Investing in Yes Bank!
It is customary for ANALysts – today it means the whole Indian population MINUS the fund managers whose portfolio is on a public platform. It of course includes FM of the past who had the privilege of ……….. their clients portfolio. (you can fill in the unparliamentary word in the blank).
So suddenly Prashant Jain is being ridiculed for investing in Yes Bank, and obviously for buying it recently in the QIP at a price of Rs. 85. Sure I can join the bandwagon – I would not have invested in a Rana company or a Ravi Parthasarathy company. That’s because I influence a small investment number, not even a fraction of what fund manages handle.
First of all you have to see things in perspective for an equity fund manager. Investing in a stupidly bloated BFSI stock is not easy. All of them buying Hdfc bank sounds like a joke, I am sure it is a joke and we all hope it does not go wrong. It might, but right now sell YesBank and buy Hdfcbank looks like a perfect deal. In 2030 we may realize that “sell Hdfc bank buy YesBank” may have been a better deal in 2020.However, that should have been visible in 2020, not in 2030 or later! I have had arguments with two top FM – about Yes Bank – and they did not have a problem holding it. I had an issue so stayed away from the share. I did invest in the funds which these guys managed. I still do. Sure, I get a call from the competition saying “our FM does better than SN or PJ but never get a mention”. Early movers perhaps. I am sure they are right, but then I have invested for 20 years if not more and that is a lot of comfort. If I were managing Rs. 350,000 crores would have I invested in YesBank? difficult to say, but maybe I would have.
What about investing in the debt issued by Yes bank? Of course I would ahve invested. We all know that the Inter Bank market is amazingly deep and never ever runs out of money. If I do not lend to a successful bank (ok, visibly successful, auditors not even raising a doubt about the quality of assets, I would have.
What I did not like about YesBank is the constant murmur about the promoter and some of the people at the top. I also did not like the good quality people that they lost. I also did not like some of their client names. I repeatedly asked a couple of Fund Managers who understood banking far better than I do. I don’t understand banking of course – not the way I need to understand as an investor.
Another very bad learning that we have had in the market is that “parentage matters” and “rating does not”. So my investmens in YESBANK went for a toss – compared to my investments in the paper of Indian bank. The lesson was “don’t bother about rating, if it is a govt bank it will get bailed out”. So PSU banks far far more lousy balance sheets are considered to be safer than pvt sector banks. Very poor learning.
Giving a hair cut to equity but taking Tier 1 bonds to zero sounds illogical. LiC has exposure to equity and debt of YESBANK – I have been too lazy to do research on that. I have got used to seeing LIC’s name in every problem in India. I have no clue how much of Tier 1 debt is held by Army Insurance, etc. I am sure these guys will go to court. Let’s see when.
Yesterday I got a chance to buy Nippon Amc shares. This was because some of the schemes had an exposure to the debt schemes of YESBANK. Sounds so stupid I had luckily sold at 449, it felt good buying at 337 and 329 – thanks to Corona and YesBank.