I have recently started investing in stocks. I prefer value investing- try to buy good companies below Intrinsic value. I do comparative valuation, DCF & EVA sometimes Not always accurate but manage to reach some number in excel. I am thrilled to be part of this group with so many active, vibrant yet sincere minds. I hope to catch up fast on better investing skills.
Below is my portfolio for your reference. Would be great to have feedback, advice & suggestions on quality, duration & risk factors.
Wouldnāt it be nice, if people also show cash as part of their portfolio, showing what % of their portfolio is cash? The reason is, I as a retail investor, try to have about 15% in cash always which can help in averaging on a stock later.
Hi Anupam,
Seems solid portfolio with some great cos. However I have few observations:
Portfolio seems too diverse. (No holding with 10% or more)
Unitech & Lanco seems interesting in value portfolio? Whatās your rationale for investing in unitech & Lanco.
Since, these are my personal views, take them with pinch of salt.
Thanks
Unitech & Lanco are risky bets. Expecting turn around in Q3, Q4. Also Unitech is 2nd biggest realtor available at 20% of book value. Its only 1700 crore. Imagine you can buy out a formidable real estate company for less than 2000 croresā¦I see this as a discount. however last 30 days no great movement, rather lost some money in both.
I didnot plan for diversification Cap wise or Industry wise. I am picking stocks basis MOS & IV.
I am tracking companies, where QoQ losses are reducing- so that at some point they cross over to profit. May be stock will pick up from that inflection point. Let me know if this method is wise or has any + correlation with price movements
Unitech & Lanco are risky bets. Expecting turn around in Q3, Q4. Also Unitech is 2nd biggest realtor available at 20% of book value. Its only 1700 crore. Imagine you can buy out a formidable real estate company for less than 2000 croresā¦I see this as a discount. however last 30 days no great movement, rather lost some money in both.
I didnot plan for diversification Cap wise or Industry wise. I am picking stocks basis MOS & IV.
I am tracking companies, where QoQ losses are reducing- so that at some point they cross over to profit. May be stock will pick up from that inflection point. Let me know if this method is wise or has any + correlation with price movements
I am positive on NMDC and eClerx as good quality, long-term investment. For NMDC, it takes some bravery to have bought it / averaged down.
.-veās
Its cyclical. Iron-ore prices / over-production / china down issues.
Management may not use capital aptly. Just as an eg: the steel mill venture may not turn out well.
Naxal security issues at their main mine at āBailadilaā
Quarterly profits are down, almost half they were 12 months back.
+ves
Company management is giving out positive noises; regarding improving railway lines / a slurry pipeline. (Transportation from interior regions may become cheaper.) Increasing production.
Company is still profitable. Has a good ROCE. Has an additional āother incomeā of about 500 Cr each quarter (Sept 2015), due to cash reserves in hand.
Company is at around book value and 6-7 P/E. Pays good dividends.
I am invested in Balkrishna Ind for last 4-5 years. Still holding. This is good stock and hold on to it.
But I am not sure about your picks like Lanco, Intellect design, EROS, Unitech etc. The seasoned investors have raised concerns on their accounting and business practices. Lanco is clear red flag in your portfolio at the moment. The management is suspect. Be very careful.
You said you just started investing using value investing tenets. That is good. It should help you in the long run. But I suggest you also add promoter quality check in your due diligence. In the long run you will thank yourself for that. In fact I run that check immediately after the quick analysis of the numbers and valuation before I do more detailed analysis and due diligence.
Although we have a tendency to appreciate management when stocks rising and doubt their credibility when its falling. But your observation is correct. Esp Lanco. Eros is still ok types. However considering Lanco is in infra, was reeling under court cases and other problems its stock seems to be bitten down. I am hoping they will turn around - won cases, started generating power to haryana & also raising fresh capital. Having said that lanco is still a speculative betā¦bit of experimentation
How do you do management quality check- suggest a systematic/practical method. Going to AGMs, meeting etc are not possible for me.
Best way is to know from your network. That is value of groups like ValuePickr. Also read 5 year ARs and see if they walk the talk and level of disclosers etc. E.g. except couple of companies many Pharma companies do not disclose adequately.
But best way is still from other knowledgeable people. Scuttlebutt approach works best.
In India the management quality is most important variable in my own experience. My attitude now isā¦ there are more than 5000 companies listed. I can always find few high quality business with decent management and decent valuation. We are spoilt for a choice in Indian market. Never lower your standards. It is not needed
I am sharing with you a screen made from screener.in. The filtration , rationale and outcome are shared below. I would request your feedback on the efficacy of the screen. I plan to make a equal weighted portfolio. Rebalancing to be done once a month on a fixed day- 15th of each month. New names if any thrown by screener gets added and losing ones gets replaced.
Core Theme : All times remain invested in Quality Stocks ,having great Recent Quarterly Performance and market supporting with Price Momentum. No microcaps and penny stocks.
Hope this adds value to you all and eager to have your insights and review on the strategy.
N.B: Valuation is not factored in at all. Its complex, subjective and debatable. To mitigate over valuation risk and keep things simple, the monthly SIP will be linked to Nifty Level. An X% drop in Nifty will result in 3X% increase in SIP. e.g. Say I invest Rs 100,000 per month. Then 5% drop in Nifty from recent peak then 15% increase in SIP. So New SIP will be Rs 1,15,000. A 50% drop in Nifty ( Crash), then 150% increase in SIP. So new SIP would be Rs 2,50,000.
No Back Testing done. I neither have the IT/ Finance skill to do it. Anyone capable & interested may please do it and I will be happy to see if this beats the benchmark and generates max return , minmises risk, max drawdown etc. Would be great learning.
The objective is to identify āAt presentā Quality companies, having good recent quarterly performance and supported by price momentum. Now its not a multi-bagger find because its already discovered. Having said that, the quality+financial+momentum combination will take it higher for 2-3-4 quarters more, till the time either performance stagnates or falls below expectation. Rebalancing every 30 days will ensure that you have the best stocks in the portfolio at all times (10-15 stocks max)
Exactly why back testing with same criteria would be beneficial IMO. It would indicate what sort of returns you can expect over longer term, drawdowns compared to say nifty (or other benchmarks) and returns compared to other benchmarks. Past performance is no guarantee but a useful guide.
Try this query
Dividend Payout >0 AND Unpledged promoter holding >30 AND Sales growth 3Years >25 AND
Tax >0 AND Market Capitalization >2500 AND
DMA 50 >DMA 200
Regards
Not always accurate but manage to reach some number in excel. I am thrilled to be part of this group with so many active, vibrant yet sincere minds. I hope to catch up fast on better investing skills.
