CoffeeCan portfolio for family

Q&A: Questions & Answers Portfolio Q&A
1

I am in my early 30’s and started investing only 5 years ago. The reasons in the initial periods were to create an alternate source of investment apart from debt for my family and a secure future for our kid. My investments include some good picks and some bad ones but all for the long haul.

Criticism, feedback and suggestions are welcome.

details of the portfolio
Goal: Long term value appreciation and regular dividend income.
Total stocks 39
Top 5 stocks holding : 48%
Top 10 stocks holding : 66%
Top 25 stocks holding : 92%
Tail stocks:8%
Major stocks are small caps/ Microcaps
Top sector weightage : IT (40%)

Top 5 stocks

  1. Tech Mahindra : This stock is in the top 5 because it had a major allocation before the bonus and split. After this event, the stock crashed to half and I have averaged all the way until it touched 400. Holding for the long term as it is a Mahindra group stock with good governance, major foray into the telecom sector which still has long term (10 years) tailwinds and stable growth. A major stock in our portfolio need not give any good or bad shocks and it is visible with slow and steady growth compared to TCS and Infosys.

  2. Mindtree : This is a major stock in my portfolio because I love this company. They have had a solid and steady growth even after missing their announced revenue guidelines a couple of years ago. Mindtree followed Tech Mahindra when it fell to 400 levels but has since recovered. Mindtree will be a part of L&T very soon and I see it as a positive despite current promoters not being happy.

  3. Tidewateroil : Another company I love. I intend to increase the holdings gradually. It is a steady performer with a hefty bank balance and high dividend yields. Performance has been lumpy over the periods at best. With Standard grease willing to take over Tidewateroil from Andrew Yule, I see better growth prospect in the future. A revamped website, Channel sales growth and premium packaging, premium television spots (recent cricket tournament) are only some of the positives visible after Standard Greases took over. Veedol has a global brand recall and Tidewateroil also has many global subsidiaries (albeit low contribution at the moment).

  4. Sinclairs Hotels : Sinclairs is a microcap hotels company with zero debt. They promoters are traditional with the belief of keeping a strong balance sheet and maintaining a good quality. The book value is currently higher than the market cap. Its balance sheet is enviable in the hotels business with the likes of Leela and Kamat fighting heavy debt. The negatives are mostly the locations of some of its hotels in Bengal, Assam and surrounding areas which are prone to stikes and lockouts. They have struggled in started a new hotel in recent years.

  5. Triveni Engineering& Inds: : Another small cap from a group company. I have invested in Triveni because they have tried to not only focus on Sugar but also grow their gears business well. It is a small cap company which was recently available below 50 levels. Additionally, their water treatment business is the need of the future.

6 Sasken Technologies : My portfolio has tilted heavily towards IT with the inclusion of Mindtree and Tech Mahindra. But I see Sasken as a major benificiary of the 5g push and Mr. Mody has had extremely good relations with many top corporations globally. I see a future growth from their 5x5 vision.

  1. BSE LTD : BSE has thrived well under mr. Ashish Chauhan. They have taken a lot of initiatives apart from equities where they have lost to NSE. While BSE was criticised for beareaucracy a decade ago, NSE is marred with corporate governance issues recently. I intend to upgrade BSE into the top 5 stocks. Good dividend yield is a bonus.

  2. DCM Shriram ltd . Another sugar with with multiple businesses. I trust the corporate governance of DCM Shriram group and they have been quick to go with capex whenever they have had good cash on hand. Their fennesta brand is wellknown and they have a good hold in the agriculture sector.

  3. Mahindra and Mahindra: : The main company of Mahindra and Mahindra. Mr. Anand Mahindra is a person with forward thinking. While the major contributors to the business are tractors, the company now owns Ssangyong, Pininfarina, Jawa-BSA- Peugeot (2-wheelers) and Genze USA. They are wellplaced in the Indian auto sector and Ssangyong might turn out to be a dark horse with sales channels in UK, Australia and other countries.

  4. Savita Oil technologies. Another lubricant company with power business. With a high EPS and a recent deal with Tata motors for Lubricants, Savita is looking to grow its topline and bottomline. I do not see any real moat after they terminated their Idemitsu tie-up. It is best if the promoters merge their company with another lubricant maker. I do not see people asking specifically for Savsol at garages. One of the major pros is the company’s corporate governance. The promoters have recently come up with a second buyback.

  5. Karnataka Bank : A bank that has no owners. The growth is pretty slow but it shows in its valuations. If LVB- Indiabulls mergers goes through, I hope Karnataka Bank also gets merged with another big entity. The bank has close to 1000’s branches and the directors have a good control on the banks activities.

  6. Lakshmi Vilas Bank . I had purchased this bank when it was recovering before the NPA crisis. A rights issue and IBHL merger news led to this bank taking up a major part of my portfolio. It will be left as is for now.

  7. SMS Pharma : SMS Pharma holds a major part of the portfolio along with SMS life. SMS pharma has recently increased holdings in VKT pharma and SMS life has increased holdings in Mahi drugs. Debt is on the higher side and the pharma company has had an issue containing raw material costs.

  8. JM Financial: : Invested when Mr. Nimesh Kampani was at the helm. While his son has taken over the business, Mr. Vishal Kapani remains an unknown quantity at the moment compared to his father. But some of the business decisions of JM group have been excellent. Some concerns about governance have been raised recently but I do not see a matter of concern.

  9. Vidhi Food colours: . A microcap dividend paying company. They have transformed the company from known as a chemical trading company to a food colours manufacturer by stopping their trade business and renaming the entity. I find it to be a good long term hold.

  10. Kellton Tech : The stock that started with a bang has seen a lots of headwinds. Promoters taking up heavy debt and reducing their stake in the company has rung warning bells. But only recently have they started buying back their shares. Q4 2019 has not been encouraging but I will hold on to see if the Chintam Brothers really have it in them to turn Kellton into a bigger and more profitable company. Fortunately, they have realized that rather than a faster growth without revenues, it is important to build a stronger company with stable growth and revenues.

  11. Ashok Leyland : A company from the Hinduja Group and a major truck manufacturer. Ashok Leyland is an innovator in the truck business and a strong performer. The resignation by Mr. Dasari is a shock but I am sure, the Hindujas are capable of finding an able replacement.

  12. Kalyani steels : A company from the house of Baba Kalyani Group (Bharat Forge). The recent headwinds of debt and bankruptcy and recession has affected this stock for now but I see its growth beating the industry averages on the longer term.

  13. Welspun India: Welspun is a major home textiles maker with good presence in USA and China. The stock tanked after the Egyptian cotton scam and hasn’t been able to recover. The company has gone ahead and settled the case as mentioned in the last quarter. It remains to be seen if this textiles major will be able to grow again.

  14. Indostar Capital finance: An NBFC promoted by Everstone. I was a part of the IPO. Company has since taken over IIFL’s CV finance business. NPA and liquidity crisis saw the stock correct a lot but I see it performing decently in the long run.

Other stocks I hold are

Techno Electric
Mishra Dhatu (IPO)
Coral Laboratories
SMS lifescience
DHFL
MOtherson SUMI
ION Exchange
IMFA
Cupid
JK Paper
SUNIL Healthcare
Piramal Enterprise
TCS
PPAP automotive
Keerthi Inds
Hindustan comps
Alembic Pharma
Andrew Yule

Looking to add Cera Sanitaryware, Axis bank/Indusind bank and Affordable robotics if pricing and performance match. Thank you for reading.

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I feel there are too many stocks. The idea of coffee can portfolio is to have between 12-15 stocks which are consistently compounding ! So i would seriously sit down and pick 12-15 of those stock which i think would consistently compound and wait to buy them at right price and keep adding when market provides the opportunity.

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4

This is not coffee can portfolio. Companies should have 20 years runway to do well. Not man of these qualify.

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5

Thank you for the feedback.

As mentioned in the initial post, I have been holding stocks since I started investing, hence many stocks exist in the portfolio but not on the active list.These hardly make up 7.5%. I am currently concentrating on the top 25 stocks only which make up 92% of my portfolio.(top5 stocks make up 48%).

Alternatively, if a new opportunity comes up which is better than my holding , I will invest leading to a change in the top25 stocks.

6

Few of your stocks have established corporate governance issues like Kelton Tech, Welspun. Please get out of them and focus on few good midcap/largecap companies for wealth preservation and generation.

7

Thank you for the feedback. I will re-evaluate both. If you are talking about Welspun’s Egyptian cotton scam, I have covered that above already.

We have business with Welspun and hence The investment. It is one of the very few textile companies that pay vendors on time and in full. I also find Trident to be a good alternative.

I was invested in Kellton before their issues came up alongwith the 8k miles fall(was invested in that too. I exited 8k miles then). But Kellton was below my average price and decided to give it a shot. Promoters stake increased this quarter and they have decided to not follow their previous guidance for excessive growth by pledging shares and taking debt. I read that as a positive. I agree with your warning on Kellton and will keep a cautious eye on the stock. I already hold Techm and Mindtree( l&t very soon) and they are really the focus stocks.

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8

Wealth creation is not a casual excercise.
Investing in so many stocks simply means one is not sure of any company hence put money in lot of stocks.
Wealth has been created in past only through concentrated portfolio with full conviction and future visibility.
Simply seeing financials, EPS, PE etc will never give you future visibility, concentrate on business prospects, scalability and promoter.
For example i bought C G Power in around August 20 after company gone into hands of Muruguppa group, though many of my whatsapp group friends asked me it has huge losses but i bet on company’s prospect if it goes to a good promoters.

Same way i invested in Olectra Greentech at around Rs.100 around seeing states are focusing on EV buses and Olectra has tieup with Byde which is no1 company in EV busses where Warren Buffet had investments.
Recently i invested in Panacea Biotec, seeing after over a decade company cane out of financial crunch and this vaccine leader of over decadial experience was suffering due to huge debt and that problem is over so very likely company can give huge return on small equity capital.

Large amounts of money aren’t made by buying what everybody likes - they’re made by buying what everybody underestimates.

— Howard Marks

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