2. Chapter 10 Shyam Sekhar
• Introduction – Mr. Shyam Sekhar is a chemical engineer by
qualification, started his investment journey in the early 1990s. While
simultaneously is running his family business of paints.
• Sir has an ecletic style of investing, managing both the Fisher and
Graham style of investing with great results.
• Sir likes to keep an eye on the balance sheet, he likes to optimize risk
and reward along the array of underlying business cycles.
• Sir also learnt to study how business grew or died when the situations
changed and to identify their winning attributes.
3. • Early investing Process and journey
• Mr. Shyam started his initial investment journey with very little money maybe just with Rs.2000 or Rs.3000, Mr.
Shyam spent less and save whatever he could. He received Rs. 2 lakh from his family and then invested whatever he
saved. He mentions that his real investing journey started with Rs.10 lakh in 1993 and invested 40% of that in
research infrastructure It took him 8 years to reach 10 crore mark. Then the journey became better. Sir used more
leverage, where it was 10% at peak and now it has reduced to 3% and reducing. Sir did own equity research in the
early years.
• When Sir started investing, markets were unregulated. Stockbrokers ruled the market. Sir sees much wider investing
equiy participation in India.
• Sir believes one needs to continuously update his knowledge and keep measuring change. By accurately estimating
change, one updates his knowledge.
• Did Sir’s education/work experience help him become a better investor or was it a stumbling block?
• His family background helped him to take risks, think out of box, and be quick in thinking. As sir’s education was in
chemical engineering, sir felt that it helped to understand related industries, think logically, understand superior
manufacturing technology. Having spent a lot of time learning the discipline and also running an industry that is very
process driven, Sir had learned a lot
• Every supplier sir dealt with, every customer sir met with two decades of continuous engagement with various
stakeholders in the chemicals and coatings business has taught sir a lot. Sir is able to understand the cycles, capital
allocation needs, the potential of most process business quiet well . This has helped Sir greatly in his investing.
4. • Return filter whenSir make an investment
• Sir doesn’t believe in setting goals. But sir project earnings and keep reviewing them to satisfy him that his projections are
on track. Sir is happy to be on the steady ride to investment performance.
• Generation of investment ideas and research process.
• Sir ide generation is theme based, sir writes investment theme and then identify stocks that fit the theme and provide
attractive financials. Theme based investing helps sir create attractive choice among ideas. Understanding of a theme and
stock happens in sync, when they take place together, belief builds up very quickly. Sir looks whether a company is a good
allocator of capital.
• Sir read everything on companies and industries that come his way. From industry opinions, company news, industry
analysis, corporate announcements, Conference calls, business history of a company or a group, to magazine articles on
companies, global trends in every industries. Sir gets deeper understanding of some subjects sometimes, and writes
thesis and puts forth his thesis to his peers and gets their opinion.
• Some examples of themes are as followed :
• The state government’s gas connection for every household scheme triggered the rise in the Kitchenware
industry by disrupting cooking forever.
• Now the consumer durables industry will be disturbed by the government’s power connection to every
household plan.
• GST as a theme is going to cause a major shift, from unorganized to organized in several business.
• Logistics and cold chain is another emerging theme in India’s agriculture resurgence.
5. • Meeting Management and doing Scuttlebutt
• Sir meets management and sir believes to meet management AGM is the right place where one can go and talk to
management. For many years sir visited numerous AGMs, Sir even bought a few shares sometimes even 1 share, so that
sir gets an annual report and AGM notice. Now sir finds AGM phony and pseudo. Sir now relies on Annual report,
published information, and do scuttlebutt a lot. Sir talks to suppliers, customers, and at times competitors to understand
the competitive position of a business. Sir studies products, markets, technology, innovative and changes in consumer
behavior.
• Attributes that are very important for an investor.
• According to Shyam Sir one should enjoy investing, it should not feel like a burden. As long as one enjoys every moment,
irrespective of performance one will be relevant. A person who has seen several cycles will react differently then one who
is in his first market cycle. As an investor one must learn to be aligned with the market and keep himself focused on what
he is doing, an investor must run a race at a pace he is comfortable with. Every investor must know how to build himself
and his ecosystem up. Oppenness to hear other viewpoints is critical.
• Reading at least 1 annual report a day helps one sharp and curious. Make notes on companies, document expectation and
clearly review them periodically is sure to make one better investor.
6. Chapter 11 Chaitanya Dlamia
• Introduction –
• Mr. Chaitanya Dalmia an MBA belongs to an illustrious business family
from Delhi. Sir is a deep value investor, he likes to buy out of favor
businesses and then make it big.
• Sir’s current role is as a CIO of Renaissance Group helps him
understand Macro economic environment scan , corporate structures,
corporate finance, legal and taxation, equity investing, structured
debt, asset allocation and risk optimization.
7. • Early stage if investing in Stock Markets
• Mr. Chaitanya’s brother observed that all old businesses were traditionally invested in Fixed Deposits of banks, So he
looked at other avenues to invest in such as UTI mutual funds, then and only a few private players existed in the market
but they did not inspire much confidence. So they hired a professional who would invest on their behalf, after some time
the professional left and the responsibility fell into Mr. Chaitanya Sir while his brother focused on Private Equity and
Buyout deals.
• They hired a professional in 1999.
• Identifying ideas was not a problem since the entire market was available cheap. One could make money by investing in
few good shares and go to sleep.
• Sir did three things right to invest in that market which was, Firstly they thoroughly read Annual report of many years of
all these companies. Secondly, they ensured that they were paying a cheap price for the stock. Lastly and most
importantly they had the guts to deploy capital.
• Education and Work Experience helped to become a better investor.
• Experience in business did not really help much since promoters in India then were not very considerate of minority
shareholders. There was no equity culture at that point and they were unaware of value investing in India. Therefore for
them background in education or business was really a baggage.
8. • Generation of Investing Ideas
Mr. Chaitanya does not have any outside capital, meaning they are never under pressure to deploy capital. They sit on cash
until they find ideas, This gives them luxury of scanning the reports and companies. They believe in being alert to new ideas
and they open to any viewpoints.
They try to focus on opportunities such as Corporate Actions which are M&A, Buyback, merger, rights issue.
They invest in business in which they understand easily. Their view about meeting management is today’s management has
become smarter and turned into salesperson of their own company. At the extreme some management has ignored
operating their business and focusing on selling stories to either raise they capital or to pump up their share prices.
They believe in margin of safety that is they believe in being broadly right than precisely wrong. They do not regret in
loosing opportunities, but they believe in their process. They track companies to ensure they don’t miss out on anything
major. Also it will help them to ensure what company is planning to do.
9. • What keeps you motivated even after creating wealth in stock market?
• According to sir this profession allows to choose your pace, few mistakes don’t kill you. We don’t have to deal with
corruption. It’s a thinking profession, not a fixing one. You don’t have deadlines. You don’t have to bother your
competitor’s next move.
• Advise to New Investors
• It is best to keep it simple. Thorough homework to generate an Idea. Wait patiently till one gets a stock at a right
price. Have the temperament to see loses. Re - evaluate your thesis all the time and “invert” as Charlie Sir said. Try to
move on quickly by cutting down your losses and your mistakes. Finally, do not get the feeling of being left out get to
you, because one will always miss a lot of ideas.
• Few habits one should attribute is remain unemotional with a stock, re assess your work. Avoid traps and paralysis.
Develop conviction. Work patiently.
