I have few suggestions to remove excess stocks
- Market cap weight - Arrange stocks by market cap and remove after 25 stocks. Repeat after 3 months. Advantage- bad performing stocks will lose cap and get removed.
- Momentum based- Arrange stocks by 1 yr or 6m price return and remove after 25 stocks. Repeat after 3m for 1yr and 6m for 6m. Advantage- Small cap performers will also stay.
- Theme based- Remove public sector and cyclical or commodity stocks according to your preference. Advantage- Conviction to hold in downturn.
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I am posting my latest portfolio below. 70% of allocation is in top 20 stocks. Portfolio is still down 5% even after run up in Nifty due to Yes Bank and Multibase India where loss is more than 60-70%. I have sold some of the stocks in last 2 months and didnât buy any except tracking position in few pharma stocks and couple of other stocks. I was expecting Nifty will go down once Q1 earning starts coming. But it doesnât seems to be happening. I exited from Bharat Electronics in loss. I am listing my portfolio wishlist which I need to build if market goes down. I still need to reduce the list to around 25. I dont think I will be able to go down below that number.
| Stock |
Allocation % |
| Dilip Buildcon |
5.96 |
| Caplin Labs |
5.51 |
| ITC |
5.44 |
| L&T Technology |
5.30 |
| Avanti Feeds |
4.74 |
| HDFC Bank |
4.38 |
| HDFC |
3.95 |
| Jindal Steel |
3.92 |
| Vinati Organics |
3.77 |
| Nippon |
3.60 |
| Rain Industries |
3.47 |
| United Spirits |
3.03 |
| Oriental Carbon |
3.01 |
| 3M India |
2.84 |
| Godrej Consumer |
2.67 |
| Hero Motocorp |
2.58 |
| Bharti Airtel |
2.57 |
| Ion Exchange |
2.22 |
| SBI |
2.22 |
| Maruti Suzuki |
2.17 |
| Mindtree |
2.09 |
| Reliance |
1.99 |
| Larsen |
1.94 |
| RITES |
1.86 |
| Radico Khaitan |
1.78 |
| Yes Bank |
1.75 |
| Heidelberg Cem |
1.43 |
| Aurobindo Pharm |
1.35 |
| Axis Bank |
1.25 |
| Birla Corp |
1.16 |
| PI Industries |
1.02 |
| Bandhan Bank |
1.00 |
| Bajaj Finance |
0.94 |
| Infosys |
0.93 |
| Multibase India |
0.82 |
| Eicher Motors |
0.80 |
| Dabur India |
0.73 |
| Manappuram Fin |
0.69 |
| Sunteck Realty |
0.54 |
| Motilal Oswal |
0.53 |
| Nippon ETF Ba |
0.42 |
| Granules India |
0.40 |
| Alembic Pharma |
0.38 |
| ICICI Bank |
0.33 |
| Shakti Pumps |
0.33 |
| Nippon ETF Ni |
0.23 |
WishList(for future) -
Core - 70-80%
Muthoot, Avanti Feeds, Vinati Organics, HDFC Life, Nippon AMC, Caplin, OCCL, 3M India, United Spirits, Nestle, Titan, Asian Paints, Pidilite, HDFC Bank, PI Industry, LTTS, Mindtree, GMM Pfaudler, Bharti Airtel, Reliance, Dr Reddy, Aurobindo Pharma, Dilip Buildcon
Opportunistic - 20-30%
Rain Industry, Radico Khaitan, Aarti Industries, Atul Ltd, Alembic Pharma, Granules, Jubilant Life, ION Exchange, Heidelberg Cement, Transpek
I would request you to provide your feedback on the wishlist. I want to add pharma and specialty chemicals as i get opportunity. I am still now sure on what should be fair price for these companies.
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Below is the update on my portfolio. I sold some of the stocks in last few months and trying to keep stocks to around 30. There are some stocks with tracking position. I want to increase allocation if opportunity arises. Any feedback is welcome
| Instrument |
% allocation |
| ITC |
6.6 |
| LAURUSLABS |
6.5 |
| APLLTD |
5.6 |
| BHARTIARTL |
5.6 |
| CAPPL |
5.5 |
| AVANTI |
4.8 |
| DBL |
4.7 |
| GRANULES |
4.6 |
| SUVENPHAR |
4.3 |
| DEEPAKNTR |
3.9 |
| ALKYLAMINE |
3.8 |
| RITES |
3.4 |
| TRANSPEK |
3.4 |
| LTTS |
3.1 |
| NAM-INDIA |
2.7 |
| KSCL |
2.6 |
| RAIN |
2.4 |
| UNITDSPR |
2.3 |
| RELIANCE |
2.0 |
| AARTIIND |
1.9 |
| ORIENTCQ |
1.7 |
| PIDILITIND |
1.6 |
| GMM |
1.6 |
| NAVINFLUOR |
1.5 |
| VINATIORGA |
1.4 |
| MINDTREE |
1.4 |
| PIIND |
1.4 |
| YESBANK |
1.3 |
| GARFIBRES |
1.3 |
| NCC |
1.1 |
| ULTRACEMCO |
1.0 |
| AMBER |
0.9 |
| LALPATHLAB |
0.9 |
| IEX |
0.9 |
| IDEA |
0.8 |
| SUNTECK |
0.6 |
| ATUL |
0.6 |
| DIVISLAB |
0.1 |
| ASIANPAINT |
0.0 |
Sir putting less than 3% in any stock unnecessary make portfolio big and donât create any decent wealth. Better to consolidate those a bit more and exit from low conviction shares
Thanks for your suggestion Naveen. I agree that allocation should be atleast around 3%. Most of the stocks where allocation is less than 3% like Garware or Naveen Flurorine etc, I am just waiting for dip to buy more. These are my high conviction ideas, but I dont want to buy entire 3% in one go. Hence there is low allocation in some of the stocks. Having said that, there might be still couple of stocks which I have bought for experiments e.g. Sunteck realty or Kaveri seeds where my allocation could be still 1-2%. But overall I want around 30+ stocks with atleast 3% allocation. I found it very hard for me to limit stocks to 15 or 20 as I am not so confident on many stocks. Hence I am minimizing the risk by diversifying more.
I am sharing my latest allocation. I am still not able to reduce the stocks to 15-20-25. But I am listing my main ideas. Apart from below, I am researching and small allocation on stocks like Indoco remedies, JB Chem, Borosil Renewable, Mastek, IDA, Caplin, Vinati, PI Industries etc.
My investment journey has been changed from where I started 3-4 years back. e.g. earlier I had stocks like Maruti,Hero,Coal India, DBL which I sold over time. I realized that as an investor, we should search for growth in value stocks. There are many investors like @Worldlywiseinvestors @hitesh2710 @sahil_vi who helped in this transformation. I may not have concentrated portfolio of 10-15 stocks. But I will be happy with 25-30 high conviction ideas with allocation from 2% to 10%
| Instrument |
% Allocation |
Comment |
| LAURUSLABS |
10.6 |
Highest conviction idea. I think best is yet to come when all API,Formulation,Custom Syntensis and Bio will be listed as separate companies in future. Could be bought more on dips |
| DEEPAKNTR |
5.1 |
Also high conviction idea. But valuation seems on the higher side considering most of revenue comes from Phenol segment |
| JUBLINGREA |
4.6 |
Opportunistic buy. Waiting for Diketene to kick off |
| RACLGEAR |
3.9 |
High conviction idea. Not confident on current valuation. But I like the management considering their experience with Japense customer(Kubota) |
| SUVENPHAR |
2.7 |
|
| ANGELBRKG |
2.7 |
|
| NAVINFLUOR |
2.6 |
|
| IEX |
2.6 |
Leader or Monopoly in energy exchange. IGX still yet to kick off. Valuation seems on the higher side though |
| ALKYLAMINE |
2.4 |
Valuation seems high, so I reduced from 4% to 2.4% and may sell off gradually |
| GPIL-BE |
2.4 |
Seems undervalued and could be bought more. I am confident because company decrease debt and doing CAPEX |
| RAIN |
2.4 |
Opportunistic buy |
| SEQUENT |
2.2 |
Seems long term story, liked the management, Will increase allocation to 3-4% |
| LTTS |
2 |
Confident on company, but not comfortable on valuations |
| NEULANDLAB |
2 |
|
| SUNTECK |
1.9 |
Realty sector having tailwind and company has asset light model |
| TATAPOWER |
1.8 |
Company moving from Thermal to Renewable, leader in solar roof top, started EV charging station and reducing the debt too |
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@kumars1672
Most of the companies in your list seem okay. But if I make a total of all the allocations, I think you are still in a substantial cash position, if not invested elsewhere.
I think the current market is one where there is a lot of sector rotation and one can take advantage of changing sector fancies and make quick bucks. If you are so inclined though.
I would prefer to see higher allocation to the current favored sectors like real estate, power etc.
Tata Power today has given a clean breakout above its previous all time high of 160. I think it should outperform going ahead. I had posted charts on the relevant thread.
Another sector I think that could do well and which seems underowned currently is the auto/auto anc space. I feel something like hero moto has limited downside and can provide decent returns. I do not have it in my PF currently but I have always been a big fan of the kind of wealth creation it has done over the years. I still feel if picked up at right price and with right allocation, it can make a big difference to portfolio returns.
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Hello Hitesh Sir,
First of all, thanks a lot for reviewing the portfolio and providing your feedback. Also your observation is correct. I didnât list all the stocks since other stocks have very low allocation(some has just tracking allocation). I am still struggling to have good allocation to 20-25 companies. Apart from 4-5 companies, either I have low conviction(e.g. Indoco remedies,JB Chem etc) due to research now done on them or stocks are overvalued e.g. Alkyl Amine, IEX, Lal Path, MindTree etc. I am adding them now to the end.
I agree with you about high allocation to sector having tailwinds like real estate and power. But I couldnât find any good player apart from Tata Power in power sector and SunTec realty in real estate. There are other player like DLF, Godrej Properties, Obreoi realty. But some of them have high valuation and I need to research on them. May be I should increase allocation to these two stocks atleast to make 4-5% each.
About auto and auto inc, I had RACL Geartech where I have high conviction. But it is mainly into luxury bikes and I have 4% allocation in it. I was not comfortable in increasing allocation more than 4% and hence didnât increase it further. I had Maruti and Hero in past. Infact I started thread on Hero in VP. But later on I sold both Maruti and Hero since I found better opportunity in pharma sector. But I will again look at the company.
NCC - Oppr bet. was waiting for infra sector to play out which doesnât seems happening
BORORENEW - Leader and only player in solar glass
RELIANCE
GMMPFAUDLR - waiting to see revenue coming from Pfaulder
SAREGAMA-BE - Platform play
HIKAL - Oppr bet
APOLLOTRI - Infra play
MINDTREE - my first 5X. But unfortunately I didnât average up and ignore this stock. Lesson learnt for me
DHARAMSI
INDOCO
CAPPL - Holding from last few years, but recently reduced allocation
MASTEK - Betting on new CEO and company reducing dependency on UK govt projects
NAM-INDIA - may exit as story didnât play out on it. I was expecting Nippon funds coming to India after acquisition, but it didnât happen
VINATIORGA - Seems over valued now
PIIND - Same as Mindtree, should have averaged up
INTELLECT
PRAJIND-BE - Etahanol story. I liked their R&D. but not sure on valuation
LALPATHLAB
HFCL-BE - oppt bet due to infra
IDFCFIRSTB
JBCHEPHARM
GARFIBRES
Below is my list of Top 15 stocks which is around 75% of my portfolio. Laurus is 10% of the portfolio and IEX may be 2%. I think I have improved my portfolio over time and inspired by @Worldlywiseinvestors @sahil_vi @Tar. Typically I read/watch everything which they post on Twitter/YouTube. Not to forget and say Special THANKS to @hitesh2710 sir for clearing everyone doubt. I learnt one big thing from him that we shouldnât have anchor to price and keep average up the winners. There are many more things that all of us learnt from these gems. Thank you all for your feedback on my portfolio and help me improving in the journey/road to financial freedom
LAURUSLABS
DEEPAKNI
TATAPOWER
RACLGEAR
BORORENEW
GPIL
JUBLINGREA
ANGELONE
NAVINFLUOR
SAREGAMA
PRAJIND
APOLLOTRI
SUNTECK
MASTEK
IEX
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There are some lesson learnt in journey of refining the portfolio. Lot more to learn -
- Average down the losers - I keep averaging down the losers like Yes Bank and Multi base India without understanding why they were going down. Yes Bank was a hope story and I always thought management will perform even though they were failing in walk the talk. Finally I sold most of the stocks around 13 while my average was around 120-130. Lost lot of money. But it was big learning. Like everyone say - tuition fee paid to the market
- Price anchoring - I couldnât buy a stock if it went higher than price which I have seen or bought. I didnât check if story has improved over the time. This is another learning where @hitesh2710 guided many people like me that we shouldnât anchor to the price.
- Average up - This is also big lesson I learnt that we should average up the winners and leave losers as it is(if not cut them). I still think that average down also works and should be done where there is no fundamental change in the story of a company and stock is down due to market correction. e.g. Deepak Nitrite type of stocks. If they come to 1500-1800, I can keep buying more
- Allocation - I still need to work on it as I have many stocks(not listed here) which are in 0.X to 2%. I like @Worldlywiseinvestors suggestion that one should build their own % allocation(e.g. 2,4,6,8). I think this works best for me instead of 4,6,8,10 as I may not have good conviction in some stock and may just keep 2% of it in the portfolio.
- Valuation - As Mr R Dhamani says, we should load the truck when valuation are in our favor. This is the area where I need to work on. I am still learning and like idea of approximately right then precisely wrong. Anyway, if a company is good fundamentally, we can buy little bit higher too if growth is good. I am not saying PE of 80-100. e.g. companies like Saregama at this point of time. It is growing at 25-30% and I think we can buy at PE of 50-60 even though there is no margin of safety.
- Opportunistic bet - There could be 10-15% of portfolio kept for opportunistic bet .e.g companies like GPIL, Jubilant Ingrevia where risk/reward ration seems favorable. These companies may be commodity like companies but their growth prospects looks good in comparison to their valuation.
- Selling too early - There are some companies like SBI,JSPL which I sold very early even though I have conviction on companies like JSPL since they were reducing debt qtr on qtr. So lesson learnt is that it is OK to have some companies where there is growth prospects, but they may be commodities or PSU.
Areas still need work -
- Sell - I think this is the area less talked about and is very important like buying. e.g. I have seen few companies like Sequent Scientific where I have seen stock going to 300+ and not selling it even though management said there will be no growth for next few quarters. We may say that business is good and we should keep holding. But we forget about opportunity cost. I started using trailing stop loss for some of the companies and sold IT companies like LTTS,Mindtree using them. I know these are good companies. But their valuation were stretched.
- Cash reserve - Sometime I feel like we always keep thinking about what to buy today. Instead I should reserve cash and keep researching existing companies to build more conviction. I saw one quote somewhere that Research a lot, buy very less and sell rarely. Cash helps in buying companies at cheap valuation when good companies are down due to market correction. Need to work on it
- Building conviction - I think I spent lot of time listening/reading news about companies. But not thinking or consuming that information. It is important to think/analyze in order to build conviction. I need to work on it.
There are many more things to learn and I will keep adding in future. Thanks to VP forum for all these learnings and your valuable suggestions.
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Below is my latest portfolio. I have almost 20% in cash from last few months and waiting for dip to deploy them. There are few lessons which I learnt in 2022. I am listing it here(at the end) for otherâs benefit as you dont have to make mistakes on your own to learn something.
I have made around 15% return in 2022 with some learnings. My goal is to have 15-20% return every year. I know it canât be linear. But atleast this is what I am targeting for.
Latest portfolio -
Instrument
LIQUIDBEES - Almost 20% - planning to deploy in 3-4 tranches on market dip
GPIL
APLAPOLLO
LAURUSLABS
SAREGAMA
DEEPAKNI
BORORENEW
RACLGEAR
IEX
TATAPOWER
IDFC
GOLDBEES
RAJRATAN
IIFL
SHBCLQ
PRAJIND
PIXTRANS
HCG
AXISBANK
PIIND
NH
KAMAHOLD
JUBLINGREA
NAVINFLUOR
Mistakes/Learning -
1 Donât fall in love with stock. Keep check on business growth. If business is not improving or management is not doing walk and talk, reduce the exposure to the stock or sell it entirely. I bought Lauras Lab with 8% exposure(biggest holding) and paper profit was 60-70% till last year. But I didnât sell because I trusted on Management guidance, management keep confirming 1 billion revenue guidance for 3 quarters and finally they said they canât achieve it. I should have sold some portion of stock when management commentary changed. I sold some part of stock recently at 20% loss instead of 60% profit. so lesson learnt is that dont allocate 6-8% just on hope and growth not reflecting in business. I still think business is good, but I should have booked 30-40% of profit
-
Trading/Momentum - I need to improve on momentum/trading. e.g. Defense/PSU/Fertilizer stocks. They grew 80-100% in 1-2 months. But I was not able to buy them at the beginning. I thought PSU stocks are bad. Lesson learnt - catch them while they are young and keep booking profit. I dont think I lost money in them. But I didnât earned too. I need to improve on them for satellite portfolio.
-
Learn about business and growth - this is where Value Pickr, You Tube videos and Twitter help. Keep learning about existing business and new business and be ready with your watchlist. It will help in buying business when market falls.
-
Valuation - This is the area where I dont have much confidence if a stock is expensive or not and need to work on it. There could be few criteria like PE is less than median PE or P/B in case of bank or EV/EBIDTA etc. I need to learn more on it
-
Avoid hope story - There are few stocks like IBreal estate which I bought when embassy group took the company. But so far merger hasnât been taken place and court keep on delaying the order. Hence stock has been punished and is -50% from my buy price. It is still a hope story for me. Lesson learnt - dont average down in this case. I should have stayed with initial amount so that loss would have been minimal. There are many other stocks like #1(Sequent scientific,Neuland lab) where I lost money while I could have sold them on profit. They were hope stories. I am out of them now
-
Basket approach - we can have basket approach in some of the sectors where we dont know much about the companies. e.g. Defense,PSU bank,Fert,Sugar sector. Buy 3-4 stocks in each sector with almost equal weightage to make basket. This is a learning for me. Everyone has different style. Some people are happy with 5-7 stocks and make good return, some have 15-25 stocks and some people like me could have 30-40 stocks.
-
Core and Satellite approach - We should have core and satellite approach. like 60-70% could be core and 30-40% could be satellite. Satellite could be the stocks with low allocation where we dont have much conviction. e.g. PSU, Defense,Fert stocks etc could go to Satellite basket.
2 Likes
Below is my updated portfolio(top 25 stocks). Some of them are opportunistic bets. I am more than 50% in cash and waiting for opportunity to deploy it. I may use some part of it for trading bets in case market doesnât drop. Some of my allocation got reduced or exited due to stop loss triggered around Sep end market draw dawn.
| Instrument |
% allocation |
| GRAVITA |
4.5 |
| GPIL |
3.2 |
| PRAJIND |
4.7 |
| VSTTILLERS |
4.6 |
| IDFC |
4.0 |
| UGROCAP |
4.3 |
| DEEPAKNTR |
4.6 |
| SSWL |
4.4 |
| JYOTIRES |
4.1 |
| LEMONTREE |
3.5 |
| RACLGEAR |
3.4 |
| BOMDYEING |
3.9 |
| MAPMYINDIA |
2.2 |
| SPANDANA |
2.8 |
| UJJIVAN |
1.8 |
| GULFOILLUB |
2.4 |
| IIFL |
2.1 |
| KLBRENG-B |
1.7 |
| HBLPOWER |
2.4 |
| PIIND |
2.5 |
| GOODLUCK |
1.8 |
| PSUBNKBEES |
2.3 |
| SBCL |
2.4 |
| ADANIPORTS |
2.3 |
2 Likes
2023 Calendar year has ended. It has been more than 5 year that I started this thread. I made lot of mistakes in these 5 years. I thought of documenting mistakes done in last 3 years mainly and my learning over the years.
Mistakes
- Not selling losers and averaging down losers -
2023 - Laurus Lab from 70-80% gain to 30% loss(hope story), PPL pharma(bet on promoter), Sunteck(good company still lost money), EKC(bought on tips) etc. Lost 20-60%
2022 - Neuland lab(hope story), Sequent(animal pharma story not matching with numbers), EKC (bought on tips) etc where I lost 40-80%
2021- Yes Bank(average down), Granules, Transpek - Lost 20-60%
2020 - Yes Bank(average down), Bharti Airtel, Shakti pump etc - Lost 20-60%
Learning - Losers should not reach to more than 10-15%)except all market is down. Also never average down losers except you are super confident and company is showing growth in numbers.
-
Price anchoring - I used to have price bias. If I see a company at a price and price increases, it was hard for me to buy. @hitesh2710 Sir helped people like me in overcoming this bias.
-
Portfolio sizing - I have done this mistake over years and still doing it. I dont think diversified portfolio is bad and I may never have portfolio of 15-20-25 stocks. I am not that type of investor. But I think everyone has their own style and should be doing what they are comfortable with. There are investors, fund managers which has 50-60 stocks and still make 20-30% CAGR. So by portfolio sizing, I meant giving good allocation to winners or average up. This may be drawback of having so many stocks that you lose track of who is winning. I need to improve it so that I am averaging up winners and have losers remain in the lab and one day they will be kicked out from the lab.
-
Reduce number of stocks - this is somewhat related with above. My goal is to reduce number of stocks in the portfolio. I am planning to have separate portfolio for satellite stocks which might increase/decrease over time and core stocks. Currently I started liking every idea if technicals are good. Some stocks perform and some doesnât. I remove one which doesnât perform. But number of stocks keep increasing.
Few more learnings -
Although some of learnings are mentioned in the mistakes itself, some other learning are -
-
Top down approach works as comparative to bottom up investing. You can pick best company from tail wind sector and may not get any return. But if you pick average to good company in tailwind sector, you will make decent money.
-
Technical plays a good role in getting return in term of entry/exit. I need to improve on it.
-
Learn fundamentals of the company to make core portfolio and have conviction in the companies.
Overall, I think I am lucky that I survived with all these mistakes and made returns more than nifty.
Any feedback/suggestion/questions are welcome
4 Likes
Hey @mylu - what made you move out of BHEL? What did you find in the CAG report then?
