Hello Mehnazfatima,
Kindly provide the company names which are making long product steels.
I am humble & heartful thanks for initiating & carrying the sugar cycle thread in this forum.
Just an update to make sure that I am on the safe side of SEBI norms. I had liquidated all of the stocks recently and have come under the guidance of an equity advisory firm. I won’t be able to discuss about my portfolio anymore.
Thank you all for your useful comments once again and happy investing.
Which advisory and why did you select them nishant…just curious
I am not comfortable disclosing the advisory service. The reason for going with advisory service was that I needed a very experienced mentor. Also, the portfolio size is significant enough to not be fiddling around with. I was acting very naive when I was using a concentrated approach earlier.
Regards.
Ouch…do take it in the right spirit but this must have been one costly journey. I recall somewhere in this thread that your dad had compounded the original portfolio 15% for 25 years…that’s a 33 bagger!
Answer is more of a framework for concentrated investing rather than company specific.
While going for Concentrated portfolio, rather than going for maximizing gains in individual investments. Think about protection of capital. Valuation at which one buys into concentrated position is of paramount importance. Never bet on making a good sell hence be miser while initiating purchase.
There has to quantitative margin of safety in purchase of each security. Some logical floor to price which would sustain over holding period even if its breached downward from time to time.
Its not for faint hearted, nor for those who are who watch stock price daily. One needs to have range of intrinsic value for a security & discipline to manage position size when security starts hitting upper values of intrinsic range. Either convert investment into trade when stock price starts hitting upper range, or exit, don’t just watch price & count money & get greedy.
More importantly concentrated investing is boring. Too boring. There is absolutely nothing to do except wait for either price to hit upper range or some bad corporate governance/fraud at core business level.
From qualitative point of view, there has to demonstrated track record of competence & high RoE & proof of sustainability of RoE going forward. Betting just on growth is bad strategy from 100 occurrence perspective. Bear market can hit any time while investing & concentrated bet just on basis of growth is bound to screw up badly.
Business needs to have some competative advantage which will give it high RoE over a decade even if one or two year it faces headwind.
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I am not talking about Nishant or the PMS he invested in. But a general comment. Recently I saw a funny tweet which goes something like, fee for entering, fee for staying, fee for exiting and a lot more ( for ex custodian, brokerage, transfer, brokerage, certificate and a few more.). Plus there is this profit sharing. Ofcourse i am not taking about the most important thing which is trust. ( All these are assuming you trust him/her)
So I wonder if it makes sense to go to PMS regardless of how good they are and how big the portfolio is. ( Assuming one knows the basics of investing)
Sometimes I think I need a PMS. But when I look at their record, selection of highly risky stocks, volatility in their portfolio, CAGR over five years, I think I can do better than these. And even if I do not, I will just need to blame myself.
Not many proven strategies are there in India that have lasted 5 years at the hand of these shops. I know that in several cases, wealth accretion of PMS manager had a very high CAGR while clients got peanuts or even suffered.
Yes, as Unmesh said, managing your own long term portfolio is very very boring and frustrating as sometimes, you cannot undertake even a small trade for months together.
But , for a large size, I will better blame my decisions than being fooled by someone else.
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Agreed.
I believe the most important thing in concentrated portfolio is to avoid bad stock picking. Periods of underperformance should be acceptable for large portfolio as above average compounding will help creating meaningful wealth. It is however easier said than done. 
Especially when you have 5-6 stocks in your portfolio, you would often have to pass most of the interesting ideas because you can not allocate 15-20% of your large portfolio to most of those new ideas. Plus its better to see the story unfold in companies you are invested in and understand rather than to chase those extra 10-15% returns in new ideas.
Another thing I typically avoid is to have cheap stocks in concentrated portfolio. I believe its better to be little late than being very early. For concentrated portfolios, it often makes sense to buy some stock after it has doubled or even tripled as long as the growth story and visibility gets better with price pop. Investing insignificant amounts in such companies often leads to having a big tail and rarely makes meaningful difference to overall portfolio returns.
Just my 2 cents based on experience so far. Many of the arguments I have made might be false but this is what has worked for me so far. still learning and long way to go.
Regards,
Nilesh
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Quick comments on the interesting discussion above.
I have enrolled for a Portfolio advisory service (PAS) rather than PMS. There are subtle but nonetheless important difference between the two.
First of all there is No profit sharing in PAS generally. Just an annual fee, which again varies depending on portfolio size. (generally between 1%-2%; lower percentage for larger size, higher percentage for lower portfolio size).
There exists few other PAS which command a fixed fee (say 20,000 INR) irrespective of the portfolio size. But then they give a one size fit all portfolio template, which might not be suitable for a larger sized portfolio.
Secondly, unlike PMS, the PAS doesn’t execute the buy and sell. Its your job to do it. They provide you the stocks, the rationale behind those stocks, the allocation, and the buy/sell price range. If you fail to execute few of the advices, in cases where the stock shoots up like crazy or goes down, thus not giving enough time or favorable price range to execute, you update your adviser back. Then he would decide the alternative options. Thus, its a little dynamic process. There is a good amount of exchange going on between.
Regarding whether to subscribe to an entity like PAS, its a very subjective factor. I personally was comfortable with short term, extreme and unpredictable volatility, as long as 3-5 year targets keep hitting.
Also being young, it is easy to mold your investment process and philosophy and align it with your adviser. This provides much more degrees of freedom to your adviser who can freely decide what to do and when to do etc.
If you have a long experience of being in the stock market, its likely that you would have formed very strong opinions on how stock market work. In which case, it might be difficult to come under an adviser, especially if the whole investment philosophy clashes between the two. There is also an ego issue which prevents you from coming under an advisory service as it feels like accepting a defeat or surrendering.
Also, in case you make decent money all by yourself, you can claim all the credit and bang your chest. But if you make even more money with the help of advisory services, you would have to give away most of the credit to your adviser, which kinda sucks for many people.
Choosing an advisory service is in itself, like choosing a stock to invest on. You need to have very strong conviction and also need to do a background check of the entity before deciding to go for it. And most important of all, you need to have trust once you come under. And give enough time (say 3-5 years) before judging the performance. Its similar to climbing on a weighing scale to check your weight. if you check it daily, you would see huge fluctuations. But if you check weekly or monthly, there would be lesser noise and you can gauge your weight difference much more accurately.
Regards.
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How did you do this part? Did the adviser gave you his audited past performance record? I have met a few advisers and none of them gave me even a self-reported performance record let alone an audited record. I felt like the advisory business thrives on finding clients who are less knowledgeable than the adviser and maintaining the status quo.
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Hi Yogesh,
I did not ask for a detailed CA level audited past performance record.
I have taken a much more naive approach.
I have been following him for the past one year. I trusted his claims on what stocks he held in the past 15 years for what duration and timeline, what failed and what worked for him. He infrequently documented his learning from the mistakes and has shared them in the past. I also had a long one-on-one conversation with him.
I liked his approach, and slowly had developed enough conviction on letting him mentor me as well as scaffold my portfolio construction.
On a much more objective basis, I would rather judge his compounding capability 3 years down the line.
Maybe I am a gullible person
Regards.
Just to be clear, I have never claimed that PAS is more “profitable” than
PMS.
Please read my earlier posts carefully.
Best regards.
Basant Sir strategy was flawed, aying up high for growth… best thing to do is to concentrate in 8 to 10 stocks based on valuation and hold a few stocks as tracking position… Basant Sir is not the Peter Lynch of India…Peter Lynch made most in cyclicals… which Basant Sir never try…