Yogesh's blue chip 10 Portfolio

(KKP_Investor) #183

MOSL and Edelweis are great companies that are doing really well in the world where more and more accounts are being opened. ICICI Securities just came out with an IPO also and it was not priced great due to all of the issues with Chanda. Days of ICICI are almost over like Merrill Lynch was 20 years ago, since Zerodha and IIFL and Kotak are in the works, but MOSL and Edelweis will remain in vogue since they are great money managers, portfolio creators and also have a good growth model in progress. Best is to hold thru thick and thin since we will get some corrective periods when these brokers will take a sizable hit. Keep 1/5 of your purchase outstanding to buy at that time in the future. KKP Investor

(Yogesh Sane) #184

Over the years I have used several methods to find new stock ideas including reading news, IPOs, new listings, magazines, recommendations from friends, stock screeners, MF top holdings etc. However, one method that has consistently worked for me is to quickly scan everything that is available to buy and then bookmark the ones that are worth further digging.

In order to scan all the 3000 odd companies that trade on NSE & BSE quickly , I extract high level financial data from a corporate database which I have subscribed to. It can also be downloaded from screener.in. Once this data is in Excel, I use a set of charts to quickly visualize the important numbers from income statement, balance sheet and cashflow and important ratios for last several years on a single screen. Screenshot below shows how a typical screen looks like

Story of a company in 40 charts

This screen lets me quickly check how the sales have grown over the years, if the sales growth has trickled down to gross profit, operating profit and net profit, how the book value has grown, if the debt is growing, how has the cashflow kept up with cash profits or has the receivables and inventory ate up all the profits. Cashflow analysis help me analyze if the company is able to fund it capex with CFO or it had to go external funding. DuPont analysis quickly gives an idea how efficiently company has utilized its capital and if the high ROE is a result of higher leverage or higher ROA. I can also check if there any structural change in its asset turnover vs operating margin trade-off. Finally, the market cap chart (on the bottom right corner) shows how market has responded to the developing story.

If a picture is worth thousand words, a chart is worth thousand numbers. 40 charts on this screen tell the story of a company as it unfolded over the last decade. It literally takes me just a few seconds to reject a bad company. I cycle through all the companies in the database either by alphabetical order or by market cap. Sometimes, I end up rejecting few good ones too, but I am OK with that. Within 2 to 3 weeks I am able to scan all the companies in my database. I go thorough this exercise at least once a year.

Once I go through charts of several hundred companies, a good company will quickly stand out even if it does not meet all the characteristics of a good company. Your mind gets trained in identifying patterns of a good company. A visual image of a company based on its numbers is far more convincing that some qualitative factors like visionary management or key shareholders. This method also give me an assurance that I have looked at all the available options before making a choice. A stock screener on the other hand makes you wonder if a good company has been wrongly filtered out only to discover it later after the price has ran away.

Normally I bookmark about 200 to 300 companies that stand out for further study. Usually, only about 20 to 30 companies are replaced each year. Rest of them remain the same. Out of these, based on fundamentals of the company, I create a shortlist of 20 largecaps, 30 midcaps, 50 smallcaps and 10 SMEs for further analysis. Out of these 110 companies, I further narrow my focus to 50 and then 20 based on valuation. After that its my gut feel. I end up having about 8 companies in my portfolio from this 20.

This process is similar to how we buy a car or a mobile phone. You start with everything that is out there, make a shortlist, then go for a test drive before making final choice.

(Ar) #185

Thanks for he prompt and such a detailed response

(initin) #186

Thanks for putting such a detailed and pictorial method to look for the stocks, can you please share how can I make all these charts in excel sorry for asking such a naive question as I’ve very less exposure to the excel.


(Ar) #187

Just adding to the above question, if I may - am guessing you would be using macros to make the charts once you have all downlaoded all the data into excel as there would be around 120k charts (3k*40) or do these come as part of the standard template in excel from the database

(nikhil pai) #188

Thanks a lot for the detailed reply @Yogesh_s. Can you please guide the process to get this data for all the companies in one shot from screener.in.

Best regards,

(yourraj) #189

Such a displined approach need patience and great deals of experience.I have strong belief that acquiring knowledge takes a great amount of man hours but after learning make in to use and sharing knowledge is the best part thanks
Could you please share the data source that you are using .Analysis is based on wrong data may leads to various biases and ultimately you enter in the right company at wrong times or missed some excellent companies even sometimes it happen you choose wrong company.
can I ask you to share your Exiting checklist if any from a stock thanks a lot .Your journey is motivated me and I am sure others also .It help to sharpen the tools thanks again

(skg) #190

I am planning to have below portfolio in long term along with expected price. I will not wait for below price to come. Instead I will buy these stocks as soon as they are 25-30% down from current price.

Bharat Electronics - 100-120
Exide Industries - 100-120
Amaraja Batteries - 400
Maruti Suzuki - 5000
M&M - 450
ITC - 120
HDFC Bank and/or ICICI Bank - 1200/150
Yes Bank - 250
HDFC - 1200
Jindal Steel and Power - Already below book value
Asian Paints - 500
Cera Sanityware
Kajaria ceramics - 250
Eicher motors - 12000
Escorts - 400

Apart from these, I am thinking of small cap like Deep Industries, Nitin spinners, Kitex garment. Currently I have allocated 25% of my planned invetsment. I am waiting for some stock correction(25-30%) so that I can allocate 25-30% more to my portfolio. My horizon is long term(5-10 years or more) depending on how business perform

(atul1082) #191

Presuming that u hv given prices on right side, it seems difficult such a price level would come.u HV to b realistic

(Dragon) #192

You are right…Most of them are nifty components…If these prices comes true then nifty will be somewhere in 6 to 7k range!

(skg) #193

I will not for exact price to come. e.g. I already started buying Bharat electronics @167(average price) , ITC(250) etc. My plan is to buy more of these shares on dip. But is there any suggestion on portfolio?

(Dr Manoj) #194

Thanks for sharing such a good method.

(vipinsays) #195

Amazing peice of work.40 charts in which nothing can be missed out.which site you have subscribed for data.is it possible for you to share the Excel sheet.

(atul1082) #196

@yogesh @hitesh while going thru old conversation of 2012 and 2013, I find some of he learned members had identified potential multi baggers and members must HV definitely benefited from those deliberations.The year 2018 is going to b a tough year to identify those kind of stocks by most of us except a few of u, who have been bestowed upon an excellent skill.
May I suggest that we start a discussion afresh inviting views on future potential stocks along with the justification and analysis of Q4results.I m of the opinion that it would be highly rewarding for the members, would raise the level/quality of discussion on the forum.

(Yogesh Sane) #197

Guys, purpose of my previous post was to present an approach that use charts instead of tables to quickly analyze a large set of numbers. You are welcome to comment on this approach and suggest improvements. Underlying data can be sourced from screener.in or from annual reports of companies. This is all public data anyway. I use a corporate database because it saves me some time but you will appreciate that licencing agreement will prevent me from freely sharing this data.
There are companies that provide data for a fee e.g. CMIE Prowess, Capitaline and ACE Equity etc.

@atul1082 I am attaching a presentation made at the Mumbai Investor’s group in Feb 2018 with few stock ideas. This may be useful.
Investment Ideas Feb 2018.ppt (46.5 KB)

Disclosure: Not a buy or a sell recommendation. Strictly for discussion purpose only.

(Dr Manoj) #198

Thanks for sharing valuable information.

(shwapd) #199

Yes, I agree with you. Charts are the best way. Visualizing data is much easier than reading data. Great work. Having worked in Analytics for so many years I have experienced how the story changes as soon as we start visualizing data

(Marathondreams) #200

Hi @Yogesh_s,

while checking your stock ideas from Feb 18’ ppt attached above, I came across Nov. 17 news article about the promoters of the the company mentioned by you - Associated Alcohol

Would like to hear your thoughts about this?

BTW Dolly Khanna invested in this stock in Jan-Mar quarter and it is on upmove in last 2 weeks :face_with_raised_eyebrow:

(Yogesh Sane) #201

Yes, I read about the Income tax raid. However there are no charges filed, no arrests made and certainly no conviction in a court of law. In stock markets we treat anyone accused as guilty until proven innocent and it is understandable because it’s our own hard earned money at risk. But an IT raid on a company in an industry that does does a lot of business in cash due to high incidence of taxes isn’t a lot to worry about.

In case of corporate governance issues, I am more worried about cases where interest of minority investors are not protected and promoters takes minority investors for a ride using its majority holding. That does not appear to be a case going just by the article. Under-reporting of sales and income is very common in industries that are doing a lot of business in cash. It hurts government in unpaid taxes and lower reported profits for investors while promoters siphon money through other means. Over the last few years I think lot of business is being reported on paper looking at the numbers. This is purely my hypothesis based on observations and nothing else.

I also look at other corporate government indicators like debt reduction, tax payments , promoter salaries, asset write-offs, (lack of) clean surplus accounting etc and I didn’t see any red flags. company’s numbers reported over last several years are also internally consistent. Usually any company that is ‘managing’ numbers will have some red flags somewhere and so far I haven’t seen any. There is always a chance that something will be overlooked though.

Finally, this is what the company says about ethics.
Source: Annual Report 2016-17

Ofcourse no company will ever admit any wrongdoing in an annual report so this glossy page is not worth much but the fact they chose to say it out loud could mean they want to stand out on this aspect? Take it for what it’s worth.

(Ketan) #202

Thanks for sharing your learnings @Yogesh_s.
A query on charts you shared- seems you download data from a source (Capitaline) and feed them in your excel to generate these graphs, or graphs are also generated by source like Capitaline? I am curious to know this to understand affordability of such software/source for individual investor like many of us. Cheers!