Blackstone to acquire 70% in Aadhar housing from Wadhawan Global – parent company of DHFL

Oh, here’s some bit of good news for DHFL…finally!

Private equity giant Blackstone looks set to acquire Wadhawan Global’s 70% stake in Aadhar Housing.

DHFL which owns 9.15% in the company will also offload its stake. ET is pegging the deal at Rs 2700 cr.

Also, check this Tweet out by Andy Mukherjee:

Will be interesting to see the reaction of the bonds on Monday. In case you don’t know, here’s how they have so far:

Pain in DHFL bonds continues

I can’t seem to get over this. Although the 40% YTM number on that 0 coupon bond is shocking, I can understand that, that bond is thinly traded. But even the other NCDs with relatively more volumes are yielding between 20% to 26% – I mean wassup with that?

Here’s a monthly chart depicting the carnage in some DHFL NCDs. What a dive off the cliff that is.

Yields as of yesterday’s close.

Podcast: A conversation with the legendary short seller Marc Cohodes

Short selling is a tough business. I’d say a billion times harder than being a long only trader or investor. Why? Just ask all the Tesla bears.

Some short sellers go short just to capitalize on the downside. But then there is Marc Cohodes. His driving goal has been to ferret out frauds that are ripping off people and investors and are a blot on the fabric of society.

Just know this, while short selling might look glamorous given the post mortem headlines we read, it is far from the truth. It is enormously and monumentally hard given the pyschological toil, not to forget the cultural disdain they have to put up with.

I’ve been investing for about 10-years. I’m another 50-years away from being a novice at best. Up until I heard this conversation, I had never heard of Marc. In fact, his name doesn’t come up that often compared to the almost mythical status the shorts by Jim Chanos, David Einhorn, George Soros, Stanley Druckenmiller, and others.

But he’s exposed some of the most insidious and disgusting frauds in his time.

In this marathon 3 hour conversation, Marc candidly and in great details talks about his beginnings, his greatest hits, failures and the lessons he learnt. There is a mountain of insights both about investing and life in this conversation.

This is easily among the top 5 things I’ve ever heard in my life. What makes this conversation all the more riveting is the fact that Marc was in his EFK mode. What’s EFK you ask? Listen to find out – I’m not gonna drop spoilers.

Thanks for this conversation Marc.

Cheatsheet: DHFL crisis

Just when you thought things couldn’t get any worse for NBFCs, they did. Unless you are living under a rock, then you’d have heard about the crisis gripping DHFL. Here’s what went down so far!

Find out!

Expense ratios in the US are hitting rock bottom. But investors in India still don’t care about costs

Was reading the Q4 trend reviews by Morningstar and came across this stunning graph. Well, if you even have the elementary understanding of trends in mutual funds, then you’d be aware that there is a great cost migration in the US. i.e. from active to passive and this has resulted in a massive fee war, largely perpetuated by Vanguard. Today, in the US, you can build a core portfolio at a cost of less than 10 basis points – that’s goddamn crazy.

Back home in India, Indian investors are still being ripped off with high expense ratio funds being showed down their unwitting throats by distributors. The sad truth is that Indian investors don’t give a shit about costs. If they did, then they wouldn’t get sucked in such funds. It looks like we still have a long time to go before investors realize the importance of costs.

I was just checking Morningstar and I found 27 close ended funds which had 3% expense ratios, that’s is crazy!

FundExpense Ratio
BOI AXA Midcap Tax Fund – Series 1 Regular Dividend3.25
BOI AXA Midcap Tax Fund – Series 1 Regular Growth3.25
Sundaram LT Tax Ad Sr IV Reg DP3.14
Sundaram LT Tax Ad Sr IV Reg Ds3.14
Sundaram LT Tax Ad Sr IV Reg Gr3.14
Sundaram Multi Cap Ser II Regular Dividend Payout3.14
Sundaram Multi Cap Ser II Regular Dividend Sweep3.14
Sundaram Multi Cap Ser II Regular Growth3.14
SBI Tax Advantage Fund Series II Dividend3.13
SBI Tax Advantage Fund Series II Growth3.13
SBI Long Term Advantage Fund Series I Regular Dividend3.11
SBI Long Term Advantage Fund Series I Regular Growth3.11
SBI Long Term Advantage Fund Series II Regular Dividend3.1
SBI Long Term Advantage Fund Series II Regular Growth3.1
SBI Tax Advantage Fund Series III Regular Dividend3.1
SBI Tax Advantage Fund Series III Regular Growth3.1
Sundaram Multi Cap Ser I Regular Dividend Payout3.07
Sundaram Multi Cap Ser I Regular Dividend Sweep3.07
Sundaram Multi Cap Ser I Regular Growth3.07
Sundaram Emerging Small Cap Ser V Regular Dividend Payout3.04
Sundaram Emerging Small Cap Ser V Regular Dividend Sweep3.04
Sundaram Emerging Small Cap Ser V Regular Growth3.04
Sundaram Emerging Small Cap Ser VI Regular Dividend Payout3.02
Sundaram Emerging Small Cap Ser VI Regular Dividend Sweep3.02
Sundaram Emerging Small Cap Ser VI Regular Growth3.02
Sundaram Emerging Small Cap Ser VII Regular Dividend Payout3.01
Sundaram Emerging Small Cap Ser VII Regular Growth3.01

In spite of the recent reduction in expense ratios, there are still 6 open-ended regular mutual funds with expense ratios of more than 3%.

FundExpense Ratio
Reliance Consumption Fund3.15
Baroda Midcap Fund3.07
Principal Dividend Yield Fund3.01
Canara Robeco Bluechip Equity Fund3
DHFL Pramerica Diversified Equity Fund3
Union Value Discovery Fund 3

This is in spite of passive funds and ETFs being available for almost free

Nifty 50 index funds
FundExpense ratio
UTI Nifty Index Fund0.0013
HDFC Index Fund-NIFTY 50 Plan0.001
ICICI Prudential Nifty Index Fund0.0032
SBI Nifty Index Fund0.0025
Franklin India Index Fund – NSE Nifty Plan0.007
Nifty Next 50 index funds
FundExpense ratio
UTI Nifty Index Fund0.0013
HDFC Index Fund-NIFTY 50 Plan0.001
ICICI Prudential Nifty Index Fund0.0032
SBI Nifty Index Fund0.0025
Franklin India Index Fund – NSE Nifty Plan0.007
Nifty 50 ETF
ETFExpense ratio
SBI ETF Nifty 500.0007
UTI Nifty Exchange Traded Fund0.0007
Reliance ETF Nifty BeES0.0011
ICICI Prudential Nifty ETF0.0005
Kotak Nifty ETF0.001
Nifty Next 50 ETF
ETFExpense ratio
Reliance ETF Junior BeES0.0023
Aditya Birla Sun Life Nifty Next 50 ETF0.0005
UTI Nifty Next 50 Exchange Traded Fund0.0022
SBI ETF Nifty Next 500.002
ICICI Prudential Nifty Next 50 ETF0.0015

I haven’t really accounted for tracking error and nor have I sorted these funds based on how cheap they. Even so, they are damn cheap. Any investor today, can certainly do worse than a combination of Nifty 50 + Nifty Next 50

Crazy yields on DHFL bonds (NCDs)

Ola folks, here’s the first post on Nakedbeta. Well, you’ll be pretty much aware of the Cobrapost allegations against DHFL Finance. The stock was down 5.48% today. But what transpired in the bond markets was much crazier. The yields on some DHFL NCDs shot up to 24%. That’s freaking crazy.

Although, you’ll have to take this with a pinch of salt given that, there are hardly any volumes in the cash segment. But nonetheless, that’s a massive spike. Retail investors hardly pay attention to the bond markets given the smaller size and lack of awareness. But the bond markets always tell a better story than the equity markets and here it is.