Deepak Shenoy's blog

Buffet Exits Bank Of America

You might think that when Warrent Buffet says "Rule One: Never Lose Money. Rule Two: Never Forget Rule One." it means that he makes money on every trade. He doesn't. At least, not when it came to BoA:

Warren Buffett’s Berkshire Hathaway Inc. sold its stake in Bank of America Corp., ending an investment that spanned three and a half years in which the lender’s stock lost more than two-thirds of its value.

Buffett’s firm had no shares in the Charlotte, North Carolina-based bank at the end of 2010, compared with 5 million shares three months earlier, Berkshire said late yesterday in a regulatory filing that lists the company’s U.S. stockholdings.

Berkshire, where Buffett serves as chief executive officer and head of investments, entered the Bank of America stake with the purchase of 8.7 million shares in the second quarter of 2007.

This is why you shouldn't follow what people say, follow what they do.

Money Matters: Trades for Less Than Cash?

A number of mails in a few newsgroups I've subscribed to go like this:

QIP of 71.7 lakh shares made at Rs 625 per share in October 2010- Rs 448 crore

Add Cash and Cash Equivalents on March 31, 2010

Net Current Assets-Rs 225 crore

PAT For 9Months to December 2010-Rs 89 crore

Cash and Cash Equivalents With Money Matters As of Dec 31, 2010- Rs 762 crore

Number of Shares Outstanding- 3.5 crore

Cash Value of Money Matters stock- Rs 217 per share.

SBI Will Sell Bonds at 9.95%

State Bank of India has a new bond issue out (Shelf Prospectus).

Size: Upto 10,000 crores from retail, but official issue size is 2,000 crores.
Listed: Yes, on the NSE/BSE.
Interest rates:

image

9.95% for retail on the 15 year bonds, and 9.75% for retail on the 10 years.

IDFC Infra Fund NFO: Quick Analysis

I had a chat with the IDFC Mutual Fund team recently. They have an infra fund launching between 14th and 20th of this month, and I spoke to members of their fund management team.

So first - salient points - here's the scheme document. The NFO runs from 14th to 28th of Feb. They will deploy the money starting 5 March. There's an exit load of 1% if you get out within a year. There is no entry load.

Jan 2011 Monthly Inflation at 8.23%

The Jan Inflation Number went back to 8.23% from the December number of 8.43%. This sounds very bullish but I think the data is crappy.

Monthly Jan WPI at 8.23%

At Yahoo: Losses and Endowments

On Feb 10,2011 I wrote about Losses and Endowments:

(Reproduced in full)

Given two choices, which one would you take? You have to walk to me, and

1)      I'll give you a guaranteed Rs. 500, and if I feel like it, I'll randomly throw in a Rs. 500 bonus.

2)      I'll show you Rs. 1,000 but on a whim, randomly, I will take out Rs. 500 before giving the rest to you.

Chances are that the second one looks unattractive, especially if you had to do it over and over again. But your mathematical mind has already realized that if I am truly random in the choices I make, what you make is around the same in both cases. But the second choice makes you believe you have lost Rs. 500, while the first case gives you a feeling of an extra Rs. 500.

MV Chronicle: LIC Bima Account, Anil Ambani's Woes and More

The Feb 12, 2011 Edition is about LIC Bima Account, Anil Ambani's Woes, MarketVision Links, Editors Picks and more. (You need to register. It's Free)

(Excerpt below)

Aditya Puri: Don't Free Savings Rate In Crunch

Latha Venkatesh interviews Aditya Puri of HDFC Bank. He makes some excellent points. (Video, Transcript) Video is embedded below. (The transcript's all wonky, see the video)

He doesn't want the savings rate deregulated as long as there is a cash shortage - like right now. And going by that, he says that net-net, the savings rate will come down. I imagine it is true, and that savings rate junkies must consider that liquid funds currently return over 7% and there is really no reason to put lots of money in savings accounts. Getting (taxable) higher interest on savings accounts will only marginally help a few people; having said that the interest should be market determined, not kept at a constant 3.5%. And in the same way banks should be free to charge for services (ATM, cheques etc.) With competition, the nickel-and-diming might reduce, but as you see in the US, it still happens.

The RELIANCE-SEBI Tussle

In 2007, RELIANCE (RIL) sold shares it owned in Reliance Petroleum Limited (RPL) for 223 rupees.

RPL Share Price

The share eventually fell back to 70 in late 2008, and recovered to 130 levels when it was merged with RIL - 1 share of RIL for 16 of RPL, which translates to an RPL price of Rs. 112 (RIL is at 900, and had a 1:1 bonus after the merger). Sadly, at the time the merger price was effectively Rs. 60 per share of RPL or so, which is exactly equal to their IPO price in 2006.

IIP Growth at 1.55% for Dec 2010

The Index of Industrial Production showed a 1.55% growth over last year.

As usual, there were crazy revisions. November data which disappointed everyone with 2.7%, is now revised up to 3.62%. September is up to 4.9% from 4.4%. So this could just be a head fake, for all we know.