Commodity and Cyclical Plays

Investing Strategies
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Hi friends,

Here’s a small presentation on my experiences in commodity and cyclical plays. Plz feel free to discuss.

-Jiten Parmarcomm.pdf (145.5 KB)

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Sir can you explain with an example any previous position you have taken or done with this kind of method.

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Sugar and Paper stock near last stop, as I feel as well. So which of other cyclicals are worth considering now, as per you?

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Dear Jiten,

Good presentation. As what i have seen that when their margins are at 5-6 yrs low will be the best time to enter as no body is looking at these stocks and cycle will be at the lower end as so many distress players will be moving out, so picking up any company that can survive well for next 2 yrs can be the best bat.

Please give your comment as i have not played any cyclical stock so far but looking at it for future position. please correct me if i am wrong.

Thanks

Prashant

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Several websites which provide the price info on commodities ask for subscription … can we list down a few reliable websites which we can rely on to track the commodity price.

Also based on your experience can we get some idea around past commodity cycles length … for e.g. Sugar 4–5 years … etc

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My recent basket (last 6 months) has been in Fert and Agri.

Also, would like to add to cement basket at opportune time.

-Jiten Parmar

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It can vary. Past is just an indication. We can’t be fixated to past cycle length. Indications on ground, etc more important.

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Nice presentation.

How do you look the cement sector per se especially in the south India.

As Telengana and Andhrapradesh are showing good signs in despatches.

Would like to know how do you study commodity cycles.

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Informative presentation. Thanks a lot. I am new to the stock market, still learning.

I was planning to invest in some poly film firms, e.g. Cosmos which I have been tracking for a while. Is the poly cycle ending or ended. Is it wise to invest in it. Appreciate your feedback.

Best

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We are in mid of cycle, I believe. Peak can take some time, but as capacity utilization starts improving, so will the fortunes of the industry.

Disc : Hold Cosmo as largest position, all FOC.

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The agri/fertilizer basket has performed quiet well. Off late, added some integrated steel players to the metals/mining basket.

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Because of demonetization I believe the packaging business will improve… on top of it, people are aligning towards branded names in fmcg… so I believe this will collectively help the packaging companies to improve their capacity utilization and therefore the margin…

Cement and construction companies that take orders from government will have a huge growth potential until the next election… the central government is changing gears, which I believe is a huge positive.

The railways which is being discussed now and then, will somehow come into mainstream in the near future, so I believe this sector is also worth watching… but I think his is a long term story…

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One can use the CANSLIM principle, 52 weeks high … I noticed

Sugar stocks in last November 2015… every day hitting new high , i bought, i got 20x returns…

now daily rubber stocks are hitting all time high, macros also important … CANSLIM makes you rich.

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There are multiple ways to make money. Be comfortable with the one that works for you. I like to buy at beaten down valuations and when out of favor and in the deep end of the cycle. Has worked for me very well.

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very good analysis of cyclicals jitenp
very helpful like novice investore like me
is there any approximation cycle period for each cylical industry
for example sugars 7-8 years downtrend and years of super uptrend

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I believe two things are very important for cyclicals

  • Underlying cause of uptrend
  • capacity buildup.

For this sugar cycle, both are supportive so far

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It is never fixed. Rather than time, one must look at factors, which are explained in the ppt. For example, sugar downcycle can vary from 4 to 8 years.

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It’s always about timing in this space. And this might not be for everyone’s psyche. Must be done only if comfortable. Risk has been displayed in one of the slides in the ppt.

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Nice and crisp presentation @jitenp. Though I call myself a value investor, I play safe and avoid companies with heavy debt burden. But slowly I’ve realized that every stock is risky at one price and value play at some other, its investor’s own comfort zone which matters much. As you say, there are many ways to make money in the market.
That said, my limited experience in commodities is in mining sector - GMDC and NALCO, that I bought in Dec 2015. I’m still holding both with good return, but not like Sugar shares (5x-10x?), though! But then, I’m not complaining!

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