YouSaid · the spoken record

Andrei Stetsenko

lines on the record: 88
first: 2024-01-04
most recent: 2024-01-04
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Which, by the way, is if not this year, then next year on track to become the world's second busiest after Atlanta, you know, coming out of from nowhere 10 years ago, to see these things in person, I'm hoping gives me a way to talk about them in a slightly more compelling way.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yes. And it's best for the blog. Yeah, dispatch.com. The real formal purpose of the blog is to talk about Indian macroeconomics. And there's a couple very big posts there just about India's economic history for anyone interested in that, including as well as a couple more that are about more recent developments. But I'd say what I've tried to do at least is to make those more than just a dry summary of what's happened and kind of intersperse these discussions with my own personal experience. And so while you can just read about just about anywhere, the boom, for example, in infrastructure in India where they're investing unprecedented amounts in metros and roads and airports, it's a totally different thing to see at firsthand and to walk through the brand new deli airport.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Very messy, very noisy democracy with a lot of, you know, it's not perfect, just like our democracy. I think that the upside of that is that India can change course, can change governments without a revolution happening, you know, there is this social and political process that's well established for figuring out what the priorities of the country are. I think that there's nothing close to that sense of expected stability in China.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Consumers, one very obvious, tried and true way to boost consumer sentiment is to make consumers feel wealthier. And one way to do that is to increase the value of their financial assets. And so, you know, that's neither a prediction nor a suggestion that that is what might happen. But I'm saying that that is, that would be one very logical reason for reversal of what we've seen there. And just one last China related point is just that I think there is been this, especially when China was growing at a much faster rate than now, there is this refrain that, well, China, they get stuff done. And so they're not a democracy, but upside is that if they want to build a piece of infrastructure, they get it done. Their economy grows at the rate they want it to as compared to India, which like the US is, you know.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think it's whenever something is that beaten down, an even more interesting sign or indicator for me is when people are just, they're so exhausted by their experience with something and so kind of beaten down by losses with something that it just kind of, it's not that they dislike it. It's just that nobody's even paying attention to it anymore. So there's really, I think you could say the best now the case with, for example, technology companies there where I think a lot of the decline in market prices, it's reflective of an actual deterioration in fundamentals. But I think it's still the case that discounts to intrinsic value can be had. I think if we're just thinking very kind of directly as to player in that drama, who's G, if his number one problem is a sputtering economy and specifically a really kind of underwhelming recovery post-COVID recovery from a Chinese”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“I've promised many final questions, but this is my last one. So we talked a lot about India. I know you do a little bit of work in China as is now evident has a lot of problems. But as Howard Mark says, it's all about the price, like high yield bonds had a lot of problems. But if everyone says, I'm not going to own high yield bonds and they have a spread of basis points, it can be attractive. Likewise, Chinese stocks have a lot of issues. But if the Chinese market had a PE of one, obviously that might be a little bit compelling. It's not a PE of one, but it's a lot cheaper than it used to be. What are your thoughts overall on that market? And seeing any opportunities there?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“I can't discuss our specific track record, but I can, to what you just said, just offer one closing thought about why I think, let's just say, you know, performing well relative to an index, relative to whatever metric you want you want to think of in India might be kind of a more worthwhile game”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'd say that professional struggle to separate the wheat from the chaff. Professionals get the active management wrong a lot. And so if you're going up against them, you have very long odds.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Would you say there's a tendency in the investment business for companies that are not those super high quality companies? I mean, when the S&P 500 has a really good track record over the past 20, 50 years, it's because a small percent NGO, a minority of companies are those high quality companies that are lifting up those indices. If you could only own those companies, those would be massive underperformers. There's a huge middle mid swath of companies that are. They're not disasters, but they're just they haven't moved in 10 years. They're earning what they did 10 years ago. Is there, I guess, a process, especially with passive indexation for those companies to, no one really wants to own them, but it's just they're there, you know what I mean?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“You don't know, but you can assign a high confidence. And so, I mean, it's pretty infrequent. The opportunities you get to buy into that kind of business at an interactive valuation, but they do come along. And if you have come along, and I've had the luck to kind of coincide in terms of my thinking with a couple of those payments, music rights, there's India kind of taken as a whole. There's a few examples of businesses where I think it's not that people don't get that they're good businesses. I think it's just that people underappreciate the degree to which they can sustain that kind of compounding.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“The actual that's why quality is so important. That's why whether a company can reinvest earnings at a high rate of return, why that's so important, because if you really do that right, it won't matter a huge amount the price you pay today.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Compounding really is magic. I mean, I think there's a lot of reasons why a lot of people don't benefit as much as they could from compounding and earnings and the corresponding compounding in stock prices. But I think the simplest reason is just that it's pretty hard to have an intuitive sense of the power of compounding. If you pay 30 times earnings today for something growing earnings at 20% versus paying five or ten times earnings for something barely growing, the thing selling at the higher P is the much better investment, you know, whether we're looking at 10, 20, the differential as to how much better it is just grows over time because the”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“You know, figure out if something is very obviously at a discount to its long term intrinsic value, buy it, and try not to check the price too often.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“And the reason is that dead people don't trade. And it's also the reason why housing in some contexts, including in our country, has generally worked out for a large number of people. It's that there's this forced hold. There's a lot of friction with buying and selling a house. And so just like with a retirement account, the rules that constraints that make it difficult to trade in and out, they're a future, not a bug. And so if you can only do one thing as an investor, it's just think long term. Timing is something that it's a fool's errand, like we saw with this recent run-up in rates where a lot of people were caught wrong footed by that. And you can very easily overcomplicate the whole process. I think kind of the tried and true approach of”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Short term thinking. It really, it's such a big factor that I think this is maybe anecdotal, maybe apocryphal, but I heard that the best performing fidelity accounts from a study fidelity did or might have been another broker was a certain category of people and a certain group. And the group was dead people.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Got it. Final question for you, Andre, before I let you go. It's a very broad one, but what do you think is the biggest or most common mistake people make in the investment business or in the investment process?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“There's basically these two camps, and I think to the extent that anyone would ever think about investing in airlines, you'd much rather invest in an airline in that kind of dualistic scenario than one where there's this kind of free-for-all and there's a new low-cost carrier that's undercutting everyone who can launch each year.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Consolidation I was definitely a believer in that. I still am just in the axiom that, generally speaking, consolidation is good in terms of the ability of a business in any industry to maintain and sustain profit margins, returns on capital. I think the case I'm currently more familiar with, again, is India where the industry there as a whole has been extremely, you know, it's kind of a killing field of various people who thought that they could do it differently, including that famous liquor baron who's now been, you know, he's in exile in London after trying to start an airline, which is one of many that have failed over the years in India most recently. It's consolidated down to basically two companies. There's InterGlobe Indigo and basically the Tachas and the state-owned airline Air India was privatized and is now owned by the Tachas.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Final industry I want to pick your brain on is the airline industry famously an industry that pretty much from its inception has been unprofitable and I think every company except for Delta maybe has gone has gone bankrupt over the past decade there was a sense at least in the investment community that was changing the there were some mergers consolidation even Warren Buffett invested in them then COVID in that I know Warren Buffett sold those stocks what's your experience been in that sector and I mean were you ever a believer in that it would be a very profitable industry and if you were do you still believe that”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, you have to be detail oriented but not obsessive, where I think with something, whether we're talking about US tech companies or Indian companies, in the Indian case, Steve and I, we go to India twice a year, spend maybe a month out of each year there. And I think that's a very important month to spend there. I think the other 11 months are it's great to be very removed from the day-to-day because that's what allows you to profit off of other people's short-term thinking where it's very easy, I think, when you're in the midst of everything to get caught up in the daily narrative of, oh, you know, well, there's a rumor about this company or this industry, you know, the prospects are getting worse for XYZ reason. It's very rare that the actual intrinsic value.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, how much attention pay that much attention to it, but I probably paid more attention to you, to the news and the narrative of, oh, now everyone's talking about private credit. Everyone's talking about banking and everyone is... Yeah, everyone's an AI expert. Everyone is writing creating their AI newsletter. I mean, I feel like to really have. You know, an edge in the investment business in terms of investing in businesses is it you kind of have to tune all that stuff out?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's the obvious fact is just that it's a mature industry. And so in terms of stocks, it's not that I think any specific bank is unattractive. It's just, I think you have better opportunities out there. These are not businesses that are likely to compound earnings at a higher rate for years and years. And it's not because they're not smart. It's not because they're not good at what they do. It's just because it's a mature market. The products that are offering, they're already in the hands of the people who need them. That's for the crisis. Yeah, I'd say it's one thing, one lesson I've learned is just that there is no such thing as a boring year. You can think that everything is just going swimmingly and then something will erupt to make your day interesting.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“That makes me think of the analyst in the US who chided Jamie Diamond not on credit, but in 2021 said, Jamie, why don't you widen your net interest margin a little bit by going out on the curve for own a 10-year bond, own some longer duration securities? And Jamie said no. And of course, those are the securities that were impaired immensely by the rise in rates. How much work do you do on US banks as people can tell you're very familiar with the payments world? I do a lot. Do a lot of interviews on the US banking system. But that's because they're interesting. But I know not necessarily the best performing stocks or the best businesses. But yeah, what are your overall thoughts? And yeah, how did you experience the banking mini-crisis in March with the fall of Silicon Valley Bank versus Republic, et cetera?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Just a quick anecdote that one of my favorite stories from India was I was in a meeting with a finance company there that was being chided, berated by all these domestic institutional analysts in this meeting for not growing faster. And the reason they weren't growing faster is that, you know, they didn't want to compromise their lending standards. And I think that in when we're talking about lending businesses, growth can be both a good and a bad sign. You have to know what the assets are.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Can grow a business as a lender just by giving people money, you know, a lender growing their business by 50% is not by itself impressive. In fact, it can be dangerous because people will accept being lent money.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“The low risk customers are spoken for. They already have cards. And so if you're winning their business, you are probably not doing something that's sustainable.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“So not to be too obsessed with India, but since you mentioned it, a specific example does come to mind. I won't name the company, but there's a great issuer in India, a credit card issuer, that I'm very interested in. And it is growing at double digits, 20%, 30%. And I think if I came across the company with those numbers in the US, I would have the opposite reaction to the one I have in India where because the Indian market is so nascent when it comes to payments, especially with credit, there are a lot of potential customers out there who don't have a credit card currently who might be very eligible for one in terms of being able to pay it. And that, if you saw a company put up those kinds of numbers in the US, I think the first question would be, well, where are they getting those customers? Because the quote-unquote good customers that”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Okay, that makes sense. So that's buy now, pay later. And then, what about the credit card business? Not about the payment networks, which you referenced earlier, but about the actual business of letting people money on credit cards or that many of the big banks are in this business. There's some banks that specialize in it, but that's a credit business, unlike the network business.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“When we talk about what is earned by the networks, it includes both, so it's separate from interchange, but suffice to say that it's both based on overall volumes and on a transaction basis. And so to the extent, everything else being equal, that you take the same dollar pi and split it into a greater number of transactions, that's better for them.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“I loved there was this great maybe calling it a meme is too disparaging, but this idea that people were throwing around when the rates were lower than they are today about how BNPL was a big disruptive threat to the incumbent credit card industry. And that was just so funny because when people do these BNPL payments, when they select that at checkout, they're plugging in their credit card number. And so it was actually a boon for the credit card industry because they were splitting what would have otherwise been one payment into a bunch of smaller transactions, each of which would incur transaction fees and if you aggregate all that together, it would have been more lucrative than just one lump sum transaction.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Within the fintech payments space, what do you think of the credit card business? What do you think of the buy now pay later business, which I don't really understand at all, but it has gotten pretty, pretty big.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“I'll tie this back into what we were saying earlier about Indian companies, where I think Tenor especially 20 years ago, PayPal was a lot like the typical Indian company that I meet with today, where it was providing a much needed service and a very rapidly expanding industry. And not only was the industry payments in this case expanding, but the electronic share of that was expanding, maybe PayPal's or whatever company we're talking about, its own share of that was expanding. So there were multiple simultaneous tailwinds towering growth and the pie was expanding at a sufficiently fast.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Did they in the past because they definitely have been a successful company over the past 20 years? Are you saying the past 20 years were good, but that has already changed? Or are you saying this problem has been with PayPal for a long time?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“And then they're also at the mercy of the fact that the market as a whole is not, they don't determine how it's structured. And so they really are, you know, they're collecting basically a difference in terms of merchant discount rates, which are affected by interchange, which are set by the networks. PayPal and companies like it, you know, including merchant acquirers that actually sign up the businesses that accept payments, they can have decent businesses, but ultimately at the end of the day that the fundamental kind of starting point for their businesses, they don't determine that. The issuing banks, the card networks, the bigger players do that. And so, yeah.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I'm familiar with the industry, and one of the brightest spots and a very bright overall industry has been e-commerce. And both of the leading players in terms of payment networks, they have subsidiaries that directly address this market demand for kind of a white label checkout solution for businesses selling online in terms of being able to accept payments. And when you check out at an online merchant, the bright spot for PayPal and for other companies like it that they're kind of service providers plugged into this broader ecosystem is there's this kind of list of options you can select at payment, including PayPal. And that's problem number one. So they're at the mercy of that consumer selection. There's a large and some would say expanding set of alternatives there.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Gross margins are going down because it's doing unbranded stuff like that, but they do have a new CEO. So I know you took a hard look at the company. And when you take a look at something, you go very, very in depth. So share what at first said, okay, this is worth taking a look at. I mean, it is a company with high margins that has a PE. That's a lot lower than it used to be. Let's put it that way. But so, what originally drew you to it to take a look at it, and then what said, you know, maybe it's good, but it's not good enough for me.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“You mentioned the payment space. You know, not going to talk about any stocks that firm owns, but maybe we can talk about a company that you took a look at and analyzed it and you decided not to invest in that. And that company would be PayPal on the Face PayPal was a darling during the buoyant time in stock market of 2021. And the stock at least has fallen on hard times. And as is often in the stock market, this price goes down and then everyone has a reason for why it goes down. And the reason is, oh, Apple is taking away its market share.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“And higher nominal growth means earnings are also growing faster than they might have in a lower discount rate scenario. And part of it is just that the valuation which you'd be interested in that company, it's not so high as to make it unattractive just with that tweak to a model.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'd say that if your appraisal of a company is radically altered by a change in the discount rate, then you are overthinking, you're spending way too much time on your analysis and not enough time just on figuring out what it is you're trying to do. If we're looking at some of the high quality businesses that come to mind in the US, I can mention the sectors at least that I like, such as payments, there really is it doesn't make a huge difference to the intrinsic value, or at least my appraisal of intrinsic value, whether the discount rate is three, four, five, six, or even higher part of the reason is that, you know, with higher rates, we're usually talking about higher nominal growth.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Right, okay, so that is, I guess, on the liability side, but what about the valuation side of, okay, when interest rates are using the 10 year for your discounted cash flow? You get a lower number when the 10 year yield is higher. And that is a nice theory, but is it kind of okay? Okay, that's nice, but like keep that wharton. Don't talk that to me, you know.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it has been a bull market. It has not been a bull market for companies that were directly negatively impacted by higher rates. And so the most obvious category of stocks to avoid in this kind of environment. Companies with a lot of leverage, a lot of direct exposure to rising cost of debt where they'd have trouble funding their borrowings. But if we're talking about a company like some of the tech giants in the US that have huge amounts of net cash on their balance sheets, higher rates are arguably a boon for them because they're now earning billions of dollars in risk-free interest on these cash piles.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“How much do you think about macro when looking at a stock? And specifically the economy in general, but specifically interest rates, you said intrinsic value, that's future cash flows, that's your sense of the business, but then you have to discount them back to the present with, you know, and those future cash flows, that stream can be much more valuable when interest rates are at zero than when they're at 5%. And that generic observation led many people to say, oh interest rates shot up from zero to five percent. So the stock market is going to have trouble. And it did in 2022. But I mean, you know, we're in a new bull market 2023 has been a very good year for the stock market, which has surprised many who take that discounted cash flow thesis maybe kind of as gospel.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“If the fundamental situation Think the generalized approach that's the one to take, not just in India, but I'll focus on India here is you invest with the long term in mind. You have reasonable confidence in why your assessment is likely to be the right one. And you try not to overpay”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“What about getting in and out at the right time as your thesis changed? When you buy a company and you very constructive on the fundamentals that it will grow its earnings. Narrow A, the stock triples in a year. What do you do? Sarrow B, the stock is cut in half or down 60% in a year. What do you do?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Struggling to grow at 5% instead of 3%, struggling to maintain pricing power. In a lot of cases, in the companies I've looked at in the U.S., there's real doubt as to whether the business will be as good five years from now as it is today. In India, that's just, it's so much less of a concern. I mean, you might find a company that grows a lot faster over the next five years than another, but they're both going to grow. Not to say that there's obviously examples of companies that don't do well, but generally speaking, even if you are throwing darts at a board in India, you'd still have earnings growth. You basically have to be doing something pretty badly to not grow in an economy that's growing at 7 or 8 percent.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'd say that the biggest lesson I've learned in relation to that is that people like to talk about what's sometimes a margin of safety when you buy something. I'd add that if you buy something that can compound earnings and has a long runway of growth ahead of it where it can not only generate a high return on the capital it has invested, but also reinvest the capital it generates at high rates and keep that compounding machine going, that will go a long way towards addressing the issues arising even if you overpay based on current year earnings. It's I think a much harder task to try to consistently now perform and make money looking at these developed world companies that are slower growing where they're fighting over basis points of margin they're you know”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I guess now we can move on to a broader conversation just about overall investing not just in India. How do you decide when to sell something? I mean, do you have a target in mind or do you always have a sense of intrinsic value? And okay, this is trading above intrinsic value. So it's time to sell. That is kind of the easy question. The much harder question is what happens when you like something and you buy it and then it goes down a bunch. I mean, how do you go about selling it? I know the world stop losses. That is for trading. And you and my dad are definitely not traders. You're much more investors, but there's a similar sense of risk management. Okay, I mean, do I double down when the market is telling me that this, you know, clearly people have doubts and sometimes the market's not smart, but sometimes it is. What does the market know that I don't?”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Families. And so there's a lot more. I think that ties in directly with the fact there's a lot more volatility because there's a lot less of that kind of steadying hand of institutional ownership. And for someone like us, we think of that as a huge opportunity because you get the opportunity pretty frequently to buy things that dipped by a huge amount on no news, basically rumors and correspondingly to sell things that skyrocket to much higher Ps on stuff that isn't fundamentals.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, it's really not a long list, and there's a variety of reasons for that. One of the main explanations as to why I think if you look historically, there's been a huge opportunity for our performance by stock breakers in India definitely to a degree that to a greater degree than in the US is just that the financial markets are a lot less sophisticated or however you want to phrase that where I think your median US company, institutional investors will be the majority of the will own the majority of the shares outstanding 80 or 90 percent in some cases in India the average institutional ownership is you know closer to 10 or 15 percent at most and so there's a lot more like you said owner ownership by the what in india there are known as promoters the the controlling founding managing”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'd say that if you are a top 10 shareholder of one of the companies that I'd be interested in India, I probably know your name. It's not a huge list. I'm saying I'm talking about foreign institutions.”
2024-01-04 · Forward Guidance · Dispatches From India | Andrei Stetsenko, Partner at Farley Capital · IDENTIFIED FROM THE TRANSCRIPT