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It's Warren Buffett season. Even as the US media are busy talking about the Mexican costumes the 83-year-old Oracle of Omaha will wear in the annual meeting early next month, his counterparts in this part of the world are making news.
Asia's Warren Buffett, Li Ka-shing has made investors in Southeast Asia nervous by selling his China plays. Last month, Li sold a significant stake in beauty care business Watsons to Singapore's sovereign wealth fund Temasek Holdings. According to financial blog Sovereign Man, the Hong Kong billionaire has exited many real-estate investments and this could be in anticipation of a crash in the Chinese economy.
A Chinese fund manager, who manages a few billion dollars of mutual funds in mainland equities and bonds, said the fear was real as the shadow banks had begun defaulting but was confident China would find a middle path.
Even a soft landing, which Chinese officials are attempting, could create havoc to the region's economy and put the world economy back to sleep.
The Indian Warren Buffett crown, though, is seeing competition. Stock investor Rakesh Jhunjhunwala almost seemed to have had it till a few years ago. But he said, "I am Jhunjhunwala, not India's Buffett."
Deal king Ajay Piramal was the first reported to have the traits of the Berkshire strongman when he sold his formulations business to Abbott. After his recent deal with Vodafone, the comparisons have resurfaced. But can one-and-a-half opportunities make a value-investment legend?
Piramal bought the unlisted Vodafone stock in two deals in FY12. He sold it last week for a return of 52 per cent.
Between the two Piramal purchases of Vodafone, the Sensex had hit a low of 15,175 in December 2011. It has gained 49 per cent since.
So, was the risk of investing in an unlisted stock worth the three per cent alpha (excess over benchmark), when you could have earned the same in highly-liquid top stocks, which provide decent exit opportunities without any private treaties?
The Sensex surging automatically means there were many top stocks, which gave substantially higher returns during this period. Take Tata Consultancy Services. The tech bellwether was at Rs 920 levels when Piramal dug into Vodafone. Today, it is over Rs 2,218. That's double and more. Piramal Enterprises stock has gained 70 per cent since August 2011. Was the Indian Buffett searching for value in the wrong place?
The investment in Shriram Transport Finance Company seemed so. Without the recent surge, driven partly by the talks of a top-up investment in the parent firm, the Rs 1,652-crore investment made in May 2013 at Rs 723 a share was barely in the money.
Maybe these simplistic numbers do not fully capture the 'Buffett value investment philosophy' the Street sees.
But identifying Pakistani, Sri Lankan and Indonesian Warren Buffetts will continue. With the Buffett frenzy showing no signs of a crash or a soft landing, soon we could see titles such as Warren Buffett of Chandni Chowk and Andheri (East). If the old man gets to know, he might find a value investment there.
