Hitesh portfolio

(Hitesh Patel) #3574


The problem about trying to learn and master an art is about getting carried away with it and trying to use it everywhere. We have the famous Mark Twain quote " To a man with a hammer everything looks like a nail. " Similarly with anything we know very well or anything we have learnt new, the urge is to try to apply it wherever possible and sometimes wherever its not advisable.

For a surgeon the most important thing to know is when not to operate. Similarly for us who know or are good at one discipline of investing, its very important to know its limitations. Trying to apply DCF where it is not applicable e.g in lumpy businesses or unpredictable businesses is often fatal. Similarly trying to apply patterns that work during bull markets during bear markets is likely to fail.

We have to be open to the idea of applying different disciplines of investing to the same idea. If in some idea, the charts, fundamentals, scuttlebutt etc all fall together there is higher chance of success.

Regarding drawdown in stock prices after buying I find that if stock prices go down along with general market corrections i am okay with it. Besides if the investment thesis I have in a company continues to play out I am not too worried. But if results do not come through as expected, I usually exit. Letting winners run is a thing that comes with experience.

(A shah) #3575

Thank you so much Hiteshbhai for so simply explaining as always the qualitative aspect of investing .
Hitesh bhai ,I dont have any idea of technicals . Whats the best resource to learn technicals so that it can help me along with my fundamental analysis for determining entry point .
Many thanks

(ashitpanjwani) #3576

Thank you hitesh bhai for your as always elaborate response.

(Rahul) #3577

Hello Hitesh,

I have a question on how an investor’s journey would change as he matures.
As a young beginner (started in Jan’18, joined VP in Oct’18), having this knowledge would help me set my expectations in the right range at the right phase.

Do you mind dividing your experience into different phases and how you felt during those phases? And more importantly, how long were those phases for you?

Thanks in Advance!

(paresh.sarjani1) #3578

Exactly sir… I think average time is 45 days for cashless… And moreover insurance companies sometimes deduct 10% from total bill approved which they can’t even collect with customer then(No doubt hospitals already charge them higher by that percentage initially)

(skg) #3579

Sir , i have two questions.

  1. If you have high conviction on a stock and start buying, but stock keep on falling, do you keep averaging even if stock allocation become more than what you have planned to allocate. e.g. if your investment strategy says that one stock shouldn’t have more than 10% allocation in the portfolio, but you start buying from higher price, do you stop averaging once 10% allocation is done or you keep averaging?

  2. I was thinking of looking at one of the pharma stock between Ajanta and Aurobindo. I know you had Ajanta in your portfolio in past. I just wanted to know your thought between these two companies which one you like or is there any other company in pharma you find better than these two

(django) #3580

Hitesh Sir - A conceptual query regarding on how to look at RoE of a company which has very high Non-Current Investment.

E.g. Ultramarine & Pigments

Net Worth: 433 Rs Cr
Non Current investment: 257 Rs Cr (value of shares held of its parent company Thirumalai Chem)
PAT FY19 Q3 TTM: 57 Rs Cr

RoE (considering Net Worth ‘as is’) = 57 / 433 = 13%
RoE (considering Net Worth without Non-Curr. Investment) = 57 / (433 - 257) = 32%

Now, would you consider the RoE to be 13% or 32%?

(Hitesh Patel) #3581


The query is too technical in nature but if I would be looking out for myself the correct formula would be to calculate ROE without non current investment. If at all one wants to consider non current investment, then since the stake is not going to be sold off, it would be apt to apply holding company discount to the tune of 50-70% (which is usually the norm, although there can be arguments for and against this) and then calculate the ROE.

(Hitesh Patel) #3582


I would narrate my experience with my journey.

In the beginning when I read One up on wall street and started looking at companies, I used to get very excited by cheapness in all its aspects. And I found many bargains and would often end up buying and selling a lot. Because there was a lot of churn in ideas, there was a lot of churn in portfolio. I had no idea about long term investing. And in the process I missed a lot of big multibaggers. Essentially I had no idea about quality of businesses as although I had read all the stuff in the book by Lynch, I had not digested it fully. This was during 2009-2011 phase.

The next phase of journey began by reading views by other investors on theequitydesk.com and that sort of started the ball rolling. And as chance would have it I met Donald somewhere in 2010 and was hugely influenced by his methods and patience. Then I met other friends on VP forum, personally and the interaction helped in the maturation process. Besides these reading other books like Pat Dorsey’s book and numerous other books helped in the journey. 2011-2014 was a great journey in terms of learnings.

Nowadays since 2014 onwards I am more at peace with myself. I reject a lot of ideas but sometimes am guilty of not working hard enough in the process. I developed a keen interest in technicals in last few years and have found that combining very simple basic principles of technicals with fundamentals works very well with my style.

Another thing I observe closely (and some investor whatsapp groups help in the process) is trying to guage investor psychology and taking a call on where markets at that point of time are. Sometimes it works and sometimes it doesnt but its a work in progress for me. Even the barrage of ads on tv like mutual finds sahi hai kind should have alerted us about market froth.

Some things that are work in progress are trying to catch stocks which plummet fast and where in the past I have invested and have the confidence about the management and the business potential. e. g avanti, in recent memory. In the current pullback/resumption of rally I have observed these are the very stocks that give very quick returns. The caveat is one has to have very high conviction to be able to hold on to positions despite stock prices going down consistently.

Reading investment books, reading up annual reports, listening to concalls etc takes up a lot of my time and it helps in taking a balanced views of businesses I follow.

(Rahul) #3583

Thank you very much Hitesh!
Very helpful!

(Hitesh Patel) #3584


  1. I am very mindful of allocation to a particular company in my portfolio. If after I buy the stock price starts falling , I dont go beyond my desired allocation even if stock prices fall. Its a discipline I have instilled in myself over the years. But in markets where stocks remain sideways/go down as was the case in last few months, ideal thing would be to buy in small lots and once the allocation gets done, hope for the best.

  2. Among the pharma names, I would prefer aurobindo pharma as of now because I think it is well placed to grow over next 2-3 years. I personally dont own any pharma stocks as of now.

(arpitjain512) #3585

Hitesh Bhai…awaiting for your inputs on this. Hitesh portfolio

(sarthak kumar) #3586

Dear Hitesh Ji,
Could you tell what are the basic principles of technicals that you analyse in addition to fundamentals while deciding to buy or sell a stock.

Thanks you so much for your generosity in answering all questions :star_struck:

(Hitesh Patel) #3587


I dont track Muthoot capital too closely. But I recall that it has high concentration of business originating from Kerala. So geographical concentration risk remains for the company. Rest of the details you have put up look interesting but I am not too keen on NBFC space. If you want you can look at MAS financials and the numbers are probably even better than Muthoot.

(Hitesh Patel) #3588


Among some technical patterns I follow most of them are pretty basic. Some of them are trendline breakouts, 52 week and all time high breakouts, reversal patterns like inverted head and shoulders, double bottom, supports at previous tops, triangle breakouts, etc, some continuation patterns like cup and handle (its often a reversal pattern also) etc.

I dont go into too much details of indicators etc. unless they are absolutely confirmative in accepting or rejecting the picture painted by other patterns.

Technical analysis is a vast subject and I feel one has to find what works for us and stick to it and improve upon it.

(skg) #3589

Thanks Hitesh Sir

I am also buying in small quantity. But sometime I end up buying more or less than overall targeted quantity because I started buying from high. I am working on it.

About pharma, do you see any issue with pharma space in term or valuation or any other risk. Just wanted to get your thoughts on why you are not invested in pharma space at this point of time.

Again thanks in advance for your guidance to new investor like us.

(girishrbhat) #3590


I always struggle in knowing if i should look for daily or weekly charts and what should be the duration (6 months , 1 yr, 3 yr). Can you please give your experience in what has worked the best for you in terms of setting up the chart.

(Divyanshu Taneja) #3591

@hitesh2710 sir awaiting for your inputs on this
1)Which business newspaper you read and will recommend
2)your recommendations for business magazines and journals
3)your recommendations for websites
4)your recommendations for daily,weekly,monthly reading materials for investment basis
5)How to track rising trends like paper trend,heg graphite trend etc
6) any paid subscription recommendations


(Hitesh Patel) #3592


While considering the duration of charts, for long term investing, weekly and monthly charts are more suitable. For trading or short term delivery based trading, daily charts are more suitable.

Another thing that can be useful is to find out larger patterns on long term charts and then fine tune entry points by looking at shorter term charts like daily charts.

Personally I prefer weekly and daily charts.

(Hitesh Patel) #3593


  1. I dont read any business newspapers on a daily basis. I read the financial pages of our gujarati daily newspaper and that too not too often. I usually dont feel the need to read these daily economic newspapers.

  2. Business magazines … again I dont read any business magazines or journals. Ocassionally I read capital market magazine.

  3. Website is obvious. Valuepickr.

  4. For investment basis, most important is to go through annual reports, concalls, research reports etc on the company and the sector. Besides these, reading basic and advanced investment books and many a times re reading these books is very helpful.

  5. Tracking rising trends like paper, graphite etc, I usually do it by going through the charts of these companies. If same or similar patterns are observed across the sector in all or most companies, I feel more confident of the sectoral trend.

  6. Paid subscription, I have read reports of various sites and found sharekhan, centrum, kotak to be detailed though often biased. These are not strictly speaking paid but in these days of info dissemination are not too difficult to locate.

All said and done, point 4 is the richest and best source of investments.