Ishan's [email protected] portfolio


(PillarsofCreation) #1

Hi everybody,

I have been in market since 2010, when I was an engineering undergraduate student investing my scholarship money in the markets. I read all sorts of books and was most influenced by Grahams’ philosophy of buying ultra cheap stocks and selling them when they didn’t seem so cheap. That philosophy didn’t really work well and I ended up losing half of my scholarship money.

This made me dig deeper into the art and science of investing and it took a whole lot of effort to fundamentally shift my view ONLY buying cheap stocks to buying stocks that are relatively undervalued but are growth oriented.

Adopting that method, I invested in early 2016 and currently my investments have produced a 11% okayish CAGR in the last 2 and a half years. As the title says, I am currently striving to build a portfolio that can produce a 14-15% returns for 15 years. I will be reviewing my rationale every month and in process eliminate the short term noise to focus on the longer picture. Key things that I look at when evaluating an investment:

  1. Management quality: Integrity and walking the talk
  2. A defensive barrier
  3. Would I be good with owning the company as an owner and not just as a shareholder
  4. Impact of technology
  5. Probability that the company can grow at a decent pace for a long period
  6. Whether the company is justly priced (this one is very tricky, but I try to stick to a process)
  7. The longer term macro environment of the industry

Here’s the portfolio that I have created using the above points as guiding principles:

  1. GRUH
  2. Honeywell
  3. Britannia Industries
  4. HDFC Life
  5. Bajaj Finance
  6. RBL Bank
  7. Eicher Motors Ltd.
  8. Finolex Cables
  9. PI Industries
  10. Voltas
  11. Care ratings
  12. Symphony
  13. L&T Technology Services Limited
  14. Multibase India

Also researching Dewan Housing Finance, Kotak Mahindra bank, Page Industries, Havells, V-Mart, Tasty bites and Minda Industries. The issue with these companies is largely growth prospects in the longer period.

I regularly read ValuePickr to gain insight on stocks and to better my investment philosophy. The post is to both elicit a discussion on the portfolio and better the investment thought process.

Thank you esteemed members :slight_smile:


(prabhatg1) #2

Any rationaL behind choosing these stock apart from CAGR


(Divyanshu Bagga) #3

Can you also share your concentration in each stock? It will help to know which are your high conviction picks.


(Bheeshma Sanghani, PhD) #4

Hi @ishan

Your portfolio consists of all good high quality names cleaely. All are well followed and discussed. If the target is 15% over 15 years as you have outlined then its a nice portfolio however in my view portfolios of high quality names go through periods of under performance where one needs to keep belief that quality will deliver. In these periods, its pretty difficult to hold on from a tempremental perspective.

Some portfolio level strategy is needed that will help one tolerate underperformance should it occur. It could be buying cos which have fallen out of favour and are available cheap or cos with good dividend yields for e.g. anything that helps one to hold on. Devoting a part of your portfolio to such cos may well assist you to sail through.

Just my thoughts. Best of luck

Bheeshma


(PillarsofCreation) #5

Hi @bheeshma

Considering how well named and researched these names are talked about, I’m comfortable holding them from a longer period perspective, but would definitely review and juggle weightage based on your advice.

Thanks for the advice.


(PillarsofCreation) #6

Hi @Divyanshu_Bagga

It’s an equal weighted portfolio of stocks.

I’ve been a european sovereign fixed income trader and use technical analysis to arrive at market levels where I would accumulate these stocks.

I think nifty will go to levels of around 9100-9500 in an year or thereabouts. Will start building this portfolio by that time.


(Divyanshu Bagga) #7

Good picks. Liked that you have Gruh, HDFC life, and Bajaj Finance. I would definitely pick them if market crashes.

But I am concerned about symphony. Do you think their is enough growth potential with people migrating towards AC as technology improves?


(mylu) #8

Very nice picks…all the best


(KoolSIM) #9

You mention that DHFL, Kotak, Page, etc. and then you mention ‘The issue with these companies is largely growth prospects in the longer period.’

I am lost here. What exactly are you hinting at? Is there any problem in these cos over the longer run, or is it that their growth prospects are largely priced in and one should not look at them?


(PillarsofCreation) #10

What I believe is that the growth will be slower which will lead to average returns for the coming years. Especially, with regards to a Kotak and Page, their sheer size means that they will grow slowly.

Let me elaborate how I think about an opportunity in terms of size. One method I use is doing a comparison with China. The largest Chinese banks have a market cap anywhere from 250-290 Billion USD. Let us say that India manages to repeat what China has done, which means that India would need to grow at 8% for a period of 20 years.

Let us also assume that Kotak becomes the largest Indian bank!. In this case, Kotak would command a market cap of around 290 billion USD from its current USD 35 billion that is a CAGR of 11% over a period of 20 years.

Obviously there are a lot of other factors but for the sake of simplicity, this is how I’m thinking about the opportunity.


(KoolSIM) #11

Thanks for your comments. Yes I agree in that case. I guess I was just confused by the wordings initially.

Growth modeling over a longer period (especially when we speak of decade or more) would always have a high error rate in them. More so in case of consumer companies like Page Industries. Stratospheric valuations would mean that your best bet is that you make a bare minimum CAGR over the long run but the risks are too high. At least Page appears to be correcting, but Avenue Supermarts could be another example where valuations are too demanding, regardless of what the consumer growth story in India may be.