ValuePickr Forum

Dinesh Sairam's Portfolio: Requesting Feedback

I would say, make it more micro. If you are uncertain about the businesses you already own, yes, move money into assets you consider are fairly safe. I consider government bonds to at least keep my capital, if not appreciate it. I have very little idea about gold.

We are currently in the midst of a crisis and I have 70% in liquid funds - I might as well sell the rest of my portfolio right? But the companies I am still invested in, I believe, are fairly guarded from any impact from COVID19. In case they are not, I don’t think that will damage the B/S by much (I don’t mind 1-2 years of bad results).

I sold Cera recently and IndusInd before that because I am very sure they will be heavily hit by this pandemic. Same goes for companies in my watchlist - some of them I’m sure the impact will be limited and others, I am not so sure. Of course, price is the common question for all of them.

So again, I would suggest a micro approach.

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hello sir , what is your opinion about put in liquid funds ( are they surely safe?), or we put money in cash only and wait for opportunity.

Liquid funds that invest 80%+ in Government Securities / Short term Debt instruments are safe in my opinion. Everything else carries risk.

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Your investing picks remind of me a few years ago. Your knowledge of investing is amazing.

I would suggest to invest in Coffee Can stocks available at good valuations now like Pidilite, Relaxo etc. and hold on to them. Cera is also a good coffee can stock. In your portfolio, I would say use the balance cash to buy Coffee Can stocks that are not ‘hot’ right now and available at reasonable prices.Invest in good market leaders and you will multiply your money.

DHP India is okay. I am invested in it too as it is part of Vijay Malik’s portfolio, like you highlighted from the annual report.

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Thank you for the suggestion. I don’t want to do a ‘Coffee Can’ as long as I am into actively managing my portfolio. Maybe that is a good idea for when I want my portfolio to be on autopilot. That day is not today, however.

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Dear DInesh pl share more on orient Refractories. It has fallen to RS 140 due rejection of their merger plan of 2 Group companies RHI India and RHI Calsil. To me they are mergin low margin RHI India and RHICalsil with High margin ORL. I feel this erode ORL Valuation. Currently it is hovering RS 160 to RS 175. How much more it will go as per your Valuation and expectation. I am watching to add. But unable to decide.

The merger was rejected mostly on account of the valuation done for the group companies (RHI India and RHI Calsil). The court felt that the valuations favored the parent company more and the Indian shareholders would lose out. Actually, I will have to agree with the Court that it’s true.

Here is the full judgement:

https://nclt.gov.in/sites/default/files/Feb-final-orders-pdf/C.P.(CAA)-2199(MB)_230-232_2019%20RHI%20India%20Pvt.%20Ltd.FINAL__0.pdf

I’d suggest skipping ahead to the last 7-8 points if you want to get the gist of it.

In any case, I think this is just a hiccup. The court did not reject the merger based on anti-competitive acts or anything big of that sort. That is a relief in itself. I’m sure once this crisis is over, they will appeal this decision or may be come up with a better valuation for the Indian shareholders.

I think ORL’s core business is pretty straight-forward. I would personally buy it close to Rs. 100-120. But this merger with group companies comes at a considerable dilution to ORL shareholders (Almost 35% dilution - according to the valuation report submitted to the court). I wouldn’t be happy with this at all if it went through. So, I’m contemplating on the valuations.

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Will you please put a link of your presentation?

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Thanks, but this link didn’t work but your Twitter’s did.

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Hi Dinesh, have you done analysis on CUB as it’s in your watchlist? Disclosures on moratorium book very well explained, attaching concall n presentation. Do share your views

MD_June 20_final.pdf (55.6 KB) bbb359fa-e551-4064-8fa5-30dbaed116b6.pdf (254.0 KB)

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Not just CUB, but other banks too are hoping that things will get better soon. If they don’t though, things can go to hell in a hand basket very soon, considering the leveraged nature of Banks. Even the regulatory pressure as they mention, like restriction on transaction charges / ATM charges and so on, adds to the misery.

That being said, the one thing I like about CUB the most is their conservative nature (Especially after my terrible experiences investing in “risky” lenders like DHFL and IndusInd). Their CAR is 16%+ and the management expects only a ~5% of their Loan Book to be restructured. Even if you consider the possible NPAs (SMA 0/SMA 1/SMA 2), they don’t even form ~2% of the Loan Book.

I’m mostly waiting to see when Moratorium will be lifted and whether things will get back to normal from the get go. If it gets extended further, things can get tricky. But again here, I like the fact that they are making provisions without any hesitation for each possible slippage.

@dineshssairam have you ever looked at Aditya Birla Capital?

Sorry, I have not tracked Aditya Birla Capital.

They mentioned about the recovery in this latest press release

It is quite strange to note that you are sitting on 70% cash - real money is made in markets like these. One might say that it is a bubble but if someone is so intelligent to identify a bubble ,he/she should be able to ride the bubble and exit before the dance stops.
Stop loss function can be used as safety mechanism.
Many a times I wonder that certain intellectual type of investors miss out on bubble - they may be philosophically right but we are in the market to make money and not to take a high stage on certain ideology.
Am nowhere saying that one should invest in every kind of company - an experienced person can clearly identify whether the bubble is in good stocks or some pump/dump is going on in certain bad stocks.Riding bubble in good stocks can be rewarding.

Would like to listen to your views - again it is a personal choice but I find it strange -experienced people sitting on cash when prices are rising and one can make good money by insuring himself by using stop-loss option.

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I guess it depends on when I acquired this money. If I’d gotten a good part of it in March/April, I would have invested it. Even within my Portfolio, Heritage Foods and Cupid have done 100%+ since then and others have risen a lot.

But I acquired this money only towards May/June. By then, most companies I were tracking were off the “March lows”. I could neither see a bargain, nor understand the longer term impact of this crisis on the companies I track or own.

Now, what you’re suggesting is that I ignore the price tag and invest anyway / ride the momentum until it lasts. I am not comfortable doing that, especially because I’m not good at Technical Analysis. I’m sure I’ll do more bad than good to my portfolio if I do this.

Finally and I’ve mentioned a few times here - since I work for an Investment Bank, I require an approval every time before I buy or sell something. So on top on having no idea how to time the market - I’m also physically restricted to transact on a whim. After I decide to buy/sell something, it will take 2-3 working days to get the approval and execute the transaction. Post that as well, there are restrictions on minimum holding period and so on. This is a two edged sword. While it sucks that I don’t have complete trading freedom, it also helps put a hard stop to impulsive decisions. Since my liquidity is artificially restricted, I think twice before executing any transaction.

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Thanks for your reply. Got your perspective.

@dineshssairam
Are you tracking Jamna auto or nocil. Jamna auto promotors are increasing holding frequently also share price is going up when Ashok Leyland management indicated recovery. But result is bad.

I have been tracking Jamna Auto alone on and off. But at this point, I’m far out of touch with the CV / PV market (With the exception of the Tractor market). Between BSVI implementation, scrappage and the impact of COVID19, I’m mostly confused.

Specific to CVs, the rail corridors that are coming up may pose a considerable challenge. I still believe CVs will be required for last-mile connectivity. But certainly there is going to be some impact of the sale of CVs.

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