Buffett in Beijing RepoRt
| May 2012
advantages. Having predictable and
growing corporate cash ows, which
are run by shareholder focused andcompetent management of high integrity.Resulting in superior returns on equityand compounded returns for investors.
Interviewer:How about geographicalfocus? India versus Asia versus China?Hemant Amin:
Presently, we areinvested about 50% in India and 50%ex-India. Of the ex-India portion, 80%would be in Hong Kong & Singaporeand the rest in the U. S. So India is abig focus, as is Asia. The focus is reallyon understanding business models thathave really worked well in developedcountries like the U. S. and hopefully weget to invest in companies in India whichfollow similar models and strategies and
benet over decades with the benet of a
vast population needing similar productsand services as the West. Hopefully theycan ride on the same wave of growthpotentiality, as what their counterparts inthe U. S. have done over 2 or 3 decades.
Interviewer:What would get youmoving quickly into an opportunity?Hemant Amin:
We usually don’t rushinto stuff. We take our time to studyWe need to have comfort that the datawe have at hand really is genuine. Thatit has a track record of quality earnings,rather than someone giving us futurepredictions. On the contrary, we havestayed away from deals and / or delayedour entry into deals that have come to usin a hurry.HDFC Bank Limited provides
banking and nancial services to
individuals and businesses in India.HDFC operates a network of 1,986branches and 5,471 automated tellermachines in 779 cities. The companywas founded in 1994 and is based inMumbai, India.
HDFC Bank Ltd.
(HDB) - NYSE
Prev Close: 28.57Open:
29.01Bid: 29.00 x 200Ask: 29.00 x 1001y Target Est: 36.50Beta: 1.23Next Earnings Date: N/ADay's Range: 28.90 - 29.3852wk Range: 24.47 - 36.80Volume: 88,490Avg Vol (3m): 729,465Market Cap: 22.62BDiv & Yield: 0.22 (0.80%)
(Source: Yahoo Finance)
HDFC Bank Ltd.
On one occasion, we declined aprivate equity deal in India and we wentback a year later and paid twice the pricethat we were offered previously, simplybecause we found more comfort in thenumbers than we did 2 years ago. It’sa multi branded, consumer franchisefood business in India. We are morecomfortable on missing out on the earlyrise. We would rather be sure of earningsquality and sustainability than jump intoinvestments. Being very active in theinvestment world is counter productiveI believe.
Interviewer:Do macro themes driveyour ideas?Hemant Amin:
Not really. I personallydon’t seem to have any edge. The questionI ask myself is what do I bring to thetable when I am considering investmentopportunities? What do I know that theworld doesn’t know, for example? Atany point in time, several things in theworld may seem to be going wrong.Most people including very highly paidEconomists get predictions wrong evenwhen armed with sophisticated data andpredicting models.To evaluate an investment idea fromwhat is happening on a macro and thenlooking at opportunities, I have found it
personally very difcult to get right.
Rather, what we focus on, is to keep atab on 50 to 70 businesses we really like.We think we love the businesses. We lovethe type of numbers that they are turningout, but maybe the valuations are notright to really press the buy button.Yes, from a macro perspective thingsmay affect valuations which in a senseprovides us investment opportunities,but we wouldn’t necessarily look at themacro and then try to paint a picture of where things are going.Because our investment decisionsaren’t for a year or 6 months, potentially,