valuations | wealthymatters

“I can’t pick the tops, but I can pick the bottoms.”

December 24, 2015 1 Comment

Jeff Sandefer was once my teacher in school.Since graduating from Harvard Business School in 1986, Sandefer has had many successful business ventures, amassing a personal fortune of hundreds of millions of dollars.

Here is the story of how this Texas oilman acquired 17 billion barrels of Australian shale oil reserves in a controversial deal that eventually generated roughly $150 million for his philanthropic organizations. Those nonprofit groups now play a major role in Sandefer’s efforts to change higher education in Texas.

Confidentiality agreements prohibit Sandefer from revealing details of the Australian play. He says he can’t even confirm the identity of his partners, the Ziff brothers of New York, even though their involvement is widely known.

Some in the Australian media have portrayed Sandefer’s 2003 investment in Southern Pacific Petroleum as a calculated ploy to force SPP into liquidation and hijack the company’s vast reserves and technology. Read more of this post

Filed under Alternative Assets, Entrepreneurship, Paper Assets, Philanthropy, Theory, Tool Kit Tagged with contrarian invester, funding a charity, Investing in oil, Jeff Sandefer, legacy, multi-millionaire, Philanthropy, postaday, Sandefer Capital Partners, valuations

Real Wealth Vs. Paper Valuations

May 31, 2015 Leave a comment

Sam is a painter. He has about $50000 in cash and no particular income source apart from small gigs here and there. He is very savvy in his expenses and doesn’t waste any of it, painting most of the time.

He shows his paintings to one of his friends, who happens to be a consultant. The friend on seeing a particular painting, stops and wanders in exclamation, “Dude, you should show this to art galleries, they would pay 100s of millions for this”.

Sam gets excited. He gets some more consultants to do the review for his painting and they too tell him that they can sell the painting easily for 50 million dollars. He pays the consultants $500 each in fee and they are off.

Sam is very happy. He is going to be a millionaire. He decides to celebrate. Spends 1000 dollars on dinner and wine. Next day, he meets a lot of people, “They say, yeah, this is a really wonderful painting. Congrats, you’ve come up with your masterpiece.” Read more of this post

Filed under Alternative Assets, Entrepreneurship, Paper Assets, Theory, Tool Kit Tagged with paper wealth, postaday, real wealth, stealing your wealth, valuations, wealth effect

Avoid Stocks Of Holding Companies

August 1, 2013 Leave a comment

Historical data shows that holding company shares might not be good for minority shareholders as the market traditionally values holding companies — an entity that controls a clutch of businesses — at a discount to their book value.

ET looked at valuations of nine holding companies listed on Indian stock exchanges. Specifically, they looked at one metric: the price-to-book value ratio. Book value is the total value of a company’s assets less intangible assets (like trademark or intellectual property) and liabilities. For seven of these nine holding companies, this ratio was less than 1, indicating under-valuation. The average discount-to-book value was 40%, and ranged from 4% (EID Parry) to 93% (UB Holdings). Aditya Birla Nuvo and Tata Investment Corporation were the two exceptions (See table). Read more of this post

Filed under Paper Assets Tagged with ACC, acquisition of cash flow, Aditya Birla Nuvo, Ambuja Cements, Bajaj Holdings, Book Value, discount to book value, dividend distribution tax, double incidence of dividend tax, EID Parry, Holcim India, Holcim-Ambuja Cements deal, holding company stocks, JSW Holdings, McDowell Holdings, mergers and demergers, mezzanine structure, minority shareholder interests, minority shareholders, postaday, price to book value P/BV, Rane Holdings, selective acquisition of cash flow, share investing, shift profits, stock investing, Sundaram Clayton, Tata invest Corp, UB Holdings, valuations

Rakesh Jhunjhunwala-The Rare(ing) Bull

April 27, 2011 9 Comments

Rakesh Radheysham Jhunjhunwala is a famous Indian stock investor.He lives in Malabar Hills with his wife Rekha ,daughter Nishtha and twin sons Aryaman and Aryaveer and works from his office at Nariman Point in South Mumbai. He regularly appears on various business channels on television to share his ideas and opinions on the Indian markets. He is well-known in investing circles as ‘Rocky’ and among his close associates as ‘Bhaiyya’.He is considered to be India’s Warren Buffett. In 2010, Forbes rated him India’s 51st and the world’s 1062nd richest man with a net worth of $1.0 billion.He is the first dollar billionaire from India to have made his fortune primarily from the stock markets.

He considers Mr Radhakrishnan Damani as his guru (mentor) and best friend.He counts Kamal Babu, Ramesh Damani and Kamal Kabra as friends.He manages his own portfolio as a partner in his asset management firm, Rare Enterprises (Ra-Rakesh Jhunjhunwala, Re- Rekha Jhunjhunwala).“The sheer passion for markets and the ability to do what I enjoy is what inspires me,” says Jhunjhunwala. He has been asked to manage other people’s money, but prefers the freedom of not having to answer to anybody, and has thus turned all offers down.Rakesh does not try to beat the market as opposed to investment managers who have to answer to a lot of people, and hence look at indicators like how much alpha — or returns in excess of the general market — they are generating. “The only person that I have to answer to is my wife, and she just wants to know what the absolute returns are, not whether I am beating the market”. He expects the market to do very well as he believes that India is at the beginning of an unprecedented multi-decade bull run.Obviously he believes in putting his money where his mouth is as he owns only Indian equities.There are 7-8 stocks that make up 80% of his portfolio, and his holding period stretches from 3 years to 10. Read more of this post