Saturday, November 5, 2011

Hospital for Profit

I have been to Fortis Malar and also Apollo and noticed the buzz of activities, the processes followed, world class infrastructure, foreign country patients, cutting edge technology, high skilled doctors and the cash ringing offices.
What a beautiful growth story! Fortis and Apollo are trying to make an organized health care sector. They not only focus on multi-specialty hospitals, but also are having a chain of clinics as well. People coming to these hospitals are surely going to increase, what with raising income level, sedentary and stressful life leading to chronic diseases and a booming health insurance.
So are Hospital stocks looking like stable, defensive stocks?
Well almost! Let’s have a closer look. You have a heart disease, do you go to Apollo/ Fortis. For me which hospital is not important? I want the best doctor. Who is the best doctor? You choose a doctor because he is recommended by your physician/friend/relatives. If the doctor visits a Hospital then you go there. You don’t go to a Hospital because it’s a good brand. The brand of Hospital is not really as important as the doctor’s brand.
A doctor will have to pay more % of his income to a branded hospital than an unbranded one. Usually a good doctor with decent money in his pocket will open his own clinic and ppl throng to those clinics.
Hospital really make the mark in in-patient services like surgery, monitoring of patients and using of cutting edge technology for treatments, which cannot be provided by a doctor in a small clinic. Here a good corporation can ensure quality process, reliable service.
Hospitals can charge any amount of money and the patient cannot bargain and Hospitals can generate profit, but it just doesn’t make sense. Hospitals (just like education institutes) are for serving people. They should really be a Not For Profit organization. In some fields, charity and service mentality should be the focus, Hospital is one such field.
Fortis and Apollo are improving standards of the Hospitals in India and those professionalism is really necessary in this unorganized sector. These companies will sustain and generate enormous amount of profit.
But there is this eternal dilemma, if I go in as an investor I want them to make all possible tests for the patient, let him undergo a big surgery, let him be put in a monitoring unit for 3 days. Should I entertain a patient who is seeing a Physician or a patient with rare disease, let me go to the second one he will give me high margin. But the patient in me always wonders, are they doing this test because its best for me, or is it best for the shareholder!
What should be the agenda for these hospitals, to increase the revenue 3 folds in 5 years! Hospitals should really pray that their income should reduce, that they should close some of their hospitals (meaning Healthy nation)
‘Hospital for Profit’ is an oxymoron.

Saturday, October 15, 2011

FMCG - no Pharma - Yes

FMCG, Pharma are both defensive stocks. But I frown at FMCG stocks and prefer Pharma for the following reasons:

1. FMCG has easily duplicatable products. All biscuit manufacturer have cream, marie, butter buiscuits and also take for eg huge player like HUL, which has several soaps. If Liril’s share is increased, it might be eating the Pears

2. Heavy.. very heavy Adv cost in FMCG and brutal price wars

3. People need new products or improved products every week

4. In Pharma the doctor chooses the best product and ppl don’t mind paying price

5. In Pharma even though we’ve generics, Doctor knows whats the best and they choose the leader

6. Unlike FMCG in Pharma there are fewer ppl who decide what to buy, its easy for the Pharma companies to sell to them

Change in my Investment Style

Initially I was investing in bulk per month say 5k/month in a single share – now I’ve changed it to 1k per week – different shares every week
I was initially worried about the loss, I was like if I invest in a share @100 and now it’s is 80, I’ve to invest in a lot more, so that I can average my money. That’s a dead trap, now I’m comfortable looking at the loss and if I believe that the fundamental is still fine I still don’t worry about keeping my loss low. If I find the share interesting I still buy only once a week that too only for 1k, so even if I’m wrong my loss is not substantial.
If the fundamental of the company changesor of the loss is huge – then I book my loss
I’m reasonably good in booking loss, but have not yet booked gains. I believe in staying long term (many many years and exiting only when I need money or if the fundamental changes)
I’ve to work on exit criteria. Should I make 10% stop loss a rule? I’m worried about unnecessary selling and again buying the same share, it will increase my transaction cost. My philosophy is don’t try to manage short term. A good stock even if I bought in 52 week high will still be a good appreciation after 5 years

Saturday, September 24, 2011

PSU Stocks

Long long ago I used to travel in my company bus and I had a companion and we would speak about shares and mutual funds, at that time I was not into shares.
He once said, “Sundaram has launched PSU find”
I replied, “But how can anyone buy a PSU, it’s Govt company and they cannot really work only for profit”
He replied, “PSUs have good cash flow, stable business and many are monopoly”
Then why should Govt sell it, Govt was initially planning to sell sick units but now they are selling just about everything.
There are many star performing PSUs with Navratna, maha ratna status, but its still a govt company and it will have bureaucracy and they will not be as nimble as pvt company.
Govt is still a major stakeholder and they will be taking decisions based on what is good for nation, lets say the profit is low, they will not restructure the organization, they will not lay off. Lets say 1 of the vertical is a losing business, they might not shut it down. Govt will be worrying about communist and vote banks.
But, PSUs are still giving dividend, yes they are, but its may be because of the pending FPOs
Its good to buy Govt bonds, but not PSUs.

Monday, August 22, 2011

Disturbing Dialogue

In one of my previous projects, I was working on a proposal. I was not very much interested in working on that proposal, I already had a project in hand and I was asked to do something extra.
As things progressed, there was a delivery pressure on that proposal and there was this news going around that we may need to work over the weekend to complete that. I never liked the idea of working in a weekend that too for a proposal which I was not passionate about. I was like, “that’s not my main responsibility, why should I stretch for this?”
That Friday I met my manager and said, “I’d completed this and this and the proposal is in good shape.. blah.. blah.. tell me if I’ve to come over the weekend?”
“You tell me”, he said
I looked at him baffled.
He smiled and said, “You are working on this proposal and you know how much needs to be completed. If I want I can ask you to come over the weekend, but there is no glory in me doing that. You decide”
I silently walked back to my cubicle.

This particular dialogue was the most disturbing I ever heard. This incident never changed me, but as I look back this is the reminder on what I was lacking.

What’s the difference between ownership and just doing your work, caring and just trying to be politically correct?

What would you do?

“What! Your father is in hospital!! Don’t hesitate to call me if you need something”


Do you just show up?

Saturday, July 23, 2011

The Dance of Fire - Blurb

The Young man moved across the mountain ranges with sheer determination. He was on the move for many days, he knew that he was moving in mountains which were never visited by men, except may be for the Maker of Fire. He wanted the knowledge; he wanted to know how to make the fire. This single skill, this single technique would decide the survival of his clan.

Wrote this story recently. Please drop me a mail if you are interested in reading this story.

Saturday, February 12, 2011

The Book of Eli - Review

Saw this movie some time back on Sony Pix.
The movie that you enjoy or for that matter anything in life is when you watch something without any expectation and then you are pleasantly surprised.
ppl recommending a movie is good, and you see it you like and you are happy, but what is really good is that you bounce on something and you like it.
This movie is very cool, there are a number of post-apocalyptic movies in hollywood which are standing out like I am Legend, The Postman ..
What is important in a fantasy is that it should be realistic. ppl should feel it, they know that its not possible but what if it is?
So the movie which wins the heart is not the one with lot of actions and graphics, but the one with characters ppl can identify. A theme where ppl may be curious to know what they would have done.
So here is a story of Eli who walks towards West to deliver a book and he comes across a town controlled by Carnegie. Carnegie is looking for a book which he hopes will make him control the people. Maybe thats the book which Eli has.
The interesting thing here in this post-apocalyptic theme is ppl who are born after the apocalypse are illiterates!
Is Eli superhuman? No says Carnegie. But it doesn't seems to be the case. May be he is protected by the book.
Eli leaves the town and a girl follows him and they are in turn followed by Carnegie and his men (Carnegie already wounded in leg by the bullet fired by Eli in a previous fight)
The movie touches on themes of belief, being grateful
As a person who loves reading I got glued to the theme of young people being illitrate and old are literate and if the dwindling old population doesn't do something then the written words will be lost.

Friday, February 4, 2011


Isn’t it amazing? Isn’t it absolutely marvelous that whatever man has created has its origin in the mind? Call it idea, vision, imagination, intuition, dream, fantasy or curiosity. It is in the mind and lets generalize and name it ‘Thought’.
The company you are working on, the commutation you took to reach office, the machine in which you are reading it …all started off as a thought.
Man has this thought in mind, but that is not enough for him, he wants to see it in the physical reality. If man got contended with what he saw in his mind’s eye, there would’ve been no civilization, no modernization; man would’ve been just an animal, which spends considerable time of its life in thoughts. This urge to create the thought in physical reality, makes our life interesting.
Isn’t this physical reality just a collection of thoughts? Agreed that there are many things in our lives which are not created by man, like stars, plants, animals, may be these things could also be thoughts coming from some source which we don’t know. Lets not worry about those non-man made things, what matters is there are still many things which are in our ‘circle of influence’ which were created by men and it means that it has its origin in thoughts.
If what I am experiencing now is a bundle of thoughts, not all my own. I want to take an active part in this experience, I want to experience something which currently in physical reality is not in sight. If I could dream about it, visualize and develop the desire to experience it in physical reality then it should be possible to create that experience.
If the experience desired is individual , that is changing my ‘state’ in the physical reality then it could be experienced fairly quickly. If I want my thoughts to affect the physical reality considerably then the thought has to attract similar thoughts. A single thought by a man looks very tiny, but if that thought can spark similar thoughts among men it can create an ‘avalanche of resonance’. It can create magic.
Whatever may be the scale of experience which we desire to experience in the physical reality. If we can focus and nurture the thought, telling ourselves that ‘its possible’, so that the thought can overcome counter thoughts in our mind. Then we have better chance of creating the experience in physical reality.