Varun 2020 portfolio - 2 strategies

Hello Varun,

I believe every investor/trader has a different style and if something is working for you, you should absolutely stick to and improve upon it. If your portfolio is generating good returns with 24-25 stocks in it and yet you are comfortable, I can’t see why you should change.

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Hi Everyone

Its long time I haven’t posted but am regularly following the forum on daily basis and must say gets a lot of insight daily on various stock stories. Many of you are doing quite well with their portfolio. So congrats.

Just wanted to update my portfolio although hardly changes

Core Portfolio - 82%of overall portfolio - Most of holdings almost 3-4 yrs old and still holding and will continue with them for long time to come

Yes Bank - 307
Lupin - 530
Bayer - 1550
Alembic Pharma - 51
Marico - 124
DHFL - 99
Tata Elxsi - 606
Persistent - 250
Crisil - 2180 - Recent rentry
Vguard - 43
Supreme Ind - 620
Havells India - 253
Mindtree - 631 - Recent entry

Satellite Portfolio - 17.5% of overall

Shilpa Medicare - 400
JLL - 290 - Recent rentry
Greenply - 186
Repco - 817 - Recent entry
Mold tek - 156
Hester Bio - 537
Wockardt - 977
Salzer electronics - 220 - recent entry
Astec - 425
JHS sevendguard - 35
Max Ventures - 58

I am sorry if I disappoint here due to almost 23 no of stocks I hold - but its my strategy which has worked for past 4 yrs and given me CAGR returns of 33%. Recently portfolio is outperforming for past 1 yr or so.
I invite readers views.

In continuation of previous post at the same time I am kicking myself of getting out of two stocks I had max conviction for so long and actually held them for longest time. Biocon I got out at 620 and Delta at 90. I am really sad.

JLL stands for which company.

JLL stands for Jyothy Labs

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Hi Varun…I was going through ur portfolio. I found Salzer Electronics to be an interesting company.
Can u throw some more light on the company. Its strengths/weaknesses etc.
That would be helpful.
Regards
Ranvir

Hi Varun

I totally agree with your stretegy however diverified depends on stage of bull Market. I started investing in Oct 2013, though I am in markets from 2005 however due to huge gains in Futures, long term investing did not attract me. Started building my portfolio in 2013 with so called dead stocks, suzlon, madhucon, rattan power, ncc, bought yes bank at 270 was best decision. All investment were concentrated & theme was power reforms. Strategy paid off in Madhucon where I made 5 x gains, bought Gayatri projects & by God’s grace made fabulous 5x return in mere 1 year. Capital has been multiplied by 7x in 3 years. My strategy is to invest 40-50 % in 3 stocks, than 30% in 10 stocks & remaining 15% in 7-10 stocks which are newborn in portfolio. Start churning off stocks wherever I feel valuations are exorbitant & incrase allocation wherever I think discount is playing out.
I am rotating quite sharply if any fundamental change is occurring, 6 months ago 25% portfolio was in Pharma, now cleaned all due to pricing pressure in US. Below are my holding

  1. RBL Bank
  2. IDFC Bank
  3. Ujjivan SFB
  4. Kiri industry
    5 meghmani organics
  5. Balaji amines
  6. Sagar Cement
  7. HSIL
    9 HIL
    10 Force motors
    11 SpiceJet
  8. Gitanjali Gem
    13 emmbi industry
  9. LEEL electtical
    15 garware wallrooe
    16 Virinchi
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Continuing the discussion from Varun 2020 portfolio - 2 strategies:

Hi Everyone

Its been a long time I have not updated my portfolio. As I mentioned in the beginning I follow two portfolios as Core Portfolio (80%) and Satellite Portfolio (20%). There has been lots of shuffling in the portfolio meanwhile and last two years have been pretty exhaustive, stressing and soul searching. Portfolio is approximately down 18-20% from ATH in Jan 2018. I have learned more in these last two years as an investor than in previous 5 yrs to that.

I always pay attention to the portfolio value rather than being getting obsessed with individual companies performances. There would be always some winners and some losers. Because of last two years CAGR has dropped to 20% at portfolio level. Sometime in September last year portfolio suffered more than 10% drawdown in single day and within few hrs as two of my portfolio stocks lost more than 40-50% that day. DHFL and Yes Bank yes you heard it right. It was my mistake I allowed these two stocks two grow die to price run up in my portfolio to such an extent that I never realized that such event could prove catastrophic.

Both these stocks together were 22% of portfolio. I exited quickly after realizing the mess and still made on average 3x-4x on both the stocks as I had invested in 2012 and avg buying price was very low but still damage at portfolio level had already been done. I was also late in exiting few pharma companies I had in portfolio like Lupin and Alembic. Although I made loads of money on them but still sold them way off from ATH. Similarly sold Biocon too early in pharma aftermath.

Meanwhile I applied only in one IPO that is HDFC Life and got all of them. Bought more later also. The other success in last two years have been Hester Bio Sciences, Bajaj Finserv and Infoedge. The list of losers is pretty long like BSE, IDFC, Future Consumer, Piramal, IFB Ind, Singer India, Avanti Feeds and LT finance etc. Some of them I am still holding on.

The updated portfolio is as follows

I would request everyone to review it and give their inputs on it. In next few posts I shall be sharing my learnings and investment philosophy.

Lets have a healthy discussion.

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Watchlist (Not exhaustive) with one liner reasoning:

  1. Zydus Wellness (Acquisition of Heinz Portfolio shows appetite to grow, valuations stretched, have started nibbling)
    https://www.business-standard.com/article/companies/riding-on-heinz-zydus-wellness-eyes-rs-4-500-crore-turnover-in-5-years-119060500884_1.html
    https://simplywall.st/stocks/in/food-beverage-tobacco/nse-zyduswell/zydus-wellness-shares/news/why-zydus-wellness-limiteds-nsezyduswell-return-on-capital-employed-might-be-a-concern/
    https://finance.yahoo.com/news/heres-why-zydus-wellness-nse-085935713.html
  2. Bajaj Auto (Resilient in current downturn and having minimal impact of EV in coming times - may launch E scooters and 3 wheelers)
    https://www.financialexpress.com/auto/bike-news/bajaj-urbanite-brand-launch-likely-on-october-16-the-companys-second-scooter-innings-will-start-with-an-electric-vehicle/1729763/
  3. M&M (Finding it quite interesting at the moment along with low valuations, lot of value in subsidiaries)
  4. Nippon Life (Reliance gone, Profitability is the focus now for Japanese player)
  5. Acrysil India (Debt free, long period of growth ahead, execution is the key, right time, right space, right valuations)
  6. KRBL (Low valuations, Brand value intact)
  7. Alembic Pharma (Watching the developments from the side lines for re-entry, had earlier made 12x)
  8. Indian Terrain
  9. MCX
  10. ZEE (Good asset, low valuations, watching the space)
  11. Hester BioSciences
  12. Aditya Birla Fashions and Retail
  13. Hawkin Cookers (Tax Benefits, Growth coming back)
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My preference about the Core-Satelite PF format would be such that, the Core PF has one primary role: to eternally generate cash. To provide stability and financial certainty.

Therefore, this should be a set of safe and steadily growing companies. Low risk. Naturally, with this criteria mostly Large Caps would qualify.

The method of extracting profit would be to replace the stocks that have become expensive. Right now, large cap Banks, IT, Paints are expensive, but Energy, Autos, Pharma are attractive. . The assumption is that three years down the line, Energy will give better returns than Banks from current valuations.

With this stability, the steadily generate profit can then be used to make less safer bets, where the future is not as clear due to which the gains can be disproportionately high.

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Yes spot on and I agree to first part but to say only large cap qualifies to be in core portfolio, that I am not sure. We have seen even large caps baring few are not spared in down turn for example Maruti, Eicher, ICICI, AXIS and to name many others. Mostly I have quality large mid caps to large caps in core portfolio. Tata Elxsi and Vguard were once part of satellite portfolio and only in last two years I placed them in my core portfolio.

I have had so far mixed results with core-satellite PF format and pretty bad in last two years. I had reduced stakes in many of Core PF stocks to fund Satellite PF stocks however have been on loosing side more often than not. While Core PF stocks have continued their journey upwards the Satellite PF stocks have lost their way. The strategy is still in testing stage.

Good read on Tata Global Beverages and United Spirits

https://www.outlookbusiness.com/markets/feature/now-serving-5293

https://www.outlookbusiness.com/markets/feature/premium-blend-5406

Disc
Invested and Increasing stakes

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Trusting Ajay Piramal

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Invested and Part of Core Portfolio at much higher levels. No change.

Piramal is a great company and I am a great admirer of ajay piramal, was invested till last year.

What I feel is that when an entire sector goes through a correction (NBFC) then it becomes very difficult for the sector to perform barring one or outliers like bajaj finance. Plus there is nothing to hide that piramal has heavily lent to the down and out real estate sector. As a company and management there is no second thoughts but as an investment I think it’s time is up and I feel it will be very very difficult for the stock to perform henceforth as per expected previous levels.

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Outlook for Marico

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Invested

@chiragp I appreciate your views and its now more or less a consensus on street partially a making of price action. WB said that he would give more weightage to the track record of a company then future projections in taking investment decisions. Most of the time future projections have no meaning.

I would still give a couple of quarters. Certainly not increasing stakes. Lets also not forget that 45% of PEL is Pharma and IT.

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Nice article on United Spirits. I recently entered into Radico Khaitan( tracking quantitiy) since i heard few of their products like Rampur whisky, magic moments vodka are good. I was also watching United Spirits for some time since all of its product are good. I agree with the article that more people are starting drinking in India(including females) as comparative to last 10 years. So it is a long bet for future.

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Tracking Closely The following sectors - could very well lead the bull markets

  1. Insurance / AMC
    (HDFC Life, ICICI Lombard, SBI Life)
  2. Retail
    (ABFRL, Indian Terrain, AFL)
  3. Speciality Chemicals
    (Tata Chemicals, Sudarshan Chem, Aarti Ind, Himadri, Galaxy Surf)
  4. Consumer Internet
    (Infoedge, Matrimoney)
  5. Health and Wellness - Slightly Long shot
    (Zydus Wellness, Tata Global, Marico)

Apart from above I strongly believe selective Consumer finance companies, Well run banks, and Consumer discretionary will keep on performing pretty well)

Disc:
Invested in HDFC Life, Infoedge, Marico, Zydus, Tata Global, ABRFL as part of core portfolio)

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Adjusting for 29 days of Mumbai rains the results looks quite good for Capacite. Large, growing and very well diversified order book too.

Disc: Invested as tracking positionsCapaciteInfraprojectsLtd (1).pdf (3.5 MB) CapaciteInfraprojectsLtd (2).pdf (792.4 KB)