Shubams95 portfolio

(shubhams95) #1

Hi guys. My name is Shubham. I am a 21 year old investor looking for great return. My area of interest is small cap stock having a growth investing style. Here are my stock allocation

50% Cupid
25% Indo count industries
20 % capital trust
5% accelya kale

Can anyone guide on how my stock selection are for 5-10 year horizon?

(Alphin) #2

Instead of looking at growth , first check what is the risk/chance of these companies going bankrupt in next 5 years.

If there is slightest chance u should not invest…

(Alphin) #3

As per me Cupid has most risk as product may get obselete, other buisness has own risks but not that significant.

Indocount - quality risk
Capital first - bad loans risk, though not that probable
Accelya kale - check if they have single large customer.

(shubhams95) #4

I guess cupid has the most risk. But I feel because of the fact that their products is UNFPA approved and they get orders from the African government,they can survive as they have some competitive advantage

(divyansh ) #5

Try looking at pokarna , poddar pigments , ruchira papers . small cap stocks are way risky as their business have vulnerabilities which might swipe things completely. Hence a good balance sheet with good margins avb at cheap valuations helps in scoring a decent margin of safety.
Disc: I m invested in the three stocks I mentioned above

(Rajeev M. Parashar) #6

You should mention your thesis for picking these individual stocks. People tracking/invested in those stocks might then help you to fill the gap in your understanding of these businesses.

Disclosure: Not invested in any of the stocks mentioned.

(shubhams95) #7

I will tell you in brief why I’m invested in these stock:-

Cupid - Has UNFPA approval and has African government order which is an good economic moat. Just recently Cupid shares were picked up by a Fund.

Indocount - indo count is an asset light based business. Most of its revenues come from the USA. I feel that textile industry is such an industry which will boom in India due to various factors.

Capital trust(btw don’t confuse this with Capital First) - NBFC bank have good NIM of 15% as well as collaborating with YES Bank gives a good assurance that the YES bank will have a check on it. NBFC is a sector where there is lot of potential since many people don’t have access of loans easily

accelya kale:- We all know that airlines industry was a wealth destroyer for many years due to its intensive capital requirements as slim(or even negative) profit margin. Having said that the airline industry is set to be 10 times as large as today due to the fact that people need to move,business need outsourcing. To keep the profit margin high they need good ticketing and accounting system and that’s were Accelya comes in. Looking at its huge ROE and free cash flow plus partnering with airlines like JET Airways I don’t see this company going out of business any time soon.

In addition to this, all of this companies have high ROE,low debt(D/E < 1),high ROCE and good free cash flow.

(shubhams95) #8

I would like to know from the more experience investors regarding my portfolio and suggestions if any :slight_smile:

(HG) #9

You are 21 but maybe you have been investing for a while. I’ll say that if one has to experiment/make mistakes etc. its better to do it when you are 21 than when you are 40 :slight_smile:

(shubhams95) #10

Thank you :smile:
I consider myself lucky to investing in such a young age. I also plan to be a fund manager some day…

(Prem Bhat) #11

While I commend you on your decision of having started your investment journey into stocks at an young age, starting off with a 50% exposure to a single company is way too risky even looking at a long runway - unless you track, researched & follow the company very very closely and have very high conviction levels. On the other hand, a 5% allocation to another company (in a concentrated portfolio) doesn’t provide any upside to your portfolio in actual value/amount terms even if it were to double/triple from where you bought it.

Portfolio construction, sector allocation and process of investing is as important as the companies you choose to invest. I personally prefer to have a concentrated portfolio of 3-4 stocks during the early stages of portfolio building, with max 25-30% & min 10% allocation to any one company and build it up as time goes by and you find the company & its management delivering as per your expectations.

I am not invested in any of the above stocks so unable to provide any specific inputs there, but pls do consider what your actions are going to be under different scenarios,say, (i) in case stock price goes up or down by 15-20% or (ii) other stocks lie still as their managements are taking longer than promised to deliver on projects/growth or (iii) in case of a black-swan event etc.

Hope this helps.

(NNaik) #12

I would say that look to diversify your risk lot more. In my opinion 10-15 stocks is what you should look to build for your portfolio. Your portfolio should be such that a stock going to zero should not hurt your portfolio significantly. But it should also not be so diversified such that winners don’t give you a good boost.

You can start by giving more allocation 10-15% to your high conviction picks. With time as business keep performing and valuations remain reasonable you can continue to build those positions and average up.

I would advise against the tendency to average down.

Again caveats these are my points of view and I am no expert yet. Still learning from my mistakes

(shubhams95) #14

Thanks to all for your views :slight_smile:
I’ve heard about your views about portfolio concentration and I agree on your part. However I would like to point out that since many research houses like BoB capital, HDFC recommended cupid, I was increasingly convinced that cupid will outperform so I had increased my concentration. However time will only tell if I’m right with my research
However other than portfolio allocation, I’ve hadn’t heard anything much regarding the quality of the companies I’ve selected and I request you to provide some insights.

(Alphin) #15

You have to correlate and find out information on your own, don’t depend on anyone else to do that for you. That will be your edge over the market participants.

For a start, you can do your own research and post of loan waivers in UP and other states will affect the repayment of loans to MFI and private lenders like capital trust in your pf.

(Sumit 2.5 C) #16

I am not very experienced like others here (doing direct stock investing for around 3 years now), but replying because my portfolio is also completely small/micro cap portfolio.
4 small cap stock portfolio is too much concentrated, though it will make really BIG if 1 out of the 3 stocks turns 10bagger from here. But that kind of bet could be taken when your conviction is very high, valuation of the stock is very much comforting and your portfolio size is also not too big; you dont want to take such small cap concentrated bet with a large size portfolio.
As small/micro caps business still not widely established, and there is always risk of unknown, not all the information about the company will be available for you to access, No matter how much research we do investing in equity means we are taking bet on companies future growth and future is always uncertain. Hence I feel it could be more diversified, we have lot of such stories in India.

Since you have mentioned:-- [quote=“shubhams95, post:14, topic:9764, full:true”]
I would like to point out that since many research houses like BoB capital, HDFC recommended
– just note that, if you are reading about your stock in a report from research house, then stock is already discovered/tracked by large number of analysts and Institutional investors might have already took position. I am not saying that’s a criteria to filter out such stocks (:slight_smile: ) we have several instances when stocks are widely discovered/richly valued and still becomes multibagger due to continuous earning growth), but un-proportionate amount of money would be made if we can be ahead of market, take position into stocks before institutional investors enters.
Just shared my thoughts, different opinions make market, there are hundred ways of making money in market (loosing money as well . :wink: ).

(shubhams95) #17

In response to both the replies I would like so say that I was already invested in cupid long before the institutional players recommended it.
I just increased the concentration thinking that I was right in the first place and further concentration would’ve increased my returns :slight_smile:
Also feel days ago ELARA INDIA OPPORTUNITIES FUND LIMITED bought 11 cores ₹ of cupid shared which further strengthen my research.
Has anyone heard of this fund btw?

(shiva_1957) #18

Hi Shubham . You have made excellent choice of stocks for 21 years old . I suppose you mean Capital first in place of Capital trust . I don’t know about Capital Trust but if it is Capital first , it is also an excellent choice .You may consider replacing Indo count by Welspun India as Indo count has had a huge run up in expectations of better future show of results. If results are not to the expectation , stock may undergo a vicious fall. Another suggestion is to reduce the weight of Cupid . You have made a good beginning and wish you all the best.

(yudiagg) #19

Capital Trust( not first ) is an interesting stock. I am holding it for last one year. You may like check details in screener.

(shubhams95) #20

No the stock I’ve invested in is Capital Trust, a NBFC - MFI company. I cannot even imagine investing in Capital First because of its low ROE :frowning:
Regarding Welspun, sorry not going to change my mind either. After their fake Egyptian cotton scandal I don’t trust that company. I believe Indo Count will be a better company due to the fact that it has an awesome management and sustainable future.
Lets see about cupid. The thing is that I’m bullish on Cupid as I see a lot of potential in selling contraceptives in India as well as in USA. Currently their main source of revenue is from African Govt. and they have applied for US license

(shubhams95) #21

This was my first multibagger :smile: It gave me 100% return.
Unfortunately the initial capital was small but nevertheless its a good company.