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Foodcos are doing bumper in the worst environment when everything was stalled. Some are compounding in nature, some are event based themes. (A article written sometime back, for curious minds - link)
Holdco was converted, as discount between holdco and underlying asset filled up + financial institutions face another major risk now - anarchy.
General
Most of industries are in bad shape, RE is dead (and hopefully black money buried should sink - if not by value, by time-value), banks r disingenuous and deceptive in numbers (a small blip has wiped out profits and assets for over smart bankers), and their main customer base - middle class doesn't/wont have jobs or purchasing power and industry doesn't need capital with over capacity and shrinking volumes. Market valuations are disconnected from the ground.
Whether investors will be hit by inflation, or deflation or currency debasement or nationalization of assets or anarchy, is unknown - the situation is precarious. And many equity or debt assets may be useless.
The only thing which may somewhat work is some compounding equity, some Gold or alt-currencies, and some agricultural land for self-use.
--The End --
Businesses cant do well when the house is on fire. It is stupid to have a million dollar in bank, when kids/girls are not safe.
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Holdings are doing well despite present ongoing scenario - they are the basic ESSENTIALS, and should glide through well - but businesses cant grow in environment of social unrest. Recession proof FMCG is facing major heat now and should be visible in this quarter.
I dont find opportunities in this market*. Buying at 60c and selling at 90c is not the game I wish to play. And dollar-compounding businesses are either less or are expensive. Most businesses are either facing
- Demand destruction
- Balance sheet destruction, esp the loved banks and tiger-riding NBFC cowboys,
- Size of debt on balance sheet is not remunerative to take a bet,
- Business returns are not great
- Businesses facing bureaucratic onslaught (Against the on-going narratives - the costs of doing biz has gone up).
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I am fearful of the ongoing environment, and not sanguine about future of many industries, chiefly due to tech change or trade wars. And so is felt by private investors and businessmen. As I mentioned in my last note, follow the money - follow the people who have made money - who r not rent seekers or tv boys - follow the people who r investing their capital, who sink and swim with their personal capital, who have skin in the game. Rest all talk is cheap.
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* Good work exists when less is done, and for oneself! Found that Quarantino talks about making only 10 movies in his lifetime - just like Buffett's punchcard. Will follow this, unless something worth doing comes on the table.
-- The End
