ValuePickr Public Portfolio

Investing Strategies
41

Thanks Donald,

Reading yourexplanations, esp the detailed ones and your repeated emphasis on quality of underlying business is a joy to read. I understand (to some extent) what you want to say in terms of business categories mentioned above.

Let me ask another question (s)…

With couple of A+ stocks on radar, Does capital allocation framework suggest that any further allocations should go to them only and not to A or B.

is Kaveri a buy even at these levels…better candidate than Mayur/Astral… ??

Probably what you said is right,valuingstocks still remains an ART which comes with experience. Will try projecting 12-24 months ahead as you suggested. That might help. You mentioned that earlier as well, but I missed that with so much information inflow going on…:slight_smile:

Thanks,

Atul

42

Am I missing something here? Where is the capital allocation mentioned in the table? Is it in a different thread or its for a individual to decide on it?

43

ValuePickr investigation into Capital Allocation is work in-progress. It has to mature through a full bull & bear cycle before the results can be/should be made public. And perhaps never might be!

Capital allocation requires mature handling. As mentioned prominently in the Capital Allocation discussion thread, this is for aggressive active investors investing in a Concentrated portfolio. Capital allocation framework is NOT for passive investors. ValuePickr Portfolio follows the High Conviction vs High Undervaluation methodology as described.

The framework is shared so we can evolve/refine this as we grow. Everyone is encouraged to think about it, and maybe even test the waters, slowly gradually. Decision-making is entirely the individual’s and we hope can only get better with more exposure & practical experience in markets, followed up with shared learnings from the Community (in that order).

44

please point me to the link containing the latest list of ValuePickr recommended stock picks ? Am new member to the site, and still struggling my way to find this information. Thanks a lot.

45

Hi Drake,

Hope the following helps.

ValuePickr Scorecard is updated once in 6 months.Last Update was done on Dec 16, 2012 (Please check this same thread). Minimum recommended Hold time is 6-9 months even for the Opportunistic Bets. Similarly it is recommended to hold Long term Portfolio candidatesupwards of 2-3 years - to give these opportunities enough time to play out.

We do not advocate monthly churning of Portfolio.

46

Hi!

Its been six months since the last scorecard has published. Would like to see the updated one. Previous one has helped me to trim/add stocks and which helped me big profits on Ajanta. Thanks again.

Gigme.

47

Like some have mentioned before, yes it’s time for ValuePickr Scorecard update, last updated in Dec 2012. Its updated every 6 months, so June 2013 the next edition is due.

Doing some thinking aloud and inviting a lil’ bit of discussion before Admin polls senior ValuePickrs and comes out with the next edition of ValuePickr Scorecard.

At ValuePickr we have always been advised to differentiate between our best picks. We did not want a 10 stock Portfolio, with a safe & typical 10% each allocation. In 2011, we published ValuePickr Capital Allocation framework (a work-in-progress) which for the first time gave us some practical, easy to follow guidelines. High Conviction with High Undervaluation - implied High allocation. If any of the two is Medium, allocation could only be Medium. But of both Conviction and Undervaluation was minimum - allocation had to be only nibbling.

Yes, this is a more aggressive investment/allocation strategy. But it was advised primarily for the reason that at ValuePickr we do extensive in-depth research, where sometimes our insights into the business & sustainability of competitive advantage is of a high order, with scores of folks tracking new developments/commenting on the same - Conviction sometimes is High, and when that couples High Undervaluation, it’s time to strike. Certainly this is not for everybody, surely NOT advisable for passive investors (who can’t/don’t spend much time analysing businesses).

Following this allocation framework, I must say has come in very handy for me. It has brought in lot of discipline ( & hence clarity) in how we think of Business Quality; understand better why Mr Market may allocate higher ratings for for one business but not to another (nevermind that financial metrics are actually better in the latter). Importantly this allowed us to slot businesses in different grades - and as Hitesh is fond of saying - learn to ride these businesses differently.

In thisMayur thread, we had argued back in Sep 2012 when Valuations had stretched to 12x+, that time had come to allocate away some capital to other deserving (on one hand the growth picture for Mayur Uniquoters had moderated, and on the other Valuations had completely caught up - it was difficult to see a consistent ~15x+ for Mayur). Arguments were made in favour of Astral Polytechnik and Kaveri Seeds (where growth was intact & likely to go higher).

Think that was a very timely & engaging discussion we had. Both Astral & Kaveri Seed calls are playing out. Which existing businesses (in the ValuePickr Portfolio) currently call for more Capital allocation? And are there any strong contenders that you think should make a maiden entry into ValuePickr Portfolio?

My vote would go to Kaveri Seed for more allocation (till say ~1450-1500) in Long-Term Portfolio. (Will defend this shortly in the Kaveri Seed thread). Canfin Housing and Finolex are study-in-progress contenders for Short-term Portfolio. Unichem I must finally sit with - was told is it languishing at trailing 10x, why?

-Donald

48

Would love to see the additions & deletions in the ScoreCard…

49

Hi Donald

,

I am sure the Valuepickr portfolio is superb and will continue to deliver above average returns. There are some similar business like Gujarat Reclaim and Indag rubber; multiple Pharma companies. Would it not be better to choose the one which is better.

I would also like to request if there is a posibility of a steady compounder like Page or ITC included (there is your discussion in the Investor’s edge which throws a lot of knowledge)

Thanks!!

50
ValuePickr Scorecard 4: June 2013


1. As is evident from successive scorecards - with judicious stock selection and enough TIME in the Market - we have been constantly improving the Compounding record. The Portfolio has also become more concentrated.
2. Current View & Qualifying Comments will be added after polling Senior ValuePickrs.
3. Time for another comprehensive review and new additions to both Long-Term and Opportunistic Portfolios. Senior ValuePickrs will be polled for this exercise over the next month.

ValuePickr Scorecard 4: June 2013
ValuePickr Long-Term Portfolio Idea Initiation Reccomendation Lowest level Highest Level CMP Absolute Annualised
Min 2-5 years Hold Timeframe Date Price Date Price since Recco since Recco 7-Jun-13 Returns Returns
1 Mayur Uniquoters* 18-Aug-10 118.5 10-Feb-11 120 113 505 432 260.00% 115.56%
2 Ajanta Pharma* 17-Jan-11 90.0 17-Jan-11 90.3 86.5 1015 944 945.11% 405.05%
3 Astral Poly Technik 2-Mar-11 124.05 29-Mar-11 125 121 567 536 328.80% 157.82%
4 PI Industries* 7-Mar-11 59.4 7-Mar-11 59.4 69 126 124 108.75% 50.19%
5 Kaveri Seed Company 18-Jan-11 333 14-Aug-12 800 830 1611 1575 96.88% 116.25%
6 Poly Medicure 6-Apr-11 261 20-Nov-12 400 401 575 525 31.25% 46.88%
* Price adjusted for splits/bonus

ValuePickr Opportunistic Portfolio Idea Initiation Reccomendation Lowest level Highest Level CMP Absolute Annualised
Min 6-9 months Hold Timeframe Date Price Date Price since Recco since Recco 7-Jun-13 Returns Returns
1 Atul Auto* 19-Sep-11 64.67 10-Oct-11 65.33 57.33 226 188 187.76% 118.58%
2 Indag Rubber 15-Nov-11 147 1-Dec-11 150 120 329 215 43.33% 47.27%
* Price adjusted for splits/bonus
1 Like
51

As indicated in Scorecard 3 (Dec 2012) Qualifying Comments, Businesses such as BKT, GRP, Suprajit belong to Category B businesses as they face cyclicality in demand from time to time. Management excellence have seen these companies do very well over the long term. We had advised a Reduce/Exit policy for these stocks till such time we see a turnaround in the Demand situation.

This is reiterated in Scorecard 4. These businesses have given us excellent returns, but we need to ride them differently (than Category A businesses) - these 3 have now been excluded. These remain very much on ValuePickr Radar. As & when we have evidence of demand situation turning, we will be advising Re-Entry. Please keep checking/alerting us on newsflow & reports, etc on the demand situation -in the specific stock threads for periodic updates.

Oriental Carbon and Manjushree Technopack are the other exclusions from the Opportunistic Portfolio. The reasoning and views for Re-entry (if any) remain as above.

Review exercise is on for inclusions in both Long-Term and Opportunistic Portfolios. Will be updated in a month’s time.

52

There are couple other good stocks (giving good returns) with good Buinesses (solid balance sheets and growth) very much discussed here like Cera, Kajaria, Amaraja and la-opala to name a few. But these don’t seem to interest seniors.

Munger puts lots of emphasis on “always invert. To know where to die, so you don’t go there.” So just wondering what are the specific reasons(if any) that are keeping seniors away from these stocks to help us understand more what to avoid so that we can avoid that despite everything looking good.

Thanks

53

You are right there are quite a few other businesses that have done well (that are also discussed here at ValuePickr).

The simple answer why many of these have not made it to ValuePickr Public Portfolio - Not enough HOMEWORK has been done in time. First-hand Management interactions have not taken place. In many cases local scuttlebutt or on-the-ground field intelligence may not have been compiled. Which means that there is not much value-added information to differentiate between desk-research/research reports put out by brokerages/other analysts,etc. Consequently CONVICTION in future visibility/sustainability of competitive advantage may not be that HIGH among senior ValuePickrs.

Since ValuePickr Portfolio is a Public Portfolio and is the official position/advisory by ValuePickr updated every 6 months, we have a RESPONSIBILITY to our increasingly growing readership. Inclusions to ValuePickr Portfolio are contingent on our research process having covered mandatory steps as above. That we are 100% sure of having done full justice/due-diligence as per ValuePickr outlined Research process. By conscious choice, ValuePickr Portfolio is a concentrated portfolio - we wanted it that way. But that also meant it does not have the luxury of a big diversified portfolio. We therefore need to be real sure of our bets.

Having said that, we are hopeful that the day is not far when more & more ValuePickrs will start contributing actively. We will have more collaborative bandwidth available to harness and cover a larger universe of businesses - identify & address promising ones faster, and complete the research process faster. Do our job better.

54

Thanks. I fully understand and respect these views.

55

Market & Suggested stocks has grown up a lot since the last recommendation. Awaiting to see the new addition to the List.

56

Dear Admin,

Is there a thread separate from this where the individual component scorecard of the companies are being reviewed by seniors?

Thanks

Supratik

57

Dear Admin, Eagerly waiting for our Valuepickr portfolio and analysis :slight_smile:

58

I am now very clear about my suggestions for additions to ValuePickr Portfolio. Recording them here to get other senior ValuePickrs to actively consider, for subsequent poll by Admin:

Long-term Portfolio:

1). Shilpa Medicare - with a 2-3 year horizon. This is a company with a difference. Good growth drivers in place within 18-24 months. Do not expect immediate fireworks. This is a very difficult story to understand - and make larger investment community understand. Lot more work needs to be done

2). PI Industries - CSM:Agri Inputs has turned decisively in favour of CSM with a likely 55:45 share for the current year. This is happening in a year where Agri-inputs had a bumper 1Q and more is expected in the Rabi crop season, due to very good monsoon. Which means in weaker Agri-Inputs years CSM (growing easily at 30% a year) will start playing the stabilising hand. Management has walked the talk on most fronts. Company appears under-valued at current levels. Management Q&A in Sep 2013

Opportunistic Portfolio:

1). Avanti Feeds - Excellent addition going by the results. This is again a business/industry not well-understood by the market. From what we understood good days for the Indian shrimp processor/feed companies and Avanti in particular are here to stay - definitely for a year or so forward, but most probably for next 2-3 years as well. management Q&A expected to be published in a week - waiting for some corrections from company side. This was a 4 hour long intense discussion to capture, reproduce and then get authenticated - very important - as this is our first real exposure to the business/industry.

Looks likely we will have official ValuePickr recommendations post the Management Q&As in Sep - as we will be also doing updates at old favourites like Astral Poly Technik, Ajanta Pharma and Poly Medicure along with some new ones:)

Thanks for bearing with us. This diligence is extremely important - and takes time.

59

Donald ,

I am surprised to see that Unichem is not included in this list.

60

Nani,

Unichem is certainly a good prospect. However we are unable to make a Management meet happen there - no visibility on that currently.

As per Admin Policy, we cannot include in ValuePickr Public Portfolio any prospect where we have not completed due process - including Management Q&As, etc.