Investment thesis on Restaurant Brands Asia
We have put together a brief note to explain our thought process underlying this investment
Read MoreThe shadow of Private Equity ownership on our buying decisions
The purpose of our letters and occasional blogs is to provide transparency in how we are thinking with the goal of creating stronger alignment with partners who want to think and act long-term.
Two companies in our portfolio – STAR Health Insurance and Restaurants Brands Asia – have existing Private Equity (PE) shareholders looking to exit. Everstone is looking for a buyer for its stake in RBA. Similarly, there are a few PE investors in STAR who are looking to sell their stake.
PE funds have a finite life and need to return capital. The shadow of these exits often results in a weakness in stock prices till the exit is complete. For example, one of the PE investors in STAR sold a large stake via a block deal last Friday at a discount to the prevailing market price which resulted in a 8% drop in price.
Read MorePMS vs Mutual Funds vs Alternate Investment Fund
Enclosed note contains our perspectives on suitability of PMS structure versus other investment vehicles.
Read MoreImplications of global repricing of risk
We have put together a brief note explaining implications of global repricing of risk.
Read MoreWhy not sell if we are concerned that Small and Microcaps are overvalued
We have put together a brief note explaining why we are not selling despite our concerns around over valuation in Small and Microcaps.
Read MoreOur approach to building Solidarity
Enclosed note discusses our approach to building the firm.
Read MoreA perspective on churn
We have put together a brief note to explain our perspective on portfolio churn.
Read MoreWhy have we continued to buy Star Health
Star Health has corrected significantly since our first purchase.
Enclosed is a note that explains why we have continued to buy Star at lower prices.
Why do we never go down the risk curve in Financials to chase cheap valuations
Silicon Valley Bank in the US has collapsed. SVB imploded as 3 risks collided
- Side effects of excessive money printing came to the fore –> steep increase in the US yield curve as long term interest rates rose from 1.5% to >5% in about 15 months
- Highly concentrated depositor base which withdrew large sums quickly
- Huge Asset Liability mismatch –> short term deposits were parked in long term Assets (akin to what happened with our Real Estate NBFCs). Hence, SKB was forced to sell long term assets and book losses when faced with withdrawals at the wrong time, which eroded its Capital base and created momentum for a run on deposits (vicious cycle).
An article that explained what happened is enclosed.
Read MoreInvestment thesis on Kama Holdings
We have put together a brief note to explain our thought process underlying this investment
Read More