@distilled_feni This market correction has taught me many lessons. In early 2017 as there was a lot of froth in mid/small caps, I had shifted allocation more to large caps. So even though the going was very painful, the capital preservation was achieved due to the shift to large caps. So all the gains of 2017 are lost and at the moment around 6 to 8 % down when compared to 2017 Jan level(pf was down 10% in 2018 and 30% in 2019 so far). I believe the next phase will be for small/midcaps. So, now I have a highly skewed allocation to small/midcaps!. Regarding stocks, I exited CCL(execution of retail business is not going to be easy/predictable), PEL(though I knew that infra lending is risky, as new revelations come out like Lodha; I thought there may be more cockroaches inside the cupboard), dmart(valuation), Asian paints(valuation and need for money), wabco(buyback price being low and opportunity cost), multibase(mgt not retail investor-friendly) and Mayur(delayed implementation of PUC plant and succession clarity). I have started experimenting with cyclicals with the advice of a subscription service. So started nibbling on metals, infra , power and auto. I have increased stake in Avanti, OCCL, gruh and hikal. I have pared some gains from hdfc bank and started investment in sonata in view of the appreciating US dollar.
Discl: This is not investment advice. Please do due diligence before you make any investment decision based on my experience.
I always analyze tata companies and never invest as each of them dont focus on one core businessā¦
I have invested in their recent bonds 
Dear sir I would like to understand your rationale behind why did you exit sonata Software? It would be great if you could explain your insights. Thankyou.
I had exited Sonata not due to lack of conviction, but to raise funds for personal need. I again reentered in feb but the Covid19 has upset all my calculations. Now management gives negative guidance for next couple of quarters as logistics and Aviation sector will take some time to recover. Good thing is they are trying to diversify their offering into segments like utilities, commodities and digital. Hopefully they will be able to ride the storm!!
Hey! Did you make changes to the latest portfolio?
Covid has impacted the portfolio significantly. Itās skewed towards small caps and midcaps. I exited many laggards like Bandhan, Hikal, Sunflag, Varroc, Deccan cements,NMDC and IDFC bank. I have reduced the financials and increased Pharma and Healthcare. Hence added Natco, Alkem, Kovai Medicals and Polymedicure. Also added Mayur Uni(reentered), Nilkamal and Cosmo films. Shifted from HUL to Marico. Also increased IT by adding Majesco. The portfolio is down 12% so far this year(I had booked losses in all the laggards). But overall the pf has an annualized return of 17 to 18% in last 14 years.
Sir, 18% over 14 years is fantastic. Basically you are talking about 10 times of net worth over 14 years, Great stock picking, God bless!!
Hi @sajijohn Just a question on how did you get into stocks like Laurus and IEX as an example which are market darlings at the right time, I am just trying to understand how did u time ur entry, this is purely to understand the approach
Thanks,
Pandi
Hi @pandi.rao, IEX is a recent entry @260 and laurus @338. I developed my conviction on it after going through many Twitter threads on APIās especially the videos of Sajal Kapoor. I noticed IEX also in Twitter for the first time. Getting in with reasonable pf share in a growth story of long runway is more important than getting in early!
Thanks @sajijohn for your valuable insights, makes sense specially allocation on a growth story is more important than getting early with a miniscule allocation, much appreciated and all the very best.
Hello
Can you please explain your rational behind picking sunflag iron
@Sun_Light_17 Sunflag was initially recommended by an advisory to which I subscribed to learn commodity cycle investment about 2.5 years back. Later the stock price went down more than 50% and I held on though I reduced my allocation. Only recently it started performing in the metal rally. They make special steel rolled products including flats and rounds. Their products are for autos, defence, space and aviation industries. I still havenāt recovered from the losses of holding it. Management is clean and buying from market and they are reducing debt.
A market correction is a good time to review the portfolio and discard the laggards. My portfolio had reached a nadir in March 2020(more than 30% drawdown). At that point decided to try techno-fundamental recommendations of a subscription service. In other words momentum investment. It served me well to recover all losses and now with handsome gain. In the present correction, pf is down by 6.5%. I have reduced my exposure to Pharma and increased exposure to construction, Power and Banking. I was fortunate to get into IEX and Tata Power at reasonable valuations. Through the last two years, I have unlearned buy&hold strategy and done regular booking profits at predetermined targets and invest in new ones that are in demand rather than contrarian ones(which I used to vouch for). I have learned a lot from this forum and I am grateful to God for the outcomeā¦
| L&T | 5.2 |
|---|---|
| TATA POWER | 5 |
| ALKEM LABORATORIES | 4.8 |
| SUNFLAG IRON & STEEL | 4.7 |
| HCL TECHNOLOGIES | 4.6 |
| MASTEK | 4.6 |
| PI INDUSTRIES | 4.5 |
| POLYCAB INDIA | 4.4 |
| HDFC BANK | 4.4 |
| DIVIS LABORATORIES | 4.3 |
| GUJARAT STATE FERTILIZERS | 4.1 |
| CERA SANITARY | 4 |
| APAR INDUSTRIES | 4 |
| ICICI BANK | 3.9 |
| CAPLIN POINT | 3.9 |
| CANFIN HOMES | 3.8 |
| ACRYSIL | 3.8 |
| NEWGEN SOFTWARE | 3.6 |
| AVANTI FEEDS | 3.6 |
| MAYUR UNIQUOTERS | 3.6 |
| SOBHA | 3.5 |
| BANK OF BARODA | 3.4 |
| ANJANI PORT CEM | 3.2 |
| GRAND TOTAL | 100 |
You have a wonderful portfolio of stocks. Happy to hear about you getting into IEX and Tata Power at reasonable valuations. While I have my doubts about the sustained momentum of IEX, I am a huge fan of Tata Power, and even if they chose to continue business as usual, a simple spinoff of their renewables division alone will increase shareholder value. We do know that the management at Tata Power is really good, so rest assured they wonāt be complacent, and will continue tweaking, innovating and defining the path for renewable energy in this country.
I am a big fan of Polycab as well, especially if you got in somewhat early. It is a leader in the FMEG space, and will grow for many years to come.
I do need to do some reading about some of the other companies, but looking at all this, I have to say, job well done!
Thanks @ankit_george for your comments. As you mentioned Tata Power(av price 132 for 5.6% of pf) is definitely a long term hold. Regarding IEX, I am also surprised at the price action, though booked profit a bit earlyā¦then averaged upwards. Now the average price is 406(6% of pf). I am learning to hold on to winners!! I am positive on Caplinā¦ its strategy is different from other pharma cos. They concentrated on unregulated markets and partnered with distributors and now they own some of the distribution networks. Also, they have an asset-light model. Now they are slowly entering regulated markets and they have had some early success. They are also into an e-commerce platform for their products. Currently trying it successfully in Latin America. Another stock I am betting big on is Acrysil. They are not able to meet the demand. Their new plant is coming up shortly. Acrysil is my top holding with 6.7%. I exited BOB as it was a short term bet. Newgen is a small IT company I am slowly building position. Right now in ASM. It is a lagard for me now.
I really appreciate the insights @sajijohn!
I do have some work to do to understand the valuation of pharma and chemicals companies. Too many of them have gone skyward, as I was fixated on P/E, earnings growth and EV/Sales numbers.
I really like Acrysil. I friend recommended it to me, but I was hesitant, as I was fully invested in other companies at the time. Similar to an Acrysil or Borosil Renewables, I need to keep an eye out for companies that have value added products that are in high demand, with robust order books, which havenāt been ādiscoveredā yet.
Newgen is interesting, and I will look into it a bit more. I am very happy with ASM, but I got in at less than half the current price. They have a lot of potential, but I think they need to focus on two/three key areas and communicate better with their shareholders.
can you mention some details about business of this firm and why you like it compared to other small/mid IT firms? Thanks
@Investor_No_1 Noticed Newgen when it was ranked as a Mojo stock. Took small exposure to study it. I wanted to enter a smallcap IT stock with growth prospects. I understand that it is slowly transitioning into a digital transformational platform player for many industries. Gartner mentions it as a niche company in the Magic Quadrant for
Enterprise Low-Code Application Platforms(I am not an IT personā¦so take my opinion with a spoonful of salt!!) for two years running. It has a 5-year profit CAGR of 35% with an ROE of 20% with low debt. Its profit is equally divided from the US, Emerging market, Asia Pacific and India. In the latest quarter, the contribution from the EU has increased almost 10 times. Their 5-year sales growth is a tepid 14%. If they are able to walk the talk(they communicate well with the market participants) then the top line will grow and the market will take note ofā¦hope so!!
Hi @sajijohn ,
Great to read your thread as always!
How do you see the results for a couple of your big holdings (common between us :)) - Diviās Lab and Mayur Uniā¦
Thanks
-Manohar