Gurjot Portfolio

Q&A: Questions & Answers Portfolio Q&A
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Hi everyone

I’ve recently joined this forum. I’m 25 years old and I started investing in stocks 1 year back. After hours and hours of searching on the net for information about stock advice, stock picking strategies, value investing, etc I somehow landed on this forum. I am absolutely amazed at how knowledgeable some of the people are on this forum. I only wish that I can be as insightful as some of you in the course of time - don’t think it’s possible currently :frowning:

Here is my portfolio :-

Stock Name Avg Mkt Price % Allocation

REC 266.44 14 %

Sintex 77.82 7 %

Bajaj Electricals 275.73 6 %

ITC 337.21 43 %

NDMC 175.1 13 %

IPCA Labs 726.76 5 %

Suzlon Energy 28.18 12 %

I don’t think this looks a great portfolio currently. There would be one common theme for most of these stocks, I picked them up 20-30% lower than their all-time highs. I guess I also need to reduce my exposure to ITC.

Have a feeling that there are too many defensive stocks in this. But in the current scenario, I’m struggling to find any stock with cheap valuations and looking for tips on that. Don’t have any particular time horizon (can hold more than 2 years as well).

Would definitely like to know your views on stocks like Sintex, Suzlon.

Eagerly awaiting your views /suggestions.

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It’s NMDC* (National Mineral Development Corporation)

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Exit from Sitex, Suzlon, REC. Those type of stocks not made for long term investment.

Refer valupiker public portfolio or refer portfolio f&Q and update the portfolio with good quality names like Page, Atul, PI, CERA etc

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Thanks a lot Amit for guiding me to the Valuepickr Public Portfolio. I see most of the recommendations last updated on June 27th were Hold.

Do you still recommend entering Page, Atul, PI, CERA etcat their current valuations?

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You can consider Repco at current levels. Fundamentals have been discussed on the Repco thread and imho, CMP is decent for a 2/3 year view.

Having said that, don’t follow any advice blindly :slight_smile:

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Thanks vickyB and HG for your valuable inputs. I feel like and I know that I’m a newbie, novice, rookie and naive investor currently. Really appreciate your comments on my not-so-good portfolio.

@vickyB Yes, going to hold REC for some time. I believe the word ‘disinvestment’ sparked off a 30% decline in the stock. But i doubt how much it will recover in 1 month.

@HG Will go through the Repco thread. Apart from Repco, any other good picks you’d like to suggest?

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Gurjot - no need to be so self-critical. You have a tremendous advantage - you are only 25. So take it easy and prepare yourself for the next 15-20 years after which you could retire!

At current levels, you might also consider Gruh. I have Gruh/Repco and am adding at current levels.

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As HG says, no need to be so self-critical yar. I am abt a couple of years older and have started investing just 3-4 months back. I made many bad decisions initially and still learning. I invested PSU banks when they were at their peak…invested in defensives (pharma/IT) when they were going down and exited when they hit the bottom (exited drreddy’s at 2300 after buying at 2550 and glenmark at 520 after buying @ 550). It was in mid of June when I recovered losses and since then, have made ~30% luckily. I guess the focus should be on improving skills n gaining knowledge etc, gains/money will follow since we have time on our hands.

Thanks vickyB and HG for your valuable inputs. I feel like and I know that I’m a newbie, novice, rookie and naive investor currently. Really appreciate your comments on my not-so-good portfolio.

@vickyB Yes, going to hold REC for some time. I believe the word ‘disinvestment’ sparked off a 30% decline in the stock. But i doubt how much it will recover in 1 month.

@HG Will go through the Repco thread. Apart from Repco, any other good picks you’d like to suggest?

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@HG I promise I’ll personally come to meet you if I do manage to retire in 15-20 years :smiley:

@vickyB Yes, I’m sure even the best investors have made poor stock choices and of course me included (Eg:- Kingfisher Airlines, Suzlon - tanked 10% today…horrific)

Looking at the Valuepickr Public Portfolio (27th June), I have already made a couple of changes to my portfolio. Even though there has already been a 20-30% appreciation in those recommendations, I’ve entered with a long-term view.

Stock Name Avg Mkt Price % Allocation

REC 266.44 12 %

Sintex 77.82 6 %

Bajaj Electricals 275.73 5 %

ITC 337.21 38 %

NDMC 175.1 11 %

IPCA Labs 726.76 5 %

Suzlon Energy 28.18 10 %

Pi Industries 446.28 6 %

Shriram City Union Finance 1704.68 6 %

Should be adding Repco soon. Also, I really don’t want to book losses in Suzlon. Don’t mind even if it takes 1 year to recover. The main reason being that it’s percentage in my portfolio will keep reducing with time. You can enlighten me with your views if I’m still going wrong somewhere.

Hoping for some good times ahead.

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Gurjot, Not booking losses in Suzlon (even when you are convinced it is not worth it) and waiting for it to recover is a bad strategy. I am writing this since you also mentioned that you want to add Repco. You are switching from a bad business to a great business. What are you waiting for? Remember “opportunity cost”

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@CommonStocks Yes I agree that Suzlon is not worth it. But including Repco would not be switching from bad to good, I’d consider it as a separate addition.

However, my main concern is can a loss making company heavily burdened with debt turn around its fortunes in a industry (renewable energy) expected to do well in the next few years?

Searched in futile for a Valuepickr thread on Suzlon. Suppose the company doesn’t even merit that. Anyway, if somebody has any good insights on Suzlon to share, I’d be really grateful and probably bite the bullet to book losses.

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Money has no colour. Whether you are bringing in fresh cash or you are selling suzlon, it is worth the same. Suzlon may or may not do well, but from a stock market point of view it has had its day under the sun and might give bounce backs and unlikely to be a turnaround story for investors. Entirely my opinion.

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Gurjot, if there is even one single opportunity better than suzlon in the whole market, you should take it. Do not waste time. Because my friend time is money, literally in the case of stock market.

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Gurjot, my 2 rupees on your portfolio:

Please take it with a pinch of salt as I am quite new myself and learning.

The most important thing in the stock market, even more important than making higher returns is protection of capital!

A company like Suzlon with its ever mounting losses provides no bottom at all. Whether at Rs.28 or Rs.5, the stock can still fall another 50%. Its so hard to come up with a fair value for the company simply because you never know if and in the unlikely event that it does, after how long it will stop bleeding money!

I have personally had the experience of working in a turnaround situation as dire as this one and believe me, the odds are stacked so heavily against you, its almost impossible to succeed. Its like a vicious circle and even when you make operating profits, the burden of interest makes it difficult to become profitable. More losses means more borrowing which means even more losses! Suppliers stop providing credit to ensure their own safety, good people leave the company, the people within are extremely demotivated and generally have below average skills and capabilities (the good ones leave), things don’t move, doing any kind of CAPEX to improve sales or profitability is ruled out due to lack of cash, it becomes increasingly difficult to attract talent, and good customers start to turn away and diversifying their supplier base because they can’t be sure that you will be around for too long! The list of problems is endless!

In the meanwhile, while the company is falling or at best keeping afloat, stocks like HDFC bank, Page, Cera, PI, etc. continue to compound at 25% at a humongous opportunity cost!

There is also an interesting study which is cited by Prof. Sanjay Bakshi which talks about the importance of quality and states that great companies tend to remain great and turnarounds seldom turn around.

Disc: I don’t hold Suzlon

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Thanks CommonStocks, Nikhil Jain and Abhishek for your valuable inputs.

I think all of you make valid points.

@ Nikhil - Yes, I’m sure there are many other better opportunities out there.

@Abhishek - I think that’s a fair assessment (very well explained indeed) of how difficult it is for such companies to expect a turnaround.

I probably should explain my position a little better now. I probably shouldn’t have used the word “turnaround” because as Abhishek explained it seems very far fetched at present.

I, myself don’t expect to earn xyz % profits from Suzlon. It is just my “speculative/trading” bet for the short-term, if it can rebound to 23-24 levels so that I can reduce my losses.

Having said that, it’ll probably see the next few days in LC with the conversion of FCCB into equity shares. And then wouldbe staring at a ~ 50% loss which is why I’m holding on for now. Also, the kind of stock that this is, some positive news can trigger a small rally where I can minimize the losses.

Will be glad to know what you guys think. (I know your views, just asking about the trying to minimize losses)

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1). You do not have to recover the losses in the same stock!

In additio, but of not too much importance…

2). Booking losses in Suzlon (if they are short term) can be offset against gains in another stock.

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3 years since I updated my portfolio and WOW - what a difference 3 years can make! Can safely say - when I started this thread, I was an absolute rookie completely clueless about the world of equities barely 1 year into the stock market. As I landed upon ValuePickr in Sept 2014 - as many people have said before, thought I had landed upon a goldmine. Infact I thought, such was my luck - here’s a goldmine where just being at the right place at the right time will make you very very rich without even searching for the gold. With the VP Public Portfolio being updated regularly, the gold was just being handed to you and all I had to do was copy the portfolio to begin my journey into the world of riches! As days and months passed, more and more seniors went quiet to comply with the SEBI guidelines and soon the realization dawned on me - there are no free lunches or atleast they stopped being served at VP

The saving grace - there was no retrospective action on any of the threads to comply with SEBI guidelines - meaning everything recorded on VP till date could still be accessed, read, absorbed, understood and imbibed in our investing philosophy and investment decisions. Without this, my investing journey may have stopped even before it started like most retail investors - win some, lose some, and then lose big one time to once and for all stay away from equities.

So - as days, weeks and months passed I tried to read as much as I could through books recommended on VP, different threads of businesses on VP, annual reports, investor presentations, following famous investors, other sources such as websites, blogs, youtube videos, etc. to try and make some sense of all this information. Little by little or jargon by jargon, literally at a snail’s pace started to understand different concepts around drivers of investment returns - BQ/MQ, margin of safety, portfolio structuring and allocation, financial analysis, technical analysis, diversification, RoE, macro, micro, etc, etc. As I read more and more threads about different businesses on VP - started to understand more and more (except things specific to that industry) about how people develop their investment thesis, what risks impact those and how companies should be / are valued.

Dot by dot - started developing some mental frameworks, rules and guidelines to base my investment decisions. But soon realized, there are literally zero no-brainer/buy and hold forever investment decisions (only in hindsight do they appear so) available in this market. One needs to invest significant time and effort to understand businesses thoroughly and their key monitorables, diligently read annual reports, understand managements vision and strategy on concalls and translate all this information into a somewhat predictable expected future financials.

All of this has meant - my PF is hugely inspired by a lot of businesses covered on VP and my sincere heartfelt thank you to all the people doing a brilliant job in identifying and analyzing some of the best (or potentially best) Indian companies on this forum. Even though my PF is nowhere near the performance achieved by some others on this forum - I’m extremely pleased with the progress I’ve made over these 3 years by putting in place some sort of a process to identify investment candidates for my portfolio.

I think very few people have a perfect portfolio and I’m definitely not one of them - so really look forward to your comments / suggestions / recommendations on my portfolio.

image.png1600×1621 159 KB

PS: Predict this as one of the first observations on my PF, so let me be the first one to admit that like any investor I’m still working on and trying to overcome certain biases like price anchoring, booking losses, etc.

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Gurjot,
Steady compounders like Asian paint, Hdfc bank, gruh etc should be benchmark to asses any stock while investing. This is my way of investing only. If there is not predictability of 20 % + compounding for very long period, we are at risk at the time of all around crash. These stocks should be short term bet with stop loss not portfolio stocks. I myself don’t do it.
Some businesses you have owned with less predictability. There might be predictability, I don’t know, but based on your logic there is not.
It will always help to single out these when we consider comparing with steady compounders.

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Thanks for the feedback Rajesh.

I did have Gruh but sold it last year at 350 owing to valuation concerns and converted some of it into Can Fin (which has significantly outperformed so far) - might regret it over time, we’ll see. Also I do have a bit of HDFC - as mentioned in my investment rationale I should have had higher allocation at those levels.

Overall, I do agree with your overall thought process of looking to have 20%+ CAGR steady compounders in PF. But the 20%+ steady compoounding also depends a lot on the buy price. So since I’ve only spent so much time in the market, I’ve realized slowly that these steady compounders only correct a few times over many years and one needs to be extremely patient for those opportunities which has it’s own opportunity costs as well. I’m sure your PF would have delivered terrific returns if you managed to employ and stick with this philosophy within your first 2-3 years of investing.

I’m trying to have a 26% hurdle rate for my portfolio which means having to take some more risk than sticking with the regular blue-chips. Also - why don’t you think an Indusind can be the HDFC Bank of the future?

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Gurjot,
I did not mean this. I mean to say to focus on predictability. The rationale behind your investment lacks predictability in some stocks not all. If I am playing blind, I shall play on consensus, predictable business like Gruh, Can fin, Asian Paint, Hdfc twin etc.
I don’t know if I amr ight. But I don’t want to regret later so this is my style. Even if I lose in secular crash, growth will recover my money in next three four years. Anyway, there is separate thread on portfolio construction strategy. Really very helpful it is. Also there is live example of portfolio in ‘25% CAGR strategy for next 2,3 years’. Frankly I don’t follow any but what I do, it is working in bear phase too.
Indusind has been the best compounder and it is still good compounder even better than HDFC Bank . I belive so but my bet is on only and only on DCB bank. It is 15 % of my portfolio. Rationale was simple - When brokers downgraded stock because of branch expansion, I was not convinced with their logic of cost of operation increase. As it has to go down with business increase as in small cities gestation period is 12-18 months only. Moreover this downgrade threw big opportunity by reducing price half. I accumulated at Rs 72. Even if profits do not increase for 2-3 years and after that they increase at the rate of 25-30%, it was OK for me because I was getting at half price so already 25 % compounding for three years I was getting in advance. I did not know this strategy would work so fast. Anyway I still feel it has good predictability. Small size will help longevity in growth.

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