ValuePickr Forum

Ediacaran portfolio

Here is my portfolio built over the last 10 years. Kindly comment.
Document 4.pdf (76.6 KB)

Get out of Suven, Deepak, Repco and Crisil

Crisil still very good but credit agencies got bad name due to defaults of ILFS etc

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Document 4.pdf (76.6 KB)
Kindly view and comment on this portfolio.

Good portfolio… Keep posted on the performance.

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Hi ,
Wonderful stock selections and thus you have been awarded handsomely over the past 10 years. I think that the type of stocks you have invested in, Deepak Fertilizer and Suven does not fit. Moreover Financial Business corresponds to around 45% allocation which looks high to me unless you understand the sector very well. No doubt the underlying business of the holdings is strong but there are times when market do not give due importance to a particular sector for long as we had seen for Pharma’s in last few years.
Also top 2 holdings account for 60% which again looks very high to me. There is no doubt that Gruh and Page are wonderful businesses but no one knows until when they hit some issues and thus better to diversify a little more.
Rest all , great choice of stocks. Need to work on allocation and balancing of the portfolio.
All the best

Regards
Bharat

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All the names you have in your portfolio are, in one way or the other, leaders in their own niche markets. That’s always a safe strategy to employ. So I don’t have a lot of comments to make about the companies themselves (Also specifically, I have limited knowledge about the Pharma and Chemicals space - so outright can’t comment on Suven and Deepak Fertilizers at all). A couple of concerns:

  1. 45% of your portfolio is in Banks and NBFCs. I am not saying high allocation to a specific sector is bad, if you understand the companies you have invested in. But why invest in 4 different names in the same or related industry, when you can pile up on just one of them which you understand the most? Diversification just for the sake of diversification is not very helpful.

  2. Your note for CRISIL reads “Monopoly; the most sought after rating company; S&P holds stake- will benefit as we move towards 5 trillion economy”. Do you know that CRISIL derives only 30-40% of their revenues from Ratings? Have you had a chance to look into all of their lines of businesses?

  3. Finally, I have valuation concerns in Page Industries and Britannia… not the kind where I think they could be better value at 20-30% less, but the kind where I think even a 50% drop in price would not justify the value. But I do acknowledge that the idea of risk and value can differ from person to person. I just hope you have considered value and risk and made sure that the value outweighs the risk.

Happy investing!

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@ I am having limited knowledge and experience however before analysing your portfolio i want to ask a few questions.
10 years being a long duration to remained invested in the stock . So you had acquired enough knowledge . Could you please share your wisdom and your faults and the books you read .
I love to hear your story as how you handle the the down cycle or recent meltdown market .

You r case is not about the wealth creation but you must take route to PROTECT the WEALTH CREATED by YOU … in order to achieve steady one must tweak the portfolio .
HOpefully you had employed Trailing Stock Position in the appreciated stock .
What kind of review are you looking for ?.
DO YOU WANT to EMPLOYE more capital ?
or
THE STOCK YOU had invested in not moving as you accepted R YOU Looking to EXIT from that ?
if i like FISH i wont settle for eating chicken or potato if given chance by saying so Will take you down deep inside YOU .DO YOU NEED MONEY NOW ? if not STAY INVESTED .
DO YOU FIND MORE exciting opportunity which will roll out in future (NOT THE PRICE but the COMPANY )
SO wealth Protection must be the FIRST criteria .I like your Portfolio . But will the changing landscape of industry and the commercial function are your investment rational is still intact or loosing the ground .
I don’t know YOU or your Financial GOALS or the present Economic situation of YOU so my reply based on the companies performance .
The time when you FIRST made the investment The company may be the benefited being alone player or the demand raised due to greater BRAND and it’s value play expectation form the Customer or investor

Page Ind 2200 35% 21084 10x [should book profit ( but limited ) you need to take out the base capital and rest one can keep invested with trailing loss position IT IS FREE STOCK FOR YOU ]

Gruh Finance 52 25% 268 5x [Hand had changed so need to relook as merger entity Though Bandhan is not too bad option should book profit ( but limited ) you need to take out the base capital and rest one can keep invested with trailing loss position IT IS FREE STOCK FOR YOU ]

Sundaram Fin 535 8% 1605 3x [No comments ]
DCB Bank 95 7% 179 2x [No comments ]
Suven Life 249 5% 264 x [ Probably you had paid more amount the stock is appreciated 22/3/2018 it was 170 moved to 264 .The growth of the company was never been consistent . and franky the the pharma companies earning is always very tough to analyse .The Demerger plan WIll that excel don’t Know .There are lots of variables in the story But Love to hear your rational ]
Repco Home 186 5% 304 1.5x
CRISIL 1440 6% 1322 0.85x [The recent news about the authenticity of these companies and will always remain in question ]
Britannia 2600 4% 2845 1.1x [I owned this in past but exited as profit touch my set price target and had some other opportunity to invest in ]
MOVE ThE CAPITAL GENERETD TO NEW GREATE VALUE / Possibly UNDER Recognised if not buy Steady BUSINESS like Pidilite Asian Berger 3M

regards

disc: I am not Sebi approved analyst I may or may not own the stated stocks mentioned above in past or now . This is not any stock recommendation to sell buy or hold .

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I intend to hold the following companies for another decade:
Page, Gruh/Bandhan, SunFin, DCB, CRISIL, Britannia.
These companies are market leaders, efficiently managed, taking market share away from the other incumbents. Per capita GDP rise in the next decade and a slow but steady progress to $5T economy will take these companies to another stratosphere.
My acquisition cost/average entry price in most of the above stocks is low. Even if these stocks were to just double in the next 10 years, my portfolio CAGR will still be above average. The dividends that these companies give is substantial.
Deepak is one mistake I made - cyclical, bad sector and wrong entry time. Suven was entered at the top of pharma bull run. Repco was bought during IPO but NPLs are increasing. Lessons learnt.
Infact I have been replacing Deepak, Suven and Repco with HDFC Life (my average cost so far is 370) and ITC (avg cost around 255). The updated portfolio in next few months will show HDFC Life and ITC instead of Deepak, Repco and Suven.
I am not in the pursuit of multibagger returns. Slow steady compounders, good dividend payout, top companies in their respective sectors to be bought when there is panic in the market. The last 10 years have shown that I can stand volatility and long periods of underperformance. I don’t dither easily. I am in the search for market leaders growing steadily available below median PE.
Thank you all for your feedback. Suggestions welcome.

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@Ediacaran97

Barring the disaster of deepak fertiliser in your portfolio, which as you say you intend to replace with hdfc life/itc, the only other problem I see is very high allocation to Page Inds. 35% to any single stock is very high but since I guess it has reached such high allocation due to price run up, I think you can give it a longer rope.

In the kind of portfolio you have, I would dearly love to see a solid name like HDFC Bank. Especially in the situation it finds itself currently. A lot of unhealthy competition is wiped out due to the NPA issues and liquidity issues, That leaves a clear road for the bank to run fast. Plus it has all the liquidity it needs. And the tax cut provided by the govt will provide more money to the bank in the form of around 10% of additional profits which is additional capital at negligible extra cost. It can re deploy that money at higher rates of return and should benefit immensely. The aggressive stance of the bank is seen clearly in full page advertisements in most newspapers.

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Once a person attains the maturity that the stock market is not a casino, but a compounding machine, he has cleared an important hurdle. His choice of stocks says it.

Then on it is a question of strategy. Whether the chosen approach will fulfill a specific need/Target/goal. Of course, the goal is to be profitable, but how. Broadly speaking there can be two classifications:

Consistently earn, Year after Year, returns tied to the Index, Around 12% to 15%.

Or

Invest in growth stocks, where a stock or two gives multibagger returns.

Ones investment choice should be coherent with his needs and skill set. One must strategize around it.

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Hi ediacaran

I think this is a good portfolio with good cos. You have a strong anchor co in terms of page and other solid names. I think you could try to substitute some relatively weak cos with good quality emerging small cap names for the next 10 years but again tinkering with a good portfolio is a call only you can take. I also think that real estate is going through a structural change in terms of how developers choose to finance their projects and this may impact the business models of the financing cos in your portfolio. I don’t know much bout Deepak fertilizers and suven to be honest so don’t know how strong they are. In my view the next bull run whenever it happens will be led by cos that are in defense and product based IT cos and not service based ones amongst others. These have been laggards so far. Real estate could also be a good bet but it will have to be played through some other means.

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Instead, why not plan to do whatever best you can do from here on, like it was the first year of investing. And if logically you conclude that holding 40% in purely Financial Services and 35% in Page, and is really the only best option that you can arrive at, then fair enough.

Your approach of betting on the leaders is well placed. So, why not divert some profits from Page and Gruh into a leader of another sector like FMEG (Havells) or Auto (Eicher, Mayur Uniq, Tyre: TVSSrichak, Amarajabat) or closer to consumption theme like Jyothy Labs or ITC,

This will ensure that your investments are just as efficiently managed, and diversified.

I find it a little odd that i am dishing out advice to somebody who is clearly a winner and has managed his capital so well over a long period. But, there is clearly an allocation-skew which could prove unpleasant in the near future, given the negativity around the financial services sector.

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