After Warren Buffet's exit from paytm, the share is down by more than 60%. Did he have an insider info or is he truely GoAT ?
All the RBI notices were covered in a news story in November I think. Perfect time to exit.
whenever people invest on foreign funds like Paytm.. there is atleast small group of analyst mentoring behind it and they use paid research tools
Berkshire had the thesis of neo banking being super successful and efficient as it may reduce costs and provide incredible success. This came from a Brazilian bank(Nubank) which removed a lot of inefficiencies in South American banking systems (like waiting in long line to open bank accounts or getting charged to withdraw your money). This bank removed all of it, was able to acquire customers cheaply, then offer a lot of banking solutions and make money and do successful ipo.
They expected similar story to replicate in India when they invested in Paytm except the story had 2 major differences in India;
1. Brazilian central bank was a lot more open in giving banking licences to a new digital bank and break the monopolistic behavior of 5 large existing banks over there. In India, rbi is lot more cautious in giving banking licences and the only reason Paytm ever got an investment from rbi was because it had the payments bank licence which was seen as a precursor to the full banking licence.
2. Indian banks didn’t have so much misefficiencies anyways - and rbi can dictate bank to be consumer friendly. A digital bank doesn’t win consumers by just being digital only(maybe some cost savings from not having bank branches and staff),
I am sure once Berkshire realised that Paytm will
Never get full banking licence , it decided that the thesis no longer fits and it should exit the investment.
They won’t have known that its operation would be punished so heavily or that these notices are coming.
Kamlesh
Stealth
7 months ago
Or maybe his exit caused it to sell off further
DaringTrain
Stealth
7 months ago
After my entry also, Paytm is down 60%. That doesn't mean I am taog. It just is bad luck. Berkshire exited on Postpaid news which would have been a part of their thesis when they entered in 2018. Also, it's not buffet's investment. It's too small for his liking. As someone pointed out on twitter, let's not extrapolate everything to what a five year analyst at BH is doing. The question to ask is did that analyst get fired?
Indusplateau
Stealth
7 months ago
Big people do get insider info.
That they do due deligence periodically and external audit from Govt too.
They know more that ordinary people know.
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