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Perspective

Priced for perfection
Even Warren Buffett is having a hard time putting his $100 billion to work

N Mahalakshmi

Nothing beats the Berkshire Hathaway Annual Meeting when it comes to celebrating capitalism. Shareholders from all over the world literally spend their way to the meeting and through the meeting weekend on products sold by companies owned by Warren Buffett’s conglomerate. Buffett himself calls this annual gathering, “Woodstock for Capitalists”. His shareholders love him because over the years he has always under promised and over delivered. 

But now even Buffett is having a hard time putting his $100 billion to work. The grim reality of a high-multiple market contradicts the aphorism, “If it is too good to be true, it probably is.” Many including the Oracle of Omaha are scratching their heads wondering, how long this ‘too good to be true’ scenario will last. There are risks aplenty and we look at some in the first cover story of this special Berkshire edition. Also, there is an interview with Michael Mauboussin whose work has centered on better understanding valuation and behavioral aspects of investing.

Slowing growth is a risk but it is certainly not reflecting in valuation. Where it is surely reflecting is in the screens that we run every year to identify India’s fastest growing companies. Policy changes, demand-supply mismatch, funding running dry have taken their toll on the performance of companies over the past five years. Since we started this exercise of highlighting India’s fastest growing companies, the list has only shrunk and throws up the same set of companies whom we have profiled earlier. 

So this year, we decided to lower our filters to include companies that clocked sales and net profit of 15% compounded annually over the past five years. The previous year’s filter was 20%, which itself was reduced from the original 25%. The reduced 15% filter did give us a longer list of companies, about whom you can find out more by going through the listing tables. But before that, we have a second cover story that identifies pockets of value in the Indian market. And finally, this special edition also profiles five of India’s fastest growing companies.

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