Hitesh portfolio


(hrfacebuk) #2204

Hi Hitesh - What was the rationale for exiting Canfin?

Cheers.


#2205

Hi Hitesh, an added question along the same lines. What is your view on PNB Housing finance. It is growing at a fast pace and on a P/BV metric looks appealing.


(Hitesh Patel) #2206

@amber jain, I dont hold any of the companies you mentioned.

@hrface buk, I exited canfin to get into bajaj finance. Now have it as a core portfolio bet. Nothing wrong with Canfin either but I see a longer runway for bajaj finance and they are in a very dominant position whereas I see a lot of companies coming up in the HFC space although till now there doesnt seem to be any diminution in the business momentum for these HFCs.

Personally I feel there are some telltale signs of overheating in the HFC. Reminds me of the time when every company wanted to be in infra space or atleast wanted to have infra mentioned in their name back in 2008. Similarly in the IT boom it was fancy for name of software or something sounding similar. I think this opportunity size of HFC is being bandied about too loosely now while trying to justify fancy valuations for the sector and its companies.

@milind paradkar, PNB housing was in my watchlist post listing when it was hovering around 800 odd levels. But couldnt get into it and it suddenly ran too fast.


(kanvgarg123) #2207

@hitesh2710 Sir will it be acceptable for you to share your core portfolio? It can be of immense help for individual investors. It can give some more clarity about portfolio allocations, sectors one can be bullish upon and themes which one can look for? It can be purely for academic purposes and no recommendation. At the end, every one wants to make money but they need some guidance on how their portfolios should look like so that they don’t miss the opportunities :slight_smile:

Thanks
Kanv


(Hitesh Patel) #2208

kanvgarg,

I have mentioned earlier also about my inability to share my portfolio because of some restrictions.

And this forum is meant to enhance investor education so that people can take better informed decisions based on better analysis of companies. Thats what we all do. For capital allocation we have a thread with wonderful insights into the subject.

Currently it seems there doesnt seem to be any specific sectors which seem to be the place to bet on. Financials esp NBFC, and speciality finance companies like HFC, MFI etc seem to be in flavor these days but I cant discern any clear sectoral rally. The only place which seems to be rallying as a sector seems to be sugar and I tend to stay away from the sector so no holding. Other sectors which seem interesting with a slightly longer timeline seems to be speciality chemicals and cement.

Otherwise even in neglected sectors there are some winners which do seem to be going strong even while the whole sector is not going anywhere.


(kanvgarg123) #2209

I understand.
I have gone through the threads but taking decisions makes one uncomfortable. Confirmation Bias after looking at the senior boarder’s portfolio helps in making one’s conviction strong. There are things which I don’t understand and probably can’t comprehend. Warren Buffet said, I invest only in businesses which I understand but a common investor can miss something or the other. Anyway uncertainty is the reason why it is fun to be an Individual investor.
Understanding B2B opportunities are very tough because it is tough to get the feel of it. I have listened to numerous concalls and read AR’s religiously but always something or the crops up for a lot of companies with optically great prospects. Somehow I am always very early (I waited for 2.5 yrs for the story to play out in one company and exited but then I got played out in next 3 months) or always late (Bharat forge, Shaily engg plastics). I am still invested in both from past 2 yrs with some notional losses.
B2C are easy to understand but they are expensive companies. I added a lot of B2C companies during Demon but even then they looked very expensive.
I don’t invest in commodity plays and have given them a go till now, as understanding world dynamics if out of my scope of understanding.

I am invested in Can fin (HFC), Bajaj Fin (Consumer NBFC), Ujjivan (SFB) + IIB and HDFC Bank in BFSI space with 35% net allocation. 25% of my portfolio is in pharma which is in losses (Again late because of B2B business and not grasping the feel). Rest are all individual stocks from difference pockets.
Thanks for your prompt reply though.

Kanv


(Hitesh Patel) #2210

Coming to the blunders I committed, the mind tends to forget the painful memories and hence difficult to recall them.:slight_smile: Convenient way to limit listing one’s mistakes.:slight_smile:

The first blunder I recall was investing without any knowledge. Back in Harshad Mehta era when I didnt know about investing I recall having invested in companies like RPPL (and RPEL I thinik its twin ILU-PILU as they were then called. ) Orkay Silk Mills was another one.

Another one I recall is investing on some “wise friends” tips. I have some share certificates still with me to prove the follies. Things like MS Shoes, Mideast Steel, Soncal Cosmetics, Redex Protech.

Later on once I read some investing books first of which was One Up on Wall Street, I did invest with some semblance of half baked knowledge. Thats where two stocks came up – Lakshmi Energy and Parekh Aluminex. I had only a two stock portfolio at that time back in the carnage of 2008. Luckily I did not have enough money to lose because I had purchased a new house beyond my means in 2006 and used up all my savings to put into house. That probably saved me. Beginners’ Luck I guess. But with what little money I had, I started investing in the above two stocks and kept buying it till near bottom prices. Both turned out to be 2-3 baggers for me and I was again lucky enough to sell near tops.

Then came the equitydesk and VP phase. Post this phase the mistakes were those of a partially read investor.

The biggest mistake was about not riding winners for the full journey. Too many ideas led to these mistakes. I exited stocks like TTK Prestige, Ajanta, Kaveri, Tata elxsi etc (many more but these were the first that came to my mind) etc too early. That problem often persists still now but to a lesser extent. In ajanta I corrected the mistake to some extent by buying it back at a price 50% higher than where I sold off and with 50% higher allocation.:slight_smile: That to some extent lessened the pain.

The other mistake was not being able to differentiate long term from short term ideas. Often I mistook short term trading bets as good long term ideas. Since past 3-4 years I have made my criteria for long and short term very stringent. The short term bets if they go wrong are thrown out very quickly and I often exit with minor losses only to see the stock rebound and go on a strong uptrend. But I have learned to live with these things.

Another mistake that often tends to happen is to keep holding long term stocks irrespective of valuation froths. But again thats something I have learned to live with.

Lack of patience with some companies is often a mistake. Nowadays I tend to give my long term companies plenty of time to perform inspite of a few lacklustre quarters. But sometimes things get too much and I often sell out only to see these stocks go up. But this usually happens when there is some better idea around.

Another mistake is of not working hard enough on new ideas. I tend to reject ideas much faster due to one or other reason these days and often there are errors of missing winners. But if the overall portfolio returns are okay then these things dont matter too much.

Most important aspects of investing are stock selection and capital allocation. And patience and temperament. The first two are now easy to do but last two are very difficult even at this stage of my investing career.

These are the first offhand things that came to my mind and have jotted them down. Would recount more things when I have more meaningful stuff to write and more time to write.


My Portfolio - need overhauling
(Rits) #2211

Hitesh Bhai, how do you view Shilpa in view of latest quarterly results… Thanks


(sta) #2212

Sir
What is your criteria for long term and short term that you mentioned.?


(Sagar Bhadury) #2213

hello hiteshji,

About the cement space what are the companies you find value and growth in. Some of the southern cement companies ran up in the recent times. i wanted to know what do you perceive to be attractive at this moment.

Also as specialty Chemicals is a big sector , Any specific area you are bullish on?


(Raj A A) #2214

Hats off. What a honest introspection and plain talk…


(viv_vjti) #2215

Hitesh Bhai thanks for sharing your investing mistakes. It adds to our vicarious learnings. Also it motivates to beginners like me that the seasoned valuepickrs also started from scratch.


(krrish seth) #2216

Thanks hiteshbhai, this is really a informative post.

regards,


(BIPIN SAVLA) #2217

super like ! Thank you Hiteshbhai for candid reply


(ajjw123) #2218

I am glad and grateful that you shared your journey of Good to Great.
Your story inspires me more because when one knows that everyone is so dumb at start but with time ,discipline ,patience and temperament ,anybody can be a decent compounding machine.
I have made lot of mistakes in last 20 years and was still not able to compound my money due to behavioural issues despite picking lot of multibaggers like TTk Prestige,Emami,Yes bank,Linc Pen,Techno electric etc but selling them with every market fall.
I am doing lot of reading and pondering since last year . My one key takeaway is that Information and analysis is abundant but temperament is lacking or missing . Managing expectation and acceptance plays a indispensable role in Value investing.
So thanks again for inspiring and for sharing your wisdom regularly.
Cheers !


(amberjain2001) #2219

Thanks Hitesh bhai for update. I have ard 10 Lacs and planning to invest. as per analysts, the HFC is the upcoming industry with affordable housing area. Please suggest if that would be good area. Any ideas on L&T finance.


(Sunray) #2220

Hiteshji,

Thank you for sharing. Reading this brings me to another set of question…

How do work your ideas out? Is it driven by newspaper reports? Do you get thoughts about companies from friends? I have read several other books and also material here on VP. However I would like to hear your deeper thoughts on idea building and conviction creation.

Once you do get convinced by an idea, what procedure do you use to flesh it out and then finally how do you then chose those lucky companies, is it primarily the use of financial ratios?

Apologies in advance for the long list of questions, i am keenly interested in the process that people follow as opposed to asking for tips etc. As VP has nicely put it, how do we separate the wheat from the chaff.

I have struggled recently trying to navigate a highly priced market and choosing companies that are good, but seem too highly priced.

As I read I find several people say that they are always invested int the market, but even markets that are at 23pe or say a 2008 market that went up to 27?

I try and follow strict rules for myself with low pes, and high opm, growing sales and reducing or no debt, but at the end of the day I still face trepidation on choosing stocks in highly priced markets (perhaps it would be the same in a low priced and extended period market weakness)

Any insights would be welcome.

Thanks


(Binu) #2221

Thank you Hiteshji for a crisp summary of your investing career, lifted up my spirits to improve my investing efforts. Can’t thank you enough


(Hitesh Patel) #2222

@sanjay clockwork,

Getting ideas is not difficult these days. I guess most of companies out there are covered on VP also. Sources of ideas is often meeting/interacting with other investors, some or other research reports (which should always be a starting point only and not to be acted upon immediately), technical picks (many of these often have some strong business tailwinds behind them on deeper digging) etc.

How to take these ideas forward is mostly the question. Firstly I try looking at gross obvious negatives like too much debt, dodgy promoters, lots of pledging, poor financials and balance sheet, low opportunity size as compared to market cap etc. Any or a combination of these would help me in rejecting these ideas immediately.

Companies passing the above filters are the candidates for further work. It begins with cursory look at financials where a first look at screener does give some idea about where the co has gone in the past few years. I dont outright reject companies which have not gone anywhere in past few years bcos there are some sleepy companies which may be on verge of waking up and running hard. Screener gives me an idea about market cap, Book value, quarterly and annual results at a quick glance.

Next comes downloading past few years (sometimes even a couple of them suffice) annual reports and looking at what management has been talking and what it actually has been doing. Annual reports also provide insights into the business of the company and the financials of the company . I tend to check the financial figures from official documents from the company rather than relying only on research reports or figures from screener or similar website.

Doing all this provides with a picture of the business quality and management quality of the company. Next step is to figure out what are the investment triggers for the company going ahead. Sometimes it is there in the form of quarterly numbers, or sectoral tailwinds, impending expansions, progressive reduction of debt, etc.

A step further is to go through the concalls/presentations/management tv interviews etc provided on researchbytes or on co website or elsewhere.

If the company is well covered by analysts then it helps to go through some of them though most of them are copy paste kind of jobs though some of them are really good. If the co is not that well covered then its all the more better and likely to provide better returns if the gap between perception and performance is big.

After doing all this the final step is to write down a short 1-2 page write up which I usually use in my stock stories on companies I have put up. e.g Jagran. This write up should cover the business of the co, financials (which include last few years and quarters figures, balance sheet items like debt etc, promoter holding, pledging etc, MF/FII holding if any, market cap, return ratios etc). And investment arguments and risk factors. One of the things that can be included could be the reason to sell the company. (whenever that happens) I have yet to do the latter.

Once all this is done, then if valuations are attractive then I tend to buy the company usually in a single shot. Sometimes it takes longer.

One of the things I usually missed was averaging on the up as the story tends to improve. I am gradually getting over this problem as I add more to some companies where story does tend to improve and valuations still remain attractive inspite of stock price run up mainly due to improving financial results.


My Portfolio - need overhauling
(Chandra) #2223

Thanks Hitesh. I was looking for some guidance, this write up really helps. One general ? is screener.in Info is reliable. I have see the updates are almost recent .May be few days old. Other than screener.in is there any good site to find Cos. historical Data.

Thanks,
Chandarshekara