Please delete this topic admin


(1.5cr) #1

So I have been investing since late last year.The majority of last year I was invested in stocks that were reasonably valued and had not participated in the run up. I was also almost always on 50% cash. My gains were attributed to rain industries at an avg buy of 130. I exited rain sometime in december when the stock was making highs. I slowly exited all of my holdings at entry price itself. I currently plan to rebuild my portfolio. I like going concentrated as my portfolio size is not too big and I’m very young (22).

  1. SAIL 25% (currently holding 10%(80)- Delayed Capex plan that was supposed to end in 2015 is now over. And capacity is expected to ramp up over next few years. Last 3 quarters have been strong. Employee cost is falling. There will huge operating leverage as employee cost is set to stay constant but capacity has been ramped up significantly. They will be focussing more on long products (used in infra etc) that have better realisations. SAILs triggers- operating leverage, deleveraging on balance sheet, employee cost staying constant and increase in realisations. These could increase ebitda per ton signifcantly leading to huge delta. JSW are already operating efficiently. There is no new capex coming in the space. Risks are they could fail to ramp up capacities and this could lead to trouble. Any forced aquisition of NCLT steel players would be an issue. Downside however from current levels seem limited. Seems like all negatives are priced in. Worst case its a value trap. Im convinced on the steel story in India. I would however love to play this via JSW but the risk/reward just is not worth it. It is not a liked idea by analysts and thats why I like it.

  2. Orient refractories 10% (150)- Fundamentally strong company. Non-cyclical in a cyclical space. Excellent mgmt and metrics. Debt free and cash rich.

  3. Edelweiss 25% (currently holding 10%) (280)- Big fan of Rashesh Shah. They have a cyclical business in wealth mgmt and a non cyclical business in credit. A great way to play the financial theme in a growing economy I feel. Valuations are a bit expensive but I’m comfortable paying a slight premium for this franchise. They are growing quickly so earnings should catch up soon. Insurance break even is a plus as well. They face the normal risks of a financial company. But Im comfortable because Rashesh Shah has skin in the game.

  4. CESC 15% (1000)- Just playing the special situation. Will be holding only spencer retail post the demerger.

Rest is in cash. Will be selling out cesc partially once demerger is confirmed and then will hold Spencer on listing and then reconsider.

The market is still too expensive in my eyes.

I would like some insights on my portfolio. I would also like some ideas as I find everything still a too expensive.

P.S I also have a mutual fund portfolio so I have not risked my entire equity capital on these ideas. These ideas would be around 40-50% of my equity portfolio. Everytime I find a compelling idea and Im not sitting on any cash Ill pull out of my MF portfolio.


(Manohar T. Patil) #2

I liked your approach. It puts a lot of focus on preserving capital which is very important. I personally believe in all first 3 ideas. I do hold Edelweiss in my core portfolio. Would have liked to acquire SAIL, but currently focusing on reducing number of stocks in my portfolio to make it simple just like you :slight_smile:

I also liked your approach on keeping your cash in mutual funds. Couple of question on it if you can help pls. what types(large cap, debt, gilt, mid cap) of mutual fund you are keeping your cash in? Does the exit or entry load play any hindrance in switching cash between MF and Equity.

Thanks


(Hitesh Patel) #4

Hi

Interesting to see someone having a lot of confidence to put 25% capital in a cyclical idea like sail.

Edelweiss seems ok. Orient refractories is a great choice.

Regarding cesc one needs to see how the market is when the split cos list.

I think the allocation at 25% in things like cesc and sail seems a bit high though these are well known names with a long history.


(Hitesh Patel) #5

Hi

Interesting to see someone having a lot of confidence to put 25% capital in a cyclical idea like sail.

Edelweiss seems ok. Orient refractories is a great choice.

Regarding cesc one needs to see how the market is when the split cos list.

I think the allocation at 25% in things like cesc and sail seems a bit high though these are well known names with a long history.


(Kanwal Sudan) #7

Good to see a concentrated portfolio with such high conviction. Out of your own stocks, I hold Edelweiss but I bought it quite recently. I’m evaluating SAIL and Orient Refractories for my own portfolio.

My limited advice would be to have more stocks ~ 10 - 15 to try and significantly reduce idiosyncratic black swan risk to your portfolio.


(mylu) #9

Similar to my portfolio of 25% allocation for 4 stocks :slight_smile: by the way , EDELWEISS is a good choice and feel SAIL may not be such a great candidate,


(cabunny) #12

HI, I am very new to invsting. I think CESC is much safer bet.

**Reason : **
Standalone business ( 1350 MW power plant plus distribution in Kolkatta and Howrah ) it self has net worth more than 13000 crs.
** Now talk about other business **

# Other than that 1320 MW capacity with two subsidiaries. To built one MW Power Plant expense comes around 6 to 7 crores . So total assets value of this power generation business would be 1320*7= 9240 crs
**# 55 Percent stake in first source solution value comes around 2600 crs. **
# Spencers Retail Business, If we value it only two times of sales then it comes around 4400 crs. ( D Mart enjouing valuation of 8 times of Sales)
# One Mall in 730000 SQ feet Area in Kolakatta plus Real estate property
# Distribution Franchise in Kota, Bharat Pur and Bikaner
# FMCG business of TOO Yumm and E Vita. ( last year they acquired 70 percent stake in E vita in 420 crs)

** Debt relateed to subsidiaries is around 10000 crs**

After Demerger Distribution company will be only listed company in this space. After demerger there is scope of value unlocking.

Disc : invested in 920 range. 10 percent of my portfolio. 90 percent in liquid funds.

** Regards**


(ramanhp) #14

There is not timeline for de-merger yet and subsequent listing can take a lot of time. May be 5-6 months ahead. Would you be willing to park your money for this long, given there can be more rewarding opportunities.


(cabunny) #15

Agreed, I am tracking some other stocks ( Narayana Hardalaya and CCL product) with only small position. According to me liquid funds are better than stocks if you dont find opportunity


#16

Hi @1.5cr . since you are asking feed back - a couple of things comes to my mind on your arguments FOR Federal Bank. Something you may want to ask yourself. Am not quite sure of.

  • Is there a confirmation bias at play here? Are you looking only on the brighter side?
  • Certainly, Fed Bank is developing Fintech products in a big way. However, If technology is the key, why not RBL or Yes bank - refer to the recent publishing of “developments in Fintech space” in this forum.
  • The rain related perils in Kerala, where the bank got sizable interest. Is there an estimate of the damage?. It is either an opportunity or a mill stone. If there is a pain anticipated in the next few quarters, should it not make better sense to invest at lower levels?.
  • Going forward, there is also possibility of a bigger bank taking over Federal bank. Will it be beneficial for the investors?.

Disclosure - Watching Federal bank keenly. Exited positions at ~89 recently. Waiting on the sidelines. I had been holding positions in the company on and off.


(Susindar) #19

CESC has provided a 10 year return from 2008 of 50% which is 4% CAGR. Considering Risk free return in India is 6% plus, this will be a terrible investment. I am not sure how the spencer divestment would play out. Even otherwise I consider this group to be bad allocators of capital considering diversification in to unrelated fields such as first source. In my opinion CESC is a poor stock


(ashish) #21

The 50% return comes if you start calculating from the peak of Nov 07, but if you check after the crash of 2008, i.e from nov. 08, the return comes to almost 19% CAGR, not bad i guess.


(Susindar) #22

A bear to bull market valuation will most of the times look good. I think it is better to look bear or bear or bull to bull considering it is almost impossible to time the market.


(Susindar) #24

Sail is a cyclical stock and on top of it a PSU. I will never touch Sail as an investment as I have a high negative bias against PSUs. You only have to look at the performance of PSUs to see the reason. There are better private peers. If the sector is not a monopoly, then a PSU would have no chance to survive over the long term as there are 100 times better entrepreneurs in the private sector.


(Susindar) #26

I think each of us have our own investment philosophy. One of the checks I make is look at the 10 year chart and see what direction the chart is moving. For me, if it doesn’t move from bottom left to top right, the stock is not worth holding. There are always exceptions. But if you see any good company over a 10 year period, you could see the chart this way. Now sail do not have such a chart so do most of the PSUs. This is based on the simple philosophy that over the long term price mimics the performance of the company.


(1.5cr) #28

(post withdrawn by author, will be automatically deleted in 24 hours unless flagged)


(ashitpanjwani) #30

very concentrated portfolio


(Bharat) #34

Any particular reason for exiting this business !

what happened to the Demerger play on basis of which you bought initially


(Bhaskar Jain) #36

I think downside of a concentrated PF is during such phases in the market. PF can get impacted a lot. Having a mix of defensives like FMCG/Pharma is not a bad idea. Or ignore the short to medium term volatility and mentally be able to see PF down a lot and sleep at night. Just a single Yes Bank in a concentrated PF is enough for permanent damage.

Please continue to update this thread as and when you make any moves, it can act as a very good investment journal and we all can join you in this journey. Best of luck.


(DaNjY) #38

what is the story behind to add TV18 and SAIL and what is your holding period?