Portfolio Re-Structuring/25% CAGR quality-growth for next 2-3 years


#314

Excellent perspective on real long term investment. It takes decades of experience to have this clarity of thought. Though I am investing only since last 8 years, long term perspective seems to be working for me. It has helped me avoid low quality companies when I think of 10 years holding perod.


(Arun S G) #315

Hi there! I wanted to message you, but mail option seems missing in your profile, can you please mail me? I’d like to discuss something that is relevant to your post, but outside the scope of this forum.

Thanks
Arun


(Manish Vachhani) #317

Do not share your email/mobile no on public forum. You can simply send it through private message.


(Krishnaraj) #318

This extract posted by Alpha Ideas (from Seth Klarman’s book on Margin of Safety) talks of the problem with setting goals for investment returns (like a CAGR of 25%)…the leitmotif of this thread (a very high bar at 25%), and of course of many commentators.

If you set goals for investment returns, you will focus only on the upside, not on the downside; end up making mistakes or take for granted hidden extraneous factors that gave you good returns which may not continue (one of which is luck). What an investor can do is to follow a consistently disciplined and rigorous approach. Returns will follow

Ofcourse @phreakv6 cheekily pointed out some time ago that the popularity of threads in VP forum is an indication of the current mood. On that count this thread has dropped off the charts substantially and the one on Midcap stock carnage rose up rapidly :slight_smile:


(PrinceVegeta) #319

Last 3-4 months have seen significant corrections in some perceived ‘Quality’ stocks. I myself had and know of a few senior investors who have a major allocation or Core portfolio comprising of these stocks.

For eg: Gruh, Page, Eicher - once perceived to be untouchable leaders in their respective fields have each had a ~ 30% fall within 3-4 months

Quality Basket 1
15% + Steady Earnings Growth perception with significant fall
17-Sep-18 31-12-18 Current Price Var % from 17-Sep-18 Var % from 31-Dec-18
Gruh 337 318 243 -28% -24%
Page 32982 25239 23010 -30% -9%
Eicher 29664 23158 20300 -32% -12%
Maruti 9418* 7465 7492 -20% 0% * price on 28-8-18

In contrast, there have been some others having similar perception who have managed to hold on to price levels despite some headwinds

Quality Basket 2
15% + Steady Earnings Growth perception without fall in price / recovery from fall
17-Sep-18 31-12-18 Current Price Var % from 17 Sep 18 Var % from 31 Dec 18
Bajaj Fin 2605 2645 2525 -3% -5%
Avenue 1525 1607 1583 4% -1%
HDFC Bank 1992 2122 2109 6% -1%
Kotak 1229 1255 1229 0% -2%

The game seems to keep becoming narrower with more names going out of the Quality list as compared to the new entrants.

The message seems to be that one has to be mindful of the chages in ‘perception of growth’

Looking back and trying to recount learnings, in case of Page and Eicher it seemed the signs of slowdown in sales volume growth were visible many months before the fall. Gruh-Bandhan merger was a bit of surprise to many, which I would classify as an uncontrollable risk associated with any investment.

Looking ahead, one must keep eyes open for similar trends for eg: Avenue - faster than expected reduction in SSG? Increased regulation in pricing - HDFC AMC, fee income of Banks?.


(paraa) #320

Hi Donald,

Hope you are doing good.

I was eagerly looking forward for a write up on 2019 from your end.

Hope to see you soon here.