“The Elephant is Moving” — notes on Amitabh Singhi’s India-listed Investment Ideas

Amitabh Singhi has spoken at Value Investing Congresses in the past, and he typically talks about India-listed stocks that, frankly, we probably can’t easily buy — but he talks about the state of the economy, and the growth we should expect to continue, so though I probably won’t buy his stock I like learning about what he thinks the catalysts are for movement in different sectors.

Agriculture is a huge sector of the economy, with massive commodity exports, land trades very actively in India and may be in a bubble, and India is the world’s leading gold market (though he says they need to spend the next decade making gold less appealing — they need to move savings into equities instead, and make savings banks more appealing and accessible). There are several commodities exchanges, including for power, coal, gold and currencies. India also has the second largest number of publicly traded companies, with 3,000 that actively trade on the Indian exchanges.

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The Foreign investment money is what he calls the “smart money” in India, and the opportunity is in the small companies that don’t attract foreign investment money or get a research analyst covering them. India has thousands of brokers and analysts covering equities, but the bottom of the market — between $10-250 million — is where the opportunity is. That’s 900 companies. And probably none of them are easy for us to buy if we don’t trade on the Indian exchanges, but we’ll bear with him.

India will add a trillion dollars in GDP over the next four years, and the rate of growth is accelerating. Overall, GDP is 63% services, 20% manufacturing and 17% Agriculture. Agriculture is his focus — 60% of the Indian population depends directly or indirectly on agriculture, the rural population needs to be taken care of.

For the last several years in India, rural India has seen onion prices spike, which benefits farmers, rising land values have also skyrocketed as land has been developed, everyone is going to be given a retina scan/fingerprint scanner and a unique ID (300 million people are done so far, another ten years it’s all done), and technology has crept into rural India (mobile phones, bank branches).

99% of land is fragmented into small lots — two hectares or so. People buy tiny tools, mini tillers and water pumps are in ...

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