Hitesh portfolio


#3252

Dear Hitesh,
I am building an inflation proof portfolio for my dad with the following names. Would like to know your thoughts on that.

Company Low from 52 week
Page 22.12%
HUL 13.48%
Colgate 11.88%
P&G -alternate month 17.20%
Britannia 21.01%
Nestle - alternate month 19.89%
Pidilite 22.66%
Asian Paints 23.50%
Bajaj Fin 30.42%
HDFC Bank 10.55%
Kotak Mahindra 17.29%
HDFC AMC 30.62%
HDFC Life 34.37%

I am having fin stocks at 45% of portfolio. Using the recent correction to add some quality stocks.
Please note, also did a detailed comparison for FMCG stocks below (courtsey screener.in):


(ASG) #3253

Hi, What’s your view on Repco HFL?


(Multiplier777) #3254

Abhishek Kumar,

My two cents on your stock selection. I think this is an excellent selection if your investment horizon is very long.

I have been in the stock market for over 25 years now and the only thing I have seen is that what survives is Quality (yes, quality with a capital Q). You may buy it at an expensive price but if you hold it for long, you will still make good money. And if you are lucky and there is a semi crash in prices of all stocks and you get in cheap, the returns will be even better.

Today is such a scenario when good quality stocks are suddenly available 20%-30% cheaper than their highs. The Quality stocks will always remain relatively expensive mainly because they will continue their high grow at high ROCEs either due to the sector tailwind they are in, their market leadership, brand pull, efficient operations etc.

Many of us (including me) also invested in many average stocks where their upward price movement kept giving us the false conviction that we are owning the right stocks. Fortunately, my exposure to such stocks was small.

Now that many of those are down 50%-70% below their highs, a relook at them will tell us why we should have exited those stocks long time back at the lofty valuations. Many of these average stocks may NEVER see their all-time price again (or reach those all-time highs again after maybe 4-5 years). Most of us don’t bother to check the ROCE of their stocks but are content with a high PAT growth. It is easy to manipulate PAT growth but not ROCE. If we relook at the ROCE of some of our stocks, many would be in a single digit and never in their history have they gone into double digit which begs the question of why are they in this business in the first place (better would have been to put the invested capital in a bank fixed deposit and play golf instead).

Anyway, all the best in your investment journey. It is times like these which shake you up and give you life long lessons.

PS: I would also add Gruh to your list.


(sarthak kumar) #3255

Dear Hitesh Ji,

Could you please explain or point to a source to help me understand what exactly happened to Equitas and Ujjivan today.

Thanks


(hemenrk70) #3256

(hemenrk70) #3257

#3258

Thanks a lot for your inputs. I am myself reeling under heavy exposure to low quality stocks. Lessons learnt and time to correct the course.


(narenarora) #3259

Equitas Holdings said it will approach the RBI for an approval to merge with the bank at appropriate time, post the lock-in period of five-years.

Ujjivan Financial Services said subsequent to the listing of its bank and closer to January 2022, the company will approach RBI to consider its merger with the bank

How one should look at this possibility of merger and it’s impact on valuation thereafter.

Would be helpful to have insight into this and any other related matter.

Regads
Tracking. Not invested


(narenarora) #3260

@hitesh2710
Dear SIr,
I was lucky to get out of NBFCs (Magma and PNBHF) between Jan18 and Apr 18 (Had exposure of around 6% of portfolio). The exit was solely on the basis of reversal of interest rate cycle. In hindsight find myself lucky considering the current situation. Currently have Nil exposure to Banks/NBFCs. Thinking of building a basket of stocks of Banks/NBFCs and take exposure of about 15% of portfolio. I have put down my thoughts in key words against each of the shortlisted stocks. Also have put down key reasons for some of the stock ruled out. Request for your advise/views.
The excel file is attachedNBFCs & Banks.xlsx (11.6 KB)

Regards
PS: I like reading your posts as they are meaningful and a source of guidance.


(Hitesh Patel) #3261

@narenarora

I have made my views clear in a post on financials few posts back. They remain the same. While there is no doubt that financials have over the years been big wealth creators and may in future also be wealth creators, I think post the kind of drubbing most of them have received it will take some consolidation in form of time wise correction and price consolidation in a range before they can start moving up.

In the short term because of excessively oversold conditions in the sector, there can be sharp bounces but if one wants to buy for the really longer term, one can wait on the sidelines. Or if at all one still wants to buy, the buying has to be staggered over next few months/quarters.

The problem with a leading sector of bull markets is that investors tend to keep their hopes pinned on the sector even if the story in terms of price action seems to be over. The justification offered is that price wise it has corrected x % from top or fundamentally speaking, post this correction a lot of negatives are priced in and so on and so forth.

Coming to the list of stocks you have prepared, I think the current correction will offer great chances to own the best financial stocks i.e no brainers (if at all there is something like it in a sector which has received such solid pounding ) which too have corrected. The best among the lot would be companies which have emerged stronger post each crisis. e.g hdfc bank, kotak, bajaj finance gruh. Personally I would still be watchful and careful before taking a very long term call.

Ideal thing to do in current situation is to look at the companies posting decent results since past few quarters on a consistent basis and make a list. Then try and study them in an effort to see if the results shown are likely to be sustained forward and what kind of variables can affect these businesses. The quality of management and business is of course of paramount importance. Concalls, annual reports and trying to understand the sectoral tailwinds would help in making a call whether the earnings momentum is sustainable or not.

Once all these things are done, one has to keep monitoring the list and see how the stocks in the list behave. At the fag end of the correction, these stocks would stop falling in tandem with markets and would consolidate in small tight ranges or make attempts at small rallies which might/might not be sold off into. But the lows posted during past correction are more than likely to be held during each round of sell off. And once these stocks come of the tight ranges they have formed with good volumes, one should consider buying. Atleast thats what my plan currently is.

I Know its difficult to adhere to if the stocks you want to buy keep falling. But rather than buying a stock which is on its way down I personally prefer to buy stocks which are in tight consolidation range or are showing signs of an upmove.


(narenarora) #3262

Thanks for the detailed response. Would endeavor to follow on the advise.

Best regards.


(David ) #3263

He has the same view


(Anupam) #3264

Nice thoughts. Quality creates value, more so in the long term for sure. However, just did some back testing on some popular companies and found that Growth is a relatively more significant driver of stock price.Coupled with good ROCE it becomes explosive, at least in the last 10 years. Only good ROCE but lack of growth will at best preserve capital but not create wealth. A sample back testing is attached for reference.

Top Stock Portfolio.xlsx (16.0 KB)


(Karthick Chennai) #3265

Hi Hiteshji…Microcap stock SPL industries is turning around…promoter constantly buying…profit margin improved drastically…please give your opinion…thanks in Advance


(PrinceVegeta) #3266

Hello Hiteshji

What is your opinion about temporary parking of some funds in Blue chip ‘Parking’ stocks like HDFC Bank, Infosys, Nestle and Britannia.

Most of my ‘Cash’ is in Liquid Mutual Funds but after recent scare of defaults on CPs, I’m trying to diversify that.

The logic is that these Bluest of blue chips would normally have limited downside in case of secular falls and even in flat markets, their predictable business performance makes their average point to point returns are atleast equal to FD rates.

Many thanks in advance


(Hitesh Patel) #3267

@princevegeta

I too had a scare when I saw one of the tata liquid funds nav drop overnight by 5%. Going forward I think one should check the exposure to ilfs in any fund one wishes to invest in case of debt fund. Till some other name crops up besides ilfs.

I think the best recourse if possible is to lock in money in FD in a high quality bank even if one gets a couple of points lower returns as compared to debt/liquid funds.

Coming to your point about blue chip stocks being parking places, it could be a good idea provided we are absolutely certain there is very limited chance of capital loss in them too. If the correction were to extend further after the ?countertrend rally, blue chips also might crack. Who knows. My best course could be to park funds in FDs.


(Bhupesh) #3268

What he mean by manufacturing sector, what industry sectors get covered in it?


(MithunVV) #3269

@hitesh2710

Dear Hiteshji,

         I am an avid follower of all your posts. I have taken most of your replies as guidelines for my stock picks, not only in this thread but in many others.Since this is my first post since I joined about a year ago, kindly pardon any error from my part.

What is your opinion on the Nifty Weekly Elliot analysis I have posted here. As far as I can see, the 5th wave of the uptrend that started after the 2008 correction, could very well have been completed. But as you can see, the 5th wave retracement has not even reached 50% of the uptrend (5th wave uptrend). What is your take on this. Is it too early to expect a deep correction of the post 2008 uptrend, or do we need further confirmation.
And in this scenario, what is your cash to holdings ratio now. In the last post, you had mentioned a pull back rally, do you think that there will be much more to the down side.

Regards
Mithun


(Hitesh Patel) #3270

@MithunVV

The Elliot Wave counts you have posted seem to be the correct ones though different people will have different counts and explanations. Coming to the downmove post the top of 11600 plus, there has been a fall of nearly 1500 points on nifty which has shaken a lot of investors. Expectedly the counter trend rally now seems to be on. I had earlier also posted on a thread on technicals a possible resistance zone of 10800 region. While looking at Nifty futures chart I saw a big falling gap from 10800-10880 which could be a strong resistance for nifty going forward. If that region is crossed and nifty manages to close above that region for 2-3 days the counts on nifty would have to be revisited.

Fundamentally speaking there seem to be two opposing things happening. Results for q2 for a lot of companies have been very good and post this correction a lot of stocks seem to be appearing at reasonable levels. Especially those that have posted decent results. Because in this markets even after very strong results very few stocks have run up consistently. There has been the odd 1-2 day rally followed by weakness in prices.

Against the great q2 results there has been the usual worries about oil prices (which seem to be cooling off atleast for now), dollar strength (which again seems to be retracing some of its upmove), political uncertainty and so on and so forth. Another factor has been consistent FII selling. There has been liquidity sqeeze from the markets and as we have seen during the time of 2017 till January 2018, liquidity is very important for significant upmoves. With strength in US treasuries and raising of interest rates in US, a lot of money is moving towards the US.

Another aspect that needs consideration is the state of global markets. Most of the markets including US posted significant tops in past few months and have corrected sharply. If there were to be a global cooling down in equities, Indian markets also inspite of decent results would tend to go down.

So to cap it all, there seem to be divergent forces at work and I am not too sure which way the markets are going to go. Hence I have decided to remain in cash and have gradually increased the cash in my portfolio. I dont want to get into exact levels of cash as I dont want anyone following me to get biased as I myself am not too sure which way the markets are likely to go. As of now I remain slighly bearish but would change my views if things unfold in a way which I dont expect them to.


(MithunVV) #3271

Thank you Hiteshji. Your reply has clarified a lot of confusion I had in mind. I also had shifted to Cash ie liquid mutual funds at about 11300 odds. I think wait and watch is the right course.