Hitesh portfolio


(Hitesh Patel) #3081

@atul1082
I dont track jubilant life but it will be a beneficiary of valsartan generic price rise. A lot of companies withdrew from supplying valsartan generic molecule because their product was found to have an impurity which was carcinogenic. That left the field open for existing players which include aurobindo, jubilant life and alembic. How much it amounts to total revenues of the company needs to be seen.


(Gorthi) #3082

Hi Hitesh Bhai,

Whats ur view on Sugar stocks… All are 20to 30% up in last 2days…likes Balrampur, Dhmapur, sree renuka, Dalmia, Dwarakesh…

Do you think is this sector is finally in uptrend due to ethonal blending announsment from Gov…
.
Can someone consider this for momentam play for next 1year…

Also, can ypu share ur views on Praj Industry in this environment vis a vis Sugar stocks…

Thanks in advance…


(Hitesh Patel) #3083

@Gorthi

I dont know how to reply to the question on sugar stocks. By the time you reply the stocks have gone up nearly 40-50% on the back of 2 back to back circuits.:slight_smile:

I think with so much of momentum in place its prudent to wait for some kind of consolidation in this sector before taking a call.

This ethanol story has been going on for a long time now and it seems it is being used off and on to bring about pop ups in the whole sector.

Regarding Praj I think I would first like to see a string of decent quarterly nos from the company before being able to comment on the company.


(Gorthi) #3084

Thanks Amit Bhai …Its indeed very wise idea.


(Milind) #3085

Hi Hitesh,

Just thinking from learning point of view.

  1. As Magma finance is down around 15% from my buying price (Generally i start selling once stock goes down more than 10 to 15% from the top) it was easy for me to sell bajaj finance some shares as i can see it is down from around 3000/- and easy to sell when in profit.
    How do see magma finance?
    Would you keep it? or sell partly? or wait for 2 more weeks as once the result season start things start improving?
    With my experience i feel
  2. I should sell at least some part or may be full holding (While in loss this decision is little tough to make)
  3. I know as management promise the AUM growth will start from this quarter so I really want to wait for next 15 days but my past experience says sell it as price reflect first than result
  4. Experience says…urge to sell stocks take top priority at the wrong time so when i feel to sell magma finance, experience says don’t sell it is precisely wrong time.
  5. As there is no top for magma to see like bajaj finance (my buying price is driving my decision)
  6. Experience says once stock goes in downturn it may bounce back but at last selling decision on these shares in long term proves right in most of the cases.
  7. Do you wait for bounce back (as happens in many cases and execute selling decision firmly)

Just thinking, if you could share your thoughts on this it would be great learning for me.

Thanks,
Milind


(Hitesh Patel) #3086

@malthankar

About Magma inspite of good results the stock seems to be correcting as do most other financial stocks. That seems to indicate that the whole sector after a stellar run now seems to be going out of favour with markets.

People look at it in two ways.

The optimist and usually the guy who has not bought thinks it as a great buying opportunity. Sometimes people who dont have enough quantity end up adding more.

Those stuck at higher levels are disgusted with their decision and look out for chances to sell out and book losses.

There usually are no clear cut answers to these quandaries. I belong to a camp which is quick to sell out and book losses and look at it again if the results keep turning out to be good and the environment for the business remains favourable.

I think the markets currently seem to be fearful of a series of rate hikes in an attempt to stem the currency fall. I dont know it these measures would help but the fear of such steps keeps markets on tenterhooks. My guess is once the event is through the pressure on financials could be done with.

Sometimes these kind of markets offer good chances to rejig the portfolio to get into what we feel are better choices than the ones existing in one’s portfolio.

I myself am in the same boat as you and am looking for a meaningful bounce to exit as in the current market scenario I dont see financials making their comeback and recovering previous highs soon.


(sumit680) #3087

Hitesh ji…Im not following magma finance but my simple thinking says that why not to wait for the next conference call and find out the actual perceived effects of interest hike rates on NBFCs…I think finding out the management view will be the best method to gauge the situation…

Regards


(prakhartheinvestor) #3088

Sir, Do you have Action construction equipment? What are your insights on stock?


(Milind) #3089

Thanks Hitesh for your input, it is really very helpful.

as this kind of situation happens in many and i generally sell when i feel uncomfortable like current situation with magma, but i feel I should wait for bounce back but make a decision to sell it currently but execute this decision firmly when bounce back happens.
As i have seen recently when i sold Edelweiss or TBZ or Avanti but i did not wait for bounce back of these shares but when i look back, it seems there could be an approach of selling too like making decision to sell currently but execute it in bounce back.
Many times i feel generally stocks comes back up to 50% after fall (like 100 to 70 and bounce back up to 85 then go down)
just trying to make some way how to sell stock

It would be really helpful if you could share some of the strategies you follow.

thanks for your guidance

Regards,
Milind


(Hitesh Patel) #3090

If the company in question is having sound financials then a bounce will definitely emerge and that could be the chance to exit if one is convinced about exiting.

Sometimes it so happens that we are so focussed on minimising our losses and anchored to our buy price that as soon as it approaches our buy price after having gone down our main focus is to sell . This often leads to missing big winners. Stocks often go down 20-30% after purchase sometimes for no logical reasons. But companies with good prospects make a comeback and then go right up and then it looks silly to have sold off.

Thats where conviction in a company is very important. If conviction is strong and we are able to follow the company’s plans in the future it helps in holding. Thats where reading AR, listening to concalls etc and keeping tabs on the company in different ways like scuttbutt, interacting with other investors who follow the company etc help.

As for Magma I think its correcting more in line with corrections in all financial stocks. How long correction in financials last is anybody’s guess. Just a look at the market favorite bajaj finance shows the kind of selling pressure the segment is facing.


(s) #3091

Investing is more of Risk management and what you can absorb or kick out of your system without remorse. That is essentially problem of betting big with high conviction in any market.If you get one wrong you can get wiped clean. Ricoh India, Omkar speciality… list can go long


(Srinivasan Sundaram) #3092

@hitesh2710

HDFC and HDFC bank is close to 200 DMA…Is it advisable to enter now? what’s your view


(Hitesh Patel) #3093

@Doonsrini

I think the financial sector is undergoing PE contraction. Even when strong players like HDFC and HDFC bank start going effortlessly below their 200 day moving averages, its better to be patient and observe where the fall ends, and then take a call.

Fundamentally, HDFC corrects probably because of headwinds in HF segment plus erosion in value of its subsidiary. HDFC Bank seems to be correcting in sync with the whole banking/financials space.

I think currently it would be better to focus on segments of markets like pharma/metals and mining/paper etc which are showing good strength.

Financials will make a definite comeback but from which level and when is crucial. When a sector which has been the market darling undergoes a downturn, usually it takes quite a lot of time before it makes a significant comeback.

Examples of above are … Real estate took a fall in 2008 and could make a comeback only in 2017. Pharma started correcting in 2016-17 and its only since 2-3 months now that it shows signs of making a comeback.

The thing I observe nowadays is that cycles in various sector leaders are unfolding very fast and folding up too very fast. One needs to be on their toes to catch these upswings and ride them.

For the very very long term it might make sense to start nibbling at quality financials but my personal view is that there might be enough time going forward to do that too. (these are personal observations and I might be wrong but I am mentioning my own views as I see things unfolding in markets)


(Srinivasan Sundaram) #3094

Thanks a lot for your immediate response


(Kumar Saurabh) #3095

Hitesh bhai , I remember you were bearish on Edel due to charts n slowly whole bfsi followed . The more I study technicals along with fundamentals n the more I appreciate the value. Thanks to you n @vivek_mashrani to instill confidence in this concept. There is another sectoral pattern I observed. As I fundamentally track few real estate companies n invested, regularly go through their charts n what found that on a specific date, most of the companies I track had almost same pattern , 20 day EMA almost kissing 50 Day EMA after a good 1 year ride followed by correction n post that in last 1 week , each of them bounced back. Anything further to infer from this ? Fundamentally, I used this support as an opportunity to accumulate more at those prices but would be glad to know your views technically as well as fundamentally in case you track . Posting charts below





(Peabody) #3096

Dear Hitesh

On the financials PE contraction is definitely happening after the stellar run. The key disrupter is interest rates.Looking back at 2011/12 the scenario could play out. But financials are wheels of the economy.It cannot behave like other sectors. May be when the interest rate impact plays out, there could be a sharp bounce when the froth is taken out


(yesudeep) #3097

I’d say the debate between portfolio diversification and concentration is rather meaningless. The former is protection against ignorance and is much suited toward people who don’t know what they are doing. On the other hand, if you understand what you are doing, it simply makes no sense to allocate capital to your 7th best idea; let alone your 20th best idea.

Imagine yourself as the owner and CEO of Godspeed, a business that is the best in the world at making its product ecosystem, X, and making a lot of money selling it. Being the frugal potato that you are, you also manage to keep your costs ridiculously low. However, for a bit of perspective about how to deploy your cash hoard, you happen to hire Mr. Suit Nice Tie, a charming financial advisor who has an MBA from a much respected institution and who for a fee stumps you with “Hey, you know, what happens if we can no longer do X?” “The man has a point,” you think. Now instead of focusing your effort on ensuring that X remains relevant in the future by stepping up your game and widening your moat, you could then spend time on finding out alternatives to X. Aye, it could make sense to have one or two of these alternative sources of income especially if it expands your ecosystem and deepens customer mindshare, but if you were to do entirely unrelated things you’d risk becoming the jack of all trades.

For example, imagine if Apple started its own airline, iFly, in the name of diversification. “What a wonderful idea that would be! People love the iPhone. They will surely love the airline, especially if it is coming from Apple!”, an exuberant Mr. Nice Tie would remark. Well, if Apple started its own airline, instead of making 5 times as much as it spends, it would then have to spend 10 times as much as it would earn. Now that wouldn’t be a great way to allocate capital, would it? It might very well be a stellar and remarkable product, but if it costs you more to maintain it than it can make, it doesn’t matter how good the product is; you would lose money. And you know what they say about losing money: don’t lose money. Therefore, being the more practical smarty-pants, you would gently ask Mr. Suit Nice Tie and his band of jolly fellows who can tweak their spreadsheets but refuse to use a little bit of business judgement, to pack their bags and clear their desks on the way out. It wouldn’t hurt to vow to never hire Mr. Suit Nice Tie and his elk again. Imagine all the unnecessary salaries and severance packages you would now not have to dole out.

I’m not sure how doing 10 things mediocrely can equal doing a couple odd things brilliantly well. If I find a great idea and understand what I am doing, I’d swing for the fences. It makes no sense to take a single on a free full toss. I’d hit a 6, and there would be no two ways about that. The choice between concentration and diversification is analogous to that between the marvelous and the mediocre. I cannot settle for the latter. You might want to choose your own outlook after a wee bit of deliberation and a dose of fine whiskey. While I’m certain you’d find your own path, I do have a bit of well-meaning advice: if you buy a business buy it with the intention of never selling it. That rule of not being allowed to sell alone will force you to make substantially better selections.


(Sudhakar) #3098

Speaking of diversification and airlines, one is reminded of Mr Mallya’s misadventures.


(Hitesh Patel) #3099

@suru27

Moving avgs are a whole different system of trading where various traders use different sets of moving averages to suit their trading systems. If it works consistently, its very useful especially in conjunction with some other method of trading system/technical analysis so that the results obtained out of moving averages system can be validated by other methods of technical analysis. Its like applying different mental models in fundamental analysis. Similarly you apply various methods of technical analysis to arrive at a more precise result.

Coming to edelweiss chart once I had read the book Five waves to financial freedom by Ramki Ramkrishna, I had a look at various charts in an effort to see if I can spot these waves in different charts. And Edelweiss struck me as a perfect chart where labelling all the 5 waves looked pretty easy. In fact Edelweiss at that time was going up in wave 5 and since wave 3 was extended Wave 5 was more likely to be normal. So I had felt at that time that upside was limited at around 320-330. Since then the stock has started its A-B-C correction and now seems to be in Wave C in its ongoing correction.

Attached a labelled chart of edelweiss. Easiest thing in any chart is to spot Wave 3 which is the usually the most strong in any chart and which creates maximum wealth for investors. Then all that remains is to find out where the other waves are.


(Ankur Lakhia) #3100

Hitesh bhai,

I read your Edelweiss example of wave formation with interest. I don’t know much about wave theory. But, when I saw the Edelweiss chart you posted, it struck me something about chart of Gold.

image

Above is Gold chart for last 20 years. It looks like Gold completed wave-1 of bull market & may be close to completing wave-2. Now, if wave-3 is the biggest of them all then probably we are on to something. I am not a Gold bug but I don’t mind keeping some if wave-3 is to unfold.

Your reading will be helpful, as always.