Maharaja Shree Umaid Milla- get the business free with surplus cash of 109 Rs

7th april 2011

PLz share ur comments n suggestions

Maharaja Shree Umaid Mills (MSUM), a LN Bangur group enterprise, was incorporated on August 12, 1939.
It is a spinning-cum-composite textile company with over sixty five years standing in the chosen business of yarns and fabrics
MKt cap	Rs cr	359
CMP	Rs	416.6
Deal with IP Paper
No of shares in AP Paper	cr	0.86
Price per share	Rs	674.94
Total Realisation/ Cash which will come	Rs cr	581.07
Total Cash in company	Rs cr	581.1
Debt	Rs cr	128.0
Total Cash Net of Debt		453.1
Total no of shares of the company	Cr	0.86
Cash Value per share		526
CMP at a discount to Net Cash		32%	109

Rough cut Business Valuation			Total Discount to Fair Value	Per share incremental value
Price/Book of 0.5	Rs per share	53.8	38%	163
Earning Power at a multiple of 5 (5y avg EPS of 11.6)	Rs per share	58.4	39%	168

Nutshell,
You are basically getting the business for free along with surplus cash of Rs 109 per share

However, The utilisation of cash like Piramal case will be a key trigger...

Before ap paper announcement it was a strategic stake for Bangur's n mkt doesn't value holding co's whose inv's are strategic in nature as there is no clarity when they will be realised.
.

for excel attachments: Link

Interviews with 14 greatest hedge fund managers

Snippets from their interviews - links for full story embedded

Bruce Kovner

What market lessons have you learned over the years?

Some markets have very long, quiet periods. Some markets and some instruments become obsolete. Some markets become arbitraged out. The excess return in them goes away. One of the most important skills you need is to constantly reinvent where you put resources. Commodities markets were quiet for years. Now they’re very strong.
Does this mean that you must constantly make a macro judgment?

The view I started with and embodied in Caxton’s fund was that business cycles were very important and that they occurred all over the world, and it was useful to observe them and to take advantage of the opportunities across four different asset classes.
Which four asset classes?

Equities, fixed income, commodities and currencies. The raison d’être of the company is to observe the nature of the macro cycle across multiple economic and political zones and to take advantage of the character of each business cycle so that we would have multiple business cycles to trade.

Julian Robertson

Not many managers change their investment style?

I don’t think I did. I think I wised up a bit and realized it wasn’t just price that created value. If you can buy a stock at 25 times earnings that you are sure will grow at 20 percent for a long period of time, it is a better value than a stock trading at seven times earnings that is going to grow at 3 to 5 percent. The investor makes money on both the multiple and the growth in earnings.

"The Best Advice I Ever Got"

Warren Buffett, Richard Branson, Meg Whitman, A.G. Lafley, and 24 other luminaries on the people who most influenced their business lives.

You're right not because others agree with you, but because your facts are right.
Warren Buffett, CEO of Berkshire Hathaway
***

Make a fool of yourself. Otherwise you won't survive.
Richard Branson, Founder of Virgin Atlantic Airways and the Virgin Group
***

Recognize the skills and traits you don't possess, and hire people who have them.
Howard Schultz, Chairman of Starbucks
***

Have the courage to stick with tough job
A.G. Lafley, Chairman and CEO of Procter & Gamble
***

Follow your own instincts, not those of people who see the world differently.
Sumner Redstone, Chairman and CEO of Viacom
***

Be nice, do your best--and most important, keep it in perspective. "'Always do the best job you can do at whatever you're assigned, even if you think it's boring.' you get ahead by crediting other people
Meg Whitman, CEO and President of eBay
***

Be yourself.
He said to me, 'Jack, don't forget who you are and how you got here.'
Jack Welch, Former chairman and CEO of General Electric
***

Don't listen to the naysayers.
Sallie Krawcheck, CFO of Citigroup
***

Don't limit yourself by past expectations.
"The best advice I ever got was from an elephant trainer in the jungle outside Bangalore. I was doing a hike through the jungle as a tourist. I saw these large elephants tethered to a small stake. I asked him, 'How can you keep such a large elephant tied to such a small stake?' He said, 'When the elephants are small, they try to pull out the stake, and they fail. When they grow large, they never try to pull out the stake again.' ",
Vivek Paul, President and CEO of Wipro Technologies
***

When you negotiate, leave a little something on the table.
John Donahoe Dick Parsons, Chairman and CEO of Time Warner
***

When "everyone knows" something to be true, nobody knows nothing'.
Professor Schmidt's saying prompted me to think for myself, go back to first principles, and base knowledge on facts and analysis rather than on what 'everybody knew.'"
Andy Grove, Chairman of Intel
***

Remember the parable of the cow in the ditch..
Anne Mulcahy, CEO of Xerox
***

All you really own are ideas and the confidence to write them down.
Brian Grazer Academy Award--winning movie and TV producer, Imagine Entertainment
***

Regularly sit at the feet of Peter Drucker.
One of them is that there's a difference between effectiveness and efficiency. Efficiency is doing things right, and effectiveness is doing the right thing.
Rick Warren, Minister, founder of Saddleback Church and author of The Purpose-Driven Life
***

The real discipline comes in saying no to the wrong opportunities.
Jim Collins, Author of the bestseller Good to Great
***

Get good--or get out.
Peter Drucker, Business consultant
***

Start young.
Ted Turner, Founder of CNN and former vice chairman of Time Warner
***

Balance your work with your family.
If you have a closer family, you can be a lot more focused when you're at work
David Neeleman, CEO of JetBlue
***

Bail out of a business that isn't growing.
Mickey Drexler, CEO of J. Crew
***

Let others take the credit.
Brian Roberts, CEO of Comcast
***

Incorporate philanthropy into your corporate structure.
Marc Benioff, Founder and CEO of Salesforce.com
***

Surround yourself with people of integrity, and get out of their way.
The right people will feel far more pressure to perform well when they are trusted.
Hector Ruiz, CEO of AMD
***

If you love something, the money will come.
Donny Deutsch, CEO of Deutsch Inc. and host of CNBC's The Big Idea With Donny Deutsch
***

Keenly visualize the future.
Klaus Kleinfeld, CEO of Siemens
***

Don't chart your career path too soon.
Ann Fudge, Chairman and CEO of Young & Rubicam Brands
***

Respect people for who they are, not for what their titles are.
Herb Kelleher, Founder and chairman of Southwest Airlines
***

You can learn from anyone.
Clayton Christensen, Harvard Business School professor
***

Do what you love.
Ted Koppel, Anchor of ABC's Nightline
***

Source Fortune Magazine – March 21, 2005

Snippets from Richard pzena interview

• Pzena’s investment approach is very straightforward:
o he purchases shares in good businesses that are selling at a low price.
o He understands that it is often unrealistic to expect such opportunities to be available absent some sort of problem which causes the price of the shares to drop.
o The question Pzena and his team try to answer is whether the issue that caused the drop in price is temporary or permanent.

• ROE vs growth – which is more EPS accretive ?
o Prefer co’s with high ROE’s vis-à-vis growth rates as then growth is self sustaining and you wont need to dilute ur equity base to raise capital or leverage ur balance sheet. Infact stock buybacks can be a possibility.
• Odds & psychology
o Risk reward tradeoff
 50% chance of doubling ur money ..50% of losing a qtr ..good investment bet
• Strong discipline
• Talks about reasons for buying stocks like tenet healthcare, fannie, Freddie mac,computer associates

Summary of "Dhandho Investor" by Mohnish Pabrai

The books focuses on taking few ultra low risk bets which have a high pay-off…key being ultra low risk

Dhandho Framework
• Heads I win, tails I don’t lose much
• Few bets, big bets, infrequent bets
• Focus on buying existing businesses
o Long operating history
• Simple businesses with ultra slow rate of change
o We look for mundane products that everyone needs (WB)
o Five ascending levels of intellect: Smart, Intelligent, Brilliant, Genius, Simple.(Einsteen)
• Buy distresses businesses in distressed industries
o Getting the purchase price right is more important
o Entrance strategy is more important than the exit strategy
o Be fearful when others r greedy, Be greedy when others r fearful (WB)
• Look for moats – sustainable competitive advantage
• Bet heavily when odds r in ur favour
• Focus on Arbitrage
• Buy businesses at big discounts to their underlying intrinsic value – Margin of safety
• Look for low risk, high uncertainty business
o Leads to severely depressed prices for buying businesses
• Better to be copycat than innovator