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basant
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Joined: 01/Jan/2006
Location: India
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Posts: 18403
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   Posted: 31/Mar/2011 at 11:42am |
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Valuation is an art. Look at Wrigley: pick a figure for what the volumes will be, their prices, their competition, the likelihood of management being bright with cash. All of that figures into the moat and its size, and what that business will earn.
There aren’’t many businesses with a terrific moat. Coke has a terrific moat, right down to the container. How many other products can people identify correctly when they’’re blindfolded? Coke has not just market share, it has a great share of mind. People associate Coke with good things. Ten years from now, the moat formed by that share of mind will be even greater.
No formula in finance tells you that the moat is 28 feet wide and 16 feet deep. That’’s what drives the academics crazy. They can compute standard deviations and betas, but they can’’t understand moats. Maybe I’’m being too hard on the academics. - Warren Buffett |
Edited by basant - 31/Mar/2011 at 11:43am
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aniljain
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Joined: 20/Sep/2009
Location: India
Online Status: Offline
Posts: 238
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Posted: 01/Apr/2011 at 1:30pm |
Originally posted by basant
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Valuation is an art. Look at Wrigley: pick a figure for what the volumes will be, their prices, their competition, the likelihood of management being bright with cash. All of that figures into the moat and its size, and what that business will earn.
There aren’’t many businesses with a terrific moat. Coke has a terrific moat, right down to the container. How many other products can people identify correctly when they’’re blindfolded? Coke has not just market share, it has a great share of mind. People associate Coke with good things. Ten years from now, the moat formed by that share of mind will be even greater.
No formula in finance tells you that the moat is 28 feet wide and 16 feet deep. That’’s what drives the academics crazy. They can compute standard deviations and betas, but they can’’t understand moats. Maybe I’’m being too hard on the academics. - Warren Buffett |
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Investment is an art, not science
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manish_okhade
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Joined: 20/Oct/2008
Location: India
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Posts: 1997
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Posted: 01/Apr/2011 at 2:03pm |
Unfortunatly applying Buffette is not possible in India  . We dont have Coke, Wriggley etc instead we have old economy companies designed to work in a License Raj and now opening up to globalization but they lack moat. TATA, BIRALS etc have chosen mostly engineering sector with heavy capex business which itself acts as entry barrier but WB teaching is not applicable to them.
Sometime i feel we should study more closely RJ, RKD, RD etc which would give us more useful insight. Unfortunalt except RD to some extent all other local Buffette are not vocal about their picks . I am surprised that not a single great indian investor has published his story in print as on date does it indicate something?
Edited by manish_okhade - 01/Apr/2011 at 2:07pm
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funkyappu
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Joined: 06/Jun/2009
Location: Angola
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Posts: 445
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Posted: 01/Apr/2011 at 2:09pm |
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A few quotes ago, it was rightly said by Buffett that moats can't be quantified exactly. Even names like TATA & BIRLAS can act as moat. There're lots of moats & brands in our Indian consumption theme..Thats why Paras was sold at such high valuations to Reckitt.
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go4lalit
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Joined: 27/Aug/2006
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Posts: 135
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Posted: 01/Apr/2011 at 4:53pm |
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Manish, if you need to paint your home, what will you use, even if you find a cheaper alternative?
Do you know what product Fevicol brand sells? Will you buy a cheaper alternative?
These are Indian moats. Isn't it?
You can find many from your shopping basket.
Edited by go4lalit - 01/Apr/2011 at 4:53pm
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