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Prasad Capital Management  

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  • Prasad Capital's 2015 Market Outlook [View article]
    Thanks for your well thought out comments.

    I did mention the high US valuation ("The only thing that gives us pause about market returns (as opposed to business returns) are the relatively high valuations that those businesses fetch today."). That said, I wouldn't go so far as to call them "expensive" in a world with low inflation.

    I do share your worry about deflation - before the recent plunge in oil and commodities in general, the data was showing a fairly convincing move towards low inflation (vs deflation). The recent moves seem to me to point towards healthy deflation in the US, with the major risk being contagion from abroad. But with 70% of the US economy being driven domestically, it seems too much to be fearful (especially when everybody else seems to be looking for reasons to be fearful as my "Big Picture" paragraph above argues).
    Jan 31, 2015. 09:14 AM | 1 Like Like |Link to Comment
  • The Great Convergence Between Emerging Markets And The U.S. Begins? [View article]
    We think it's important to keep a long-term perspective when thinking about emerging markets. See our latest article at the link below which shows that the long-term trend is bearish for relative EM performance.
    Apr 3, 2014. 11:17 AM | Likes Like |Link to Comment
  • The Number 1 Risk For Equity Investors In 2014 [View article]
    I don't disagree with you, when looking at the United States. My article is more about the risks in other economies / stock markets. Any issues with those economies will likely affect the US, but I wouldn't say they will derail what looks to be a powerful recovery in the world's biggest economy.
    Apr 2, 2014. 04:58 PM | Likes Like |Link to Comment
  • Prasad Capital's 2014 Market Outlook [View article]
    What we meant by more stable is that the margins go up and down, but the trend line has much less slope than it does for the blue line. Margins will always have some cyclicality to them, but the bearish arguments tend to focus on the blue line's trend upwards, where the trend almost disappears when looking at the red line which removes interest payments.
    Jan 13, 2014. 10:40 AM | Likes Like |Link to Comment
  • Prasad Capital's 2014 Market Outlook [View article]
    Yes, you are right, the title was a hold-over from previous material. That is an error. It should say "3-year-average nominal earnings" and "over 10 and 20 years". Thanks for catching that.
    Jan 13, 2014. 10:37 AM | Likes Like |Link to Comment
  • +55% In 2013 - Prasad Capital Management 2013 Review & 2014 Outlook [View instapost]
    Aside from the various articles on Seeking Alpha, which give you an idea of the analysis we do, we don't have any formal website or additional material. The organization is quite informal at the moment (set up as an unofficial collection of the family's investment accounts). If you want more information, you can email us at prasadcapitalmgmt {_at_} gmail {_dot_} com.
    Jan 13, 2014. 10:34 AM | Likes Like |Link to Comment
  • Wal-Mart: Don't Sell Early [View article]
    That's a fair question, and the million dollar question facing equity investors in general in this environment. My perspective is to say I don't know enough to predict what interest rates will be a few years later (although if you forced me to guess, 6% real = 8% nominal seems quite unlikely). Instead of making a prediction on how they will change, I'd rather pick between the two prices I'm being offered *today* and the choice is very clear in this situation.
    Sep 25, 2013. 08:48 PM | Likes Like |Link to Comment
  • Think It's A Level Playing Field In The Financial Sector? Think Again [View article]
    To be fair, don't you have to look back at the period when banks were suffering a few years ago, and show that the big banks weren't hurt disproportionately? If they were hurt more, outperforming now may just be bringing them into balance. I don't know that's true, I'm just asking the question...
    Jun 24, 2013. 08:26 PM | 2 Likes Like |Link to Comment
  • Wal-Mart: Don't Sell Early [View article]

    We haven't looked closely at Target (at least not recently), so can't comment on it.

    Costco is an amazing retailer as well, their numbers are very stable and growth is better than Wal-Mart if I recall correctly. The challenge with Costco is the valuation is much richer, which makes it more of a risky investment. More of the value relies on future growth, which may very well happen given their long history of success, but we get nervous when most of the valuation comes from future growth.

    We will try to write an article on Costco to highlight this difference from valuation (ie. price), which is the #1 consideration for us.
    Jun 23, 2013. 08:43 AM | 1 Like Like |Link to Comment
  • Wal-Mart: Don't Sell Early [View article]
    The main point of this article was that an investor doesn't have to make any speculative judgment to invest in Wal-Mart. Its profitability and returns on equity have stayed relatively constant throughout the pre-internet and post-internet years, and continue to do so to the present day. So without having to predict the outcome of battles with Amazon, it is a sound investment. If Amazon somehow takes over significant market share from Wal-Mart, you would lose money, but as an investor it is difficult to handicap the odds of that happening with any accuracy. The current margin of safety is plenty to cover risks like this.
    Jun 23, 2013. 08:39 AM | 2 Likes Like |Link to Comment
  • Wal-Mart: Don't Sell Early [View article]
    I disagree - Wal-Mart has not become more profitable from changes over time, at least not over the 20 year history I show above. The profitability has been rock-steady, and that is one of the advantages of the company. So while complaints about quality, customer service, etc have been around for a long time (and I would argue consistent with a super-low-cost retailer), claiming any change in future profitability needs a stronger argument than this in our view.
    Jun 23, 2013. 08:36 AM | 1 Like Like |Link to Comment
  • Coca-Cola: Opportunity Of A Generation [View article]
    Exactly - I just translated "apprentice" to "young"...
    Jun 19, 2013. 10:28 PM | 1 Like Like |Link to Comment
  • Coca-Cola: Opportunity Of A Generation [View article]

    By "price is #1", I meant price-relative-to-fair... So I fully agree with your statement that a better company may be a better bargain even at a higher price relative to other things like earnings etc, simply because it has a higher fair value. So I think we are in agreement here.
    Jun 16, 2013. 07:56 PM | Likes Like |Link to Comment
  • Coca-Cola: Opportunity Of A Generation [View article]
    Yes, price is #1, and I would argue it should always be - any investment can be great at some price, and awful at another price. In my view, speculation can be independent of price, but investment cannot be.
    Jun 15, 2013. 11:31 AM | Likes Like |Link to Comment
  • Coca-Cola: Opportunity Of A Generation [View article]
    No worries at all about hijacking - I don't have enough readers yet that it matters much :)

    Part of my motivation to post on seeking alpha is to "pay it forward" - I learned a lot from reading free online articles (from the Motley Fool back then) so I feel some responsibility to share what I can, and for what it's worth.
    Jun 14, 2013. 08:45 AM | 2 Likes Like |Link to Comment