Given the culling of Prabhat Dairy allocation and update on Auro Laboratories, I am putting up a portfolio update earlier than expected.
Avg Buy Price
Allocation
Auro Laboratories
62
20%
Balaji Amines
425
19%
Stock X
20%
Thyrocare
538
4.60%
Snowman Logistics
30
4.40%
Prabhat Dairy
91
4.30%
NIFTY PUT Option
2%
Cash
26%
My portfolio size is very small in absolute terms.
Trimmed Thyrocare and Snowman Logistics to add to top 3 stock holdings.
Stock X is highly illiquid at less than 10 cr market cap. I wish to keep it to myself given the fact that it is a high risk nano cap and a bit speculative (ben graham type bargain) for now.
Portfolio is up 20% mostly driven by Balaji Amines and Stock X.
Lot more churn than expected. Given the fact that it is still not yet a year since I restarted my pf, i expect a few years of high churn before it settles down.
No thoughts on Price Action. Case of continuing to SIP by buying the dip.
Avg Buy Price
Allocation
Stock X
24
19%
Auro Labs
59
23%
Balaji Amines
397
19%
Tejas Networks
140
10%
NOCIL
115
6%
Cash
18%
Long Tail
5%
Overall Portfolio down 13%
Switched Thyrocare and Snowman Logistics for Tejas Networks and NOCIL.
Thyrocare: Not happy with the news about Nuclear being bought out due to impairment. Preferred it to be within the listed entity itself. So far it has been a case of over-promise and under-delivery. Given the headwinds and opportunity cost felt it was better to switch to better opportunities
Tejas Networks: Idea generation from @satishwe & @Prash presentation in BIG forum. Mispriced bet which has the potential to be a long term growth story if the mgmt can improve the geography mix away from India Govt entities. Sufficient cash, debt-free balance sheet and past experience of surviving through the Nortel bankruptcy gives some comfort on the staying power.
NOCIL: Initial interest was piqued while researching about Balaji Amines. Coming across the presentation from Ankur Jain given in Asian MOI 2018 Investing summit gave additional insights about the management and the nuances of the business model to make the plunge. Also as part of learning trying the cyclical theme given the customer concentration with tyre industry that is facing auto slowdown. Possibility of being too early and further correction expected over the uncertainty surrounding industry’s ability to cope with BS VI.
Snowman Logistics: Pushed to the Long Tail portion of the portfolio. Still convinced about the turnaround potential. However to avoid the risk of it becoming a value trap, I have taken a decision to average up as and when the narrative improves.
Long Tail: Consists of stocks with <0.5% allocation. Building a long tail where I can tinker around and minimize the tuition fees to be paid to Mr. Market. Inspired by Taleb’s hormesis concept.
Long Dated Put option (June Series): Sold at loss near expiry. Happy to part with the loss since it was an insurance.
your portfolio has stocks which are not very common with others. there is broad theme in india wherein decent money has been made with consumer facing business which are visible on day to day basis. what urges or makes you stick to your names and not interested into other common opportunities like fmcg or financials.
can u please elaborate your asset allocation strategy and why a particular stock has more than 15 % and how do you intend to mitigate the risk.
wishing you market beating returns
regards
divyansh
Understood. I came across this in the thread itself. Agree that this kind of comment sends bad signal to the investors.
However, I have a different PoV regarding this. Parag Milk Foods is in rapid expansion mode (launching products & exploring new geographic etc.) and thus pledging shares to raise money. Probably he was thinking that higher valuation of PMF means he would have to pledge lesser % of shares.
Disc. I am invested in it & giving it a benefit of doubt.
Thanks for posting your queries. Much appreciated!
I absolutely abhor financials despite Can Fin Homes being a multi-bagger in the past where the conviction was borrowed and naive.
With respect to FMCG, I did have Prabhat Dairy in my pf initially. However they decided to sell off their core dairy business and focus on animal nutrition instead. Hatsun is on my watchlist and would love to buy if there is a deep correction in the share price to more reasonable valuation levels.
My hunting ground is overlooked stocks where I can have variance in perception relative to Mr.Market/consensus view.
It can be argued that all the 4 stocks are proxy to the consumption play:
Auro Labs (Pharma - Metformin - Chronic Disorders arising from consumption of highly processed food - Vegetable Oils, Sugar, Gluten and Glutamate*)
Balaji Amines (Pharma and Agrochemicals)
Tejas Networks (Data consumption)
NOCIL (Tyres/Auto consumption)
*Glutamate - from the infamous MSG in Nestle Maggi issue
In my earlier phase I had a diversified portfolio. However, considering the amount of effort I am putting into each of my picks I believe having a portfolio of 8-10 stocks will be sufficient to get the diversification. Moreover my pf is very small which means I can afford to concentrate. Maybe as the pf scales higher I may increase the number of stocks to 15. For now I believe small is better.
Risk Mitigation: Be always on the lookout for dis-confirming evidence and be nimble and decisive enough to change your mind when the facts change (Easier said than done. Simple but not easy). I do intend to trim the positions as and when they go above 25% to build the cash position.
Hope I have been able to adequately answer ur queries.
I have no issue with the pledge. NOCIL too has pledging but they are debt free unlike Parag.
As u rightly pointed out, it is the thought process/incentives of the management going in search of higher valuation which makes it suspect. Assuming your assumption is true, then I hope they depledge at the earliest opportunity as I expect volatility ahead.
Do you continue to hold Balaji Amines.
I have read on this forum many times that when a stock goes down by a large percentage suddenly, there is generally something the market knows that we are not aware of. In view of this, how do you plan to proceed with Balaji Amines.
Also, if you could share what percentage of net worth is currently invested in this portfolio.
Typically yes when the downfall is specific to the stock while the broader market is under positive/bullish sentiment. However, IMHO the current scenario seems the downtrend is more to do with the overall bearish market rather than something specific to the stock.
Besides given the quality premium given to Alkyl relative to Balaji due to mgmt and diworsification concerns, I would imagine some would have switched from Balaji to Alkyl to minimize the overall portfolio drawdown.
I continue to average down in small quantities. Let us see what comes of today’s AGM (not attending) and Monday’s concall.
Remains the same around 20%. Brought down my Avg Buy Price to 320.
Balaji amines Q1 results declared. EBITDA margin down to 16% from 20% in last quarter. Top line down 11% from last quarter. 0fabacab-ff1d-4b0f-a20c-83b12c538339.pdf (1.1 MB)
