ValuePickr Forum

My Portfolio_Homemaker

(kush.pawan) #276

When and which businesses/stocks to sell:

  1. Sell only when you need money.
  2. Sell if you see everything will fall down tomorrow, which is nearly impossible to predict.
  3. Sell the businesses whose growth prospectus have reduced from your expectations, for any reason. It could be - change/degrade in management, loosing competition, regulatory issues, business prospectus etc.
  4. Sell if you are able to find better businesses having a clear edge than the ones you want to sell.

Selling is 10 times more difficult than buying!!!

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(wing777) #277

@kush.pawan
Distilled wisdom,in those 4 points regarding selling parameters.
To the wealth of wisdom in this thread,let me add my mite.
Point no.3 about reduced growth prospects due to increased competition, Page Industries is at stratospheric valuations,and has not belied investor expectations,so far.
But the entry of Under Armour,into Indian markets,may challenge the dominance of Page,though it remains to be seen if they get their entry strategy right,and not join the ranks of those MNCs who failed to understand the Indian consumer. Entry price points and perceived value propositions for the price-conscious Indian consumer, have proved to be quagmires for those who failed to do so.

(Amit Jain) #278

A retail investor does not have to behave like a fund manager and that is his advantage. A fund manager cannot choose to disinvest 50% or 80% of the funds under his management and force the investors to take the disbursement. Simply because that money will go to other funds. Their objectives are different than ours.

This is retail investors Prime advantage. It is a risk. But, currently odds are in favour, given the current situation.

Therefore, i would recommend phasing out entire PF as and when the current bull market gives a spike in individual scrips. And diverting that capital to Gold Bees and corporate bonds yielding 10%ish, which VPiers can guide with.

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(Bhaskar Jain) #279

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(Binu) #280

I don’t believe Under Armour is direct competition for Jokey, they are into high performance shoes and sportswear (just that thy carry some sports undergarments)

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(sincyvarghese) #281

Asian paints growing at 25% And dividend yield of 2-3%? I don’t know in which alternate universe it is happening. How can a stock going at 60 PE give a dividend yield of 2% leave alone 3%? I have owned Asian Paints till last Friday and will own it in the future too. But I know it is not growing anywhere near 25%.

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(Amit Jain) #282

Asian Sales growth is not 25%, but around 15%. Then the question remains, why Is the market paying 60PE for Asian?

I think, one factor is that a bulk of the money chases certainty as fund managers need to show annual performance. Their job is even more tough now as the markets have too much liquidity lately, Mcap to GDP ratio is a good measure of that.

Putting both the factors together, there is massive money chasing stocks that display certainty, which is why 50% of the [growth in Nifty 50, in the recent times, had come from growth in mcap of only 3 stocks] (https://www.google.com/amp/s/www.livemint.com/Money/pXYezxo5piGz9IEcWdJjpL/Only-3-stocks-responsible-for-over-50-of-the-rise-in-Nifty.html%3Ffacet=amp)

Should there be a hiccup in the company, or the country or it’s economy, or something global, and suddenly either the excess liquidity is squeezed or economic prospects appear hampered, then this money which is only after certainty will park itself in stocks and bonds. This is the nature of this money, to chase certainty.

I think, a retail investor has an advantage here. He isn’t under annual performance pressure, he should give up the need to see certainty in the current fiscal. So, he could pick his stocks that are available at reasonable PEs due to near term slack, but long term prospects are good and intact beyond any reasonable doubt.

In his attempt to seek out value, the investor must have a very strong sense of:

A. The amount of risk he is comfortable with. If you can’t wait beyond two years, then don’t but mid or small caps.

B. Have a reality check in your stock picking skills

Pharma Auto Cement stocks are currently soft. Hence Risk reward ratio is better. Instead of paying 60PE for 15% growth (Asian). I’d happily pay 18PE for 10% growth (ACC Or Herohonda or Cadilla).

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(ruffles) #283

How do you know the company is a great company. If this is the case everyone would be investing in the same. I guess best way of investing is to find bargains and those comes only in the bear market. So wait patiently for overall downtrend rather investing in all seasons. Also i believe there is no point in making 5-6% gains. Try for big gains which diversification can’t give. It would require you concentrated bets in special situations. So no point in investing all the time in market.

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#284

After 6 months of relative inactivity, I am again trying to look at below stocks cautiously… Thinking of allocating 3 % of portfolio to each if at all i decide to buy.

Hawkins
Accelya Kale
VIP industries
Atul Auto

Look forward to your views and opinions on quality and safety and future growth as these are not big companies.

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(sunnysachdeva) #285

of course its your decision and I am no one to ask but just out of curiosity why direct stocks and why not MF , if investing for the first one

(kush.pawan) #286

Yeah agree with the view.
If we are adding more than 10 (max 15) stocks in our portfolio, MF is a better option.

#287

MF has large no of stocks to diversify, reduce risk and volatility and may be compliance. Also MF shows NAV which though looks one number but is weighted average of many scrip prices. MF manager frequently buys and sells as well.

Now I don’t intend to do any of these myself. However, as I don’t sell, rather not selling, so every buy is making the portfolio become bigger. What could be an option is buy more of existing names, which also causes FOMO on other stocks.

The clarity of thought or strategy is clearly missing that’s why my approach looks like mimicing a MF, though I don’t intend to do so.

N. B. Beyond my portfolio I do buy MF in lumpsum approach and treat NAV as a individual stock. Whenever index corrects by say 10% or more, I put lumpsum.

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#288

Since 2015, profit has doubled and share price is same. So approx PE has halved. However, profit has been growing consistently.At 30 PE, it looks ok valuation wise.

image

#289

Oct 2018 Vs Mar 2019: Kind of mirror image. Wish one could predict :slight_smile:

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#290

Buying on dips or averaging down is relatively easy for quality stocks. I found a link explaining in greater detail. Generally stocks rise over time, but if bought on corrections , then can add that extra alpha.

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(Bharat) #291

Markets likes to see the growth and thus value the company accordingly. Till 2015 , the company used to grow its Sales in Double digits while the growth has been slowed down to single digits since 2015. That is more a reason for PE Contraction. It is still not cheap but dividend yield provides a good support on downside.
Management is mostly filled up with old guards who look to be very conservative and less innovative. There is presence of some new generation promoters and there is a hope that new generation promoters will learn from their competitors and will venture into new emerging products and utilize and capture the benefits of their strong Brand and network. Interestingly the growth has slowed down ever since new generation joined in 2015 (May be a coincidence only). Lots of new brands are emerging and it is necessary for them to stay relevant in this changing times with more aggressive marketing and innovating new products which is not the case as of now. Let us see they go from here.

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(kush.pawan) #292

For clarity of thoughts we have to read and read a lot in fact. The veteran investors who have a few hundred/thousand crore in stocks, dont diversify too much because it is the game of concentration, not over diversification which gives better returns. You may like to check their portfolios. And we can concenterate only if - we have studied the businesses in depth, trust the management, and there are excellent growth options in future.
The standard blue chip companies are already well known to everyone including MFs and their future prospectus are already priced in. Look for the businesses which are less known, on which there is no research report published. This is very tough though, and making money in equity is tough for the same reason. Investing is simple but not at all easy. Please read as much as you can, 10-15 books at least to start with.

Drawbacks of over diversification are average returns which any good MF can give. In that case spending lots of time of self management of stocks make little sense in my opinion.

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#293

@bharat19 very nice write up. I focussed too much on rising profit chart but not on profit growth % chart. I think ROC is important as much as absolute…I am curious to know what qualifies as good dividend yield and protection of downside… Didnot really get the point. 2.3% div yield… Is it good bad ugly…how to know… Is there a benchmark?
Also as per my understanding dividend paying companies have limited price rise… Psu stocks for example… Can you elaborate on this aspect a bit more…

(Bharat) #294

@kush.pawan The debate between Concentrated and diversified Portfolio is never ending. No doubt , a concentrated portfolio may give better returns than diversified but it will have more risk than diversified. One has to be very correct in concentrated portfolio while one have the elasticity of being wrong in few stocks in case of diversified portfolio. One size does not fit all.
It is important to develop one’s own style of investment suited as per risks taking ability and return expectations. Some may have higher risk taking ability or equity may be very low part of their Net worth , so they may go for very concentrated bets. For some , return of capital is more important than return on capital and they need to hold a diversified portfolio.Ultimately it is all about how longer one remains in Markets.
If someone holding more than 25-30 stocks , then MFs looks a better avenue as spending time on individual names makes less sense. One may also start with 25-30 stocks and eventually bring them down to lower numbers. A portfolio of 12-18 stocks in my view is appropriate. Regarding veteran investors , i do not think one has the data of number of stocks they hold. Only greater than 1% of their positions in individual companies are disclosed.

Less known businesses have higher chances of capital erosion than proven ones. It again depend on the risks an individual can take. Some are happy and in peace with holding a portfolio of blue chips with 10-12% CAGR Returns while some have sleepless nights holding lesser known names. Lots of variables are there behind investing and any fixed formula does not exist. What may suit you does not necessarily means it will suit others.

@homemaker : I think , more the stocks we study , more we find companies suitable for investments. It is necessary to buy the best among the list without fearing of missing out on other names. At least there would be 50 companies available as per one’s style of investment but picking the best from that list is a tough task. In the fast changing world , one needs to be a little active and keep on analyzing the portfolio stocks from time to time and should not mind shifting between the Companies rather than buy and forget. Again , it depends on what one expects from the market and how much time one can devote in markets.

@homemaker I do not think there is a benchmark for dividend yield. It depends from companies to companies. The most important aspect would be growth. If the profits are growing and dividends are increasing over the years with future visibility of growth and sustainability of increasing dividends, then dividends at a particular rate can provide support. Otherwise if growth is not there , it can turn into a value trap. My statement was particularly for this company only as i have seen levels of 2800-2900 acting as a good support at yield.of 2.5% !

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#295

True. I have a watch list of top quality 50 mid caps, assembled from VP and other sources. Now simply speaking i can bucketise the 50 into 3 segments…A, B, C basis nearing 52 week high and low as extremes. I plan to focus on top 15 nearing 52 week high and then start filtering, avoiding cyclicals or extremely expensive ones… Let me start some where and present the case for further discussion. Randomly picking names basis FOMO is not helping at all… Thanks for pointer :pray:

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