Saurabh Portfolio for 20% Expected Return

Q&A: Questions & Answers Portfolio Q&A
41

Good stuff dude! I still remember the first VP Bengaluru meetup where we met, and we’ve come a long way since then for sure. Clocking 46% CAGR is phenomenal and you should be very proud of that.

I only have Sinclair’s, Ambika, NESCO from your list but all of these I’ve part exited as the valuations grew. Cupid is perhaps the only live overlap but my allocation is very low there.

Of course our investing styles are different so I don’t expect much overlap anyway but strangely we have the same CAGR

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42

@theashworld Yes buddy, we have come a long way in last 2 years. You and some other friends from Bangalore group helped me to develop multiple perspectives on various paths to make money. It was a learning . Great to know your portfolio is doing so good. Different investment styles mean always something to learn from each other :slight_smile: . Wish you a great 2018 Shan Bhai…

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43

Thank you for clear and crisp explanation.

On CAPF, I gone through Yogesh’s reply earlier, but considering good growth due to a crazy first generation leader took the risk. Let me see how it pans out.

Shamaroo : I could see where your hesitation coming from and I consider that do not bring any big red flags and i will continue to research on it and build my conviction.

Please continue to contribute to community and wish you all the best for 2018.

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44

Portfolio underwent some change in last 6 months. Here are updates. Would be great to do a postmortem 5 years down the line :slight_smile:

Exited:
Manapurram (too much luck dependent promoters - monsoon etc etc and better options available in BFSI.), Persistent (rerating done), Tata Elxi (rerating done), Accelya Kale, Cyient (rerating done), Cupid (inconsistent b2b business and difficult to set up fmcg business) n Pure Pharma stocks (gave up while trying to understand sector)

Entered:KRBL (4.1% AT Rs 460), BSE (3.1% at Rs 796),MCX (2.5% at Rs 768), Apollo Hospital (3.5% at Rs 963), Goodriche (1.5% at Rs 330), Everest Industries (1.5% at Rs 456)

Small Entries: Sobha, Oberoi, Hesterbiosciences, TVS Srichakra, Royal Orchid

Accumulated more: PEL,NESCO, Repro, Chola, Edelweiss, RBL, Ujjivan,Sinclairs, Kolte Patil, Narayana Hrudalay, Allcargo, Century Playboard

Current 10%+ Losses (still holding): Max India, Ashaiana Housing, Allcargo, Aries Agro, Goodriche, Zee Learn

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45

Hi Saurabh, isn’t it a too big list to mange? I am also facing similar situation where buying a new company and not replacing it with any of the existing one. I am still trying to understand the best way to manage around 10-12 stocks. Looking for your views about the same.

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46

Hi Saurabh - just a quick question on Accelya Kale.

If possible, could i know the reasoning for your exit in Accelya Kale? I agree, the business is slowing down compared to the past. However, it’s niche business and there are no comparable business in the market. With the coming of Udan and growing airline traffic, would it be a good portfolio bet. Also, the stock has corrected to 1150/- levels which should offer a bit more margin of safety compared to it all time highs of 1650 levels.

As you have been holding Accelya for a while any of your thoughts would be greatly appreciated. Thanks

Regards,
Mathews

47

Hi Saurabh,
Can I understand the rationale of holding the stocks which are already under 10% loss?

48

Hii

Whats ur view on aeries agro?

49

Do you still believe in Zee Learn. I have been passively tracking this stock. There is promoter selling and lot of pledging , although financials have improved slightly

50

Hi Saurabh,

How do you value Ashiana Housing? Their nos. are lumpy and stock hasnt performed in last 3 years. I am invested and my patience has been tested. Peers like godrej, Kotle Patil etc. have done well.

51

I think I cant add any more value to concentrated vs diversified investing style debate as enough has been written. I think it all boils down to what suits our style and behavior. I am 80% invested in 20 companies. Out of 20, 10-12 companies, I have been tracking and accumulating from last 3 years,so, there is some comfort. Then, there are certain cyclic plays where understanding industry is not so difficult but entry and exit matters. I think it all boils down to individual investing style, temperament, how many hours one gives,length and breadth of exposure to business professionally, personally as part of profession, investment etc. So, there is no one formula fits all.

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52

Still I think one of the best companies but I feel their claim of pricing power based on transaction based revenue model is not correct. Though they do not disclose transactions volume every year, I could see those numbers in some of years and revenue per unit transaction did not confirm the same. Also, if you go through last 5 years of AR:

  1. Last 5 years have been one of best for aviation indsutry from growth perspective
  2. The margins of industry has gone up from 2.x % to 5%. No wonder, Buffet sir changed his stance :slight_smile:
  3. APJ traffic data is booming

So, when your customers are going through best time of life and still it is not reflected in your financials, something must not be right though I am not sure exactly what. This could be a case of consolidation also where many business go through their own lean period or who knows because warbug could not accumulate stake from open market at desired price, they want price to be subdued for people to lose interest. Anything is possible in market :slight_smile. It is still a stock which I closely watch and wont mind jumping in again in future if get positive signals

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53

A 10% loss might be misleading. A 10% loss after 1 month of purchase, 1 year of purchase and 3 year of purchase are 3 different things. Also, the sole purpose and investment rationale is also important. If thesis of a purchase is contrarian where buyer sees value but headwinds do not allow overall market to see value, this is totally possible in short term and that is how much money is made and money is lost. In summary:

  1. Depends on from how long I am holding
  2. Depends on investment thesis and some of bets are contrarian
  3. Investment horizon might be longer
  4. Stock is not just about selection but aggregation also. Certain stocks I would like to pick in staggered manner as aware of headwinds but see value. For example, 1.5 years back when there were headwinds in IT, I started accumulating persistent from 675 levels and went to accumulate till bottom was formed in 3-4 tranches. Again, stock selection, accumulation, sell, distribution , churn. Each of these are unique skills and depend on individual thesis of investment and one’s investment stye
  5. The most important one : I have my share of mistakes (20-30% out of calls taken) and these might be sheer mistakes which I may realize in hindsight :slight_smile:

But buying a stock does not mean that next day it can not go down and if it goes down then it has to be sold.

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54

I think its a play on awareness of importance of micro nutrients in getting best out of soil and rural consumption, however, has its own share of risks:

  1. Small land parcel size in India
  2. Lack of awareness
  3. Very heavy working capital model
    There are signs that there could be some interesting change in working capital model but I am still in wait and watch mode before accumulate further or sell further. So, there are risks, there are rewards and uncertainties and hence watching cautiously with a small allocation
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55

When was last meetup conducted in bengaluru & when is next VP Bengaluru meetup happening?
I would love to join this meetup and seek wisdom from fellow investors.

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56

What’s the rationale behind Century Playboard and not greenply?

57

Hey! Would love to know about how the portfolio did in the last 2 years and if there was any churn.