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Interview with Basant Maheshwari

I am conducting my Value Investing Workshop in Kolkata this Sunday, 31st August 2014. If you are in the city and would like to attend the Workshop, click here to register now.

Anyways, in utilizing my Kolkata visit to the maximum, and also to pick the brains of one of the best-known intelligent investors in India, I will be meeting Basant Maheshwari, founder of The Equity Desk and author of The Thoughtful Investor, for an interview for Safal Niveshak.

Now I need your help in preparing a questionnaire for Mr. Maheshwari.

I need to finalize a maximum of 10 questions, and thus invite you to send me the ones you would’ve asked Mr. Maheshwari had you met him personally.

Please avoid questions like “What stock do I buy?” or “What do you think about XYZ stock?” 🙂

Broadly, you must ask questions around “stock market investing” and “investment behaviour” in general and “value investing” in particular.

Please add your question(s) in the Comments section below by the morning of Sunday (31st August).

Thank you!

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. deepak mata says:

    1. Ways to value newer businesses like flipkart, hike, etc; measurement of risks in these companies
    2. Valuation of intangibles like royalties by MNCs;
    3. Difficulties in valuing technologies like in electrical s, IT. most getting destroyed in no time- BPL, Blackberry, LG, nokia, now Samsung
    4. Little original research in India; most of IPR of the world in US; many business will be wiped out. Auto components- newer technologies will explode, our companies will take time to replicate. Getting more and more difficult to value companies. What should

  2. Nishchint Sharma says:

    What are credible online resources to analyse (find) small & mid cap companies “ratio & other parameter” based on which value investing is done by gurus?

    • Parvin Worliwalla says:

      Hi Vishal,

      I have been always reading and referring to your site and appreciate your good work….till now! But this time, I am not sure if its a value add thing at all!

      With due respect to his money making style, I don’t really feel that Mr.Basant Maheshwari is a value investor who selflessly and generously and honestly shares his knowledge!
      He is nowhere even near for e.g. Mr. Sanjay Bakshi the Fundoo professor!

      Anyways I can filter off this one! 🙂

      Keep sharing your knowledge!

      Thanks

  3. Ok, here it goes:
    Q) Every stock market enthusiast tells us when and how to enter a stock, but seldom focus on honourable stock exits. I mean in the world of value investing, we tend to buy & hold for long periods of time and literally marry our portfolio. Assuming that we have been rewarded for our efforts by a few multibaggers, how & when shd we exit when we are sitting on huge gains and emotionally attached to the stock? How do we distinguish between a temporary lull and a long term decline in the company?

  4. What would you do to start your investing career if you were 20 today?

  5. Nikhil Das says:

    “How does one escape from over-analyzing?” In other words, “How much time does one devote to analyse a stock idea?” Are ‘few hours per week’ sufficient, as Peter Lynch suggests?”
    (Assuming, of course, that the time is spent judiciously on activities like the ones mentioned in his book)

  6. Question:
    All say Buy when others Fear and Sell when others are Greedy.
    But how to spot and strategise such Occasions..
    Does this means ,,it is Timing the market?

    How to create Trading plan and execure it successfully?

    If one decide to invest say 25 to 50 lakhs and earn his living on it to get regular income .Is it possible to devise mix. ( the activity should earn say 17 to 20 % annual return to make it worthwhile.( 9 to 10% being fix FD return)

    Thanks and Regards…

  7. Q. Money has no colour he says. But does it bother him that most of his wealth (or a substantial chunk of it) has been created in stocks (such as Pantaloon retail and TV18) which have been horrible allocators of capital with among the worst records on corporate governance. Does he not care for these issues or did he not care back when he bought and made others’ buy these?

    Q. Is he an investor or trader? If he answers – Investor – ask him why he sold out of nearly all of this recommended names at the start of 2008 after professing to hold them for a LONG long time just a few months back?

  8. jay badiyani says:

    1. How to identify quality smallcaps ?
    2. Genuine sources for stock analysis ?

  9. Please explain with an example (a historical one is fine) on how do you go about your process of selecting a stock. Where do you start, how do you screen/ filter opportunities which you study in detail, what criteria do you use, how do you time the purchase, how often do you review performance and which key indicators do you look at as to whether the investment is on track as expected or needs change.

  10. Since I have been following Mr. Basant for quite a few years new, I understand his investing philosophy and would be eager to ask him the following 10 questions-

    1. What is the difference between a good stock and a good business? Can a stock do well without the business doing well and would you advise to jump on such ship?

    2. You are very sector specific in your investment strategy. How do you zero in on a particular sector and how do you evaluate it?

    3. We all know that you keep a very concentrated portfolio with no more than 10 stocks (sometimes even 2-3). What is your maximum cap (as a % of your portfolio) on a single stock and how do you arrive at that allocation? Plus, if someone were to start investing today as a fresher with average knowledge, experience and emotional intelligence, would you advise a concentrated portfolio?

    4. We know that honest managements are very important for a shareholder. How do you evaluate management’s character? And how do you avoid companies like Bhushan, FinTech, Opto Circuits, Gitanjali Gems, Educomp etc. (the list is long)?

    5. You are a believer of the fact that whatever happened globally would happen in India.How do you identify global trends that are apt for playing out in India. Plus before investing in a stock you try to look at its global peers and their historical returns. How do you do that? Is there any process? Have you ever thought of investing abroad or you confine your investments to India equities?

    6. You are a big fan of private banks in India. How do you evaluate a banking stock given that we don’t know whats beneath their balance sheets and what kind of loans they are doling out? How do you build confidence?

    7. You do a lot of scuttlebutt before investing in a stock. Is there a process to it?

    8. You are not a big fan of cyclical companies. Even within cyclicals, there are two kinds of cylicals – consumer cyclicals and industrial cylicals. Should investors avoid consumer cyclicals too? Can cyclicals have any moat?

    9. The cornerstone of your strategy is to look at downside rather than the upside? How do you figure out the maximum downside in a stock?

    10. Which investors do you like (in India and globally) and what are your favourite reads?

    Rgds,
    Mukesh

  11. ANANDH SUNDAR says:

    1) Indian consumers may have simillar aspirations as their global peers but not necessarily the same ecosystem(like charging stations for electrical cars, unlimited internet/carrier sponsored smartphones)-hence trends may play out differently in India than in rest of the world, and have investing implications. For example, Samsung beating Apple in India, Ecommerce facing issues due to payment systems hence struggling to make profits. Does your investing framework take these adjustments into account

  12. My question :-

    If one wants to become full time investor and just want to get involved with the equities, How does he generate new capital to invests in?? for example, does one take leverage in a systematic way or does on do delivery based momentum trading etc… How are you generating capital or a full time individual generate capital for investing apart from trading and normal salary job (which has its huge limitations)

    Thanks,

  13. Ankit Kanodia says:

    There are several giants in the value investing field who professes the use of patient capital (no borrowed capital or debt), whereas you profess taking loan for a stock just as taking loan for a home. Can you throw some light on this aspect of investing?

  14. Shiv Kumar says:

    With the economy looking good there is a lot of optimism about capital goods companies. Their stock prices have run ahead of fundamentals. Would you advise re-looking at capital goods stocks by someone holding a very diversified portfolio?

  15. What is in your opinion the difference between value investing and deep value investing? and which one of the two style of investment is more suited to a small investor?

  16. Q: BasantJI sold all his old recommended stocks in 2008 (voltas, tv18, bharti, pantaloon etc). May be it was just luck then that he got huge gains in say tv18 or pantaloon. Now he says he is WB type – compounding investor and happy to own Page, Repco, Hawkins, GRUH, Symphony etc (free cash generating, consumer facing, high ROE businesses) for ever. My question is will he again sell all these stocks if market were to go down like 2008? or say these stocks go down 30-40%?

  17. How to deal with stocks which comes out with sudden shocks like recent cases of Bhusan steel, FTIL etc. These were looking great when things were not disclosed and sudden unearthing of facts made huge losses to small investor.

    How to identify such stocks and how to deal later when valuation has collapsed?

  18. Vishal,

    Thanks for taking time to interview experienced value investors and share their knowledge to all of us. It would be great if you can ask him the following questions.

    (1) How does he learn about an industry in which he has no knowledge about.
    (2) How does he measure the durability of the moat of a company.
    (3) It would be great if he can explain his thought process in valuing a business with an example.

    Regards,
    Jana

  19. In His Book, he mentioned that ” there is always Bull part in Market irrespective of market condition, Can you get more details on how to trace the bull always?.
    Thanks for the initiative.

  20. Q. Shall we invest directly in stocks or stocks alongwith mutual funds and min and max no. of stocks in our portfolio. How to use top equity schemes portfolio in our stock selection.

  21. My question:
    As I understand, Daniel Kahneman writes in his book “Think fast and slow”; 1) Luck plays a role 2) All successful investment manager he analyzed made decisions randomly. If so, is this is correct? ” Just invest. You will grow if economy grows or lose if economy falters.

  22. Karthikeyan Esakkimuthu says:

    Hi Vishal:

    At the outset, I appreciate your efforts in educating investors.
    My questions is

    How do we value companies which are in the business of lending like Banking and NBFC stocks, considering that there is lot of risks involved like contingent liabilities, opaque balance sheet, NPAs.

  23. How does one evaluate management and sponsor quality in India without the opportunity of a direct meeting?

  24. Vijayakumar R Yadav says:

    Two questions –
    1) the equity desk website is not very active compared to earlier periods.
    2) investing in companies growth at 30% yoy is fine but how do you realize the time for exits from these stocks?

  25. Sunny SIngh says:

    Hi Vishal,

    Thanks for the great job you are doing.

    Question: What is the relationship between between the ROCE of a company and its PE. Is it possible to establish some kind of guidance on the following lines – say companies with ROCE between 20%-30%, the normal range of PE should be between 20-25, companies with ROCE of 30-40%, the range of PE should be 25-30, and so on. I understand that there are other factors which affect the PE – growth projections, debt level, dividend payout, etc., but this kind of guidance could be a very helpful tool for stock evaluation. In Motilal Oswal’s 16th wealth creation studies it is said that companies with a 80% dividend payout, 27 becomes the floor PE based on a dividend yield of 3% (page 28). I am trying to look for a similar equation for ROCE.

    Many thanks.

  26. I am a believer of concentrated portfolio in order to create wealth. As a retail investor whose pocket is small, i can own may be 1000 / 5000 / 12000 shares in a company. How do i aspire to make big positions ? What are the avenues that can provide me funding and at the same time are economical ?

  27. Is it good to cash out post cycle change (bear to bull) ? And to what extent ? Whats your take on 8 year cycle ?

  28. Sivarajan D says:

    How frequency do you suggest to track a portfolio.?
    Holding cash and waiting to catch a fish… your thoughts.

  29. Dear Vishal,

    Here goes my questions for the legend:
    ———————–
    Do you have Eicher in your portfolio? If not, Why, Do you think, You have missed it? Second: Is Hawkins your alter Ego?

  30. Umang Joshi says:

    Hi Vishal,

    Can you please ask BM, what value investing is Indian context. Most value investors I know are invested in high PE growth stocks and they call growth as MOS.

    Thanks,
    Umang

  31. Question for BM…

    What’s his process of scuttle butting? How to get in touch with people who may be in industries where one may have no contacts? How to approach dealers, distributors, etc? What are the kind of questions to ask them? How to gain more of the “not so well known” qualitative information of businesses that one may like…

  32. There are many small cap stocks with great financials trading at extremely low PE ratios. What tests can we use to determine whether the financial statements are accurate or not, and how do we judge the integrity of the promoters without actually meeting them?

    Such stocks can provide excellent returns (remember Relaxo footwear years ago), but I am usually afraid that the stock might be an outright scam or that the promoters have no intention of letting minority shareholders partake in the success of the company.

  33. How much leverage/loans did you use when you started investing? Now that you’re successful, have you reduced the leverage or increased it?

  34. Parvin Worliwalla says:

    Hi Vishal,

    I have been always reading and referring to your site and appreciate your good work….till now! But this time, I am not sure if its a value add thing at all!

    With due respect to his money making style, I don’t really feel that Mr.Basant Maheshwari is a value investor who selflessly and generously and honestly shares his knowledge!
    He is nowhere even near for e.g. Mr. Sanjay Bakshi the Fundoo professor!

    Anyways I can filter off this one!

    Keep sharing your knowledge!

    Thanks

    I posted this above as a reply to someone, by mistake! Reporting it here in the main thread…

    • Ankur Lakhia says:

      Mr. Worliwalla,

      What is the issue? If you are not in agreement with his investing style, it will be worthwhile if you put across your reasoning for your disagreement. May be that will allow Vishal to put across a valid question to him. However, if issue is the fess he is charging for his advise then it is his prerogative how he wants to conduct his affairs or whether he wants to share his knowledge at all. We do not have birth right to expect free and high quality advise. If Vishal and Prof Bakshi are doing that, it is their kindness but not entitlement of the rest of the world. I have seen many successful investors being tight lipped about their thinking and there is nothing wrong in it.

      • Parvin Worliwalla says:

        Hi Ankur,

        This is Mrs. Worliwalla. And you don’t need to take this so personally. I voiced my opinion and that’s my birthright too! Isn’t it?

        Anyways where Mr.Basant is concerned, you might have noticed in the comments section that I am not the only one with these thoughts. It’s I fact in line with what you said too….he is not the one who would share honest suggestions for free like Vishal or Mr.Sanjay Bakshi. So there isn’t really much we can expect to learn from him.

        It’s noone’s birthright to expect knowledge for free. And no knowledgeable person is obliged to do it either! But we could take a pass on such people then right?

        Anyways since Vishal is doing this, he must have thought through it. He is definitely much more experienced and insightful than me. So let’s hope for the best!

        Take care

        Regards,
        Parvin

        • Ankur Lakhia says:

          Mrs. Worliwalla,

          Sorry if it sounded like taking it personal. Nothing like it. I am also an ordinary investor like many others. I am believer that there is no free lunch and, also, just because someone is charging something, we do not need to simply ignore the person or take a pass as you said.

          Let us look at what he is doing. He is keeping his subscribers updated on all developments happening with his recommended stocks and otherwise, he gives timely recommendations, he reviews portfolios and available practically 24×7, over the phone, through e-mail & through his forum, to take queries as many as a subscriber wants. For all practical purpose, this is hand holding of a subscriber and personalized guidance. Fees asked in return of above is actually very nominal.

          Now, think for a moment. No one who gives free advise helps ordinary investor to the extent he does for a nominal fees and returns his subscriber gets more than compensates fees charged.

          Does it not sound like a great deal? I am not doing any marketing for Basant Maheshwari and neither does he need it. My only concern it, just because someone is charging something, he should not be ignored.

          As for sharing for free, you can go through you tube videos of his and you would notice that he is sharing quite a lot, for free.

  35. Rahul.Banerjee says:

    The questions to ask Mr Basant Maheswari
    Ques 1:Before investing in a business what is the most important thing,to check? The ground realities of business or to check various financial parameters & various data points available through Sources?

    Ques 2:It is often said that investment must be done knowing ones own weakness or strength in mind,Does this statement hold true in investment or in trading?

    Ques 3:It is often said that when opportunity meets preparation one strikes success.In markets is opportunity a rare event or it appears every few days?
    Thanking you
    30th Aug 2014

  36. I was about to put a question “How a normal investor who is not a subscriber to Basant Maheshwari can benefit from his wealth of knowledge?” and saw Mr. Worliwalla’s comment. I also think someone who shares knowledge generously gets more respect. See number/nature of comments Mr. Caldaro gets every week in US.

  37. If you had an option of choosing only one great business out of two from the same sector.. How would you go about making that decision. Would being in a bull market influence your choice?

  38. Ashish Aggarwal says:

    Q. How can an individual/retail investor judge the credibility of company management? Which factors should one look at?

  39. In one article , Mr. Maheshwari points out that buying a high PE stock eg. Page Inds.is not inconsistent with value investing ,because the implicit growth rate provides the margin of safety .

    This is fine provided the future is certain . However considering the number of uncertainties and multiple scenarios possible ( eg . LTCM debacle ) , what safety does one have if the future does not pan out as expected .

    Buying at a very high PE even considering the expected growth is risky because if anything unexpected crops up then the stock would see a sharp correction .

    What should one do in such a situation ?

  40. Snehal karmakar says:

    Dear Vishal,

    Please find my 2 questions for Basant Maheshavari.

    1) Why he did miss Eicher motors & what he thinks about it now?
    2) Will he accept that, Hawkins is his alter Ego?

    Hope you will include these question…

  41. – What are the strong factors of this current bull run? Is it only because of MODI? US is not yet stable, India growth also so so…and Middle east is still in crisis? Why is this bull run?

    – So when will be and what will be the trigger point to burst the above bull run bubble? What kind of lesson we should learn from these scenarios?

    Thanks..

  42. I want you to ask him while picking a stock how does he balance out Margin of Safety and Intrinsic value of a Stock. Whats was his method of calculation intrinsic value

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