tag:blogger.com,1999:blog-735209523627178736.post8866353678781687391..comments2024-01-22T16:29:52.183+05:30Comments on Value Investing: An Intutive Approach to Investing: Sources of Durable Moats: Building Blocks of Great BusinessDhwanilhttp://www.blogger.com/profile/02537043667425952923noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-735209523627178736.post-27279106043189192562012-08-16T19:42:44.360+05:302012-08-16T19:42:44.360+05:30MUQTAR
EXCELLENT ANALYSIS AND REGULAR FOLLOWING YO...MUQTAR<br />EXCELLENT ANALYSIS AND REGULAR FOLLOWING YOUR BLOG FOR MORE INFORMATION.<br />I AM ALSO FOLLOWING FLUIDOMAT COMPANY FROM MARKET PRICE OF 28.00 BUT I NEED INDEPTH INFO OF THIS COMPANY AND FUTURE GROWTH PROSPECTS.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-52079476866426881662012-05-12T15:46:27.370+05:302012-05-12T15:46:27.370+05:30Hi,
Appreciate your comments on the two companies...Hi,<br /><br />Appreciate your comments on the two companies. Looking forward to your post with further insight into the gas sector.<br /><br />Cheers!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-43141014336613174662012-05-12T12:16:02.761+05:302012-05-12T12:16:02.761+05:30Hi Anonymous,
In terms of margin difference betwe...Hi Anonymous,<br /><br />In terms of margin difference between IGL and Gujarat Gas, I have not gone into the detail, but to the best of my knowledge, PNGRB has not yet determined/approved tariff for Gujarat Gas and hence regulatory overhang is still there (Competition Commission is not the regulatory authority for CGD tariff determination).<br /><br />Regarding the article links that you have sent, it will require a separate post to analyze relative merits of various companies in gas sector. However, my take on companies within gas sector is slightly different. In terms of regulatory risk, I see least risk in Petronet LNG as PNGRB act is very clear that LNG terminals and re-gas margin does not fall under the purview of PNGRB. new LNG terminals are only required to get registered with PNGRB and nothing more. On the other hand, I see LNG terminal becoming increasingly important part of gas infrastructure, if domestic gas supply does not rise substantially (which is base case scenario in prevailing condition). Even though, many players are wanting to enter LNG terminal business, it will take at least 4-5 years before substantial capacity is added. Till then Petronet LNG is going to enjoy near monopoly (other players Shell and Dabhol)in the business. Moreover, Petronet LNG can leverage its existing infrastructure to build additional capacity at incremental cost which is substantially lower than a new build terminal hence giving it room to have higher margins. <br /><br />Regarding Gujarat Gas, currently it is earning very good ROCE (35%). However, as Mr.Buffet suggests that a great investment is one where one can deploy large sum of capital generated from business and at very high rate of return. I see difficulty for Gujarat gas to deploy incremental capital at rate similar to its current ROCE (due to regulations governing tariff) and it is more likely to be in the range of 18-20% ( PNGRB allows 14% post tax ROCE). This in my opinion is precisely the reason BG wants to get out of this business (another reason is BG is exiting downstream business world over to focus on LNG and upstream business. I feel, Gujarat gas is relatively fairly valued or slightly pricey at this level and margin of safety is not there. <br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-65933133639299642072012-05-11T18:23:32.609+05:302012-05-11T18:23:32.609+05:30Hi,
First and foremost, kudos to you for all the ...Hi,<br /><br />First and foremost, kudos to you for all the articles on your blog! Good job!<br /><br />Appreciate and accept your points on Gujarat Gas. <br /><br />Further, I gather that the margins of Gujarat Gas have been significantly lower than that of IGL. The regulator itself, believes that Gujarat Gas is not charging unfair prices. Therefore, it is seems to be less vulnerable to policy actions by the regulator.<br /><br />Looking forward to your thoughts on this.<br /><br />Ref.: 1) http://www.thehindubusinessline.com/todays-paper/tp-economy/article2829567.ece<br />2) http://www.financialexpress.com/news/gas-sector-tariff-cut-and-after/940102/0<br /><br />Cheers!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-16557625593282194672012-05-11T17:54:06.001+05:302012-05-11T17:54:06.001+05:30excellent workexcellent workzulfiqarhttps://www.blogger.com/profile/14929977309202065970noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-33165058031369700582012-05-11T15:31:16.009+05:302012-05-11T15:31:16.009+05:30Hi,
All gas distribution companies (including Guja...Hi,<br />All gas distribution companies (including Gujarat Gas) and to a large extent gas transmission companies (GAIL/GSPL) do enjoy tremendous advantage over late entrants as both the businesses are natural monopolies. As you may be aware, a natural monopoly exist in most of the common infrastructure businesses as duplication of capital/effort employed is not justified economically and hence insulates infrastructure built by early entrants from competition by very nature of its business/operations.<br /><br />Having said this, most of the natural monopolies are regulated. This, generally is the case across the world so that early entrants do not take undue advantage of natural monopoly. Till 2008, Gujarat Gas was unregulated monopoly, a wonderful business to own! However, post PNGRB (regulator), all future (and even past) investment will have regulated returns on investment (as in power sector). Gujarat gas will have to build excess capacity (in all future expansion) and allow competitors to carry gas through its distribution network. Even though, Gujarat gas will enjoy exclusivity for few years, there after it will be open to competition. Even at that point of time, as you rightly mentioned, it will demonstrate moat based on "barriers to switching" as consumers may have to take trouble to change their connection from one company to the other . <br /><br />However, I am not sure about whether company will be able to transform this "moat" into economic advantage due to regulated nature of the business.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-52168318394338816852012-05-11T14:08:18.633+05:302012-05-11T14:08:18.633+05:30Hi,
Gujarat Gas is an example of a company that h...Hi,<br /><br />Gujarat Gas is an example of a company that has a moat due to 'Barriers to Switching'. It is very difficult (if not impossible) for a consumer to switch the another provider. <br /><br />Please share your thoughts on this.<br /><br />Cheers!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-58093247035860449922012-05-09T18:59:07.497+05:302012-05-09T18:59:07.497+05:30HI Karun,
Thanks again for your compliments.
Be...HI Karun, <br /><br />Thanks again for your compliments.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-38001055014433462322012-05-09T18:57:38.681+05:302012-05-09T18:57:38.681+05:30Hi Mr.Labitan,
I appreciate your time in reading ...Hi Mr.Labitan,<br /><br />I appreciate your time in reading the article and comments. You have done a wonderful job by writing this book covering all major holding of Berkshire and unearthing "moats" for these businesses. Kudos to you and research volunteers for contribution.<br /><br />Best Regards<br />Dhwanil DesaiDhwanilhttps://www.blogger.com/profile/02537043667425952923noreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-39456697045209316732012-05-09T17:36:18.014+05:302012-05-09T17:36:18.014+05:30Great Article. Your readers make like this new boo...Great Article. Your readers make like this new book about the Moats in Berkshire Hathaway businesses. "Moats : The Competitive Advantages Of Buffett And Munger Businesses" is on amazon at: http://www.amazon.com/dp/1105422860<br /><br />The 70 Businesses covered in MOATS: <br /><br />Acme Brick Company, w Adam Ward<br />American Express Co. (AXP), Dr. Maulik Suthar<br />Applied Underwriters, w Adam Ward<br />Ben Bridge Jeweler, w Beryl Chavez Li<br />Benjamin Moore & Co., w Mr. Jack Wang CPA <br />Berkshire Hathaway Group, w Brian Greising & Rick Mayhew <br />Berkshire Hathaway Homestate Companies, w Beryl Chavez Li <br />BoatU.S., w Peter Chen <br />Borsheims Fine Jewelry, w Tariq Khan. <br />Buffalo News, Bud Labitan & Peter Stein <br />Burlington Northern Santa Fe Corp. w David Leoy. <br />Business Wire, w Larry Harmych. <br />BYD, w Kevin Walsh. <br />Central States Indemnity Company, w Azalia Khousnoutdinova, <br />Clayton Homes, w Erin Sestak. <br />Coca Cola (KO) w Sebastian Jung, <br />ConocoPhillips (COP), w Adam D. Studts, PE. <br />CORT Business Services, w Erin Sestak. <br />Costco Wholesale (COST), w Jubin Jacob, AUC-SOM <br />CTB Inc., w Todd Sullivan. <br />Fechheimer Brothers Company, w Ben Albaitis. <br />FlightSafety, w Peter Stein <br />Forest River, w Richard Konrad, CFA<br />Fruit of the Loom®, Dr. Maulik Suthar <br />Garan Incorporated, w Dr. Edwin Fuentes <br />Gateway Underwriters Agency, assigned Daniel Rudewicz, CFA <br />GEICO Auto Insurance w Florian Beil, <br />General Re, w Raghu Dasari, & Theodor Tonca <br />H.H. Brown Shoe Group, w Mervyn H. Teo <br />Helzberg Diamonds, w Natalja Callahan<br />HomeServices of America, w Sebastian Jung<br />IBM, w Tim Bishop & Peter Stein<br />International Dairy Queen, Inc., w Tariq Khan <br />Iscar Metalworking Companies, w Kevin Walsh<br />Johns Manville, w Manpreet Singh Saran<br />Johnson & Johnson (JNJ), Beryl Chavez Li <br />Jordan's Furniture, w Zehao Sun. <br />Justin Brands, Dr. Maulik Suthar<br />Kraft Foods (KFT), w Andrea Tagart. <br />Larson-Juhl, w Tim Bishop <br />Lubrizol, w Scott Thompson, MBA. <br />M&T Bank Corp (MTB), w Cliff Orr & Richard Konrad, CFA <br />Marmon Holdings, Inc., w David Lau & Theodor Tonca <br />McLane Company, Dr. Maulik Suthar, <br />Medical Protective, w Michael Murillo<br />MidAmerican Energy Holdings Company, w Dr. Maulik Suthar & Brian Bernardino, JD <br />MiTek Inc. w Mr. Jack Wang CPA <br />Moody's (MCO), w Raghu Dasari <br />National Indemnity Company, w Jen Iwanski & Rick Mayhew <br />Nebraska Furniture Mart, w Julie Rosenbaugh, Theodor Tonca, & Shouryamoy Das <br />NetJets®, w Christian Labitan<br />PacifiCorp., w Beryl Chavez Li <br />Precision Steel Warehouse, Inc., w Adam D. Studts, PE & J.T. Loudermilk, MBA <br />Procter & Gamble (PG), w Beryl Chavez Li <br />RC Willey Home Furnishings, w Azalia Khousnoutdinova <br />Richline Group, Daniel Doyon<br />Scott Fetzer Companies, Cliff Orr & Hoang Quoc Anh, Vietnam <br />See's Candies, w Jen Iwanski<br />Shaw Industries, w Daniel Doyon & Richard Konrad, CFA <br />Star Furniture, w Pamela A. Quintero, MBA <br />The Pampered Chef® w Julie Rosenbaugh <br />TTI, Inc., w Peter Chen <br />United States Liability Insurance Group, w Stephen Chan & Colin Farrier <br />US Bancorp (USB), w Richard Konrad, CFA<br />USG Corp (USG), w Richard Konrad, CFA<br />Wal-Mart (WMT) w Florian Beil<br />Washington Post (WPO), w Andrea Tagart & Richard Konrad, CFA <br />Wells Fargo (WFC), w Natalja Callahan. <br />Wesco Financial Corporation, w Stephen Chan<br />XTRA Corporation, Bud LabitanBud Labitanhttp://www.frips.comnoreply@blogger.comtag:blogger.com,1999:blog-735209523627178736.post-81044294104665304582012-05-08T20:55:58.164+05:302012-05-08T20:55:58.164+05:30Hi
Again very well reearched article.
Thanks for...Hi <br /><br />Again very well reearched article.<br />Thanks for sharing.<br /><br />Karun SandhaZero Point SomeOnehttps://www.blogger.com/profile/12687303605569245335noreply@blogger.com