Samir Arora on 2 storytellings that have failed in the market & why
Samir Arora, Founder & Fund Manager, Helios Capital, says “one story that has failed is that there is no limit to the valuation of a good company. I have mostly shorted all of them. Even now I am short half of them in another fund. All these 70-80 PE are growing at 10-12% for the last 10 years but they are very good quality companies. “
What is looking good from a one-year perspective and what is looking good from a three-year perspective?
No, one year, three years do not literally mean one year or 3 years but broadly medium, short, whatever you want to call it.
So the advantage of looking at one, two, three year at a time is that you will not like highly valued stocks because a highly valued stock is discounted. Over 20 years, the fact that I paid an extra premium does not matter but if you look at it one, two, three years, you will have to in theory assume that after two and a half, three years, you might have to sell. So PE which now is 50, may remain 50 at that time.
But something for which I have paid 70 PE, after 20 years, will become 30.
So the point is, whatever we are owning, like for example, today we say we are buying this K economy stocks, which means rich man's stocks like in India like Landmark Motors. In the US and globally, take Louis Vuitton. That does not mean that one year or two years later, some rural will not improve.
But when it improves, five stocks out of 40 will change. What is the big deal? That is the point.
Where do you think there is strong storytelling in this market? Brokerages, they call you every day. This is a great idea. This is the big picture. Where do you think the storytelling is very strong?
By the way, the storytelling has really failed in the last two years and fortunately, because
