Curious you don't have a position James, especially given how this company seems to exhibit many of the golden threads you speak of in your book which I loved fabrics of success. I have heard your opinions on most everything related to investing except portfolio concentration and construction given you don't own Kaspi and I haven't had the pleasure of hearing from you on these fronts
Calvin, Thank you for your question. I am actually writing a piece on portfolio concentration at the moment which will be published in the next month, so look out for that.
In relation to Kaspi, I have a few unanswered questions which I have fired across to their IR team and chased once, but not had any response back. This is something I don't like.
- I asked them whether their government services earns them any revenue, or whether it is purely a means of attracting users to the platform in the hope that they will engage in revenue generating activities (shopping, banking, etc.)
- I asked about the move into Turkey. The company that they have acquired appears to be purely an e-commerce and grocery business, so I asked if they intended to replicate the 'super-app' model in Turkey by introducing banking, government services, etc.
My thinking is that if they want to replicate their success in Turkey, they need the same model... but Kazakhstan started with finance and banking, while Turkey is starting with ecommerce. There is also the legal and regulatory situation to deal with in Turkey if they want to offer finance and banking services for example, which could be problematic.
These questions are legitimate and should be easy to answer. But so far I have had nothing back.
There are also the allegations made in the Culper Research report which introduce an element of uncertainty into the equation. There is no doubt that Kaspi would have been a beneficiary of Russian flows of cash caused by sanctions on Russia. So Kaspi bank has seen boom times in terms of deposit growth and corresponding NIM earnings. But what happens if the Ukraine war is drawn to an end and all sanctions are lifted? Will that money flow out of Kaspi? If so, what will be the impact to the business?
As you correctly say, at the moment it is in the 'too hard' pile.
Munger used to say that investing is all about opportunity cost, so the question for me is whether it makes sense for me to reallocate capital from the great investments I already hold and move it to Kaspi. Currently it doesn't, but that doesn't mean that it isn't a good investment for someone else to make and perhaps in time I may regret missing this opportunity. Such is the life of an investor! I hope that this answers your question.
Above and beyond as always! Looking forward to that piece on concentration. I agree the questions you asked to IR do seem pretty prominent and not that hard to answer. I love how you tied in opportunity cost, always something that needs to be considered. Cheers James hope you have a great day
Curious you don't have a position James, especially given how this company seems to exhibit many of the golden threads you speak of in your book which I loved fabrics of success. I have heard your opinions on most everything related to investing except portfolio concentration and construction given you don't own Kaspi and I haven't had the pleasure of hearing from you on these fronts
Calvin, Thank you for your question. I am actually writing a piece on portfolio concentration at the moment which will be published in the next month, so look out for that.
In relation to Kaspi, I have a few unanswered questions which I have fired across to their IR team and chased once, but not had any response back. This is something I don't like.
- I asked them whether their government services earns them any revenue, or whether it is purely a means of attracting users to the platform in the hope that they will engage in revenue generating activities (shopping, banking, etc.)
- I asked about the move into Turkey. The company that they have acquired appears to be purely an e-commerce and grocery business, so I asked if they intended to replicate the 'super-app' model in Turkey by introducing banking, government services, etc.
My thinking is that if they want to replicate their success in Turkey, they need the same model... but Kazakhstan started with finance and banking, while Turkey is starting with ecommerce. There is also the legal and regulatory situation to deal with in Turkey if they want to offer finance and banking services for example, which could be problematic.
These questions are legitimate and should be easy to answer. But so far I have had nothing back.
There are also the allegations made in the Culper Research report which introduce an element of uncertainty into the equation. There is no doubt that Kaspi would have been a beneficiary of Russian flows of cash caused by sanctions on Russia. So Kaspi bank has seen boom times in terms of deposit growth and corresponding NIM earnings. But what happens if the Ukraine war is drawn to an end and all sanctions are lifted? Will that money flow out of Kaspi? If so, what will be the impact to the business?
As you correctly say, at the moment it is in the 'too hard' pile.
Munger used to say that investing is all about opportunity cost, so the question for me is whether it makes sense for me to reallocate capital from the great investments I already hold and move it to Kaspi. Currently it doesn't, but that doesn't mean that it isn't a good investment for someone else to make and perhaps in time I may regret missing this opportunity. Such is the life of an investor! I hope that this answers your question.
Above and beyond as always! Looking forward to that piece on concentration. I agree the questions you asked to IR do seem pretty prominent and not that hard to answer. I love how you tied in opportunity cost, always something that needs to be considered. Cheers James hope you have a great day
use of the handy Buffett too hard pile?