Hitesh portfolio

@edwardlobo

I try to be quite clear about why I am entering a particular position. Whether its a long term fundamental based investment call or whether its a trading call (be it short to medium or even long term) based on technicals in fundamentally good companies.

If its a long term call I am okay with some drawdowns in price. And there I tend to monitor business developments and keep checking my investment thesis based on quarterly nos or based on relevant newsflow etc.

If its a trading call based on charts (I Usually select fundamentally sound companies in these calls also as far as possible) then I have a definite stop loss in mind which I adhere to. In such situations if price corrects beyond the point of comfort or a pre conceived mental stop loss I tend to exit these positions. But here also I have been burnt sometimes where I get stopped out by price corrections and on my exit the stock starts moving up. :grinning: But thats the nature of the game and you have to stick to rules you yourself have set up.

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Whether the PPT is available to share in the forum? if so please forward the same

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Thanks @Bharat19 for sharing the video.

Very nicely summarized speech, touching upon all important aspects of equity investments.
Nice to see you Hitesh Bhai.:slight_smile:

its good presentation and summarized all the info very nicely.
Could we get PPT of this presentation?

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It is good to finally watch Hiteshji in conversation on his favourite topic :slight_smile :slight_smile:

Finally located the presentation. Please find attached the presentation related to the talk.

Its pretty basic stuff for beginners aimed at sensitising investors to take interest in equity investment especially do it yourself stuff. ART OF INVESTMENT.pptx (99.5 KB)

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Hi Hithesh Bhai.

Hopefully my post was a relevant one and you got a chance to evaluate my question.

Please let me know if my post was irrelevant also. I’m allways learning from my mistakes.

@ciri

Sorry missed your post.

Bajaj finance and Cholamandalam are solid companies with good track record behind them. With gruh now with merger with bandhan the situation changes and you will have to take a call of what to do with it. IDFC First is a bet on the skills and vision of Vaidyanathan and how he takes then bank forward. But I feel it will be atleast somewhat better than the earlier management.

I guess if your horizon is 10 years plus then you can also look at some other sector besides financials to add market leaders from that pack. Maybe something on the lines of Nestle or Asian Paints or Bata or Pidilite etc.

Holding companies in only one sector is sometimes risky as we might not know how the sector is going to pan out in the future. If you have observed 2-3 years back pharma looked like a sector which was considered invincible and a must have in the portfoliio. Now its in dire straits. It might recover but drawdowns have been huge and these things tend to affect portfolio performance.

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@hitesh2710 sir, thanks a lot for your insights.
Sir, what do you think about Philips Carbon Black as a stock and about Lakshmi Machine Works in the textile machinery segment(Their TMD division is seeing very dull sales I heard from a close source).

@hari1

Not tracking either philips carbon or LMW.

Thank you for the answer Sir!

I knew something was wrong with my approach, but didn’t know exactly what. You have hit the nail on the head. I am basically running behind the cover of the safe finance sector names where my conviction is high, but as you rightly said this is adding a huge concentration risk to my portfolio.

I had completely ignored the other sector leaders as they allways seemed optically too expensive for me (Market Capitalization and PE wise) but let me take a look at them once again and start nibbling into them. Once we have them on our portfolio, we will will be more inclined to keep abreast about the stocks and the sector.

Here is my approach to buying as per the learnings from this forum.

Assuming I need to buy 100 shares of a company to meet required allocation.

I will buy 10 share chunks on break outs above 200 DMA on a monthly basis upto maximum of 60 shares. Also buying 20 share chunks upto maximum of 40 shares when correction happens and company nears fair value.

Share purchase price range = 0-150% of fair value depends on the conviction.

No selling until story is completely ruined. No selling to reduce allocation %. Hold 30% liquid in all markets except bear markets.

@hitesh2710 Hitesh bhai, thanks so much for always clearing all the investment queries one has and explaining it in a simplest manner .
One query i had regarding the stocks you mentioned such as Asian paints, Pidilite and Page industries is that they are never available at cheaper valuation and it always fails DCF test and PEG ratio (mentioned by Peter Lynch) whenever one tries to calculate .
1 How should one value these types of stocks ?
2 How to ascertain the best levels to buy these stocks ?
3 Why does they fail the PEG ratio test ? The growth of Asian paints and Pidilite isnt spectacular (barring page industries case , where we can still consider the higher ROCE and high growth rate) but in this two cases growth too is not great and neither is the ROCE similar to page but still they command similar valuations ? Is it dependent on market perceptions and if so, can one invest in these stocks for 5-6 year horizons assuming that the market perception remains positive about this stocks ? Why doesnt PE derating happen in these stocks when growth reduces as it happens in other stocks ?
Please let me know what i am missing to consider in these stocks ?

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@ciri

This technical approach to buying above 200 dema is for people into momentum investing. For guys like you who want to buy for 10 plus years without selling I would tend to prefer to buy on extreme weakness and maybe buy when stock goes a lot below 200 dema. It might seem counter intuitive but would provide low cost acquisition of the stocks you select for the portfolio.

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Dear Hiteshji,
I wanted to seek your opinion regarding asset allocation. I have been investing for the 8 years and have never paid any heed to macroeconomic news. For the first time however, I have been uncomfortable with everything that is happening around us.

  1. Indian Large cap stocks are trading at above long term mean valuations
  2. Indian Small cap stocks are only slightly above mean or near long term averages
  3. Globally, liquidity has reached a peak with QT having started in US
  4. Global debt to GDP is well above long term averages - (in USA which is 1/3 rd the world economy - public debt, private non financial debt and consumer debt are close to 100 year peaks!) meaning financial leverage is no longer an option
  5. Retail investors in india continue to pour money into equity as evidenced by strong SIP flow
  6. Famous investors such as Stanley druckenmiller, Ray Dalio and Howard marks continue to remind us regularly of the debt bubble brewing.
  7. Global interest rates are at centennial lows.

Despite the correction, do you believe it is the right time to sit on a healthy (>50% or near about) cash allocation. If not, is there a cautious way to invest in equity without having to pay 60 times earnings for page or Asian paints?

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Hi @hitesh2710 bhai,
Can you please share your thoughts about this message.
On one hand the valuations seem to be high whereas the future looks to be good due to fall in crude prices, electricity price and low inflation due to the reasons of electric vehicles, battery tech, and advent of renewables. Consumption will increase.
Can you share your long term opinion.

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Hiteshbhai
What is your opinion for L T foods for long term investment?

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Hello Sir,
Can I do the investment in companies on SIP basis? e.g. I have made a smallcase on zerodha for the companies I want in my portfolio. Every month on a particular date I will invest in my portfolio. Its in a way similar to what we do when investing in Mutual funds. Please guide me.

Hitesh bhai, whats the best way to understand cash flow ? I have tried but struggled . Studying profit and loss account is easier and can be compared to previous years . What should be the things that one should look out for in a cash flow statement and how to interpret the same ?

@A_shah

Regarding valuing companies like Asian Paints, pidilite and page inds, one needs to take into account the kind of longevity of growth these companies have. Some studies done my Motilal Wealth Creation studies indicate that if the company is a high quality, less prone to disruption and isnt exposed to too many variables and has a very long runway for growth, then over a pretty long period of time say 10 plus years, the price at which the stock is bought might not mean much and the investment will yield very good returns. I think the coffee can investing also stresses on the same points.

On how to buy these companies the ideal way is to go ahead in a SIP kind of method If one is buying for 10 plus years then I think the buying also has to be done on an extended timeframe.

Key remains in buying the right companies and not going by companies currently in vogue and hence market favorites. One has to see long term history of these companies of how they have fared over good and bad times and then take a call. Usually the companies that qualify in these lists would be dominant market leaders in their segments and the opportunity size in the sector is big and growing as the years go by. These need to have top class managements, great balance sheets and excellent financial ratios.

These companies will always fail the PEG test as these are well discovered companies and there is nothing unknown about them. Over a long time period even the minimal variables in these business tend to equalise. e.g in case of asian paints crude price is important and it tends to go up and down but over a longer time period these things tend to normalise.

The other option to buy is to buy them during market meltdowns when during the final phases of market corrections these too correct and one needs to have courage and conviction and money to buy these type of companies.

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@am648

Currently the markets are skewed towards high quality mid caps and large caps in terms of preference. That is usually the case when the market levels are thought to be elevated in terms of valuations wrt nifty or any other major index.

During these times small caps or less fancied midcaps find no favour with the markets. There might be a case for studying some good small and midcap companies and trying to make a list of such companies to track and buy if valuations offer limited downside.

Coming to the global picture a lot of market gurus have expressed their concerns about the global picture and thats a worrying sign for markets. But corrections usually dont come about when everyone is expecting them.

I think part of the resilience shown by Indian markets is a lot of SIP money flowing in as well as a lot of disbelief on the part of a lot of investors who are sitting on the sidelines waiting for a major correction to deploy their funds.

I for one dont know how markets are likely to pan out but have approached markets with caution and have kept my allocation low and have some gunpowder ready in case of opportunities that might come about due to market meltdowns.

Coming to your query about a cautious way of investing I think the easiest way to follow is prepare a list of companies to be bought and buy in a staggered approach over a 12-15 month period.

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