Hitesh portfolio


(aerofire) #3121

Hi Hiteshji ,

Are you still tracking TD power Systems ? What are your views on this .


(Ashish) #3122

Hitesh,

I relooked at this thread from this year onwards and saw your anticipation inline with what Mr Market did.

Is this coming from knowing Market cycles,good knowledge from books or only experience?

Kindly enlighten on this aspect


(Hitesh Patel) #3123

@idikasony

The anticipation of what markets are going to do is largely a guess based on observations in the market, mainly fear and greed factors and nowadays another element added is investor posts on whatsapp group and investor forums.

Some part of it is some knowledge of technicals. Combining this knowledge of technicals with market observations, valuation parameters etc helps in connecting the dots.

After reading the elliot wave book I feel sometimes if we can spot a clear cut wave count and can correlate other things in sync with wave counts the picture often emerges more clearer.

But its difficult to get it consistently right and even if we get it right sometimes its difficult to act in a correct way.


(Susindar) #3124

Hitesh,

Are you aware of any red flags in Manaksia. Is it a value unlock or value trap as the current numbers appear too good to be true at 0.27 BV, 2.7PE and 7.5% dividend yield.


(Hitesh Patel) #3125

@susindar

I dont track manaksia so not much idea about it. But with current market fall affecting all kinds of stocks why not go for the better quality cos?


(Hitesh Patel) #3126

@aerofire

TD power has now announced buyback worth 30 crores at a price not exceeding 256. This probably has provided some kind of floor to the price.

Business wise I would like to watch the results and management commentary for next quarter or two before taking a call.


(Hitesh Patel) #3127

@BalusuAditya

Regarding the current fall I had exited most of my financial stocks some time back. Still stuck with a couple of them but wish to offload them too. But in all this process if I see prices of stocks like edelweiss and bajaj finance and iifl it seems they have become attractive again. Dont know what to make of it.


(Wolf) #3128

Hiteshji

What is your view on Solara Active Pharm ? with the API scarcity due to china environmental crackdown

Sequent Scientific.
I have asked you this question earlier and you were tracking it, did you initiate a buy. I attended the AGM today in Mumbai.


(phreak) #3129

Historically Bajaj finance has traded at 2-3 times book pre 2013 and between 2015 to 2016 between 4-5 times book. The whole scenario changed post that where it started trading above 7 times book and most recently at 10 times book. The current 8 times book is still very expensive and I feel it looks cheap only on a relative basis from recent peak (Anchoring) but if it has to go back to 2015-2016 levels of 4-5 times book, there is still more correction left. I feel paying anything over 4-5 times here is risky considering the turn in the rate cycle.

I feel its the same case with Edelweiss which was trading between 1-2 times book before 2016. It is only post demonetisation that it went up to more than 5 times book which is ridiculous overvaluation. At present it has come down to between 2-3 times book. Again, the rate cycle should put these businesses in their place in the near future. I feel Edelweiss should follow JM Financial and MOSL and go back to historical average valuations.


(1.5cr) #3130

I think valuing edelweiss on book value alone may not be prudent. Same with MOSL. As both wealth mgmt divisions. In addition to that edelweiss has an insurance business. Valuing such a diverse financial services company on book value alone would not be prudent right? Would a standard PE multiple make sense in such a case??


#3131

Which stocks are you currently keeping an eye on?


(phreak) #3132

@1.5cr - For relative valuations, either between peers or for the same company across a time series, any of these parameters work either alone or in combination. All we are trying to do is get a feel of what exactly changed in the economy/individual business that there is a change in the character of how the market valued these companies (either P/E or P/B or EV/EBITDA or DCF or Dividend discount model whatever metric you want to use depending on the type and maturity of business) over a short period of time of 2 years.

All sorts of overvaluation was in fact justified by relative valuations during this period. The same thing happened in private banking space as well and micro-finance companies. Bandhan/AU Small Finance Bank was trading at insane P/B multiple and so was/is RBL Bank and as was HDFC AMC. The entire financial space was being justified with a lot of reasoning from financialisation of savings, private banks will get PSU Bank business, Insurance adoption is set to grow exponentially, consumption is set to blow and so on. These are not incorrect assumptions but they were baking in value from the far future into the present, especially when the present involved serious macro headwinds.

I think its only prudent to expect everything from private banks, nbfc’s be it HFCs or microfinance or wealth management companies, ARCs, insurance businesses etc. revert to historical averages in whatever valuation metric you want to use.


(Hitesh Patel) #3133

@mparadkar

I think these weak market sentiments are likely to remain weak for some more time, maybe till next elections.

Some sectors like metals and mining, pharma and speciality chemical seem to be showing some relative strength by correcting less as compared to others. Still i would like to observe things for some more time before making a call.


(Hitesh Patel) #3134

@Wolf

Not much idea about salora active pharma but sequent remains on my watchlist.


(pradip) #3135

You sound like an expert in whatever you have to say. Will be happy to hear your views on valuations for Hdfc Bank & Gruh Finance. More particularly, if you foresee stock price crash & since when are you foreseeing this?


(Balusu Aditya) #3136

Thanks for the pointers towards the rout in the NBFC space. I, for one, am not able to make up my mind whether I should cut my losses(~30%) and look for appreciation in another sector viz. pharma or consumption or stay put and wait for things to get better in the NBFC space. What is your take on it?


(phreak) #3137

I don’t know if that’s a jibe but I will bite. I am no expert and I have less than 2 years experience learning the ropes/first principles (thanks to VP and threads like this one) and I am just a hobbyist so take whatever I say with a pinch of salt. If you look at my checklist, I have avoided banks and related businesses that are in the business of money for making money because of their self-referential nature.

HDFC Bank has not had a serious re-rating in valuation in the last 2 years like the other NBFCs, SFBs, Private Banks, AMCs, Microfin, Brokerages etc. It seems to have always traded between 3.5 to 5.5 times book and is currently in that range so its not way off like the other businesses although it is still in the higher end of the range. A meltdown could at most cut its valuation by a 15-20%.

Gruh has historically been at a premium but since demonetisation, it seems to be have traded at a 30% higher range to that premium and it currently appears to be shedding that weight.

Again - No expert.

Apologies @hitesh2710 for spamming your thread. Will be off now.


#3138

What is the reason for thinking of selling at 30% loss? Did not do proper diligence before buying? Entered at wrong time and overpaid? You need capital to invest elsewhere? You think it would take a lot of time for them to get profitable? What is the reason. I have similar experience and my reasons were all of the above.

Selling at 30% loss is big. Is this 30% loss in a few stocks or in the entire portfolio? If individual, then I guess you can look at them as investing mistakes and lessons.

By chasing a better performance sector may turn out to be another mistake, so invest with a proper plan.


(Balusu Aditya) #3139

I did my diligence but a few of them are at 30% loss owing to current sectoral and macro factors. Overall portfolio is at 10% loss thanks to a few multibaggers. The underlying numbers for the loss making companies has not changed drastically but the whole NBFC sector seems to be correcting , probably due to the interest rate hike and the IL&FS and YesBank fiasco. I am unable to foresee for how long this will last or even worse, if it is the new normal. Do not need capital for the foreseeable future but don’t want to lose money either(notionally or actually). For example, I have quite a large exposure to MOSL(~30% loss). I feel the Aspire part of their business is too small to value the whole business at 18PE. The market does seem to be punishing them unduly and that they will eventually fix their problems or control the damage and succesfully exit. But the market currently does not seem to like Housing finance companies. and MOSL has a bad hand in that business. Personally I want to average down my price of acquisiton in MOSL but unsure if I should. Similar logic with almost all the finance sector stocks.

@hitesh2710 @phreakv6: What are your thoughts?


(Hitesh Patel) #3140

@phreakv6

You are not spamming the thread. I enjoy your point of view so please continue.

This thread is not my property so no issues on that front too. :grinning: