ValuePickr Forum

Birdy's Portfolio

Hello everyone,
I am a newbie. I have been following the markets for last 2 years. I have constructed a portfolio. I plan to hold it for 7 plus years. Initially my portfolio was mid cap heavy, but then my portfolio was fluctuating too much and giving me emotional pangs.
My philosophy is to invest in high quality stocks, even if they are little pricy. I buy on dips and intend to buy into a stock over a period of 3 years. This makes portfolio management little tricky as different stocks give opportunities at different times.
Valuing a business is still a handicap for me. I am trying to bring down valuation risk by averaging. I do not intend to hit the bottom of any stock, but I definitely want to be below the mean. Most of my picks are related to Indian growth story in some way. The number of stocks is 19, which I know is on a higher side.

I request fellow boarders to critically comment on my portfolio and please correct me if I am making some mistakes.
My current portfolio is as follows -

Financials
[email protected] 10%
[email protected] 5%
Yes [email protected] 8.5%
HDFC [email protected] 1%
[email protected] 2%

Auto
Maruti [email protected] 12%
Ashok [email protected] 7%

Consumption
[email protected] 14%
[email protected] 8.5%
[email protected] 6%
[email protected] 2%
TTk Prestige @6000 6%
[email protected] 1 %

[email protected] 1 %
Finolex [email protected] 4%
HDFC [email protected] 1.5%
[email protected] 4%
[email protected] 1%
VIP [email protected] 540 5%

Thanks in advance
Priyank

Could you please provide your investment thesis against each stock pick. So it will be helpful for other VP members to provide comments.

Indusind - The reach of the bank will increase with merger with Bharat Fin Inclusion. Mr Sobti has given guidance for further expansion into security trading and asset management business.
HDFC - Coffee can stock
Yes Bank- I think it is undervalued, all the negatives are addressed.
HDFC Bank- Coffee can stock
Edelweiss - Its a bet on Mr Rashesh Shah and introduction of NCLT and IBC

Maruti Suzuki - Coffee can stock. I think 4 wheelers have a long way to go in this country. Maruti in my opinion commands premium.
Ashok Leyland - Rising GDP story plus the management being aggressive and they have been increasing their share of CVs in the industry.

GCPL- One bad quarter, and the stock corrected sharply. Great products, business should be back on track in coming quarters.
Marico -Pure Consumption story
Dabur -Pure Consumption story
Jyothy -Pure Consumption story
TTk Prestige- Pure Consumption story
Nestle- Exclusive product range plus new product launches planned in 2019.

Avanti - Good management and the downfall in the stock price
Finolex cables - Consumption story
HDFC AMC - Bet on financialization of savings
ICICIPRULI - I think the price was depressed due to ICICI fiasco. Seems to me that its cheaper than other Insurance companies. Its an Insurance play.
TITAN - Good products but is always pricy.
VIP Industries - I think we as a country have just started travelling in airplanes especially. They have products in all ranges plus Caprese for ladies. Sky bags are very stylish and are visible too. only 3 major players in the market.

2 Likes

Your portfolio looks good with quality stocks.

  • However you can trim one bank out of 3 banks to keep tracking as simple. IndusInd Bank’s promoter has pledged the shares. You must need to evaluate this situation as you are having second largest position here.
  • You can think reducing minuscule positions from consumption story
  • Also have plan if market corrected further considering current high PE valuation.
    If you have right asset allocation framework and stick with it then you can achieve your goals as you have the timeframe in your side.

You have 1% in certain stocks. Are you planning to increase them as SIP? With such a low allocation %, you don’t have any +/- impacts.

Thanks @sainkar, @Uservijay

  1. Will do.
  2. Miniscule position in titan, hdfc amc and nestle is to increase allocation as and when stock corrects, Avanti, edelweiss, jyothy were trading bets to kind of check my understanding of things. Will trim them up.
  3. Plan to play out correction is cash of 35pc of portfolio.
    Regards
    Priyank

Ashok leyland - their earnings has been swinging like a pendulum. India’s GDP growth may not be enough to value this company. Using PE makes little sense too as earnings are very hard to predict. It may be better to dig deeper to see how much risk is factored in the price.

Avanti - One of the much hyped stock, it may be prudent to see if it will be richly valued as today for the next decade. Market size and ability to scale is going to be vital to hold this story stock.

Very nice selection of stocks and sectors( BFSI and consumption(including Maruti which I consider a consumption stock).

Few suggestions( based on my thesis):
Why 4 banks? Understand that they are all quality banks but making a basket of them does not make them in my view. Choose one of them- HDFC bank is my pick; there is a huge growth still left in HDFC bank since 70% of PSU bank market share is going to shift to pvt banks and no better than HDFC bank to grab that- Nation wide presence; brand, mgmt, pedigree,consistent star performber. That HDFC bank is the next HDFC bank will not be wrong :slight_smile:

Edelweiss and HDFC AMC: though Edelweiss have varied businesses,still i would say lot of overlap with HDFC AMC; here also my preference would be HDFC AMC; tried and tested brand. The way Edelweiss was volatile in 2018 gives jitters( thats my opinion though)

Auto: Maruti is superb; even you can continue with Ashok Leyland as well since both are into diff segements- Pessenger vehicles vs commercial vehicles

FMCG: again in my view, a basket of stocks does not make sense; given the fact that most of them are like single digit revenue growers; My choice is Nestle and Dabur. You can look into D-Mart as well.

VIP industries, Titan - great companies and thus great picks.

This way you can reduce your PF to approx 12.
For retail investors like us, an optimal concentration will give much better returns over a long period of time.

I hope you will take my feedback positively :slight_smile:

2 Likes

I agree with fluctuations in earnings, but it seems to me that they are predictably in line. That s the nature of auto business. I think the whole pie of CV industry has no other way apart from growing. Increasing roads, more urban population, more logistics should be the way going forward. Ashok leyland has been foraying into international markets as well. It s coming out as a big brand . I will dig deeper in risk analysis and will revert.

Regarding Avanti, it is a trading bet. I agree that i do not understand this business well.

Thanks @abhijain for a detailed reply,
I agree with you on most of the points. Basket of stocks does give an illusion of security. Going forward I will reduce the number of stocks that I hold. It gets difficult at times to monitor them all.

At all times Titan, Nestle, Dabur and D mart stay at an uncomfortable valuation for me. Haven’t been able to get an opportunity to pick them up at a respectable valuation. They are on my watch list. That shouldn’t entail me buying sub-standard stocks though.
Regards
Priyank

I have reshuffled my portfolio a little.
I am willing to pay the premium but want to own good businesses for long duration of time. I want to invest maximum savings in defensive stocks as capital preservation is the first aim, hence my portfolio is inclined towards consumption.
Aim is to see 15 pc CAGR after 10 yrs.
No more major juggling of portfolio from here on.
Dabur 11%
Godrej consumer 13%
Hdfc 9%
Hdfc bank 3%
HUL 10 %
Indusind 8%
Marico 7%
Maruti 14%
Ttk prestige 4%
VIP industries 7%
Yes bank 7%
Minor holdings in britannia, nestle and tvs srichakra, titan

3 Likes

I moved into 85pc of cash portfolio a month back. The whole negative news inflows gave me jitters - High Nifty PE, Global Slowdown, Auto numbers getting affected across the board, Maruti cutting production consistently, Battering going on in the broader markets… Emotional control when stakes go high are far more than i anticipated :slight_smile:

Thankfully, my speculation played out well. My stocks took up some beating in last one month. I have had minimal losses just by sheer luck (minor profits in fact, just because i think i bought good quality stocks).

I realised, that I have already moved in and out of the markets thrice in last two and a half years. My major concern has been valuation.
Eventually every time I end up convincing myself that good quality commands premium, I start buying, in the end selling my portfolio out of fear of over valuation. It has occurred thrice already.

I understand that in the long time frame of 10 years, entry price doesn’t matter so much, however I am realising, to save myself from the short term emotional turmoil, it would be better that I invest at cheaper valuation, so as short term movements also do not affect me emotionally. I read at few places, people recommending that better entry point is when Nifty 50 PE is less than 24. I understand nifty is a dirty metric, however, valuation concerns even in good quality stocks end up giving me some emotional churn.
Is there a way out of this cognitive dissonance?

3 Likes

So are you expecting a fall? Apart from the valuations what made you sell the FMCG stocks, If you have long view, I don’t think these are bad choices, these are coffee can stocks, considering the long runway they have.

Although it is good to come out when you are in doubt and revisit them again is a good idea in itself, perhaps an art. I have started doing that lately, and it is proving to be a good decision at present, and if I don’t get a chance to enter again then maybe I have taken a wrong decision.

1 Like

It would be arrogant for me to say that i expect a fall, but seeing the carnage around, I have started to find 45-50 PEs unreasonable for FMCG companies too.

1 Like