Wednesday, 15 November 2017

A Few Lessons From Sherlock Holmes - Peter Bevelin

Since I read Peter Bevelin's Seeking Wisdom, I have wanted to read his other books. So, I managed to get through his "A Few Lessons From Sherlock Holmes" recently. To be honest, I was a bit disappointed. The book seemed, to me, to be a collection of quotes from Sherlock Holmes books collated thematically. Though Seeking Wisdom was also on similar lines, that is, someone who had read all of Munger's writings and speeches would actually find it very repetitive, it had a structure to it. Also, Seeking Wisdom can be read without knowing anything about Munger, which is not really the case in this instance.

I had highlighted some quotes from the book. I am putting them here. Hope this is beneficial for those who have not read the book to get an idea of what it is about.

What distinguishes Holmes from most mortals is that he knows where to look and what questions to ask. He pays attention to the important things and he knows where to find them.

To know what to do and not do, we first need some genuine understanding on how reality is - how things and people are and what works and not

Considering many ideas over a wide range of disciplines give us perspective and help us consider the big picture or many aspects of an issue

But only what is useful - it can be dangerous to know too much

He said that he would acquire no knowledge which did not bear upon his object. Therefore all the knowledge which he possessed was such as would be useful to him.

It is useful to know something about human nature and what motivates people

Ask: What is in their interest to do?

But knowledge doesn’t automatically make us wise - the most learned are not the wisest

What is the problem? What do we ultimately want to achieve or avoid? That is the problem which we have to solve.

“The greatest sign of an ill-regulated mind is to believe things because you wish them to be so.” (Louis Pasteur)

Never jump to conclusions and try to collect facts as open-minded as possible

“Men see a little, presume a good deal, and so jump to the conclusion.”

It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts.

Don’t be too quick Let us know a little more before we act.

And don’t blindly collect endless amounts of facts

One forms provisional theories and waits for time or fuller knowledge to explore them.

Data! Data! Data!...I can’t make bricks without clay.

Make sure “facts” are facts - Is it really so? Is this really true? Did this really happen?

We must look for consistency. Where there is a want of it we must suspect deception.

Don’t miss the forest for the trees - It is not the amount of information that counts but the relevant one.

Separate the relevant and important facts from the unimportant or accidental

The first thing was to look at the facts and separate what was certain from what was conjecture.

It is of the highest importance in the art of detection to be able to recognize out of a number of facts which are incidental and which are vital. Otherwise your energy and attention must be dissipated instead of being concentrated.

There may be many theories that fit the facts

Sometimes it helps to shift perspective

Never trust to general impressions, my boy, but concentrate yourself upon details.

What have we overlooked?

Sometimes we overlook that which is most obvious

In searching for the obscure, do not overlook the obvious.

Use the simplest means first

Sometimes things are not as simple as they seem. But sometimes they are not as complex as they seem, either

But don’t try to over-simplify complex matters - especially when we deal with systems with complicated interactions

What normally happens in similar situations? Why should this be any different?

Analogies - What does this case resemble? What is the same between this situation and others?

Negative evidence and events that don’t happen, matter when something implies they should be present or happen

What doesn’t matter? What can’t happen? What can’t it be? What can’t be done?

Test Our Theory- if it disagrees with the facts it is wrong

Facts don’t lie but we may have interpreted or stated them wrong and therefore drawn the wrong conclusion

Patience - Take time to think things over

And avoid distractions and concentrate on the problem

Put yourself in the other person’s shoes

Get a different view - talk it over with someone else

Don’t make the world fit your tools and use the right tool for the job

Watch out for overconfidence

Update our beliefs in light of new information

Criticize ourselves - Have we tried to find evidence against what we believe? Why might we be wrong? What have we overlooked? What (new) information or evidence is needed to make us change our mind?

When we get better understanding or the facts or evidence don’t agree with the theory we must change the theory and change course

Learn from your mistakes - and learn the general lessons

To learn we must face the mistakes and try to find out why we made them. Then comes our gain.

Know our limitations

Don’t think about how to get things done, instead ask whether they’re worth doing in the first place

Avoid danger - we shouldn’t expect to survive when we enter tough seas

We shouldn’t disregard even a small probability

The future is hard to predict

Friday, 20 October 2017

Weekly Reading: Some interesting stuff

How the term "Demographic dividend" is being misused and what it really means

One of those "list articles" on what the author has learnt from Stan Druckenmiller. Some of the points are really important.

Google, Twitter and Facebook workers who helped make technology so addictive are disconnecting themselves from the internet.

Intelligence is not the same as critical thinking and the difference matters

A good primer on Indian Steel industry

Saturday, 30 September 2017

Weekly Reading: Some interesting stuff


The situation of Graphite producers in China

Cities are wooing Amazon for their 2nd HQ

China is looking to upset the current petrodollar system by introducing a gold-backed “petroyuan” oil futures contract. And since China is the largest importer of oil globally, this shift away from the petrodollar could be bad news for the US but it could be great news for gold owners

To listen and understand; to question and disagree; to treat no proposition as sacred and no objection as impious; to be willing to entertain unpopular ideas and cultivate the habits of an open mind.

Is this the beginning of the end for booze companies?



Wednesday, 27 September 2017

Tata Global Beverages



NOTES FROM AR 2017
Tata Global Beverages (TGB) is a natural beverages company with brand presence in over 40countries. As the second largest tea company in the world, with a growing interest in coffee and water, TGB is home to a stable of innovative global and regional brands, including: Tata Tea, Tetley, Himalayan natural mineral water, Tata Gluco+, Good Earth tea, and Eight O’clock coffee.

• 2nd Largest player in branded tea in the world
• 20,000+ SKUs produced across tea, coffee and water
• 40+ Countries with significant brand presence

BRANDS
• Tata Tea - Premium, Elaichi Chai, Chakra Gold, Gold, Teaveda, Kanan devan, Gemini, Agni
• Tetley - Presence in UK, France, US, Canada, India, Australia, Middle East, Poland
• Good Earth, Jemca, Vitax, Teapigs, Joekels
• Coffee - Eight O'Clock, MAP, Grand Coffee, Tata Coffee Grand
• Water - Tata Water Plus, Tata Gluco Plus, Himalayan
• Company has entered the new Asian markets of Singapore, Malaysia and China, which are large tea consuming markets. The company has entered a tie-up in the e-commerce channel in China to focus on the business-to-consumer (B2C) category.
• Co has undertaken a multi-year extension of its partnership with Kuerig in US, for the manufacturing, sales, licensing and distribution of the EOC coffee and Tetley tea brands in K-Cup pods for use in Keurig brewers
• Tata Coffee Limited, a subsidiary which operates in the non-branded business, announced the setting up of a state-of-the-art Freeze Dried Instant Coffee plant in Vietnam with an installed capacity of 5000 MT per annum.
• Tata Starbucks our 50% JV had opened 91 stores; performed very well in the current year with double digit growth

Continued focus on health and wellness
• Expanded portfolio of green teas and fruit & herbal teas, in line with this trend. Tetley Super Green Tea (fortified with vitamins). Tata Tea Teaveda and Tetley Balance two product ranges inspired by Ayurveda and containing herbal ingredients - were launched in India and Canada
• Eight O’Clock coffee in the USA launched a new line called Infusions

Premiumisation
• Tetley Indulgence launched in the UK is a range of black teas in indulgent flavour twists such as cookies & cream, chocolate mint, gingerbread, and spiced apple.
• TGB collaborated with Starbucks to create a signature innovation, India Spice Majesty Blend especially for the Starbucks Teavana™ portfolio in India
• Himalayan natural mineral water - launched a sparkling variant in select channels and also piloted ‘Orchard Pure’ flavoured water
• Tetley now outperforms the herbal tea category's growth- Tetley +19% vs Category +6% (as per Nielsen study)
• Promoter shareholding is 34.4%
• Institutional shareholding is 33.64%
• In the process of divesting the Instant tea business in China. The decision to divest was taken mainly due to the marginal nature of the business and under-performances as compared to plans.



Q1FY18 Analyst Presentation
5th consecutive quarter of operating profit growth despite higher spends behind brands and competitive intensity in developed markets
• Improvement in tea volumes whilst softer volumes in coffee
○ Improvement in India despite impact of GST transition in India
• Good improvement in Profit before exceptional and tax despite higher advertisement
○ Effective management of commodity costs
○ Good cost management
• Commodity costs
○ Softness in India tea prices
○ International tea prices hardening further impacted due to Brexit
○ Coffee Costs – showing a hardening trend
• Volatile currency markets
○ Brexit leading to GBP depreciation
• Increased focus on under performing businesses
○ Exit from China Business
○ Exit from the Russian business

India Business: - India business grew by ~4%-5% which was impacted by GST transition
• Gluco-D have witnessed steady acceptance from the consumers
• 50% tea consumed and sold in India is branded tea.
• Tata Tea Elaichi growing at robust pace
• Tata Coffee Grand gain shares with new variants
• Launched Fruski on a pilot basis - a tea based RTD.
• Starbucks currently operates in 95 stores which will be start generating EBITDA profit in next ~1-2 years

UK business:- Strong performance in UK driven by growth in market share across major categories despite sustained decline in overall tea market and continued competitive intensity. Green tea continue to grow well. Teapig the super premium brand posted good growth

Bangladesh has witnessed robust growth in Q1 FY18 with record profits in Q1 FY18.

USA - Promotional phasing and higher commodity costs impacted performance of EOC business in US during the quarter. Tetley green tea reflects modest growth despite decline in category.

Russia was a loss making unit which have been restructured, going ahead performance from international business will improve.

Non branded - Topline declined due to reduction in sales volumes of instant coffee and plantation products (impacted due to lower crop and lower export realization due to stronger INR).
Tata Coffee infused in aggregate an amount of US$6 million (mn) on greenfield freeze dried instant coffee facility in Vietnam

Canada witnessed an improvement in the topline. The company continued its value and volume leadership in the country. It also launched Tetley RTD in three flavours - Lemon Ginger, Peach mango and Pomegranate Berry
In order to drive its performance, the company has come up with strategic priorities, which include base business rejuvenation, investment for growth and driving operational efficiency.
The company intends to invest in incubatory businesses - Starbucks and Nourischo to drive future growth. Under Nourishco, the company has launched variants of Tata Gluco Plus, Himalayan flavoured & sparkling water. Nourischo has witnessed traction in the operating profit.

What is Changing?
1. Continuous debt reduction
2. Focus on higher margin products to increase margins
3. Getting out of loss making or non-performing geographies like Russia signals management intent on turnaround
4. As per media reports, Tata Global Beverages may sell its stake in various Tata group’s listed companies to its parent, Tata Sons, in the coming months. TGBL currently owns 725 crore worth of stake in other Tata group firms, viz. Tata Chemical and Tata Investment Corporation. TGBL has a 4.39% stake in Tata Chemicals and 0.29% stake in Tata Investment Corporation. The company may utilise the funds towards a) brand building activities or b) payoff of the debt or c) dividend payout, or a combination of these

RISKS
* Business is dependent on bulk tea & coffee prices
* Exchange rate fluctuations
* Gradual move of taste from tea to coffee and other drinks

FINANCIAL


Friday, 15 September 2017

Weekly Reading - Some interesting stuff

Ray Dalio's principles, before his book launch

Characteristics of successful investors (a bit generalized)

A glimpse of how man & machine work 'hand-in-hand' at Amazon

A lot more Lithium mining is needed in the near future

Having a kaleidoscope of mental models helps in navigating the investment world when most are edges are disappearing

The tough stance of RBI and the changing regulatory environment is forcing Essar to look at paring its debt

Friday, 8 September 2017

Weekly Reading: Some interesting stuff

What provides the edge - deep research or insights derived from thinking over multiple subjective arguments?

Deliberate practice does not add much value in a probabilistic field of work such as investing

Chinese flying trains - An alternate future of transportation?

Ashish Chugh's take on investing in Indian markets

Fear of missing out has taken over from value discipline, a development that is a sure sign of a bull market. Also, includes a discussion on bitcoin and ETFs.

An interesting business model - MoviePass users receive a debit card that they can use to see up to one conventional 2D movie a day.

A Few Lessons From Sherlock Holmes - Peter Bevelin

Since I read Peter Bevelin's Seeking Wisdom, I have wanted to read his other books. So, I managed to get through his "A Few Lesso...