Markets with Bertie: From onion shampoos to unicorns

Bertie loves quoting great people in the quarterly newsletter to his investors. It’s only because we stand on the shoulders of giants that we can see far, said Mark Twain. Or did he? It doesn’t matter as long as the investors remain suitably impressed and don't redeem. The trouble with quotes is that one can’t always remember who said what, which is where Twain and Charlie Munger come to the rescue. The other trouble is that even great minds do not always think alike and often say contradictory things. This confuses Bertie.

Bertie felt the same confusion when he was listening to a team of research analysts from a bulge-bracket firm. The consumer staples analyst titled her speech Small is Beautiful and informed Bertie how small direct-to-consumer (D2C) companies are eating into the big players' market share. While Bertie cringed at the thought of buying an onion shampoo at the behest of a half-clad dancing influencer, he nodded sagely.

The cement analyst followed with a discourse titled Winner Takes It All, telling Bertie how the two tigers prowling the cement jungle are going to devour all the smaller prey. Bertie can’t ask Munger and Twain to reconcile their differences, but he certainly can with sell-side analysts. And that's exactly what he did.

Idiot-proof business

Just as wearing atrocious outfits is a pre-requisite to attending fashion soirees, having deep gashes of red is a pre-requisite to being a unicorn. This is why a unicorn returning over ₹200 crore in profit made Bertie sit up as if he were seeing a photograph of someone in a white shirt and blue jeans at the MET Gala. The enterprise in question was Royal Challengers Bangalore, a 17-year-old venture that may already be a double unicorn and promises to keep delivering more.

As Bertie dug deeper, he realized how simple the business was: assured revenues from Board of Control for Cricket in India (BCCI) in the form of a fixed share of ever-growing broadcast rights and a BCCI-imposed cap on the largest expense—player salaries. Neither team performance nor any 'Moneyball' analysis mattered. The old oracle was onto something when he said, “I try to invest in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”

Unsecured punting

Outside his homeland, the only other banks that Bertie takes a keen interest in are in Indonesia. His man from Jakarta called him with news that one of his favourite banks had conducted an informal survey revealing that almost 20% of their retail customers were engaged in online gambling. The Indonesian government is cracking down hard on this menace by blocking a large number of sites, freezing bank accounts, and increasing fines and penalties. The banks have gone a step further by tying up with telecom companies to identify customers who also have gambling apps installed on their phones.

While talking to Jakarta, Bertie saw the latest credit growth numbers in India and wondered what portion of the red-hot unsecured personal lending is making its way to online rummy and poker or the mother of all online gambling—F&O. He shuddered at the thought and promptly deleted the fantasy cricket app from his phone.

(Bertie is a Mumbai-based fund manager whose compliance department wishes him to cough twice before speaking and then decide not to say it after all.)