Impatient Optimists Vs Value Investors in the New Year 2014: The Billion Dollar Stories of Bill-Melinda and Lupin (Bamboo Innovator Insight)

The following article is extracted from the Bamboo Innovator Insight weekly column blog related to the context and thought leadership behind the stock idea generation process of Asian wide-moat businesses that are featured in the monthly entitled The Moat Report Asia. Fellow value investors get to go behind the scene to learn thought-provoking timely insights on key macro and industry trends in Asia, as well as benefit from the occasional discussion of potential red flags, misgovernance or fraud-detection trails ahead of time to enhance the critical-thinking skill about the myriad pitfalls of investing in Asia at the microstructure- and firm-level.

Dear Friends and All,

Nearly ten years ago, the Bamboo Innovator had met with the founder of a Chinese drugmaker who was seeking to list his firm in Singapore. As this Chinese entrepreneur hails from the northeastern Shandong province and Shandong men are generally stocky like rugby players, this particular entrepreneur stood out for being unusually small-build. So the Bamboo Innovator asked him and found out that he had been afflicted with polio when he was young and he managed to recover from the disease. The gritty entrepreneur remarked that I am the only fund manager who observed this condition and made an effort to ask; he is usually bombarded by questions about profit margins and guidance on sales figures. The Bamboo Innovator is positive on people who have overcome personal adversities in life as they tend to be resilient in creating value for others. We invested in the shares of this Chinese pharmaceutical company and not only did the market value climbed four-fold from around $75 million to $300 million, but importantly it was also possibly the only Chinese S-Chip firm whose accounting was clean and did not suffer when the wave of accounting fraud revelation swept across the statistically-cheap Singapore-listed Chinese firms during the 2007/09 Global Financial Crisis.

******

As we step forward into the New Year 2014, the Bamboo Innovator was captivated by a WSJ article “What I Learned in the Fight Against Polio” written by Bill Gates on Nov 10. It talks about how the Bill and Melinda Gates Foundation has helped India stayed polio-free for more than two years and the lessons for solving other human welfare issues worldwide. Impatient Optimists is the name of the blog (www.impatientoptimists.org) of the influential Bill & Melinda Gates Foundation featuring the work and stories of the people working every day to help alleviate suffering, poverty, diseases, promote health, and to help students realize his or her full potential. These are all urgent problems requiring innovative solutions that have long-term investment implications which we will discuss shortly with the story of the Indian compounder Lupin (NSE: Lupin, MV $6.5 billion) and how its focus in the neglected niche of anti-TB drugs transformed the firm into India’s third-most valuable listed pharmaceutical firm, compounding shareholders’ wealth by over 138-fold. Bill Gates wrote in a blog post on Dec 23 about a summary of “Good News You Might Have Missed in 2013” that include how we got smarter and faster at fighting polio and that funding commitment to the Global Fund to fight TB and malaria was renewed. Gates also shared a tweet expressing his excitement on what he is looking forward to seeing in 2014: a new vaccine called pentavalent that can prevent five diseases.

Gates

Lupin

Lupin (NSE: LUPIN) – Stock Price Performance, 1995-2013

To read the exclusive article to find out more about the story of Lupin, of Australia’s CSL which is up 85-fold to $29 billion and how value investors can potentially gaze at the next Lupin/CSL, please visit:

  • Impatient Optimists Vs Value Investors in the New Year 2014: The Billion Dollar Stories of Bill-Melinda and Lupin, Dec 27, 2013 (Moat Report AsiaBeyondProxy)

Impatient Optimists

 

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Founder, manage thyself

Founder, manage thyself

BY JUSTIN YOSHIMURA 
ON DECEMBER 30, 2013

buddha

Ben Horowitz summarizes the hardest job of CEOs as, “managing your own psychology.”  Until recently, I believed that I was pretty good at this. After all, despite not taking more than a few days off since I was 15 — even after I sold my previous companies I would immediately start working on the next thing — I’ve never felt “burnt out.” Read more of this post

Anyone Who Thinks We Need A ‘Catalyst’ For A Market Crash Should Brush Up On Their History; There was no “catalyst” in 1929. Or 1966. Or 1987. Or 2000. Or 2008…

Anyone Who Thinks We Need A ‘Catalyst’ For A Market Crash Should Brush Up On Their History

HENRY BLODGET

DEC. 30, 2013, 7:57 AM 7,240 19

There was no “catalyst” in 1929. Or 1966. Or 1987. Or 2000. Or 2008… The stock market continues to push higher, on route to posting one of the best years in history. This advance comes in the fifth year of recovery from the financial crisis, and it has seen the S&P 500 nearly triple off its low of March, 2009. These years of gains have gradually made investors more comfortable again, and now there appears to be a widespread consensus that it’s finally “safe” to own stocks. I own stocks, so I’m certainly enjoying the advance. But unlike some other investors, I’m not feeling more comfortable as they move higher. Rather, I’m feeling less comfortable. Why? Read more of this post

Transparency the crux in China’s struggle to deal with rising debt; Fears after key China debt level soars 70% to $3 trillion

Last updated: December 30, 2013 7:36 pm

Fears after key China debt level soars 70%

By Tom Mitchell in Beijing

Local government debt levels in China have soared to almost $3tn in less than three years, according to an official audit highlighting one of Beijing’s most daunting challenges as it attempts to sustain economic growth while avoiding a financial crisis. Read more of this post

How to Worry Less About Money; What Goethe can teach us about cultivating a healthy relationship with our finances

How to Worry Less About Money

by Maria Popova

What Goethe can teach us about cultivating a healthy relationship with our finances.

The question of how people spend and earn money has been a cultural obsession since the dawn of economic history, but the psychology behind it is sometimes surprising and often riddled with various anxieties. In How to Worry Less about Money (public library) — another great installment in The School of Life’s heartening series reclaiming the traditional self-help genre as intelligent, non-self-helpy, yet immensely helpful guides to modern living, which previously gave us Philippa Perry’s How to Stay Sane, Alain de Botton’s How to Think More About Sex, and Roman Krznaric’s How to Find Fulfilling Work — Melbourne Business School philosopher-in-residenceJohn Armstrong guides us to arriving at our own “big views about money and its role in life,” transcending the narrow and often oppressive conceptions of our monoculture. Read more of this post

6 Ways To Create A Culture Of Innovation: Reward employees with time to think, while providing them with the structure they need

6 Ways To Create A Culture Of Innovation

REWARD EMPLOYEES WITH TIME TO THINK, WHILE PROVIDING THEM WITH THE STRUCTURE THEY NEED.

Every organization is designed to get the results it gets. Poor performance comes from a poorly designed organization. Superior results emerge when strategies, business models, structure, processes, technologies, tools, and reward systems fire on all cylinders in symphonic unison.

EDITOR’S NOTE

12/30/13

Happy (almost) New Year! We’re saying good-bye to 2013 by revisiting some of our favorite stories of the year. Enjoy. Savvy leaders shape the culture of their company to drive innovation. They know that it’s culture–the values, norms, unconscious messages, and subtle behaviors of leaders and employees–that often limits performance. These invisible forces are responsible for the fact that 70% of all organizational change efforts fail. The trick? Design the interplay between the company’s explicit strategies with the ways people actually relate to one another and to the organization. Read more of this post

10 Extraordinary People and Their Lessons for Success

10 Extraordinary People and Their Lessons for Success

by Sarah Green  |   9:00 AM December 30, 2013

From presidents to hip-hop producers to poets, the last page of every issue of Harvard Business Review is always an interview with someone who has succeeded outside the traditional corporate world. Here, some of our favorite lessons from the class of 2013:

Justice Sandra Day O’Connor on having long-term colleagues: “Treat people well. Don’t mislead them. Don’t be prickly. Don’t say things that are aggravating. Try to be as agreeable as you can be. Try to be helpful rather than harmful. Try to cooperate.”

Cartoonist Scott Adams on using his MBA: ”When the comic strip first came out, it showed Dilbert in a variety of settings—not just the office. I didn’t really know what was working, because I had no direct contact with readers… So way back at the dawn of the internet, I started putting my e-mail address in the margin of the strip… I found out that there was a common theme: People loved it when Dilbert was in the office, and they liked it a lot less when he was at home or just hanging around. So Dilbert became an office-based comic, and that change made it all work.”

Chef Nobu Matsuhisa on starting as an apprentice: “I was 18 and didn’t know anything about fish. My mentor taught me the basics. For the first three years, I didn’t make sushi; I washed dishes and cleaned the fish. But if I asked questions, he always answered. I learned a lot of patience.”

Saturday Night Live producer Lorne Michaels on hiring: “I wouldn’t choose anyone whose side I didn’t want to be on. It isn’t like we hire 12 and figure six will work. We don’t bring in anybody we’re not rooting for. Sometimes they succeed in week five, but for most people it’s two, three, four years before they become who they’re going to be. You have to allow for that growth.”

 

Hip-hop mogul Russell Simmons on meditating twice a day: “Every creative idea, every second of happiness, is from stillness…. But the way you move around the world has nothing to do with the stillness in your heart. Moving meditation—that’s what we have to practice. It doesn’t mean you have to move slow; you just have to see the world in slow motion.”

Golfer Arnold Palmer on learning humility: “One time at Augusta, I was going into the last hole with a one-shot lead to win the Masters, and a friend from the gallery hollered at me, so I walked over and accepted congratulations. And then I proceeded to make six on the hole and lose. My father had warned me about that. I was told all my life not to accept congratulations until it’s over.”

Poet Maya Angelou on courage: “One isn’t born with courage. One develops it by doing small courageous things—in the way that if one sets out to pick up a 100-pound bag of rice, one would be advised to start with a five-pound bag, then 10 pounds, then 20 pounds, and so forth, until one builds up enough muscle to lift the 100-pound bag. It’s the same way with courage. You do small courageous things that require some mental and spiritual exertion.”

Designer Philippe Starck on persuading clients: “I’m very good at explaining. I don’t work like a diva. I don’t say, “Oh my God, that must be pink,” and refuse to discuss it… I am cuckoo, yes. I am the king of intuition. But I am also a serious guy. I explain in a clear way. And then, even if it’s something that looks completely different than expected, something completely against mainstream thinking, clients understand. I explain that it might look strange but why, given the two to five years it will take for development, it will for so many reasons be exactly the right thing to do… And then the clients agree, always, 100%.”

President Mary Robinson on being frank: “At every stage, it’s [a] passion for human rights that has prompted me to speak truth to power, to stand up to bullies, to be prepared to criticize even the United States after 9/11. People told me it wouldn’t help my career as high commissioner, but it seemed much more important to do the job than to try to keep the job.”

Historian David McCullough on hard work: “When the founders wrote about life, liberty, and the pursuit of happiness, they didn’t mean longer vacations and more comfortable hammocks. They meant the pursuit of learning. The love of learning. The pursuit of improvement and excellence. I keep telling students, ‘Find work you love. Don’t concern yourself overly about how much money is involved or whether you’re ever going to be famous.’ …In hard work is happiness.”

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