Hitesh portfolio

Hiteshbhai,

If you can share your wisdom on managing the number of stocks in one’s portfolio.

I use to have 5-6 stocks in the portfolio when the portfolio was small compared to the overall networth (house, fds etc) ,

But since the portfolio has grown to significant size of the overall networth after few years of consistent investment and good returns…the number of stocks have gone up to 15-16.

My top ten holdings consist 80% of the portfolio.

What are your views on managing portfolio when the portfolio size is significant to the overall networth ?

jshah,

How many stocks to keep in one’s portfolio is a very subjective call with a lot of people having very strong views about the subject.

I personally remain flexible in terms of no of stocks to keep in PF. Usually it ranges between 7-8 to 10-15 stocks.

But at end of day everyone has to design the PF and no of stocks in a way in which he is comfortable.

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@ hitesh

one general question…do you know who has the 180 days exclusivity of generic crestor which is suppose to be going off patent this year. I tried searching on net but didnt found much info on this.

Though some companies have got the tentative approval but is thier any specific company which has got 180 days exclusivity just like torrent and alembic in case of abilify. Would appreciate if you can answer this.

Thanks in advance.

rohit,

I dont have more info about crestor exclusivity or any co holding it.

For what it’s worth…

Source: http://www.aurobindo.com/docs/press-room/company-news/2010-2011/aurobindo-pharma-receives-tentative-approval-for-rosuvastatin-calcium-tablets.pdf

Disc: No holding.

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Based on the above, Watson labs has got the 180 day exclusivity.
Watson having been acquired by Allergan (Actavis), makes Allergan the ultimate ANDA holder.

Above information can be retrieved from FDA portal or from the below dashboard.
https://public.tableau.com/profile/vishnu1702#!/vizhome/ValuePickrDrugsFDADashboard/Dashboard1

For more details, lookup the following thread:

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Thank you so much guys…

Hitesh ji what is ur view about aksherchem it’s pe is below 10 .and it’s overall growth seems good.

I dont track aksharchem so no idea about it.

Hitesh bhai…can you please update about your recent picks / portfolio update

Recent buys i.e in last six months include Piramal, HMVL, Allsec, NIIT, Praj, etc. An opportunistic and more of a technical bet is Mercator.

Exits include Take, Granules, Torrent Power etc. All of these were opportunistic or technofunda bets and once desired gains are achieved I usually exit unless undervaluation persists inspite of price rise.

The older ones like Torrent pharma, alembic, shilpa, avanti, Canfin, Repco, jagran etc remain and some of them are doing very well and those that I was bullish on a lot like torrent pharma and alembic have gone no where in spite of great results.

Looking at the portfolio as a whole helps tide over these disappointments bcos just as these diasppoint, others like avanti, shipa, allsec etc are going great guns.

None of the above are recommendations and anyone contemplating buying any of the disclosed stocks should do proper due diligence and take appropriate positions.

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Thank you sir.

I have torrent pharma, cadila, alembic, DCBBANK, gruh hcl tech Tech mahindra

What’s your view on caplin?

Hi Hitesh, any views on the booming and muched talked about micro finance sector? It would be great to hear Donald’s view here too.

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hnk

I dont track caplin so not much idea about it.

@vidurchhabra, Microfinance sector companies seem to be on a roll. Most of the companies seem to be growing at nearly 40-50% cagr since past 3-5 years. Currently there do seem to be tailwinds for them. I would like to monitor their asset quality closely though. Loans given for productive purposes could after a period of time and some amount of prosperity be diverted to other purposes e.g buying consumer goods like tv, fridge etc which work the other way round as compared to productive assets. Having said that I personally feel that we might be in the initial or mid phase of microfinance bubble and there might be money to be made in this theme. Trick would be to exit at opportune moment esp when price momentum robs one of one;s prudence and logic.

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@vidurchhabra
No wonder Hitesh sees possibilities of bubble territory. We should be cautious. You can form better-informed comments from stats below, and pursuing industry data -where knowledgable folks conclude there is sharp growth in lending amounts, but no concurrent growth in the physical outreach of branches and employees, then it is most likely that the credit checks of identity, pipelining and utilisation may be short-changed.

The gross loan portfolio of microfinance institutions (MFIs) stood at Rs.53,233 crore as of 31 March 2016, up nearly 84% from Rs.28,940 crore a year ago, according to data from the Microfinance Institutions Network (MFIN), a self-regulatory organisation for the industry. While the loan portfolio jumped 84%, the client base increased at roughly half that pace of 44% and branches increased just 22%, Mint’s Sahib Sharma reported on 27 June (Read here: http://bit.ly/28XnmBc ).

These stats tell its own story, doesn’t it?

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Hitesh bhai, did you see the latest presentation from stalwart advisor regarding the consolidation of organised players. Snowman logistics looks very promising in a 15000cr cold chain sector with 94% unorganised sector market share. I feel it’s a promising stock. Did you have a look at this Co.

Also Piramal enterprises, I looked into their investor presentations. Amazing clarity and what a visionary Ajay Piramal is. He is truly the WB of India in terms of capital allocation. I have gone through all his videos from various sources. I was skeptical of him few years back when he was going big time in realty and infra, so had booked out. Now I am pleasantly surprised and have invested with PEL again

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Hi Hitesh,

Can you share why Take and Granules didn’t make the cut for your core portfolio? Are there any serious management / corporate governance issues, because the revenue growth and earnings seem to be pretty good last few quarters with quite a few triggers for the next 2-3 years.

I’m aware about the Granules promoter pledging and Take’s complicated company/subsidiary structure.

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Hi Hitesh,

I am new to this forum and also new investor in stock market; can you please guide me how do I start my journey? I am 38 year old and looking for long term investment in stock(10-15 year), can you suggest few stocks?

Many Thanks.

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My stock analysis on snowman logistics- your feedback please, Hitesh ji
Snowman logistics
Only listed and organised player in a 15000 crores value coldchain sector. Huge unorganised sector dominance of 94% in the market which speaks a lot of untapped potential in capturing the market share. That too with GST on the anvil it will be good news for this organized player. Serves in a niche field of logistics and with high growth in upwards of 15% in organised retail food industry and its ability to reduce the food wastage with cold storage facilities( the very reason why govt is giving IT exemption) THE COLD CHAIN POTENTIAL The prices of vegetables, fruit, milk, eggs, meat and fish have been rising faster despite India being the second largest producer of fruit and vegetables globally. Around Rs. 300 billion can be saved annually by developing an integrated supply chain (including cold chain).
Snowman caters to multiple sectors like poultry, FMCG, quick service restaurants, pharmaceutical, tyres and films. This multi-sectoral customer base has helped strengthen Snowman’s business model in a number of ways. One, this has helped the Company reduce an excessive dependence on the fortunes of any one sector; no industry accounted for more than 20% of the Company’s revenues in 2014-15. Two, the downstream industries addressed by Snowman represent robust economic proxies of a fast-growing nation. Three, Snowman has enhanced efficiencies in each these logistics-intensive customer segments. Four, Snowman has leveraged the learnings from one customer space in another, strengthening its overall solutions complement. To summarize the sector looks very promising and being the only listed and organized player it has lot of potential.

Now lets look into its financials as per the AR 2015, the first one after its ipo( 2016 AR is not out).

Return ratios are not high ( sub 10) coz of capital intensive nature of business( capex as percentage of sales is above 40%) . But the sales and earnings growth over the three yr and five year period are in upwards of 30, that indicates the high growth nature of the cold chain sector. Debt equity ratio is 0.22 and the management indicates the ease of debt raising in the future coz of this( capital intensive nature- reinforced).

Promoter holding is low (40%) . Gateway disparks is the promoter. Management remuneration is 4.8% of PAT ( slightly on the higher side).

Dupoint analysis of ROE( 7.74%) indicates the average to good NPM(12%), low Asset turnover(0.43) - implying capital intensive nature and Financial leverage ( 1.34). Though RoA was only 5%, the have used the leveraging part to increase their returns.

So going forward, How are they going to increase their RoE- primarily by increasing the Asset turnover after all their capex(They have already achieved 1 lakh pallets) and by deleveraging. Also they have turned their focus on higher margin products and efficient capacity utilization (as per the management words they start marketing spaces the day they begin building a new warehouse, to achieve optimum capacity utilisation generally within a few months of commencing operations and have acheived 75% capacity utilisation in 3-6 months of warehouse commisioning).

As per the cash flow statement , though the operating cash flow is good because of high capex outflows and ipo proceeds ,there is net NEGATIVE FREE CASH FLOWS.

One point to note is they have Deferred tax of 13 crores which significantly adds up on earnings( PBT of 14 crores + net tax credit 10 crores) under section 35 AD of income tax. I think the capital intensive nature gets partially offset by this tax rebate from the govt.

To sum up, Being initial days of coldchain logistics and capital intensive nature of business, the financials may not reveal the true potential of this business. Maybe once they attain a critical mass it may become a superstar in India growth story.

DISCLOSURE : I am a novice in stock analysis and I have got no roots in financial education. The above analysis is purely based on knowledge gained from open forum from fellow investors and I have all rights to be wrong in my analysis. The intention of this post to know the faults in my analysis which will help me in becoming a better investor. Also I thank Mr.Jatin Khemani of stalwart advisors for his blogpost on India’s Consolidation Wave.
At this juncture I dont have any position in the Company discussed. Am waiting for your comments. Thanks in Advance.

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