Prabhakar's portfolio reconstruction - for review


(prabhakarpandey) #1

Dear All,
I started investing in late 2013 and due to the raging bull market that time, made some decent results. However the returns stagnated during end of 2015 and after that my portfolio was not moving forward. Eventually I liquidated my portfolio in early 2017 waiting for market to correct and then to re-enter. Recent carnage in small cap equities gave such an opportunity and i started to reinvest.

My Investment Style: i basically invest depending on Financials of the company, i look for following:
(1) no debt.
(2) small market cap but bigger opportunity size. ( basically i am trying to identify opportunity that can grow many fold ).
(3) high ROE
(4) PEG ratio of less than 1
(5) consistently growing top line and bottom line
(6) healthy shareholding with no pledging, and no money trading activities by promoters.
(7) Presence of some impressive investor in the shareholding like Vijay Kedia, Dolly Khanna, Ashish Kacholia etc ( i like to clone as i see the success rate of these investors is quite impressive ).
(8) from a technical parameters i am looking for stock that corrected about 50% to 61.8% of their Fibonacci levels, and RSI in oversold - in long term monthly charts.
(9) i do check about the companies in valuepickr for already available analysis and filter companies based on that.

below is my current portfolio:

Stock Puchase cost date of buy Current Price Unrealized Gain % of portfolio Rationale
Aimco Pesticides Ltd. 110.00 Jan-19 128 16.36% 4.92% I have seen several agrochemicals company giving phenomenal returns. This company looked small in size and yet good managed, and with good financials and looks like can grow quite good.
BEPL 80.00 Jan-19 70.4 -12.00% 3.57% Strong growing specialty chemical area, good financials
Balaji Amines Ltd. 450.00 Jan-19 465.5 3.44% 6.09% Strong growing commodity chemicals space, good financials
AMTL 30.00 Jan-19 32.25 7.50% 2.54% growing electrification in india will require more metering devices
Atul Auto Ltd. 150.00 Sep-13 316 110.67% 12.59% waiting for the new plant to be active, that could boost sales and profits.
Harita Seating Systems Ltd. 400.00 Jan-19 495 23.75% 5.16% Strong financials
Can Fin Homes Ltd. 280.00 Jan-19 251.65 -10.13% 3.69% growing projects for home financing, it has not yet started to take off unlike in deveoped economies.
Repco Home Finance Ltd. 450.00 May-14 408.75 -9.17% 5.66% this is very disappointing stock for me, trying to exit at a reasonable price.
Everest Industries Ltd. 496.00 Jan-19 433 -12.70% 3.60% Increased constructions in the fast developing economy.
Multibase India Ltd. 451.00 Jan-19 439.1 -2.64% 5.25% Increased requirements of plastic products
Pil Italica Lifestyle Ltd. 5.80 Jan-19 7.4 27.59% 5.26% Increased requirements of plastic products
Tata Elxsi Ltd. 1001.00 Jan-19 914 -8.69% 7.52% Strong software company, part of Tata group
VETO 74.66 Jan-19 60.55 -18.90% 6.69% good financials, available at cheap price ( I thought )
Cash 27.44%
100.00%

I am holding cash of 27% , and am looking at following compnaies at following levels :
Rationale for all of them is strong financials, i.e. ROE, debt/equity, strong top line and bottom line, PEG less than 1.

  • Venkey’s India
  • Jamna Auto Industries
  • PSP Projects
  • KNR Construction
  • TCI Express
  • Tata Metallics
  • Ashok Leyland

Looking forward for your feedback.

thanks
Prabhakar


(Bharat) #2

Hi ,

I think you focus more on Numbers. Cloning the big investors is extremely difficult as you do not have real time idea of when they buy , why they have bought and when will they sell. Unless you do not have your own set of reasons for the companies you own , it will be extremely tough to take decisions in tough times. One should always remember that “Behind every share , there is a company”. Understand what is actually makes and how it is placed with respect to any of its competitors rather than only going by the numbers. Though Numbers should back equally.

Your rational for Aimco that “Agro Companies have given phenomenal returns in Past” should not be the reason to buy any company of small size in that sector and hoping that it will also go big some day. I do not track Aimco and might possible that it may become big someday but i am only telling that the reason should be company specific.

On AMTL , even if you consider numbers , how does it pass your ROE test ?

There are too many companies and you are still looking to add more . Below 5% allocation to individual story does not make any meaningful impact even if those bets become multibagger.
I think 12-14 companies are good for a portfolio but still it depends on one’s risk and return expectations.

I do not track most of the above companies so won’t be able to give any views. Neither i am an expert , in fact , i have been in markets for only a year now. So my views may not be that matured.

Disc: I own PSP Projects and track Balaji Amines , Multibase. Have some apprehensions regarding Multibase which i mentioned in that company thread.

Regards


(prabhakarpandey) #3

thank you for the feedback.

Yes i do focus a lot on numbers.
About large number of companies :- i want to target about 16-18 companies. The small caps are full of risks and in order to cover for that it is better to diversify, thats the reason of not choosing 10 companies but rather 16-18.

AMTL is an exception, it is more based on story than the numbers…

thanks.


#4

Could you explain more on PIL ITALICA? I have a position in it, invested from 2017 when I started my investing. I cannot compare it with any other big player in the same industry. Sales are increasing, no promoter pledging, but no profit, OPM negative or single digit, no dividend at all. But I think it may slowly pickup as I see decent reviews on Amazon, surprised to see people buying on Amazon despite not a big name and high price. I will watch for some more time.

Good to see it for the first time in VP.


(prabhakarpandey) #5

I liked its financials:
sales growth : 17.5 cr in 2010 to 72 cr in 2018
profit : -1.5 cr in 2010 to 10.8 crores in 2018
ROE : ~ 20%, debt to equity: 0
promoter holding : 66.12% with no change in last several quarters

the product array if very good, almost similar to Nilkamal.

size of the company is small, growth is good and size of oppourtunity is quite big.


(KKP_Investor) #6

Step a bit higher in terms of Capitalization on your investments. Sector Diversification, Country Diversification, Time Diversification and also Size Diversification are keys to long term success to generate wealth. And, then work hard at your job to do Wealth Creation. Sweating over your investment returns is not the name of the game since your brain can generate more wealth from age 21 to 45 than you can ever imagine if the focus is on education and career. I have proved this formula by design and it is still the best of the best formula bar none. People who find 2014 to 2016 a huge success and quit their jobs regret 10 years later, but the career ship has sailed past them.

My suggestions on what to do is in the above answer without going down to script level since there are a dime a dozen recommendations out there. Right now, I like Infra, Real Estate, Auto and Auto-Ancillaries a lot with a touch of bottomed out Pharma.

KKP