Ravi Kothuri Portfolio


(rkothuri) #1

hi,

I have been investing since couple of years and introduced to ValuePickr by one of my friend. Impressed with the amount of work that individuals are carrying in this forum. I am working currently in full time job and been semi active in the valuepickr discussions. I have been trying to build a strong portfolio for long term. Please go through below and share your suggestions.

I have setup SIPs for my financial goals and have been buying shares directly with whatever money left and the plan is to move to direct equity once I get to comfortable levels. Though I am not reducing the amount of money that I am putting in equity and keep it increasing every time there is an increment (so its like another SIP). I buy the shares every month with this amount and not been in with cash any of the time. During the demonetization I deployed some more capital to buy shares which I got as a bonus.

When I started I used to buy companies on some news and then sell it for a small amount of profit or book loss. Some of the companies where I made profit are Cadila (bought when it got FDI warning and sold after one year as results are not improving - should have been a long term hold), Vedanta, Hindalco (both being cyclical in nature bought at the bottom of the price but sold early as I am not in a stage to understand cyclical business) , Chamanlal(sold early due to not much information available publicly, may be a mistake), Bandhan Bank (sold on listing due to high valuations & Ujjivan is already been in PF), Caplin(should have kept this and sold Granules instead as valuations are too high for caplin), CMI(not happy with promoter actions), Finotex chemicals (no bad news but just price was not moving, again a mistake), Kaveri seeds(booked profit after came know about the land issues) .

Companies where I made losses are Welspun India(sold at 50% loss due to Egypt cotton issues forming a no trust on management), Suzlon Energy(one of the early shares I bought as it used to be highest volume trade at that time), National fittings (again not much info available public and bought at a price which doesn’t have margin of safety). Companies where I made neither loss nor profit are HMVL (not happy with the management in deploying the cash they have), Byke Hospitality (showing good growth but felt it might be able to sustain the competition from other online players), Waterbase( management not walking the talk but share price increased so much after I sold but no regrets), Take solutions (again good business but not happy that promoters are not able to divest scm business which they are saying they will since long time - may be I should have kept it more?)

Below is the current portfolio. Preference is given to management quality which are growing consistently and have long way to go in the business.

Goal is to increase the holdings in companies like Thyrocare/Wonderla/Nesco/CCL etc. while reducing/completely sell Granules. I have to decide for PI/Alembic whether to hold for long term as they already proven business. Increase the holdings in Ujjivan/Skipper/Bhansali/Minda depending on their results and future plans. For Emmbi/Sharda I have to figure out if they are long term sustainability business and so take action depending on the outcome.

Please share your views on the portfolio, my approach to stock investing, what additional parameters I should be looking before taking a call etc.

I will update the thread with more details on what books I am currently reading and portfolio allocation strategy , what companies are in watch list etc. soon.


(Bheeshma Sanghani) #2

Hi @rkothuri

I like the fact that you have outlined the thesis for all your investments. It shows clarity which is important. I dont follow any of the cos except Wonderla. However whatever little i know about Emmbi, Sharda & Skipper - your top 3 - suggest that they are good cos with good growth prospects. Generally, the idea is to select the top cos in your portfolio such that they are able to reinvest at reasonable returns on capital on a consistent basis. These re-investment opportunities come when there is an industry tailwind , new or unique products, new markets, new mgt and so forth so one will have to measure the cos against these things.

There is also the q/s of valuation which one can ignore if cos are scaling up rapidly and you have gotten in at a sober valuation - in which case you have to just ride it. For the rest - like BEPL/Minda etc - where valuation is out of hand - one needs to take a call. In general, the less the churn the better but easier said than done esp when the cos are good as most in your portfolio seem to be. Overall - I think you have a very good looking porfolio with a good mix of sectors and cos.

All the best
Bheeshma


(rkothuri) #3

Thanks @bheeshma for the review. They are helpful in further analysis and add insights to improve my current thinking.

I also request fellow boarders to review and provide their inputs.


(Kumar Saurabh) #4

Hi Ravi,
Like it that equity is driven by a clearly defined purpose and not just for making money but not knowing how much. This would surely help you to identify how much risk you want to take for the rewards sufficient for financial freedom.

I see lot of commonality in our portfolio. My personal objective is to make 8-15% money above inflation and hence, please consider my feedback with same expectation (as I am not aware of your quantitative expectation from the above portfolio)

Coming to portfolio, let me categorize it in 3 sections:

  1. Companies known and either invested in past or rejected due to some reason or want to buy at better valuation:
    Sharda : If you are sure about intangible assets on the BS then good, somehow I could not convince myself and could not gather enough ground information for mental satisfaction on intangible assets, hence avoided else it looks a very attractive business model going by numbers

Skipper: One of better companies in its field but realized its a working capital heavy high receivable business and hence switched to something else during demonetization opportunity
Wonderla ; One of mistakes where seems i have misinterpreted possible risks in the business and did not take enough margin of safety while valuating the company. A very good learning and i still love the business but again decisions are relative. One of borderline companies for me where would love to cross the line at some price
Canfin: Historically very good company, how they respond to intense competition from pure private sector companies is something to be seen. The fight for the pie due to sheer market size opportunity seems to be big every passing day. I am not sure if Canfin was at the right place at right time by chance or by design (differentiating factor) though their numbers have been very impressive.

Orient, PI : Great quality companies in my opinion though I do not hold currently
Granuels : If you are ok with debt and promoter pledge. I do not understand pharma much hence not much to add. All i know they in transition from API to formulation

  1. Companies which I am also holding:
    CCL,NESCO, Ujjivan,Thyro
    Obviously, have positive bias as I hold. However, I think Ujjivan would need a closer watch on how they tranform into SFB and thyro I have smaller allocation as I am not yet comfortable with valuation being a low entry barrier business. I am yet to convince myself completely that volume could a moat and still in wait mode for a bigger accumulation

3 Rest companies totally unknown to me and hence no comment

Overall, liked portfolio a lot as:

  1. Do not see any dubious one which can sink the ship (at least the one i have tracked)
  2. Really like some of companies in portfolio from a longer term perspective
  3. Purchase price seem to be ok ( i m not great at it but rough estimate of range) and with a plan of SIP should be ok few years down the line
  4. Judicious risk balance from sector, currency etc type of risks

Just one concern I have which is - Anything more than 10% exposure is truly a highly concentrated investment in my opinion and you should be double sure about understanding of risk reward opportunities in those investment along with complete business understanding.

Cheers and All the best buddy


(rkothuri) #5

Thanks @suru27 for the detailed reply.

I have not churned the portfolio much. Here is what I did since last update:
Sold Granules - Growth by debt, heavy promoter pledging. Alembic is already in PF(though didn’t add Alembic as well since last update).
Sold Canfin - Messed up the stake sale. Not so good number in last couple of quarters.
Sold both of above in loss.
Sold Bhansali - Made handsome profit of 150% and sold at 200. Stock has corrected much since then due to fire accident and now company stopped the expansion. Will keep in watch list and look at the next quarter results.
Added more Nesco/CCL/Sharda/Ujjivan in small quantities.
Entered Mahanagar gas/Ruchira papers as tracking positions.

  • Ruchira was available at historical PE and taken a small tracking position at 117.
  • Mahanagar gas was corrected due to shell stake sale and has good opportunity to grow in Mumbai. Worry is that it has not gone of bidding in most of the GAs.

Entered RBL bank/GIC as trading bets but felt GIC is a wrong decision. Reading more about RBL and planning to keep it for long term/buy as and when feel more comfortable.