Equity Advisory

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Sunday, 9 August 2020

We Are Hiring

I am looking to expand the Intelsense Advisory team. 

Intelsense is an equity-only advisory service focused on three different styles of investing- long-term, technofunda and quantitative investing for a diverse range of clients in India and across the world.

The best-fit candidate would be:

- Honest, hard-working and ready to learn. As we are a small team, a good person to work with is the most important criteria.

- Able to analyse businesses and do deep-dive into company financials statements and perform valuations.

- Able to interact with company management /investor relations to understand the company strategy. 

- Conduct primary research (e.g. channel checks, dealer interactions, exploring expert networks etc)

- Ability to explain thoughts clearly through writing

- Able to prepare excellent PowerPoint presentations and Microsoft Word reports.

- Possessing strong analytical skills and a good understanding of finance and accounting concepts.

- Excellent with MS Excel, preferably with VBA macro writing skills.

- Excellent written and verbal English communication skills

- Ability to work remotely.

Preferably located in Calcutta (Kolkata), but any location is fine. Currently, would need to work remotely till decided otherwise.

Educational qualification: CFA / CA / PGDBM (Finance) would be preferred but is not mandatory. Passion for equities and equity analysis is mandatory. 

Freshers or those with minimal experience would be preferred as they would have less to re-learn!! A lot of work experience is a dis-qualification.

Flexible work timing. 


Anyone interested should apply with the following:

1) Brief CV

2) Written research report on any listed company in India or any Indian sector. Reports should be in pdf format only and in the English language.

Please send in your details to hr@intelsense.in. DO NOT send only your CV. The research report is the primary criteria for shortlisting.

We will revert back to the shortlisted candidates only.

Thursday, 6 August 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

I especially try to not post Corona related articles as that is all one gets to read in all traditional media.

 

If you like the collection this consider forwarding it to someone who you think will appreciate.

The incredible allure of TikTok

It turns out that in some categories, a machine learning algorithm significantly responsive and accurate can pierce the veil of cultural ignorance. Today, sometimes culture can be abstracted.

Prior to TikTok, I would’ve said YouTube had the strongest exploit algorithm in video, but in comparison to TikTok, YouTube’s algorithm feels primitive. The top creators on YouTube have long ago figured out how to game YouTube’s algorithm’s heavy dependence on click-through rates and watch time, one reason so many YouTube videos are lengthening over time. It’s rumored that Bytedance examines more features of videos than other companies. If you like a video featuring video game captures, that is noted. If you like videos featuring puppies, that is noted.

Merely by watching some videos, and without having to follow or friend anyone, you can quickly train TikTok on what you like. In the two sided entertainment network that is TikTok, the algorithm acts as a rapid, efficient market maker, connecting videos with the audiences they’re destined to delight. The algorithm allows this to happen without an explicit follower graph.

https://www.eugenewei.com/blog/2020/8/3/tiktok-and-the-sorting-hat

 

A look at how New York Times is approaching news business

New York Times has six million subscribers, almost $700 million in cash in the bank, and a singular insight that underpins the Times’ path forward: the average number of news subscriptions a news subscriber will have is one.

Local publishers may not believe that they are competing with the Times, but the Times believes it is competing with them. Its rich-get-richer dynamic increasingly provides all the news that’s fit to subscribe to, while publishers both national and local fall further behind.

https://www.cjr.org/analysis/nytimes-subscriptions-local-publishers-compete.php

 

Success is a catalyst for failure

Why don’t successful people and organizations automatically become very successful? One important explanation is due to what I call “the clarity paradox,” which can be summed up in four predictable phases:

Phase 1: When we really have clarity of purpose, it leads to success.

Phase 2: When we have success, it leads to more options and opportunities.

Phase 3: When we have increased options and opportunities, it leads to diffused efforts.

Phase 4: Diffused efforts undermine the very clarity that led to our success in the first place.

https://hbr.org/2012/08/the-disciplined-pursuit-of-less

 

The tech-terrorist

Technology is, in other words, enabling criminals to target anyone anywhere and, due to democratization, increasingly at scale. Emerging bio-, nano-, and cyber-technologies are becoming more and more accessible. The terrorist or psychopath of the future, however, will have not just the Internet or drones—called “slaughterbots” by the Future of Life Institute—but also synthetic biology, nanotechnology, and advanced AI systems at their disposal.

http://nautil.us/blog/omniviolence-is-coming-and-the-world-isnt-ready

 

Ever wondered the difference between dumplings, dimsum, momo and wontons?

Dumplings are just wheat-based snacks with some fillings, or at times there is no filling at all! So, even an Italian Gnocchi or Ravioli, or even our very own Indian Samosa will qualify as a dumpling!

The term “Dimsum” originates from Chinese lexicon and can also be made with any kind of flour- be it rice, or wheat, or even potato starch. A dimsum’s outer coverings are semi, or at times, even fully transparent and the fillings are finely diced and chopped.

Momos are Tibetan or Nepalese counterparts of the Dimsum. They are traditionally supposed to be only steamed, made with wheat flour, and usually always stuffed with some filling. Moreover, momos, unlike dimsum, are mostly eaten alone without any kind of beverage accompanying it.

Wontons are a kind of dumpling that are traditionally found in the Northern regions of China. Unlike their brothers, the dimsum, and the momo- wontons are more square-ish in shape and slightly more fine in their texture and are also fried to golden-brown perfection. The fillings inside are also flavoured intensely with garlic and ginger- thereby giving the humble Wonton a unique place in the dumpling hall of fame!

The gyoza is a much more recent addition to the dumpling family, and it comes all the way from Japan! The gyoza has a much thinner outer layer, and the fillings are also more finely chopped. The Japanese gyoza is a close cousin of the Chinese dimsum- but there are subtle differences in the flavor, texture, and cooking techniques of both.

https://www.mygoodtimes.in/food/bucket-list-khana/dumplings-momos-dimsum-whats-the-difference/


Disclaimer: Abhishek Basumallick is the Head of the equity advisory www.intelsense.in for long term wealth creation and a pure quant focused newsletter at www.quantamental.in. The blog posts should not be construed as investment advice. Please do your own due diligence before investing.


Friday, 31 July 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

I especially try to not post Corona related articles as that is all one gets to read in all traditional media.

 

If you like the collection this consider forwarding it to someone who you think will appreciate.


Corporate rivalry takes down the internet in a whole country

Can one person take down a whole country? Surely, Daniel Kaye, a hacker, has proven this. The attack against Liberia began in October 2016. More than a half-million security cameras around the world tried to connect to a handful of servers used by Lonestar Cell MTN, a local mobile phone operator, and Lonestar’s network was overwhelmed. Internet access for its 1.5 million customers slowed to a crawl, then stopped.

This attack was done by Mr. Kaye. And he was hired by Avishai “Avi” Marziano, Cellcom’s chief executive officer to take on Lonestar. In 2015, Kaye and Marziano discussed using DDoS attacks to slow down Lonestar’s internet service and irritate its customers into switching.

https://www.bloomberg.com/news/features/2019-12-20/spiderman-hacker-daniel-kaye-took-down-liberia-s-internet

 

The Fall of GE

Founded in 1892 by Thomas Edison, J.P. Morgan and several partners, General Electric’s corporate pedigree had been peerless. The company was a charter member of the Dow Jones Industrial Average, on board at its creation in 1907 and the only one that remained there 110 years later.

GE grew from the nation’s premier power and lighting company into a behemoth. By the turn of the 21st century it was valued at $600 billion, encompassing media, plastics, aerospace, energy, digital, financial services and more.

But in the months after the retirement of Jeffrey Immelt, Flannery’s predecessor, all its apparent wealth began to evaporate.

In Flannery’s first year on the job, more than $140 billion in value vanished from GE’s stock price — bigger by far than the losses incurred by the epic collapses of firms like Enron and Lehman Brothers. GE was unceremoniously booted off the Dow.

It turned out the problems at Power were not unique. For years, GE’s profits had been a mirage built on whirlwind mergers and accounting sleight of hand. The funds that had been doled out to shareholders as fat dividends — and had covered its managers’ lavish perks and pay — had largely been borrowed on the strength of the company’s golden credit.

https://nypost.com/2020/07/11/how-a-power-hungry-ceo-drained-the-light-out-of-general-electric/

 

Insource your thinking

Wisdom is earned, not given. When other people give us the answer, it belongs to them and not us. While we might achieve the outcome we desire, it comes from dependence, not insight. Instead of thinking for ourselves, we’re dependent on the insight of others.

Earning insight requires going below the surface. Most of us want to shy away from the details and complexity. It takes a while. It’s boring. It’s mental work.

Yet it is only by jumping into the complexity that we can really discover simplicity for ourselves.

https://fs.blog/2020/07/thinking-for-oneself/

 

Insects are going extinct by the thousands

Declining insect populations have become a hot topic in Europe since a study in 2017 revealed that, in some parts of Germany, more than 75% of flying insects had disappeared over the previous three decades. Soon afterward, researchers at the University of Sydney estimated that 41% of all insect species worldwide were declining, and one-third were threatened with extinction.

https://www.project-syndicate.org/commentary/harmful-pesticides-threaten-global-south-by-layla-liebetrau-2020-07

 

Human judgement versus artificial intelligence

As artificial intelligence gets used for more and more routine tasks in the service sector, exercising judgment may be one area where humans retain an edge over machines. This is far from certain, however. What people perceive as good judgment may stem from the ability to spot certain cues in the environment. This ability may be unconscious, just as a dog can catch a Frisbee in mid-air without knowing how to calculate wind speed and air resistance. As machines can be taught, so do humans. In the long run, one of the trickiest aspects of human judgment may be knowing precisely when to let machines take decisions and when to leave it to people.

https://www.economist.com/business/2020/07/18/a-question-of-judgment

 

Disclaimer: Abhishek Basumallick is the Head of the equity advisory www.intelsense.in for long term wealth creation and a pure quant focused newsletter at www.quantamental.in. The blog posts should not be construed as investment advice. Please do your own due diligence before investing


Thursday, 23 July 2020

The Story Drives the Stock


Stocks and markets move on three things:
1) Earnings
2) Liquidity
3) Narrative

You get a multibagger when all three are in alignment and in your favour.

Most fundamental investors focus on the earnings. Most technical analysts focus on the liquidity (price, volume). Very few focus on the narrative. 

If you look back, markets and individual stocks are always built around "stories". The dotcom boom was based on the story of the rise of ecommerce. Then in India we had the infrastructure story, the "Indian decade" story, the BRICS story, "the Modi rally". And the list goes on. Same thing has happened in individual stocks and sectors. 

The IT story, the consumption story, the Pharma story, the Chemicals story, the agri story, the intelligent fanatic story. People call it by difficult names - "megatrends" or "long cycles". But at the end of the day, it is nothing but a story we tell ourselves. 

If the earnings and liquidity fits the story line, you get a self-perpetuating story!! Then mediocre or poor managements start look visionary. Valuations reach the sky. Corporate governance is swept under the carpet. Promoter shenanigans are spoken of in hushed tones.  Believers are heralded and disbelievers are trolled.

These three are inter-related. Most of the time, you start with one and the other two follow. Sometimes, earnings come first, and at other times liquidity. Rarely does the story come first.  Usually, the story gets built on the prevalence of the first two. But for the long term returns, the story is as important as the other two.

Bottomline - Be aware of the story in the stocks you buy or the sectors you invest in. Be tuned in to any changes in the story.

Disclaimer: Abhishek Basumallick is the Head of the equity advisory www.intelsense.in for long term wealth creation and a pure quant focused newsletter at www.quantamental.in. The blog posts should not be construed as investment advice. Please do your own due diligence before investing.

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.

I especially try to not post Corona related articles as that is all one gets to read in all traditional media.

 

If you like the collection this consider forwarding it to someone who you think will appreciate.


The Nespresso coffee revolution

The idea of a portioned coffee system had been around since the 50s, but no one had seriously pursued it. Favre’s aim was to build a world in which espresso was available at home. Customers would own a machine, into which they would place a sealed pod filled with ground coffee. The pod would keep the coffee fresh. (Although roast coffee can stay fresh for weeks, ground coffee loses its freshness after about half an hour.) The capsule design would also ensure greater aeration, mimicking the repeat oxidisations at the Sant’Eustachio. After the pod was inserted, a needle-like spout would pierce one end. Hot water would be pumped through this needle at high pressure. As the capsule became pressurised with water, the foil would be forced against a spiked plate, bursting it inwards, and out through the spout would run an espresso.

Today, some 14bn Nespresso capsules are sold every year, both online and from 810 brightly lit boutiques in 84 countries. More than 400 Nespressos are drunk every second. Hundreds of rivals and imitators have emerged, some making capsules for Nespresso machines, others pushing competitor systems.

https://www.theguardian.com/food/2020/jul/14/nespresso-coffee-capsule-pods-branding-clooney-nestle-recycling-environment

 

One line summary of investment classics

The author has gone through all the classic finance books and distilled the message into a single sentence or phrase.

https://awealthofcommonsense.com/2020/07/tldr-the-best-finance-books-in-one-sentence-2/

 

A short history of money (with a US bias)

In his expansive and excellent book A History of Money, author Glyn Davies lists six functions of money:

  • Unit of Account
  • Common measure of value
  • Medium of exchange
  • Means of payment
  • Standard for deferred payments
  • Store of Value

Modern paper currencies don’t meet the sixth function—un-invested dollars (or euros, or yen) dwindle in value over time. The modern dollar is an abstraction, created out of thin air. It can no longer be converted into anything at a fixed price. Yet, for most of its history money was tied to some underlying commodity.

http://www.millennialinvest.com/history-of-money/

 

The origin story of the Tupperware party

The story of the ubiquitous plastic container is a story of innovation and reinvention: how a new kind of plastic, made from an industrial waste material, ended up a symbol of female empowerment. The product ushered women into the workforce, encouraging them to make their own money, better their families, and win accolades and prizes without fear of being branded that 1950s anathema, “the career woman.”

The most amazing thing about Tupperware wasn’t that it extended the life of leftovers and a family’s budget, although it did both remarkably well. It was, above all, a career maker. When women came to one of Wise’s parties, they were more than just convinced to buy the product— Wise was such a charming host that she persuaded many buyers to also become Tupperware salespeople. Putting people on waiting lists, for instance, made them more eager to buy, so she signed them up regardless of whether the product was available. She also discovered that throwing containers full of liquid across the room made customers reach straight for their chequebooks. Amassing more and more saleswomen, Wise encouraged her followers to do the same. Driven by the idea of making money simply by throwing parties for friends and neighbours, the women in Wise’s workforce ballooned in number. Wise’s team in Detroit was selling more Tupperware than most department stores.

https://www.mentalfloss.com/article/59687/how-single-mom-created-plastic-food-storage-empire

 

The evolution of emojis

This elasticity of meaning is a large part of the appeal and, perhaps, the genius of emoji. They have proved to be well suited to the kind of emotional heavy lifting for which written language is often clumsy or awkward or problematic, especially when it’s relayed on tiny screens, tapped out in real time, using our thumbs. These seemingly infantile cartoons are instantly recognizable, which makes them understandable even across linguistic barriers. Decoding pictures as part of communication has been at the root of written language since there was such a thing as written language.

Pictograms—i.e., pictures of actual things, like a drawing of the sun—were the very first elements of written communication, found in Mesopotamia, Egypt, and China. From pictograms, which are literal representations, we moved to logograms, which are symbols that stand-in for a word ($, for example) and ideograms, which are pictures or symbols that represent an idea or abstract concept. Modern examples of ideograms include the person-in-a-wheelchair symbol that universally communicates accessibility and the red-hand symbol at a pedestrian crossing that signals not “red hand” but “stop.”

https://nymag.com/intelligencer/2014/11/emojis-rapid-evolution.html




Disclaimer: Abhishek Basumallick is the Head of the equity advisory www.intelsense.in for long term wealth creation and a pure quant focused newsletter at www.quantamental.in. The blog posts should not be construed as investment advice. Please do your own due diligence before investing.

Thursday, 16 July 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week.


I especially try to not post Corona related articles as that is all one gets to read in all traditional media.

 

If you like the collection this consider forwarding it to someone who you think will appreciate.


The Unsung Hero
Please read this. It is the story of an unsung hero who has left an indelible mark in the world with his contributions.

https://12mv2.com/2020/07/13/transcript-peter-kaufman-speech-at-the-redlands-forum/amp/

 

Meditation changes your brain

As science begins to dig into the long-term impacts meditation has on the brain, researchers are turning to the minds “Olympic-level” meditators for answers—people who have done up to 62,000 hours of meditation in their lifetime.

Davidson found their brainwaves showed never-before-seen levels of gamma, one of the strongest types of brain waves,  theorized to appear when the different regions of the brain harmonize.

The typical person will have a gamma wave very briefly, for example when we’ve solved a problem we’ve been grappling with, and for a second all of our sensory inputs come together in harmony. The brainwaves of long-term meditators, however, show gamma all the time as a lasting trait, no matter what they are doing. “It’s their everyday state of mind,” says Goleman. “Science has never seen this before.”

https://www.mindful.org/the-remarkable-brains-of-high-level-meditators/

 

China's ballooning debt problem

An Institute of International Finance report published in May 2020 suggested that China is now the world’s largest creditor to low income countries, with China’s outstanding debt claims on the rest of the world having risen from US$875 billion in 2004 to over US$5.5 trillion in 2019 – more than 6 per cent of global gross domestic product (GDP). The Institute of International Finance (IFF) estimated that China’s total domestic debt hit 317 per cent of gross domestic product (GDP) in the first quarter of 2020, up from 300 per cent in the last quarter of 2019 – the largest quarterly increase on record. China’s consumer debt is the fastest growing segment of overall debt, particularly in the form of mortgage and consumer loans. Household debt rose to 54.3 per cent of China’s GDP in the last quarter of 2019 compared to 51.4 per cent in the last quarter of 2018.

https://www.scmp.com/economy/china-economy/article/3084979/china-debt-how-big-it-who-owns-it-and-what-next

 

From Rags to Riches

Few consumers, anywhere, have heard of the wiping-rag industry. But it bails out everyone. Approximately 30% of the textiles recovered for recycling in the U.S. are converted to wiping rags. And that’s probably an undercount. The 45% of recycled textiles that are reused as apparel eventually wear out, too. When they do, they’re also bound for the wiping-rag companies. Nobody counts the number of wiping rags manufactured in the U.S. and elsewhere every year. But anyone who knows the industry acknowledges that the numbers are in the many billions—and growing. The oil and gas industry, with its network of pipes and valves, requires hundreds of millions of rags per year to wipe leaks, lubricants, and hands. Hotels, bars, and restaurants need billions of rags to clean glasses, tabletops, and railings. Painters need them for spills and drips. If these businesses can’t reuse clothes and sheets, they’ll opt for disposable paper towels, synthetic wipes, and new cloth rags, complete with all their environmental and financial costs.

https://www.bloomberg.com/features/2019-wiping-rags/

 

An Introduction to Booneisms

From walking off my first job to start my first company to closing down Mesa Petroleum and to opening up my own hedge fund at 68, it’s three quarters of my life laid bare.

The book is built around little bits of advice I’ve been known to give over the years. At some point, family, friends and staff began writing them down and they became their own genre, now known as “Booneisms.” Many of them are about life and leadership, and other lessons I’ve learned through my ups and downs over 90 years.

https://www.forbes.com/sites/tboonepickens/2018/05/11/ninety-years-of-lessons-learned-t-boone-pickens-letter-to-the-class-of-2018/#6f26bf18e3c6


Disclaimer: Abhishek Basumallick is the Head of the equity advisory www.intelsense.in for long term wealth creation and a pure quant focused newsletter at www.quantamental.in. The blog posts should not be construed as investment advice. Please do your own due diligence before investing.


Friday, 10 July 2020

Weekend Reading

Reading across disciplines is one of the best ways to improve our investment acumen. Here is a summary of some of the best articles I read this week. 


I especially try to not post Corona related articles as that is all one gets to read in all traditional media.


The great investors who no one knows about

Two secretive brothers from New Zealand have perhaps THE best long-term track record in the investing world. Starting in 1986, the two turned $10 million of family money into over $5 billion just 20-years later. That’s an astounding 36% CAGR. The two brothers have gone to great lengths over the years to maintain a low profile and keep their faces out of the news. They were amongst the first investors to plunge into emerging markets like Russia, Brazil, and the Czech Republic. They are the Chandler brothers: Richard and Christopher. They ran the Sovereign Global Fund for 20-years (the two have since split off to manage their own money with Legatum and Clermont Capital).

https://macro-ops.com/the-chandler-brothers-the-greatest-investors-youve-never-heard-of/

 

The unknown Pharma billionaire investor

If discovering blockbuster drugs is the pinnacle of pharmaceutical industry success, then the next best thing is getting rich by earning pennies from every pill sold. For 24 years, that is exactly what a little known Wall Street investor named Pablo Legorreta has been doing. Few have heard of him, but millions have benefited from the top selling drugs his company Royalty Pharma draws income from. Names like Humira for sufferers of Crohn’s disease, Lyrica, the most successful anti-epileptic remedy and blood cancer treatment Imbruvica. The giant companies behind these drugs, names like Pfizer, Johnson & Johnson and AbbVie, do all the heavy lifting— producing and marketing the drugs while Legorreta sits back and collects his mailbox money.

https://www.forbes.com/sites/nathanvardi/2020/06/12/meet-the-secretive-wall-street-investor-with-the-billion-dollar-medicine-cabinet/#10051c92c361

 

How to reduce imports from China?

The larger structural question is whether we can permanently reduce the share of Chinese imports. This must be seen in context. India typically incurs a current account deficit, which means that we typically import more goods and services then we export. There are two reasons for this. We export when the price and quality of what we sell is attractive to foreigners. We import because the same is attractive to us. This, in essence, is the theory of comparative advantage and a current account deficit simply means that our overall comparative advantage is lower than that of our trading partners. However, as an economy evolves, there is another reason why this may happen, which is that our pattern of consumption becomes more import-intensive.

https://www.nipfp.org.in/blog/2020/07/03/myth-indias-import-dependence/

 

A gift of love from father to daughter made her a multimillionaire

When Hiroe Tanaka’s father died, he left behind something that would change her life: a recipe for fried meat on a stick. It was an act of love. His daughter adored the Japanese street food known as kushikatsu, and he’d spent endless hours working out how to make it just right.

The handwritten memo, which detailed how to cook the seemingly simple dish, helped save a restaurant business from bankruptcy in 2008, elevated Tanaka from part-time employee to vice president of a company named after her, and made her a multimillionaire. The university dropout who once worked as an office lady now sets strategy for the $82 million Kushikatsu Tanaka Co.

https://www.japantimes.co.jp/life/2017/05/13/food/kushikatsu-hiroe-tanaka-millionaire/

 

A therapy for permanently reducing LDL & Triglycerides

A novel gene-editing experiment seems to have permanently reduced LDL and triglyceride levels in monkeys. In the first gene-editing experiment of its kind, scientists have disabled two genes in monkeys that raise the risk for heart disease. Humans carry the genes as well, and the experiment has raised hopes that a leading killer may one day be tamed. But it will be years before human trials can begin, and gene-editing technology so far has a mixed tracked record. It is much too early to know whether the strategy will be safe and effective in humans; even the monkeys must be monitored for side effects or other treatment failures for some time to come.

https://www.nytimes.com/2020/06/27/health/heart-disease-gene-editing.html


Disclaimer: Abhishek Basumallick is the Head of the equity advisory www.intelsense.in for long term wealth creation and a pure quant focused newsletter at www.quantamental.in. The blog posts should not be construed as investment advice. Please do your own due diligence before investing.