to the western business world when even half witted, semi literate Indian promoters like Tulsi Tanti ( Suzlon) ,Kishore Biyani (Future group), G.Mallikakrjuna Rao (you guess right GMR), plethora of Real Estate tycoons.. as well as businessman Daddy's progeny like Ambani wunderBrothers, Kumarmangalam Birla, Ratan Tata, Vijay Mallya, exhibited multiple talents and core competencies far beyond any business leader ever to run Intel, GE, Microsoft, ABB, Unilever, CocaCola, IBM kind of small cap, small vision companies could fathom(leave alone envision and execute)..
..well these westerners plotted long and careful how to bring down these Incredible Indians crowding out the rest of the planet on the 10 richest persons list.

According to some reliable sources, these boys just plain pulled the money out when they knew it would hurt the brown man most.

And all along this country was jiving to the most popular tune in the nicely appointed offices of fund "managers" of various shapes, sizes and amazing hand shaking/networking techniques..

..the Indian growth story is Intact..the Indian economy is decoupled.. the Indian markets are decoupled.. the Real Estate prices go only Up in India..the growth rate will only get higher from now on.. the Index is going to 25,000.. and then to 28,000.. and finally 50,000 is now visible in the imminent future.. we will be rich and mighty and brilliant..we are decoupled.. we are decoupled..
.. this tune had everyone dancing and clapping and tears of sheer joy streamed down the more emotional fund managers cheeks.. privately, most of these fund managers realised they had underestimated their own worth in the previous plebian years.. Oh why did I live less brilliantly all these years.. anyway now I will not be denied my destiny.. yes, there will be a private jet someday(even that fool G.Mallikarjuna Rao has one)..oh yeah!!

Heady days to be in the fund management business in India, those were.. it did not matter what type of fund.. Hedge, FII, Mutual, PE, Prop,..hey even the local committee Fund you formed with your neighbours and uncles.. you were part of that WASPish(though brown) mastersOfUniverse you'd seen in Gordon Gekko.. and you worked hard to look the part..even their spouses started wondering if was the same dull sap she'd married!

(It got so bad that ordinary hand pumping, social networking, schmoozoids like our bearded accountant Ashok Wadhwa(Ambit) felt left out of the loop entirely, quickly floated a money management gimmick and felt it important to pull favors with CNBC to announce his view (..whotf is really interested in that, really) that the market looked close to bottom and would not go below 14,000 in any case.( looks like a bad start Ashok, eh?)

No summary of Indian Fund managers is complete without mentioning the sheer number of fools ICICI has released into the Indian fund management scene where their bull market genuis just pyramided incessantly into higher and higher positions( and a rather faster rate of higher self esteem and self worth) that made these gaboons some of the largest participants in the Great Indian Funds story permeating every organisation in some position and cluelessness.
(The latest and greatest example is JP Morgan's new CEO.. of course not to blame for it's coming ills ..she just joined for crisssake.. but she was heard expounding immediately on her plans to grow JP Morgan as far as her eye could see double true ICICI alumni fashion).

But what about the real drivers of the great Indian Growth Story?
The assorted bunch of "promoters" and "family run" tycoons who leapt from oblivion into global "smart" money destinations .. who were shown charts extrapolating their growth well into the ceiling by the very westernised "smart" money smooth knowalls.. slowly it is dawning on these yoyopreneurs their go getting drive is got up and gone.. and it is time to take a hard look at the books. The books are suddenly looking increasingly messy and piled with large debts and much larger urgently required (and completely unavailable) funding.. and the fact the asset side is piled with such crap at such valuations that only blind monkeys who passed accountancy are willing to sign off these books(though extracting dozens of bananas more now).
Seriously denting the announced growth plans of the "promoters" is that the only believers left in company balance sheets are the research analysts from vernacularly headed and named brokerages or the public transport commuting regulatory officers.

You know things are bad when you realise the Ambani boys have not announced a single multi-billion project in a completely unconnected industry for the past 10 days.. that is scary..

It is shocking that the market did not get weak kneed with schoolgirl delight when Reliance Industries unveiled the latest cooking extravaganza of profit growths etc. etc. at twice the industry average with lovely chutzpah.. the bovines actually got selling this stock..never fear, Muckesh is gonna settle some scores monday.. we hear he was forced to fork out Rs.1400 for a chunk of carefully planned increase in stake (as usual, much lower than market price for instant gain, when it was decided by the board) and cannot stand being played at his own game market puts him out of pocket by Rs. 400 , eh.. he is gonna show who's the Daddy now.

Junior ofcourse has his work cut out after bravely announcing Reliance Energy(now Infra) buyback at Rs.1400 a while back .. being forced to buy at Rs.1100 + as they had to sheepishly confess and blink back tears as shares disappeared below Rs.400.. all that buyback cash gone poof.
A-nil is ofcourse dodging calls from a certain Spielberg over at Hollywood who wants to know when is the $500 million turning up and recently making unflattering comments about third world wannabes trying to get into the white glamour scene..when they cannot pony up the cash.. what else you need these suckers for.

Also looks like Junior's plans to buy an English football club may have to be postponed till be can run up his various ventures' share prices up.. it's not easy to stay in the 10 richest men of the world .. that this wunderbrother pair have realised.

About our Real Estate "promoters" and their comical overseas moneybags .. let's just say "Property prices in India are not coming down" is the official word and these orangutans are giving sleepless nights to the usually smug and confidently forging ahead Private Equity types whose grasp of ground realities is scaring the privates out of them.

The captain of this floundering ship, our own Finance minister has taken to putting on his best starched whites, shawl on his shoulder , hair dyed a debonair black and spending long hours in TV studios rather than the minstry trying to exhort the unwashed masses to buy some stocks .. or at least do not sell.. as he put it plainly.. every seller should realise that each time he sells someone is buying.. ( well greatIndianGrowthStory types have been buying intelligently all the way down from 21,000 index levels).
His latest ministerial feat, delivered with his customary elan was this account on thursday.. that he'd personally called the (shaking with adulation) Chiefs of 7 main public sector banks and told them to "lend aggressively".. to anything that had a pulse.. and the Chairmen had assured him to a man .. they were just waiting for a potential borrower to walk in ..Oh yes Sir,yes Minister.

As usual .. this is the bottom ..yup, the fundamentals of this country remain strong.. yawn.

p.s. coming soon..
Indian Funds Update = I.F.U

Sunday, October 12, 2008


This amazingly clear thinking article was written in sept 2003!!

Today, we realised how many quadrillion times more painful it has been for the (very small percentage..very) thinking Americans than for us thinking Indians to watch the fools run our respective countries and economies amok... we are after all third world..and probably deserve such bankers/RBIs/SEBIs /Finance Ministers/ Mutual fund managers/ Portfolio managers/ Financial advisors etc.

Sometimes you feel the financial rewards of separating these fools from their money is not reward enough for being right.. compared to the anger you feel at the clueless schmucks still spouting drivel from their behinds..
Oh yes, the worst is over !!.. again!!

2 points from the article:
1. The Great Indian Growth Story seem to have taken off largely due to US Fed's largest monetary expansion in history.. and at the worst possible stage of a Big Kondatrieff cycle.
2. The Great Indian Growth Story now starts looking like the Great Indian Rope Trick.

Finally a little comfort:
Finance minister P.Chidambaram is working on urgent Govt. bailouts for the following key pillars of Indian La-La Land on whom the growth story hinges:

  • Real Estate Companies: All firms with more than 2000 half-finished, semi-finished or even half planned projects across the country whose old loans are long overdue and cannot get fresh loans and have no more PE suitors and whose share prices have fallen over 70 % and who haven't sold anything in last 2 months BUT who have not reduced prices at all.
  • InfraStructure companies : Who have projects in every nook and corner of the development phase and have no lenders in sight and whose PE investors come for meetings in wheel chairs and who have no basic qualifications and who have lofty aspirations for Nuclear projects and (this one is strange) who belong to Andhra Pradesh state (as our hero G.Mallikarjun Rao of GMR).
  • Private Sector Banks: All banks in this sector who have been worthy pillars of the immense wealth creation last year who unfortunately now need to show some profits(or hide losses better) and whose growth is coming back to bite their butts and whose global plans show distinct bag holder status and whose management is infested with ambitious, equal oppurtunity program fallouts and whose loans dot the countryside with worthy borrowers and whose CEOs exhibit youthful good looks.
This step is reqd as the global FIIs and PE funds have been complaining about their horrible, horrible losses due to unsophisticated "investor" behavior lately..making it difficult to keep their faith in India's Growth Story (and more importantly their jobs).

..Who can forget the swelling of pride Indians felt when the minister sagely dissected the US financial turmoil at Davos .."It was a regulatory failure."
..and promptly proceeded to get Indian banks to cut Interest rates on his return.

Lastly , from our DRIP stable .. comes the reassuring sounds of the far thinking Chanda Kocchar of ICICI Bank pronounces yesterday:
"The NPA levels continue to remain where they have been even in the last quarter. Even as we report earnings for Q2, you will not see anything untoward as far as the NPAs are concerned."

"As far as NPAs are concerned, we are not seeing any increase in it, and the corporate sector profitability is still holding up and the repayment and payment obligations are all coming absolutely on time. So, on that count there shouldn’t be a worry at all.
..All I can say is if the legal framework was halfway as effective as the US .. she would have thought twice before incriminating herself like this.

But this is India and the Growth stories remain Intact for very long ..thanks to the Decoupling.

Also as usual .. Again it is too late to sell now.. let it recover a little bit.. just a little.. pls GOD!!

Monday, October 6, 2008

The Sarah Palins of ICICI bank

The current banking turmoil has been especially hard on western female bankers who had built stylish little careers and lifestyles wafting cluelessly amongst less pretty male counterparts.

..but alas, style and intelligent sounding drivel only works in bull markets when quite a few bankers are diagnosed with abnormally large brain cells that explains their enhanced financial acumen.. and such visions somehow evaporate at the end of bull markets.

Lovelies such as Erin Callan, Zoe Cruz, Sallie Krawchek.. are sorely missed for their exceptional skills, strategic vision and grasp of this faltering sector.. but even more for objective reasons.

Let us be clear.. these stylish things are confined to the banking world and their skirts have graced no trading seats except as talented "managers" of trading teams and stunning, exciting meetings they presided over. It was all very very stimulating.

Luddic Research reports an interesting analysis of the factors that make women get raises (and in turn makes them rise) in Wall Street's "high" finance and present a convincing argument how Sarah Palin would undoubtedly have risen far above three and possibly higher because of her (GodBlessHer) disconnect from reality and simple questions.. also her "doggone it" style would make it virtually impossible to fire or demote her.. since his decisions were mostly God's will.. and there is a litter of five(and a sixth derivatve) to feed..

But she has the rallyTheTroops talents to boldly make Grand asinine decisions and megalo visions that would put many a banker to shame.

Coming back to our local banking femmes, who though severely looks challenged have nevertheless dutifully tried to grace the financial pages with their vision and grasp of the banking /financial exploits and achievements.

Few months back Luddic Research had identified ICICI bank as a worthy torchbearer of the Great Indian DRIP Story that would eclipse the BRIC folly in short order .

There was this truly gifted leader KV Kamath of many talents and evergreen matinee idol looks who by some strange twist ended up running a bank instead of singing/ dancing around trees in romantic Bollywood musicals.

As expected, not one to let dull banking offices dim his magnetic attractiveness, he quickly embarked upon a mission to surround himself by female managers of all hues and their vision to think beyond their makeup and saris. It greatly helped that the bevy of financial birds surrounding his jet black hair added zest to all official gatherings, conferences and Industry meets that this visionaries from ICICI came to spend most of their waking hours gracing.. sure beat dull number crunching back in the cubicle.

So the growth trajectory of ICICI was clearly dominated by market share/growth/ think Big kind of excitement that just saw opportunity in any thing that walked or had a pulse .The game was to grow so fast and furiously that the nobody could ever calculate how much bad loans, capitalized expenses , NPAs etc. were buried under the ever piling books.
.. the rate of growth had to ensure nobody within the bank(much less a regulator or analyst) would ever be able to figure out the real profit (using the term very loosely) since inception.

This bank quickly caught the fancy of young and old, big and small, native and foreign.. wow.. what a growth trajectory and, what a visionary (and youthful) management team..The Indian growth story soon became synonymous with this bank and its conspiciously feminine Generals who rushed in where male bankers feared to lend.

The assortment of Chanda Kocchars, Kalpana Morparias, Renuka Ramanathans and such became household legends in this country for their far reaching insights and ability to shovel cash out into the countryside..

The corporate strategy meetings were fairly brief and everyone was totally on the same page:
.. mostly a session of complementing the management on their looks , jewelry and dresses(where did you get that.. very pretty!!) was towards the end punctuated with the agenda..
..OK that's decided now 12,000 new ATMs this year, 4500 new branches this KingFisher airlines to go global (airlines are the best users of our cash, we loooove Vijay Mallya .. he's dashing and dashes we couldn't find a bigger lemon than this airlines) .. lend to every car, house, salaried, two wheeler, Freddie, Fannie, Lehman , Builder, Construction company, SME this country has or if the growth targets falling short .. create these borrowers from the country side.. India is woefully under borrowed.

.. it got to a point that if anyone in the world (yes word got out) wanted to borrow and had difficulty answering some fairly simple questions .. he knew some ladies in India who had growth plans to match and cash to burn.. all he needed to do was answer some fairly simple questions at Sarah Palin's altitude and walk out with the cash.

Small wonder the bank seems to be involved in "offshore subsidiaries" who seem to have a little subPrime problem..

.. and the bank seem to be holding realEstate assets and such loans (at cost ofcourse) that reach into the furthest corners of the India.

..and the bank seems to have millions of lovely grass roots type of two wheeler and small loans which will likely pass on to next generation of original borrowers(and collection agents) before fully repayment.

.. and of course the housing loans book of ICICI bank across the country to strictly deserving applicants has proudly been hailed as the single biggest reason for unlocking the value in the Indian Real Estate sector which had for previous 50 years remained locked and hidden .

But sadly , the current turmoil has not gone down well in the envisaged growth plans of the Bank and unless quickly rectified by large Govt. bailouts, threatens to reveal certain accounting gymnastics at ICICI that could quickly disturb the composure and the hairStyle of KV Kamath.. and the confident noises Ms.Chanda Kocchar has been making to scotch any rumours.

For starters Ms.Kalpana Morparia has hopped across to JP Morgan (good timing surely!) and quickly announced grandiose ICICI style plans for expansion there.. much as in fashion of clueless American firms trying to monetise the enigmatic growth story of India that every one is sure of and can sense but nobody can actually pin it down. (When was the last time a white man actually took some profit out of an "emerging markets" ?.. tho we are not complaining ;)

So as all the other DRIP pillars have wilted these past months .. ICICI in that ingrained, go-getting manner has gone for the floodgates where others merely dripped.

What Kamath missed in his zest for youthful self-image and quest for visionary sounding legacy, was that you just cannot rustle up girls from the countryside and perch them in nice offices in Mumbai to do anything more useful than answering the phone or adding color to offsites.. no matter how debonair your looks or how dark your hair.

As per Luddic Research , the true measure of robust health and vitality in any company ( especially Banking) is inversely proportional to the percentage of top management coloring their hair artificially to bolster market share through misdirected Libido..

..just don't work.

Lastly, there is a rumor gaining ground here that ICICI bank is really an American Bank.

Wednesday, September 17, 2008

Morgan Stanley & Monsoon Capital : Feathers flying & Turkeys trying.

For quite a while now, we have been keeping a steady eye on this global zoological bunch who've managed to pass off as a finance and investment firm wherein the careful eye did reveal a while back , the startling underlying reality that it was a bird pen for largish, puffy birds who loved to dress as suits.

Since those early days , the seeming success of these orniths ( distinctive for their awkward gait and useless views) despite their odd practice of providing every MD's cabin with private sand-box to immerse his head and views in those head-y days..oh yes!..we confess.. MS Ostriches and Monsoon Capital's Turkeys made it look so easy that we floated our own little UnHedged fund.. to try and ease the pain of cashConstipation so many Indian bulls seemed to be suffering from .. they needed relief and one which ensured they never be put into that pain again..the poor suffering bulls needed a cash enema..and needed it hard.

So we did copy their model a bit, yes.. but improved on their feathered fetish with a more hirsute pursuit.. and have to admit the westAfrican Baboons have wildly exceeded our X.

But recently the softly humming, big bird beehive of smooth, oblivious and cluelessly unflappable activity that was the hallmark of Morgan Stanley's investment genuis in this country, started showing alarming signs of disarray and disruptions and you can understand the sand and feathers flying around in downtown Mumbai's financial district can cause even the most longTermStoryIntact bulls to look up nervously from their plodding..yup, the flying feathers and large flightless birds in suits suddenly didn't look right.. especially when visitors reported the MDs' new ritual of collectively putting their heads together and in into the central sandBox at the Head Office for the entire trading hours.. the rumours were now rife..could these really be Chimps pretending to be Ostriches??..gimme a break.. just the markets overshooting again.

Though on a positive note, Monsoon Capital seems to have put together another India specific fund from entirely fresh crop of investors and plans to expoit the fantastic new Inflection emerging in this country.

As we had noted in March:

"The Monsoon India Inflection Fund LP has dropped 28.3% this month, through March 20. That leaves it down 45.9% so far in 2008, Prakash wrote in an update to investors. MarketWatch obtained a copy of the letter."
..and Gautam Prakash, one of the sharpest turk(ey)s in this business, quick learner from mistakes that he is, is aptly naming his new attempt as the "Monsoon India Deflection Fund LP" deflect any disgruntled criticism or attempts to enforce prior claims .

..smells like some American largeBird Flu, if you ask me..

Wednesday, September 10, 2008

Indian stocks bottom again !!

As most every half wit knows, India is a great long term fact a fantastic opportunity that is evident to everyone and their portfolio managers.. a certainty..clear as day.

So, what now ails the "smart" money from getting onto this gravy train.. especially when it was this very "smart" money that enlightened the clueless natives about the glorious economic future that lay ahead .

So the foreign "smart" money came in plane loads.. saw the crowds around the airports.. smelt a mega opportunity.. met up with the "promoters" and convinced the poor saps to look beyond their quick buck, corner cutting, short termist, scummy businessman outlook and get a little "professionalized", "corporatized", "organized" and soon "private Equitized".

So the ordinary Indian Business Galoot suddenly sat up and started pestering his staff to quickly tell him how much was a million dollar in rupee lacs rupee crores.. this started looking good from his angle.
For years he had had to bribe, fleece, lie , beg and finally cheat and steal from his share holders and unsympathetic bankers( the salaried class ha!) to fund his gaming the system and suddenly these young "smart" money foreigner gents ( who obviously knew something he didn't ) wanted to throw easy cash at him and his "business" at lovely "valuations" that only they could calculate oh sooo accurately.. it just excited him.

And thus the great Indian growth story was on.

Everyone and his neighbour got this "smart" money in their companies.. at ever more exciting "valuations" and "stakes".. and they even pitted some "smart" money against each other ( so much "smart" money and so little time) to bid that wee more naughty "valuation".. oooh it was heady.

..And then suddenly the "smart" money which had been confidently and in suitably impressive tones been sermonizing on the equally impressive reasons why India was "decoupled" from turmoil back home .. this same "smart" money quickly lost that knowledgeable sheen to plunge to panicked hen levels shockingly naive even vis-a-vis the retail investor losers who'd succumbed earlier to loss of faith in the Long term.
To be fair the "smart" money boys did hold on to InForTheLongHaul song and dance for as long as their religious faiths allowed (and some faithfuls hold on even till today) .. but it does get difficult to hold onto the original positions after being fired from your firm or (as increasingly seen lately) the entire "smart" money firm going under, in this completely unforeseen Emerging Markets' mess.. gets a little tough to finance Indian real estate companies in these circumstances.

And that seems likely what ails the smart money.

Now fortunately ..and after a long 2 week gap of no "analyst" and market "expert" calling a market bottom.. we have had some sane voices explain in serious tones that the worst seem to be over as far as the Indian stocks are concerned and they do not expect further down moves..

This is a big relief as many of our clients have had trouble sleeping without being able to find a single reassuaring voice after all day of scanning news and TV to confirm their hope that this looks like the bottom.. you know these poor "investors" have been holding onto their stock "investments" since Sensex 19,500 that it cannot go lower and no point selling now..after this much fall.

Well we have been busy at Luddic Research at our UnHedged Fund what with hiring and training a couple more west African Baboons to expand our core Research team and as these two specialise in special situation shorts, their dart throws have just handily beat the market ever since.

Finally further to our latest discussions with Prashant Bhatia, the analyst virtuoso over at CitiGroup .. it is likely he will join our fledgling Unhedged Fund in the newly created important position of the Chief decoyTurkey for holding forth in the financial media about the Indian Banking sector and sometimes regaling the girls with his historic US banking upGrade calls that are now folklore..notably Lehman Brothers..We got us a legend !!

Lastly, we are now a bit worried about India's first authentic Warren Buffet , who modestly confessed he has never lost money in stocks (surpassed Warren too here).. is a bit missing in action for past few months .. and his lovely face and priceless pearls are no longer being cast in the financial media.. hope all is well..since no corpulent bulls on TV means no sustainable bull moves in Indian stocks.

But then Rakesh Jhunjhunwala knows Sensex will be 25,000 by 2010 and 50,000 in 5-6 years.. so why worry about this short term noise.. eh?

Though,we thank the lord the Bottom is finally reached again..was getting a little rough.

Thursday, August 14, 2008

The Great Indian BandWagon Jam.

Currently, there looks like a bit of a gridlock in the various Indian investment bandwagons' traffic.

It has been rather trying in the recent past for the captains of various bandwagons(even hand carts reported) to keep together the flock of believing "investors" and roll the wagons towards the heady future ( filled with pelf and prosperity) that looms ahead for any "long term" believer.
In fact, most annoyingly, these formerly docile "investors" have lately been behaving like a bunch of frightened hens leaping off the bandwagons with exaggerated flapping of wings and loud squawking at the slightest hint of market downturn. This is in sharp contrast to the saner days witnessed in this "fundamental" wonderland even a couple of months back when any slowing attracted even more "investors" to leap onto the Bandwagons from the sidelines.. hell if the rural rustics were hesitant or bashful, there were plenty of foreign "investors" wanting a ride into town.. good times loomed large just ahead !

And now .. all the BandWagons..the "growthStory" bandwagon, the "fundamental" bandwagon, the "value emerging" bandwagon, the "decoupled" bandwagon, the "landBank" bandwagon, the BRIC bandwagon, the "retail play" bandwagon, the "realEstate" bandwagon, the "infrastructure play " bandwagon.. all, but all bandwagons are having trouble keeping even the longest-term-outlook hens onboard.. and we confirm witnessing leaps executed by considerably weakened and frail "investors" off above bandwagons at considerable loss of limb and dignity totter off into the bushes for much more sedentry lives.

What tugs at the heart strings is the degree to which aspirations of the nation and its entire financial community ( alongwith their former captive flocks) have deflated in hope and scope.

What has definitely aggravated the disruption of the careful travel schedules of these above bandwagons has been the disturbing and widepread discoveries that virtually all such bandwagons, originally thought to being piloted by finely attired and glib Clairvoyants, turned out to be OPM (Other People's Money) smokers who all along had had their heads up a certain orifice which offered an entirely cocooned and comforting world view of their abilities and worth.. these new revelations have derailed some rolling momentum, yes.

So the ordinary "investors" ( let's be clear here.. these are investors who believe in the long term camp and are not some ornery, short termist kind of gambling punters looking to make quick large profits in double quick times ) were surprisingly left holding the proverbial bags and sitting on suddenly uncomfortable bandwagons with increasingly ludicrous looking pilots whose natty attire no longer glossed over the fact where he (yup.. all He here) got his insider insights from.. and it left the investor disturbingly disturbed about his (recently golden) future.

Well the entire country's roads today are strewn with every variety of bandwagon in various stages of breakdown and disrepair with the pilots/drivers looking much the worse after being extricated from their self-absorbed, internally fulfilling OPM orgies...suddenly exposed to harsh sunlight .. and it is plainly traumatic.

The "experts" again see the valuations as very realistic and tons of sideline money is going to come into play and the bandwagons will roll again and .. and much merriment will ensue.. but one gets the worrying impression about the bandWagons looking more like clownWagons.. complete with corny uniforms and hats.. and headed nowhere!!

..but reassuringly , the sidelines are even more crowded now with all that cash(oooh yes..) ..waiting to rescue the markets.
Remember, we are all Long Term now.

Say it together now..
Long Term investors have nothing to fear.

Thursday, July 24, 2008

The Chimps are back.

[Announcement] : Chimpanzees buy Indian Stocks at 14,800.
BSE Sensex today: 14,777.
NSE Nifty today: 4,433.

There we said it there is no mistaking.

Not into dispensing common sense( disguised as high sounding financial acumen) free of cost.. we have taken this unusual step of actually divulging our "take" on the market owing to the following reasons:

  1. The plethora of sorryAssed "investors" who, having lost their shirts and shoelaces in the recent bull market, that have signed on as Luddic clients in hope of recovering some "investments" before their wives discover their indiscretions to neighborhood rattling public spankings.
  2. The rash of value that has emerged in Indian stocks.
  3. The reforms are back on track.
  4. Everyone else is buying this rally.. the bang is back.
As is evident from the state of this country's economy and markets.. the bovine don't get it..ever.

And shockingly the "analysts" seem to be getting the message too finally..

The Swiss bank lowered its year-end Sensex target to 15,500 points from 19,600 previously.
HSBC also cut its year-end target for 2009 to 15,000 from 21,000.

The good part is these marsupials still have their jobs or we would be hard pressed for targets.. and the good fortune that follows such targeted investments.

..but our personal experience with analysts and fund managers has been less than lovely.. for over 5 months after (getting ppl invested at Index 21,000 odd) , they assured :
20,500 " this dip"
19,500 "..just a correction buy this dip.."
18,500 "..even better value buy this dip.."
17,500 "..average down your cost .. buy this dip.."
16,500 ".. bottom is here now .. buy this dip.."
15,500 .. cannot locate the switched off.
14,500 .. still no guidance.
13,500 ".. take the matter into own hands .. hold for recovery."
13,000 ".. cannot go lower.."

Suddenly , Govt survives confidence votes and the bulls' confidence is back.. Finance minister is back in saddle and economy is once again in good hands..evidence? his quick and astute analysis of the Oil situation..within hours of the vote.

...and our "analyst" is back..
...14,500 .. the market has bottomed .. just buy every stock flat out.

.. and this time of course, he can be trusted.

Strangely.. the Real Estate sector's value is still not being priced fairly.. apart from some far sighted turkeys like Lehman Brothers giving Rs.750 odd crores ($175 mil) to equally far sighted developers like Unitech .. um.. who are ideal partners considering identical farsightedness, but more importantly identically collapsing stock prices.

Tuesday, July 15, 2008

Reliance Industries : Target Price Tars

Reliance Industries, as all Indians know is the Indian growth story, the India shining that make our chests swell with pride and (nearly) make Mukesh Ambani richest man in the world (well at least till the growth story was intact) .

Reliance Industries is such a central part of this country's scheme of making it into a developed, white nation that every fund manager worth his "grasp of the investing climate" quickly loaded up on the stock in his portfolios within the first few hours at the many gasps of sheer admiration from the gallery.

It surely helped the stock Picking Process of these fund Managers' exhaustive due diligence that the media everyday sang paeans for the Reliance Pack, its visionary founder, his offsprings and the glorious path that lay ahead.
In fact so entwined is the future of this country with this family's visionary projects, visionary plans, visionary accounting, visionary shortcuts that certain Politicians (cutting across parties) were roped in to try and pass a bill in the Parliament allowing the Groups' corporate colors be changed to the tricolor national flag colors .. in fact the only reason it fell through was the bitter wrangling between the different politicians (on opposing brothers' sides) on which brother gets the colors and which gets the national emblem.. and when a national daily threatened to actually go public with such an agenda in non positive light for the Reliance Group ( unheard of in itself).. the duo decided to postpone Sovereign ambitions a tad.

So off they went about their business.. announcing project after project, investment plans after investment plans ( all running parallel..time is of essence here).. till nobody in the investment world, or the many analysts of different hues and colors who follow Reliance stock, could even keep a tab on all the projects or group companies or cross holdings or cash flows or ratios or even which growth projection incorporated which cash flow from which project into which companies balance sheet.. in fact it is suspected the situation within Reliance offices is just as chaotic and they all finally put together some nicely sloping ( upwards at an appropriate tilt) numbers every quarter to throw at the aforementioned analysts who then keep their home fires burning by deftly analyzing the same and turning up the next morning to announce their expectations exceeded (again!) in excited yelps on TV to coax some appropriate gymnastics on the Co's ticker tape..
..and the country sits back with warmed cockles and marvels at the wunderBrothers.

But lately, as the country's "investors" grapple with having to put up with sharing space with certain non-bull variety of farm animals.. who were allowed in ( a mistake in hindsight) into the stock market jamboree during the euphoric rise( of course their bovine cash helped) to add meat to the momentum..well these non-bulls (turns out most were actual, real sheep!) have now caused significantly more damage on the down move than any good on the up move.
..and Reliance, renowned far and wide for its abilities to manage growth, manage profit margins, manage tax loop holes, manage successive Govts. , manage accounting exponentiality, manage media, manage analysts and not the least manage its' share price.. had to face actual uncontrollable down moves in the scrip.. cannot the clowns see the profit margins, the growth , the projects..

That's the problem with sheep.. no reasoning .. they either move up or they move down.. and all of them.

So it began innocuously enough, more expectations exceeded more projects announced, more regulatory environments smoothened, more growth planned .. the analysts got down to work ..
since it was soon after the heady top of 21,500 on the SENSEX .. and the media was still quivering with the last spasms of the high .. corpulent, local Warren Buffetts were competing with each other to envision higher SENSEX 25,000 ..30,000 .. 50,000 ( fact Luddic's Researchers, having failed to correlate anything(worthwhile) except unrequited libido to the market's 2 year gushing.. concluded that the lower had the visionary Prognosticator's self esteem been before the bull market.. the higher he seem to project the Sensex on his "investment" horizon.. *sigh* those were the days.

In these heady days.. our "analysts" ( OK, I use the word loosely..very loosely).. but then analysts by definition are loose losers who would be on the streets with tin cups if they actually traded their analysis.. so these "analysts" in this still quivering market.. just went about outdoing each other with their Reliance Target Prices.
To be fair for the last 2 years any analyst who upped his target when a stock dipped a bit was soon given his own cubicle, own appearance on TV, own herd of bulls to prod with his newer and higher it was not surprising the highest "target" won the best cubicle/bonus/herd.

Sample some of their efforts to claim their rightful places in Analytic History :

  • ICICI secs in June : Reliance Ind Target: Rs. 3060
  • ShareKhan in April : Reliance Ind Target: Rs. 3196
  • India Infoline in Jan : Reliance Ind Target: Rs. 3316
  • India Infoline in Mar : Reliance Ind Target: Rs. 3198
  • Angel Broking in Apr : Reliance Ind Target: Rs. 3344
The analysis is not easy and any clueless john groping around to catch a quick 20-30% on his investments knows he is in good hands when he goes through the Target announcements - these are typically liberally garnished with serious doneMyHomework words like YOY, EV, EBIDTA, FY 4QF, start with. that make normal English redundant and superfluous.
In fact we think the Angel broking guys have a good handle on the analysis situation in this country ,what with having beaten down the other wannabes hands down with a 3344 and the best narrative to boot :
" ..RIL stock is available at 18.7x FY2010E FDEPS of Rs 139.1. "
what more does an Investor need before pulling the trigger.. this is a sitter !!
In fact they wanted to fine tune the Target to Rs. 3344.15 based on the FDEPS of Rs.139.1 but the stenographer seems to have missed out in the draft announcement.

No Analyst story is complete without our old cat PN Vijay of PN Vijay Investments, who has for decades sagely advised investors how to invest and who ( along with his equally geriatric flock) unfortunately seems to have boughtEveryDip right from 20,500 to 12,900 and still holds basically Reliance in all his portfolios.

What brought this post about was the recent unfortunate events witnessed in the Indian financial capital Mumbai's streets when certain hooligans and antiSocial elements(though we strongly suspect many were mere investors in disguise) owing allegiance to a local, political, Uncle's offshot nephew's Party, stormed the cubicles of the abovementioned Analysis houses and dragging the (formerly)Target Happy Analysts into the streets and onto waiting donkeys ( you are seated facing back) quickly tarred and feathered the quivering (very different quivering , this) analysts before a loud and longish parade through downtown Mumbai.( In India cops can take a very long time coming).

Needless to say, it has been a while since anyone has announced Target(or getTar) Prices in this city and mostly offshore analysts are being used to announce any new Targets.

Update : Owing to recent macroeconomic issues, Angel (or Fairy) Broking has (through an outsourced analyst) lowered its Target for Reliance Industries by Rs.7 (was actually Rs.6.65, but steno.. ) to Rs. 3337 as they announced:
".. since FDEPS is now looking like Rs. 138.76"
..meanwhile the Reliance Industries scrip hit Rs.1977 today ?

Monday, July 7, 2008

Don Victor Niederhoffer (Don,not Down )

That's right. Don Victor just got Quixoted by the panel of judges at Luddic Research for this decade.. and going by his momentum the next decade's title looks sealed too.

Victor as we all know has shown untiring brilliance in volatile performances of many kinds in his personal, professional, sports, love and trading life that would have stretched the imagination of even Obama's pastor(of AIDs is a conspiracy of the US govt. against Blacks!! fame) into hitherto uncharted territory.
Victor was/is a brilliant mind that just kept on pitting his obvious(and harped on) brilliance against the oxen that populate the financial markets in (as is evident) not only emerging markets but also the most developed and sophisticated markets operated by man.
Now how these Oxen and other lumpen elements have managed to gatecrash the mathematical and well "counted" world of Vic is another debate- whether the entire volatile and non-rational behaviour of these markets can be educated into non-medieval impulses through proper vetting of IQ levels of the players thus enabling reward structures directly linked to the depth of thought in investment/ trading strategies.
Sample this..while the rustics and the bovine have been buying shares that go up and selling shares that go down to good effect .. Victor here has been spending quality time with trees in California (studying similarities between tree rings and market cycles), imagining identical flow and ebb between musical symphonies and market trends(he even took a violinist to a strategy pitch with his clients in his heydays), pinpointing structural replication of Cathedrals in chart formations, etc. when he is not taking cues from long dead fictional characters ( anything alive does not qualify as it would be competition and Victor is nothing if not superior).

So, Victor Q. had this simple(and as usual brilliant) money making trick.. keep selling long shot put options (a bet prices will not go down) in a rising market and pocket the premium every morning.. soon he was better than anyone in selling puts in daylight hours.. every time market fell he sold more puts and when the market rose( as it always does ) he made more money.The sheer brilliance boggled the watchers .. people shook there heads in amazement.
Then Oct 87 crash happened and wiped out Vic's little firm(and investors little cash) as also all the years of option premiums he had collected brilliantly.So he had to hock the family silver and all.. but that's not all..he was back a few years later and kicking serious ass with his volatile brilliance .
This time he was a far more Educated Speculator(having written a couple of books to that effect) and studied musical and sand patterns more vigorously to decode the mystical natural cycles of the stock market.
So some fresh turkeys gave him some money (to put an end to the violin performance at the minimum) and after a couple of years of heart pounding gyrations Vicky Q. promptly doubled down a bet that never came back.. leading to the last study of tree growth circles (circles which eerily resemble his worldIsMyOyster pet vision, which alas never materialized owing to poorly gated paddocks around the stock market) and the locals were witness to the sadly familiar sight of turkey meat deliveries from the Niederhoffer farms.
Down for the second time, Don Niederhoffer realized that only lesser men learn from failure and the better men do not learn from 2 failures, while the best of course never learn from anyone or anything (except maybe a cathedral or B-Flat minor).

DonVic's trading philosophy can be summed up in 3 words (Markets go Up)..because in between his tree ring study and musical model building he divined that markets have always ended up if you take a longer term view.. if it shows lower close,just increase your long term definition.
In fact, his "counting" showed that last century it was up a million % and why would it be different.. so always bullish is the way to riches.
Well Don has had to deal with certain irritants like various sets of "investors" left dead or dying on the wayside in the short term in his long term march to the million % returns , having to hock his family silver to get over some short term problems an finally to spend more time in the botanical gardens than trading due to lack of trading funds while lesser traders are rolling in billions of trading profits with zero insights into California redwoods.

So the Don( formerly called the Chairman or "chair" in his eye opening sight ) spends his time in reading and gently critiquing books wherein his intellect comes through clearer than whatever the original author was trying to say..and lapping up the sycophancy all other posters on his site shower him with ( actually dulls the pain of those daily maulings handed to him in the market).

What one finds on the website lately is the amazement and the surprised giggles of Victor Q. on a near daily basis at the fresh low the markets are making when he had ordained the markets always need to be bought.. if lower, more so.. if still lower, still more so.. till they come back up and prove you're the Daddy now.
As he potificates here :

..I kept wanting to say "Et tu, Tyler?" because I don't believe in bear markets, and always believe it's right to buy, especially at times like this.

Going through his posts on the site( apart from some fairly intelligent and many entertaining reads) one gets the picture Don Vic is like prancing about and brilliantly picking off pennies from the path of the SteamRoller that is unrelenting and unperturbed by the intelligent thought coursing through the brilliant prancer in it's path.. it knows it gets all in it's path..thinkers and non thinkers alike.

Now, after many an hour of analyzing this interesting example of human behavior Luddic Research has figured out that Don Vic Q. has figured it out correctly .. but his trading strategy is only suitably for investors with a 112 year investment horizon and ability to fund equity draw downs of 21,800% to 65,300 % in the ensuing years.. but he is right.. this strategy may well be infallible.

..and for his unerringly always erring vision he got the Don title for this decade hands (and markets ) down.

Monday, June 30, 2008

GMR : a Global Giant is born.

Infrastructure, Energy, Airports, Roads, Bridges, SEZs , Corporate jets, Cricket Teams .. it was a heady cocktail offering from the virginal Indian countryside was.. and that excited the excitable Fund "managers" and PE YoYos in that lovely, strange way.. the possibilities looked endless..and imaginations ran wild.

GM Rao the promoter of GMR group came from behind and upped the wunderBrothers of Indian business the Ambanis at their own game..Govt connected business strategy where "environment " management viz. Govt management is the simple and winning strategy.
Some say it was his flourishing mustache (that both the Ambanis admittedly, can never dream of growing) that quickly opened many a door for GMRao and soon as he dyed it a blacker than black shade he was the cats whiskers in Infra plays.

While lesser corporates and honesty hobbled MNCs battle it out to win over customers and marketshares.. our local business "promoters" know the big game is the political game and the fools that represent the people's choice (and of course the people's interest) are the fools to win over for a cut of the great Indian booty (before the textile wrapped FinanceMinisters /PrimeMinisters /NonMinisters hand it out all out to farmers in the hinterland).

And the results are evident.. while the P&G, HindLevers,Batas, ABBs etc. of the world battled it out gamely and honestly to sell some product and grow at a non-Indian (i.e. non exponential) rate ..our boys in blue just pole vaulted into the upper end of the global rich based on castle building expertise in non terrestrial contexts.. which to their glee sold like hotcakes amongst the global alpha hunting community of smallish "managers'' with largish visions of their abilities and worth who enhanced their self image in direct proportions to the value they dished out in their latest stake acquiring.
Things got so bad the promoters had to necessarily expand his vision and potential for his business to 1500x of whatever he had fondly decided last night to meet the excitement of the fund across his table today. "..yes, he agreed the potential was there.. if funds like you came aboard , definitely the world would soon be our oyster.." ..the show was on the road!!

So was the fate of the GMR group.. their propulsion into the corporate jetting, mustachioed promoteroscenti was in no small measure due to the Funding frenzy of the Funds that would make India into a economic behemoth..though disturbingly, Luddic Research has identified them as a bit early in the emerging of India. Consequently these fine Funds who had visions of being heralded as the far sighted cowboys who came into India, saw the coy opportunities, sowed a few(quite a few they imagined) wild oats and went back victorious to knighted lives in the cigar and brandy circles back home.. sigh, those were heady days.. and no "play" was too far fetched to let loose your fertile imagination.. landBanking,deCoupling, valueUnlocking, growthStorying, infraPlaying.. the future was owned.

It was only a matter of time G.Mallikarjun Rao expanded his vision from jute making to larger extrapolation friendly plays. Such was his ability to leap into the play du jour , that he managed to sell stakes in his company at Rs. 240 per share to 49 (forty nine) leading institutional investors ranging from Citigroup( we all know how sharp these guys are) to old fogies like Soros .. and quickly announced planned investments of Rs.60,000 cr( abt $15 B) in Power and other lucrative sectors in the finest tradition of the noveau Indian Promoter chutzpah.

Well strangely these fineYoung alpha maleish investors have had to face up to the ignominy of seeing the share price dip to Rs. 82 (as we write) and despite every single analyst and fund Manager looking to average down, talk up and holdItforLongTerm, the shares of this golden Goose continue getting cooked.
The bovine participants of the Indian stock markets have refused to see light and participate in this fantastic Infrastructure play that is destined for untold greatness.( In fact the incumbent Govt. is looking seriously into the widespread rumors that bovine participants of the non-bull variety have infiltrated the markets and playing mischief with the oneVisionBulls' sentiments (who are important for this country's future global aspirations) and asked SEBI to rustle up some somnolent, Govt discard employees to look sharp and strictly ban any cattle without balls from the markets.. bulls are still to be allowed.

Evidence of the bullish prospects surfaced again today as the GMR Infra went out and bought a Dutch Power company and announced that owing to the recalcitrant behaviour of the semi literate investors in India it would look at overseas and western markets to fulfill its expansion dreams.. It's management and business acumen obviously puts it firmly onto a fast track to glory and riches and we have been advising all our clients at Luddic to buy every dip(since Rs.239).
The reasons are easy to see-

"The group has already set up an office in London as a preliminary step and has plans to start regional offices across the globe as it buys power plants in the US, builds an airport in Istanbul, and mines coal in South Africa. The group, owned by the 55-year-old Grandhi Mallikarjuna Rao, plans to earn nearly 40% of its income from international business.
The company plans to invest $10 billion (Rs42,880 crore) in the next five years to acquire overseas assets, Bloomberg reported last week. "
And it was only a little while back they had announced they were actively studying Nuclear Energy as the next foray (going by their expertise in Energy sector).

OK Infrastructure, Energy, Airports, Roads, Bridges, SEZs , Corporate jets, Cricket Teams.. and now Nuclear Energy..

..I got 3 words for G.Mallikarjun Rao .. Save Your Hair first.

Friday, June 20, 2008

Indian Corporates face waning Libido

As Luddic Research has long identified, the Indian bull story was unique in that it was essentially fueled by a bedroom revolution rather than the conventional boardroom revolutions that have marked lesser efforts in the developed world.

From the origins in the financial centers of the country where brokers, bankers, FIIs, Domestic funds, PE funds, Hedge funds (essentially any funds etc. which were populated with smallish, shape/looks challenged individuals, having mostly suffered bullying in their growing years and virtually no success with women till *after* getting employed and even after.. minimal).. well these financial players suddenly discovered an activity that seem to enhance their self image and sense of manhood wherein they could see some of that alpha that males of their category needed to prefix .

Quickly their proclivity for announcing higher valuations, bigger portfolio/private investments (for smaller stakes) , growth projections, target prices etc. etc. spread to the industrial and corporate sectors where innocent semi literate "promoters" started seeing themselves as the second coming and soon swapped their long favored traditionally tailored, striped underwear with Jockey shorts (much to the amusement of their portly traditional wives).. but the point is, they drank the "projected" kool-aid and we all know when the rustics partake a drink they can quaff long and steady without stopping for breath.

And that is what essentially happened in the spread of the new everyStreetPavedwithGold gospel.. from the long suffering financial types' need for a moment in the Sun to the RealEstate Builders and other such sharpies recently taken to making windmills ( literally and in the stock markets ..till the blades cracked) they all took note of the ever green, young strapping looks (mostly because of jet black hair) MV Kamath(ICICI) and Mukesh Ambani(Reliance) and quickly concluded the fountain of youth springs from growth plans 3 times a day and even more grandiose growth plans next morning.. and the Indian Growth Story was on.

Most Indian business promoters knew they had an innate talent and ability to get into practically any business and quickly announce a few tens of billions of planned investments in the next mornings press. Their abilities and talents which by now spanned Telecom to Energy to Real estate to Retail to Infrastructure to Brokerages to Movies to Fund management to Private equity .. basically if they had heard of a business.. they were up to it.
Our Research shows that the mere occurance of so many talented Business Stalwarts( with the ability to straddle and excel at multiple unrelated industries) and all of them coincidentally born in the same country in the same century is a 1 in 100,000,0000,00000 chance (for the modelers - about a 37 sigma event give or take).

In fact in entire mankind's history we have only GE (GenElectric) which has even come close the emulating this kind of multi industry spanning talent that seem to be commonplace in the Indian Business houses..and passes effortlessly to their equally multi-talented progeny.

We are indeed living in the Golden era of Indian Business and it is a no brainer these wunderkids will soon be able to overcome these blips and continue with their stratospheric growth plans as planned and the current negativism in the markets will die out on the realisation this is just a little, temporary, short term pause in the overall growth trajectory being ably orchestrated by the dream team of our bedsheet wrapped Finance minister, guided by our economist Prime minister, who is in turn guided by our Italian Non minister..this trio is good at winning economics awards, elections and farmers.

But coming back to the temporary predicament of business "promoters" who have not been able to raise fresh equity, fresh debt, business prospects, confidence, in fact haven't been able to raise anything the past few weeks and prospects are only looking glummer going by the survey of male oriented grooming /manicure retailers, hair dye manufacturers and men's salons.

The younger Ambani of the amazing wunderBrothers, concerned with the collapsing equity market for his offerings ( has a boatload to sell yet, if he has to cover even 5 % of his "announced" plans, given that exactly zero of his companies makes any money at all), no much happiness, as in past, from bankers to be allowed to participate in his dreams, awkward questions about the fate of Rs.100,000 crore ($25 B) of happy "investors" money put to play in the stock markets by his sharp, far sighted team at the Reliance Mutual fund in the boom boom months.. all these developments would a lesser man, put on the back foot.. but that's the lesser man..
A-nil fired back with a mega Billion deal to hock off his loss making( for entire forseeable future) RCom to the South African ingenues, renaming Reliance Energy to Reliance Infra to participate in every other industrial ( and domestic/household too if has "growth" potential) activity undertaken in this country.. and called up Spielberg to fund his studios's sagging fortunes and build a global name for himself this lifetime.

The other heroic business "promoter" Luddic Research has pinpointed as one of the future leaders (alongwith Kishore Biyani of Pantaloon /Future group) ..Pradip Jain of Parsvnath Builders ..who despite the having announced Rs.60,000 crore investment plans in the best Indian promoter tradition a couple of months back (when his shares were "guided" into Rs.400 range..sadly Rs.150 range now) .. and having most of his capital raising and other abovementioned raising abilities severely hampered by the crass behaviour of the stock market cretins .. is clear in his faith :

I don’t foresee any softening in demand. I don’t foresee any kind of pressure in end user demand.

Related to prices, prices are bound to go up. There is no way that price can go down. Media keeps talking about softening in prices, I do not agree.

..see why Luddic Research hero worships this man.. this is after a 60% + drop in his share price and projects spread far and wide into the country side which need customers and more importantly funding.The future of this country is in good, steady, confidence inspiring and clear thinking individuals 'hands.

But.. we would also here like to put a public interest request for the good of the Indian "corporate" sector, the economy and most importantly the Promoters and fund Managers who have been caught in this nobodySawItComing downturn that is fueled by temporary inflation blips (no doubt will be remedied by immediate price controls on every commodity and maybe free food rations for the rural Indians for a few months into elections by our astute Fin minister.) who will then quickly be allowed to reduce interest rates as all "experts" had been forseeing such a rate decrease even 2 months back and we will all be happy and gung ho again..this time we will really show them what "decoupled" means.
In the meantime our appeal is to not poke too much fun at the TV "market experts", Portfolio managers and other serious faces who have been entertaining us for the past few months with their well meaning "research" and "support" levels and also please lose no opportunity to put in a " nobody could have seen it coming" into all your conversations with such soldiers .. maybe, just maybe they will internalize this truth and be able to offer some fresh "buy" candidates at this market bottom currently formed..maybe also bolster some flagging libido.

We need these local experts even more as there are signs even the PE funds are wising up to the situation at hand and (after some tough love from investors) will no longer pump cash into Realty and Infrastructure "plays" we had come to love and trust.

As we had advised our clients at Luddic earlier , we are now sure this is the bottom again and of course as we all "experts" know Long Term India is a fantastic opportunity.. we only need to weather the short term corrections and volatility.. no sweat.

..and soon,the Indian bedrooms will swing to the music of testosterone charged promoters and investors yet again..building a bigger, better, growth trajectory.

p.s. A grand, Govt. sponsored, week long, mega Yagna (vedic religious ritual) is being performed in some South Indian state as we write this to ensure the Gods are appeased and kept updated on our efforts.. the Govt is taking no chances this time around, esp with election s around the corner.)

p.p.s. A late report suggests that some muscular officers of the Finance Minister's office have visited the office which released the errant inflation report yesterday for some stern talking to and quick refresher of the patriotic oath these officers need to consider before spooking the entire country and putting at risk the hard work put in by countless "Promoters" over last 2-3 years.( as also personal reelection plans)

Monday, June 9, 2008

Lehman,CitiGroup and Prashant Bhatia

It seem like only yesterday we were marveling at the analytical skills of the fine folks at Citigroup who time and again show us what it takes to be a global financial powerhouse.

It was only yesterday our chest was swelled with pride on the financial exploits of one Prashant Bhatia who has found fame and glory ( as also some good cash) in holding forth on the future prospects of the US financial sector based on some nifty spreadsheets, that he and his astrologer out together, whenever the unwashed masses need to be educated on arcane matters such as high finance and valuing such players.. in lay man's terms basically timing the toggle between "buy" and "hold" or sometimes "outperform" vs "neutral" (but the fine sense of timing is what separates these men from boys).

Prashant and his pals at Citigroup have honed their skills well enough to be couple of curves ahead of the market ( different curves altogether, as against just being ahead on the same curve). Of course their fine insights and have been responsible for creating immense wealth for all lucky recipients of same ( and who follow same unquestionably) well as earning their firm formidable reputations as employers of talented "analysts".

We at Luddic Research have been hunting high and low for getting our hands on some comparable talent to analyze the local brokerage stocks behaviour here, but you have to admit Prashant is a talent hard to find (in fact we think his analytic skills are so blindingly obvious .. if such ever existed in the third world markets they would have long been put on their rightful pedestals and worshiped in local temples). Well, we did have the audacity to approach him (and his astrologer as a team) to offer him a position (and twenty temples ) to tempt him with a move to Mumbai but he felt his career span would be longer and less violent in the US where most all "analysts" and "strategists" seem to be in same boat,in sync, all the time and nobody is the wiser.
(Third world countries are not so developed or forgiving in that sense..and careers and limbs are quite expendable in these overpopulated markets).

Mostly, what has us foxed is, why the markets do not look past their short term noise and emotions to what these fine "analysts" are saying .. hell they spend all their waking hours "covering" and "following" and "analyzing" and "projecting" these companies.. only to be undone in the opening hours of the skittish herd.

Go Prashant!! ..don't let these losers drag you down.

This is all noise, all noise ...
Lehman has a little hiccup.
Fitch downgrades Lehman.
Moody's downgrades Lehman.

..but it does get a bit dicey when fellow "analysts" are jumping ship.. eh??

Monday, June 2, 2008

Indian Real Estate & Global morons

There is no denying the Real Estate "industry" is feeling bouts of anxiety at the moment..and most confess their nights are devoid of soothing sleep( leave alone libidinous heroics which came to mark the recent bull market fueled sexual self image.. again Real estate is mostly a male game).
The fawning "investors" who bought their stories, the bankers who fought to finance the mega mall in the boondocks, the PE funds (in fact, the only believers left now..but more on that later) who saw astounding opportunity in realty sector, the financial media who astutely understood why the stocks were going up and what was getting "unlocked" or could be "land banked", the Govt who ensured interest rates and loans were available to all and his milkman to speculate (ok.. invest) in real estate.. all these worthies seem to be now developing cold feet just when the Real Estate promoters are in Real need.

Day after day, the Industry "promoters" with millions of sq.meters under development or construction and little cash in their tills(or their horizons) explain, project, and plainly pontificate the "temporary" nature of the slowdown in "deals" but prices barely having moved downwards as a sign of doNotSeeSignificantCorrectionInPrices theory validation.

Now, we at Luddic Research know better than to pit our wit against such fine gentlemen(again, all male) who have shown exemplary leadership in setting new standards for most third world benchmarks of foresight, financial projections, corruption, bribery, political funds'(politicans') investment, strong armory and last but not least of bringing tons of unaccounted money to "constructive" use.
So when these exponents project unlimited pots of gold at the end of Indian realty rainbow, we ( never fight the market ) just happily hold on to our stocks in the certainty ( at least in the mornings) that this is the bottom today and surely cannot go any lower ( only last night the analysts on CNBC were saying value has emerged in most bigger and reputed Real Estate companies and valuations are realistic, blah,blah.. and they know what they are talking about) ..surely soon we will be back to our original purchase price!!
Consequently, Luddic Research has also been strongly advising all clients to hold on to their property investments (even if no buyers today or in our analysts' horizons) and not reduce asking prices even though there will be no deals.. you don't want to send a wrong message here. We are of course aware of the pressure some of these fine "investors" are feeling from their lenders, bankers and families but as history is witness prices never come down in India and there is too much know it in your gut.. listen to your gut..remember your middle name is (now) "long term".

We have to admit despite that our sunny outlook (and the recently hired hypnosis expert) and positive sounding prognostications administered in religious sessions and sermons (through TV acclaimed God men and astrologers) that we are holding across the country for our investors.. we have been largely unsuccessful in getting new suckers into the wonderful ponzi scheme that the Indian Real Estate was shaping into lately.. but we are proud to have held up the prices and stem any wayward "distress" type sales amongst our flock. They chant every morning(at our sessions) ".. I am LongTerm..I am LongTerm..I am LongTerm..I am help me Lord."

No discussion on Indian Real Estate is complete without the mention of the foreign hand..this time the sharp and naturally gifted foreign investment houses and hedge funds who swarmed the globe for "stories" and "plays" and identified this sector as the next boom sector where the demand supply projections, a variety of growth stories and entrepreneurial libido with minimal ethical and legal inhibitions promised to change the rules of the game or even the game itself.
It was a no brainer for the youngish crowd of over achieving and over reaching opportunity spotters from the US(primarily) and the EU,Asian wannabes, to start throwing cash and valuations (of course based on sound projections, though have to confess a little scary rosy) at these roperties, builders , construction companies and Land banked corporates that the entire Real Estate sector sat up, rubbed their eyes disbelievingly and changed their world vision (and self image) for ever .. to the extent of mostly abandoning even the time honored custom of the afternoon siesta the Industry has enjoyed for generations.. there are too many PE types wanting to discuss a deal with them..even in that afternoon slot.. though lately the meetings are not as enjoyable as the PE boys are trying to broach (cautiously ..they know the "staff" outside looks a little muscular for good reason) uncomfortable topics like revaluing downwards and how to exit options .. but mostly these fine boys are the last believers .. at least on the face of things.

As some wizened old hand, who doesn't like emerging markets much, said.. ".. only the locals make money in the these markets..foreigners make it and then give it all back .. never can take out the profits.." but then like we all know this time is different in India.

Me.. I just take the opposite positions to Luddic Research' clients .. someone has to provide the liquidity (and this explanation is fine with SEBI..we love third world regulators).. and I'm too shallow for Long Term thinking.

Tuesday, May 27, 2008

Value emerges in "Front Runners"

What is wrong with the stock markets?

For months on end we heard about tons of money waiting on the sidelines for a dip to get in and partake the merry making based on India's strong fundamentals.. months later(and a few thousand points lower) we still hear about tons of money still waiting on the sidelines.

As anyone and his "wealth manager" can see, value has emerged in most stocks which love "front running" bull markets and seem poised to resume their run into la-la-land and lost glory..but still we spy diffidence on the part of most telly tube experts, financial advisors, stock market strategists and such ( OK partly because some of them are no longer in the employ or severely taken up by praying schedules and realigning their offices for ironing out some bearish Vaastu kinks.. ) , but as we all know it is only a matter of time and soon we will all be joking and laughing about this little correction that temporarily spooked our stock picking genius.

So, what ails the markets.. it is quite simple.. we all know the market experts(voices ), telly pundits, "research heads" of broking houses and other random "analysts" are always right and it pays to listen to these knowledgeables, rather than waste one's emotions on the tragedy the market and other "non smart" money constituents ( you don't want to be seen among these plebs) ..the heartburn these non believers are foisting on our mind.

To sum it .. the experts are right and the India story is intact .. the market is wrong and keeping faith is important.

How, you may ask, can we be so sure in the face of such dismal PMS performances.. well Luddic Research has outlined key observations and reasons in their latest research note to clients :

  • Inflation Concerns: The govt is going all out to tackle this issue especially as it has dawned on them that their election prospects may be hurt more by high inflation figures than by low growth figures. (In fact P.Chidambaram has been warned against making any further public utterances about growth or lower interest rates altogether). The immediate steps being taken :
      • Some key inputs for calculation of inflation were based on prices in 2007 due to lack of fresher govt figures and were obviously no good.. so in an effort to tame the havoc this little figure is playing in the "investor" and vote bank's mind set, the govt has decided to move away from this incorrect input and take 2006 prices as last reliable records to get inflation figure firmly under control.
      • Immediately , a senior group of economists and other govt post holders have been despatched to Myanmar for first hand understanding of how that govt has been keeping inflation, prices, govt and generally the entire country under firm control ( not to mention pesky opposition parties). Multi pronged stability measures are expected to come out of this exercise.
      • The various agencies and various govt deparments involved in calculating(or otherwise influencing) the final inflation figure and various inputs have been provided longer handled brooms to ensure all non cooperating prices of any item be firmly swept under the carpet as far out of sight as these handles will permit..and any deptt lacking carpets be immly provided same before next release of any official figures.
      • In the event the above measures do not control inflation, it is expected the Defence ministry will be calling in all trade bodies and industry representatives to meet and discuss price controls a la Steel and Cement industry in the past to make its message clear.. also it is rumored minister Ramadoss will sit in as an enforcer (owing to his sterling performance at taming AIIMS).
  • Growth story intactness: The second factor which attracts 'investors" (again,mostly male) to the market is the clearly visible and exciting path to riches that make them feel sharp and sexy in a lovely way.. but again the path has to be clearly spelt out and a raging bull market is such a path where most successes are attributed to one's brain while losses are simply "nobody could have predicted this..". Currently , the market is facing a prolonged hiatus in the heady march to the top( in fact some pundits were projecting India to trounce the entire planet in terms of economic promiscuity) and governmental hand holding is already evident to achieve the (clearly visible) glory ahead.. it is destiny that will not be denied.
  • False rumors and irrational fears : The nosy media and the unscrupulous rumor mongers( some say foreign agents ) have been having a field day in blowing up non issues into unwarranted confidence busting agenda unto an increasingly edgy investor pack(already reeling with underwater PMS portfolios and "front runner" holdings ). The ability to see through these agendas and restore "investor" confidence is what separates Luddic Research from lesser shops :
      • Falling RealEstate Prices : This rumor is so obviously a vested interest plant that it is amazing anyone even takes it seriously. Every one knows in India prices never come down.. as surely as there is no house of cards built around real estate speculation. ( Case in point the PE funds and other "smart" money from more developed and more clairvoyant countries are happily pumping cash into this fantastic opportunity )
      • Economy slowing down : The cluelessness of this thought is quickly evident when you note that the currently jetBlack Kamath of ICICI (DRIP hall-of-famer) yesterday scotched any rumor of a slowdown by predicting scorching growth well into his greying years (despite some minor irritants like downgrades of their securitized retail loan portfolios which surprisingly are facing repayment issues).
      • Fiscal gap / current account gap widening : we all love and trust the finance minister and as he said "trust me .. we have thought about all this carefully .." no reason to distrust him now and get worried about Rs.70,000 cr+($17B) farmer loan waiver.. Rs.95,000 cr($23B) fertiliser subsidy.. this govt we love and trust to do magic and keep the growth growing.
Like is evident from all the above .. it is only a matter of time before we resume out glorious bull run which will silence these doubters and weak hands.. in fact our friendly neighborhood PMS manager is especially bullish ( though, worryingly, untraceable for the last 2 weeks).

Thursday, April 24, 2008

Indians for Hillary Clinton

For years India has ensured its best and the brightest headed to the land of opportunities as soon as the opportunity presented could be a bright engineer, bright MBA, bright scientist, bright scholar, bright bridegroom or just a bright Punjabi with the opportunity and before the plane had stopped rolling on the tarmac these brights would have established themselves as the pillars of the society and economy in the land of unlimited opportunity.

Only reasonable to expect of the quickly assimilating "browns" that before long they were getting politically savvy and displaying that famed brightness as discerning vote banks. This was further evidenced by "Bobby" Jindal from Punjab hinterland who quickly converted to Christianity (what's with the US ..can only church going, God fearing Christian who ascribe to George W.'s Intelligent Design magic ever get elected in this most developed of the developed ?) , disavowed his links with India, declared himself "Bobby" and got into seriously ingratiating himself with the powers that be. To be fair, he is a declared professional politician.
Lending credence to the assumption that only the brightest of the bright were allowed ashore off the boats was that turbanned marvel Sant Singh Chatwal who borrowed to the hilt from US banks before declaring bankruptcy and sidling up to the Clintons at every public event (where security was lax) till they began to acknowledge his striking headgear with increasing interest which inexorably transformed into back slapping friendship that continues to this day. In fact Chatwal is totally immersed in all kinds of fund raising and financing efforts of the Bill's various foundations to save the world and his services are proving indispensable for shaking down reluctant donors for Hillary's grand campaign( she's doing it for the country not herself) so they do not have to part with any of their own hard earned cash.

Why are we interested in this at all ? Well her false smiles and eyes popping in fake joy jar our senses thousands of miles away at an average 5 times a day and her utterances disturbingly bring up violent thoughts that one believed was only possible towards this sorry assed simian . .more on this Schmuckaroo later..I promise.

Coming back to Billy and Hillary, the unbelievable support she enjoys amongst American people and establishment ( as evidenced by her previously inevitable nomination) speaks volumes for why the USA is such a great nation and has taken a lead role in charting a course for this planet (and a few neighboring ones too,if possible) and most of the flora and fauna therein.
Ok, so most of her supporters are the illiterate, blue collar, rural and old biddies worried about a young black male running the country, but even so it does not explain the Indian community ( those few forward thinkers who have been able to refrain from trying to elect George W. the third time) supporting this two(rumor has it three) faced, sniper ducking, ready to lead from day one, gimmick on legs..especially when these are supposed to be best an brightest India produces..though I have to confess her blatant hypocrisy would have brought back fond memories(little twinges of guilt maybe?) of Indian politicians they left behind.

The only reason I can think of is that Indians are as racist (if not most) amongst all races when it comes to racism. This behavior has actually been finely practiced over the centuries and in the absence of consistent color characteristics to practice discrimination against, the previous generations struck upon caste system to be able to safely and surely discriminate and exploit.
This was safer than using skin color , which tended to vary from very fair to very dark through generations and within same castes / tribes inexplicably.Thus the skin color based discrimination was only practised against Blacks, as in African, whose color showed more consistency and could be safely used to feel superior and less worthless (brown holier than black) in these difficult times, what with casteism outlawed by infiltrated policymakers.
Fast forward to the US and despite all their academic, technological and financial success, the Indian community still struggled to be seen as anything but Brown or Indian or Asian despite much efforts to acquire mainstream first names, houses, cars, nannies, schools, professions etc.
Actually, the only acquisition which did significantly help, was getting a non Indian wife(only works for men not vice versa) to break through the brown ceiling.
Now that I focus on this, it becomes somewhat evident that the greatest factor by far is the Indian woman and her Indianness that hampers most of the progress towards blending into the American dream without the color coded baggage tags. It does sound callous but the closest any brown(we're talking only males here) has made it to the (white) American dream is by getting a non brown spouse.
This seems statistically significant to such a morbid degree that it rules out brown females being part of any (non Exotic) American dream in any forseeable future.
The contributing factors are stark( though too shallow to even think this way as they'd say):

  • She cannot dress western(trying too hard) and cannot dress Indian (too exotic).
  • She never does work out ( by mid thirties is carrying enough lard on hips to drive husbands wild)..severely restricting her clothing universe as well as vacation destinations (further away from beaches).
  • Always trying to get a grip on her social insecurity, cultural insecurity, sexual insecurity, parental insecurity, religious insecurity and any new insecurity that the TV or Bollywood potboiler may throw up in the evening.
  • A complex, emotional and intricate logic and reasoning (or lack) dog an Indian woman's mind even without transporting her millions of miles into a social, moral and psychological war zone where she feels physically (and colorfully) bested in most non brown settings, resulting in a lot more non linear behavioral idiosyncrasies that define her day.
  • Most waking hours her mindset (mildly set) dwells on concepts like how much she cares, sacrifices, loves, gives up , provides, labors uncomplaining, adjusts as a woman and is still deeply unappreciated.. to arrive at(very convinced) the truth of how much more she deserves , earned the right to, have claim to, should be showered with, from all and sundry populating her life.
By the time the brown man gets to reasoning(to her) and rationalizing(to himself) how important this woman and family life is to him and how much he really,really appreciates her, he has lost the plot of where it all started out from.

So, where does that leave the Indian American when the elections come to his/her look at Barack Obama and his athletic(and black) looks decides it for the shape challenged (usually wife) as this is exactly the kind of change they can do without (in fact any change to their status quo looks like too much work ) ..also Hillary's shape is one they can readily identify with.

So the female(shape challenged predominant) brown vote goes to Hillary Clinton..and most line toeing husbands easily get beaten into toeing this line, especially given that George W cannot be voted in for a third term and is not a candidate.
But even without the wife issues dominating the brown vote bank, the racist underbelly of the subcontinent plays up significantly enough as blacks are the only ones brown parents still shudder to think may one day be their son-in -laws or daughter-in-laws ( not to mention the mama-in-laws) where does this vote go?

I know this is subject went way off topic, but it was coming when even the milkman in India recognises HC and our local markets are still coping with US fund "managers" orgies here last year we gotta keep a lookout on what the blueCollars and illiterates in rural America, who seem to be suddenly having a hard time, might foist on us after their Texan chimpanzee.