Tuesday, October 21, 2008

Cash Is King!

Sometimes finding a great investment starts with going through several balance sheets and discovering something. Such type of research is usually very time consuming and intensive, and to be honest not meant for everybody.

Someone who is a doctor or an engineer, might not have so much time to browse through the financial statements of companies. But the rewards that one gets when such companies are found are truly incredible. It is almost like someone mining for gold and striking gold. I spend much more time researching every time markets correct as this is the best time to strike gold. I have discovered a handful of great companies which can do wonders to my portfolio in the coming few years. I’ll share one here with you, in which I have started buying.

Let us say there is a candy shop and it has Rs. 4 lying in it’s cash box. Now let us say this entire candy shop has zero debt and the entire business is being sold for Rs. 4.

Would you buy it?

Still thinking what you would do?

Well if I was in your place, I wouldn’t think for a second and would immediately buy it for Rs. 4 before anybody else gets it. Because all I need to do is put Rs. 4 to buy the business and take my Rs. 4 from the cash box back, and the entire business is mine for free.

I’m sure most of you might be thinking which fool would sell their business for just Rs. 4 even though they have Rs. 4 cash with them. Well in the real world nobody would do it, but stock markets are irrational and no wonder we can actually find people doing such things. In fact we have a candy shop that has reserves more than Rs. 11,000 crores being sold for just around Rs. 4,000 crores . This isn’t even considering other fixed assets or net current assets.

Especially with the recent correction and global sentiment of doom and depression, people seem to forget that things change very fast. The very people who were buying the same companies 7-8 times the price until six months ago, today aren’t even looking at them. This is great news for all those who want to buy and create wealth.

Now this company which I have started buying into not only assets and cash much more than its market cap, and not only does it have a book value which is almost three times its current share price. It also has zero debt – which means it doesn’t have any interest burden. In times like now cash is king, queen, prince, everything!

Whenever I discover such companies and look at their balance sheets, it brings a big smile on my face and gets me extremely excited. I know most normal people don’t get excited looking at balance sheets and seeing the cash and book value. But then as I always say people who create wealth do things that others don’t. Being friendly with financial statements and understanding business is very important to succeed as an investor.

A part of me wants to jump in and buy as much as I can with whatever money I have, as such opportunities don’t come everyday. But of course experience (losses in the past due to over exposure) have taught me to never do that and to always buy gradually and never ever allocate all your funds to a single stock, because most probably than not after you buy it, there are chances of it going down.

However I feel that every investor should study this company and see how assets truly get mis-priced. A regular investor can buy these assets at much cheaper prices than even what big Mutual Funds and FIIs have bought it at. Anybody who calls himself an investor and hasn’t noticed or studied this company yet, will probably read about it three to four years down the line and how it was a great investment picked up by a few during the stock market crash of 2008.

Study history and it has always been this way. At the moment the stock might be ignored and down in the dumps, but one of these days it is going to have every Tarun, Dinesh and Harjeet running after it. That day will be the time for me to start thinking about selling it and making a nice hefty profit.

As in the past I’m going to share this company with you. However I feel more than from just an investment angle please look at it from an educational angle. If you can understand the way I have looked at the financial statements and invested in the company, I most certainly assure you that you can use the knowledge to select other such companies in the future.

You can find out more about this company by downloading this report here. You would be directed to a Paypal page where you can pay securely via credit card/Paypal and once the payment has been received you will be able to download the report online. If you don't have a credit card you can e-mail info@happionaire.com to find out how you can access the report.

Happy Wealth Creation!

Yogesh Chabria
Happionaire

Do you agree with Dinosaur Era Thinking?

29 comments:

Mehul said...

Thanks for listening to my last comment and sharing this report. Really simple to understand and the logic is excellent. But the problem is for someone like me, to find such a company from thousands will take ages.

When we see the logic we say it is easy, but the effort and work that goes into finding something like this is what really isn't for everyone.

Please share more such wonderful companies - even if I don't invest in them it is an investment into my personal education and learning.

Keep spreading this knowledge. Something very rare - when it comes to the Indian stock markets.

dinesh said...

Reading this report makes me realize how important it is to be able to read and understand balance sheets. I agree with you Mehul, even though this is a great company - it becomes harder for a regular person to find such companies.

But with time and experience and learning we too can detect such opportunities. This report was priceless and it taught me a lot Yogesh.

Please share the other companies you have hinted at.

kirti said...

WOW!

This company is rock solid! And even after I read your report felt as if I have discovered a gold mine. Thanks for sharing it.

joe said...

Agree with all the other Happionaires here. Please share more. The amont of learning is very much from these and very practical.

kuldeep said...

At first I thought this report is very expensive, but then decided to buy it and see what is it. And I was glad I bought it. Because what I learnt is something I would never have learnt otherwise.

In past I have lost money because I have jsut invested on gut feeling and what people say. I think it is my mentality - which says to save few thousand rupees, but end up losing lakhs. This menality of mine has kept me back lots.

I'm graduaqlly changing thanks to you Yogesh and investing is like being a doctor. A doctor first has to invest in the education and learning before benefitting. I'm also understanding the intesive work and research that goes in by people like you, who actually succeed in the markets. Most of us just see you'll and think, we too can be same way without work.

I kindly request you, if possible please start a practical course to teach and train people like me more on investing. Not everyone is as self motvated. I'm sure lots of people would want to learn from you.

Thx.

suresh said...

This is the right time to look at such companies and am glad you shared it.

Please share more. Really wanting it now, as I know this is the right time. Will make tons in next 3-4 years.

Target it to make at least 5 crs. in next 5 years. Need your help sir.

dev said...

I'm investing all across the world, and after going through the report I can very well say and feel what you are saying. I was also jumping with joy when I saw the balance sheet you shared. Very very kind of you.
This type of information, for those who understand investing will know is worth millions. Really great of you share it at this stage - rather than later.

Anonymous said...

Thanks.

karthik said...

great report. thanks for sharing.

kabir said...

I have bought all your reports Yogesh, and this one by far is the most convincing for me. Keep it up and please keep sharing more.

Venkatesan said...

I have not yet bought the report, just few questions before I proceed, it would be great if it’s answered by Yogesh or somebody.

1. Just having around 11K Cr of cash reserves, will only help to boost stock price? The cash should be used by management may be for an acquisition/expansion right?

2. How this 11K Cr gets realized into stock price?

I am not expert investor, as Yogesh said I am trying to understand things.

reha said...

It is simple logic and no need to think more. If I have Rs. 11 in my pocket and you can buy my pocket for Rs. 4, would you do that?

I got the report and was very impressed. Please share more.

Thank you.

Anonymous said...

Hi Yogesh,
I have not bought the report as it is too costly just for learning. But i guess we are talking about public sector telecom company here. Graham popularized this concept of buying below cash. But he always ample diversification in case few of these picks turn out to be value traps. There seems no trigger point in sight to unlock the value in this company. In the absence of trigger, it might be a value trap.
These are my views. i might be wrong.

I think HTMT global solutions, denso india, apar industries might be better pick considering cash and Cash equivalents versus market cap. Moreover intrinsic value is also increasing in case of Apar industries and HTML global solutions.

Venkatesan said...

Reha,
I guess what you have said is true only when we purchase the entire company. We are buying a micro part of it. Say for example you are buying some thousand stocks today and selling after a year, how this cash reserve would help in your stock price? The cash is mine only when I realize it in my stock (may be in the form of dividend/bonus). My question is as long as it’s there in the reserve you cannot realize it, its just there in the company reserve. Correct me if I am wrong here?

sumitra said...

I bought the report and i think it is hard to find such information explained this way. So I found it worth much more than i spent. Irrespective of whether you are holding all stocks of company or just one stock, you are the owner. The reserves have to be surely considered and anyone will agree that Venkat :-) .

sonia said...

This company is truly gold. Please Yogesh share more such so we can also learn more and at same time not miss this opportiunity.

Thanks. Haven't still read Invest The Happionaire Way, but now after reading this report will surely check it out too.

mehul k. said...

After I went through the report I too got the same feeling you said. It is just like striking gold. Yeh dil maange more!

I read ITHW Sonia and I guarantee you it is a very good read, but I want to learn more so please bring out next book fast. Thanks.

dr. sudhir batra said...

I happen to have the privilege of attending Mr. Chabria's training and workshop sometime ago and that is how I was introduced to the 'Happionaire' way of investing and finance. Please do share more such reports. They are of great help to lay investors and let us know how to think and decide.

shobha said...

A very nice report and a very nice and detailed way of helping understand the financials. I was wondering if you can please share more such companies as other Happionaires also requested.

swami said...

The company's stock has shot up quite a lot since our purchase price. More than 40% in such a short time. Is it time to sell?

Thanks.

sid said...

Yes we are definitely kings! Swami I exited partly to take some profits. Had put in 1 lakh, took out profit of around Rs. 25,000.

In this type of market, I want to keep taking my profits home. I made the mistake earlier and got stuck, gradually I keep taking and once again enter when it falls.

kurien said...

Very good company you shared Sir. I got to learn a lot and I really believe now is the best time for our country.

imitiaz said...

Going to be like another Bank of India for sure! Also public sector so better now.

Anonymous said...

11,000K Crore is reserves leaves a strong message that the company is looking for opportunities and hasnt yet found any feasible commercial opportunities. Remember idle cash has cost implications. A solidly functioning business would have used up such huge reseves for profitable diversification or growth. More importantly I wonder on the quality of figures that get reported in financial statements.Perhaps we should stop kidding ourselves and realise that all that we read need not be true as far as disclosure of information in financial statements are concerned. Good and inspiring reading material nevertheless. Baiju Baburajan

ashmit said...

I am getting to learn so much and over the months I have also been rewarded financially by this company in terms of returns. I request you to please share more such gems.

Thanks sir.

Anonymous said...

Glad you shared this priceless information. This report was really priceless and unlike anything I have read before, simply because you also take the effort to explain how to find such companies amongst the thousands available. I don't think even an entire finance course will teach these tools.

Please share more such information.
regards,

D. Mehta

Anonymous said...

I just came to know about this blog.
this company still has market cap of 4700 Crs and as for March 08 reserves stand at 11,291 Crs book value still close to 2.8 times of current market price but not much takers for this stock.

jignesh said...

On this company I have made 40% already as I bought it on its way down and then sold it at around Rs. 70. I played around with it in the short term. However this one has good long term prospects according to me to.

Anonymous said...

Jignesh now the company has crossed Rs. 100. I sold it and made over 90%. Yogesh please share more such companies. I know you want us to learn and not blindly follow you - but at least now don't let us miss these opportunities. I have been trying to find companies but still need the Guru's guidance. In Cash The Crash also the company you shared rallied over 80% since I bought it. Please post some new reports.

Dhanesh