Chins' Portfolio

[Chins]

There are several new developments in my investment journey that I’d like to share.

Six months ago, I classified my understanding of my top holdings in different brackets, according to my confidence in having differentiated insights:

Since then, I have implemented a completely new framework while working on a company.

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I now speak to suppliers, clients and distributors of all of the companies I am evaluating. The goal here is not to look for UPSI, but to understand the nuances of operations from several different stakeholders. This has many advantages:

1. I have a better understanding of where we are in a given cycle, the major drivers, and the industry dynamics over the last X years.

2. I have a better understanding of the competitive positioning of all the companies within this space, the differences in each one’s model, and the (relative) truth on the ground.

3. I have a better understanding of the life cycle of several products that were introduced, feedback on middle management, and the real drivers of things that have promoted or stifled growth.

4. It now takes far lesser time to get the hang of a new industry or sector. A complicated story like PDS took two years to unravel, I’m now able to get to that kind of understanding within 2-3 months.

As an example of what this entails, please see the post below, where I shared the notes of my conversation with one of India’s largest public sector banks.

Ugro Capital - Opportunity To Invest in a Fintech-like Company Below Book Value

I had a conversation with the head of co-lending at a large PSU bank. They have interacted with Ugro daily for the last two years. Key pointers from the discussion: On Co-Lending Co lending uptake from PSU banks has been slow due to skepticism about the MSME segment in the wake of covid. Finally after the second wave resolved, co lending has picked up to an industry size of around 25,000 Cr. today. The formal landscape is around 400,000 Cr. and can be easily reached in 10-15 years. There…

Over the last six months, I have spoken to 2-3 industry veterans / managements a week, and I am happy to say that the number of companies I am confident of having differentiated insights on has grown from 3 (in the above image) to now over 25.

This framework is nothing new, or groundbreaking - indeed many of the top funds in the country (and some senior members of the forum) have been doing this for a long long time. I have tried to exponentially increase the number of different data points that help validate or invalidate an investment candidate, in order to raise the probability of being right.

I have implemented this framework in the family portfolio. I have sold out of all of the legacy holdings, inlcuding TCS and Infosys that have been held for 20+ years. We will be formally incorporating as a family office some time in 2024:

www.badrinathholdings.com

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The portfolio shared throughout this thread has been my own portfolio. This year, it has generated ~80%. I am sure everyone has done well in this market.

Going forward, I will be sharing the family portfolio. While I want to be transparent with my purchases, my framework involves a lot of churn, and thus will share what I think are longer term investments, and not opportunistic bets.

I will also try to share a summary of my industry scuttlebutt with a lag of a few weeks, or maybe something like a monthly post. I don’t plan on monetising these insights.

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Have enjoyed working with @nirvana_laha who has become my biggest collaborator this year. Thanks to Harsh, Yash, Bharani, Ayush, Sahil, Malhar, Vineet, Ankit, and all the others for working on many many ideas with me.