Key Learnings from Masterclass with Super-investors- Anil Goel

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Anil Goel, 66, is a deep-value investor. He buys substantial stakes in well-managed, basic businesses when they are out of favour and are available at very cheap valuations. He deployed his investment philosophy of KCPLTD- Knowledge, conviction, patience, luck, and timely deployment.

Key Learnings from Masterclass with Super-investors- Anil Goel are as follows:

 Avoiding Crash

  • Never buy a business that you don't understand.
Investment Philosophy
  • The key is to understand the business and understand the management.
  • Don't invest in a company with poor management.
  • Should have deep knowledge of the business. Once one has deep knowledge, develop conviction in one's assessment. Then one needs to have patience for the market to properly value your stock. you need to have luck, and the price comes down to your buy price, buy the stock. And you should have the nerve to timely deploy when the prices come down.
Bottom of the Cycle and cyclicity
  • In the steel business, prices were down in 2002, its cost of production was higher than the price of steel. And in any business, no one can sustain producing below the cost of production for long, hence it marks the bottom of the cycle. 
  • And at this point, if any company is started increasing their capacity then that means a boom is mainly coming.
  • In cyclical business, assets value do not matter in the stock market, it becomes a value trap. one should be able to see the reversal of the business cycle- when the earnings will come back.
Investment Process
  • Invest in small caps or out of favour companies or industries, where there is no competition among investors.
  • Buy company at very low P/E.
Generating Ideas
  • Through Investor's club where all investors meet and discuss ideas. Some Ideas come from news and articles.
  • Businesses that have growth, the management is good and is sharing dividends with shareholders, and that is available at very low valuations.
  • Through understanding market biases.
Value traps in low P/E stocks
  • If you are able to judge the management then you would understand the value trap.

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