Warren Buffett, in partnership with a Brazilian businessman, has bought HJ Heinz, a USD 28 billion processed food company that sells Heinz ketchups, soups and other products. In its financial structure, this deal may be quite different from Buffett's normal acquisitions, but in the choice of the acquisition, it fits right in. Buffett's investments often hold some lessons for the ordinary investor, despite the fact that Buffett has tens of billions dollars and acquires global-scale businesses.
His earlier investments include Coca Cola, Gillette, a huge railway company, Dairy Queen, Anheuser-Busch (Budwesier Beer) and many more business which are easy to understand and the value of whose brands is self-evident. The choice of such businesses has a lot in common with legendary fund manager Peter Lynch's idea of 'investing while walking around'. There are brands and businesses whose value first becomes apparent from what you and the people around you are doing. What you are buying, how strongly a brand is associated with a product, how resilient the desire for that product and brand is likely to be and so on. Certainly a Coke or a Gillette or a Heinz fits very well into this process of identifying.
Can an Indian investor do this? Can he or she go for a weekend of shopping and entertainment and comeback with half a dozen ideas about stocks that might be worth tracking? I tried to do that and realised it wasn't that easy in India. The reason is that so many of the products and services one might notice are either unlisted or foreign. You'll come across a set the old familiar names in FMCG or banking and then nothing new. Autos? Entertainment? White Goods? Computers? Electronic gadgets? eCommerce? There's nothing new. The companies that catch the eye are either a long way from going public, or they are MNCs.
So can't Indians invest by walking around? It's does looks difficult, but perhaps there's a way. We are allowed USD 25,000 worth of foreign investments now and this could be the time to think about seriously.