Sir u track Natco Pharmaceutical?
Your views
Natco is a leap of faith on the capabilities of its CEO Rajeev N. He has carved out a different business model for Natco wherein he takes big bold bets on litigious molecules with complex chemistry. You will find few me too kind of molecules from Natco.
The big trigger still awaited is the approval of Revlimid in the US. Its a big molecule and company has a settlement with innovator through which Natco can launch Revlimid beginning q1 fy 22 and can restrict its sales to a certain percentage (my guess is 10%) of innovator sales in US. This can progressively increase but the details of the agreement are not available as far as I know.
Everolimus approval has already been received two weeks back. Now it seems company is trying to get into domestic market with its first foray into CPTR molecule in the agrochem space. This foray was tamed by its competitor UPL by the latterâs colloboration with some other company which would launch a similar molecule. Natco has also announced its foray into pheromone based products for pests. How these domestic ventures fare needs to be seen.
But till now revlimid remains the big game changer and till now it seems the launch clarity is not available. I had a position earlier but exited because I found something else more lucrative.
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Thanks for your time sir
Yes sir they got into agrochemicals space recently. The reason I started tracking natco is it has a niche in Oncology and Hepatitis C.
I pray no one should get such dangerous disease but Fact is Cancers are rising by leaps and bounds. I think natco is reasonably good and trustworthy . So for them opportunities r big .
But from 2017 itâs sales are lagging around 2,000cr . Which is reflected in its stock price momentum as well .
So should I take a long position in natco for long say 10 years. Or better to stick n average laurus, IPCA and granules which i hold . ?
Natco ka oncology space looks promising
I am afraid I am neither qualified nor interested in advising you or anybody else on this forum on what to buy. The idea about having this forum is to enable investors to learn the art and science of investing so that they can take informed investment decisions. The aim of forum is not to spoon feed people and tell them what to buy.
I can discuss about the business of the companies I track, (and i track only a few) but at the end of the day the money that you are investing is your own and you yourself are responsible for it. So you need to take your own decisions.
PS⌠Hep C business for natco is a dead and dying business because patients are cured with its medicine and once cured that patient does not need the medicine anymore. If you listen to concall, Rajeev has stressed this point multiple number of times.
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Thank you sir
Btw sir are you still tracking Polymed Ltd ?
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Dear Hitesh Sir,
Post results, Alembic still not shown signs of recovery. However, I also notice that PE wise, the stock is almost near the lowest PE levels in last 8 years and at 200 DMA levels. I was thinking this seemingly bad times is good time to accumulate more and so I averaged down some. Do you still hold this? Do you have any views different from what you expressed in January above ?
Thanking you for your well thought and articulate views.
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@hitesh2710 Sir, Agreed but what to do for companies that are growing very fast (~40%-50%) like Dixon, HND Foods? Their valuations are also exorbitant. Does your theory also apply to these stocks? I am a new investor but managed to get into these stocks at a fairly early level. Since you are a seasoned investor, would history suggest that holding these are good or its better to sell them off since they are >100 PE? And there are quotes from Peter Lynch which creates more confusion to newbies like me - âDo not cut your flowers to water your weedâ.
@hitesh2710 bhai - wanted to pick your brain on the topic of Stop-Loss.
One common thing that I have read across many books on topic of a SL is that âyou should place a stop at a level that disproves your initial trade premise, as opposed to placing a stop based on your pain level.â This is simple and easy to grasp (in a way). This part is clear to me.
What I am still trying to figure out is what are the best practices around how to execute a SL. For example - I have a positional trade with entry at 100 and target price of 200+. I place stop where I know I would be wrong if price gets there. Letâs keep stop at 80 for our example. But how to execute the stop? Should it be applied on intra-day basis or closing basis or weekly closing basis? What is the best way to know that I am wrong given in this example?
Price may touch 80 on intra-day basis and rise back to 100+ levels and go on to touch target of 200+ in few months. Market forces proves me âwrongâ had I placed an intra-day stop, but the initial thesis went on to play-out as expected turning this trade into a loser instead of winner. On the other side, price may slide more and applying SL at intra-day basis would have been better. We would know this only in hindsight which option would have been better. I am sure there is no âone right wayâ here but I feel there has to be generic best practice(s) for SL execution that one can apply.
I want to know how have you evolved as an investor/trader in executing stops. What worked for you and what didnât work and how you became better at executing stops. If you can give certain examples and best practices of using different SL execution strategies that will be great.
Any particular reading material/book that influenced you in getting better at executing stops? Please share if there is any.
Thanks a lot - Hiteshbhai!
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As a company Alembic remains a company with excellent products and very good infrastructure. But as mentioned before, there were some uncertainties in the form of pricing of sartans and contribution from new plants. Both uncertainties still remain and there is no definite timeline for resolutions for the same. So for me its a company which occupies a place only in watchlist as of now.
You cannot go by PE in such cases. Because if next year there were to be a de growth in profits, then the current PE holds no meaning. Investing in alembic at current juncture is more of a directional call on the business once the uncertainties are out of the way. One cannot put in any earnings estimates in view of largely uncertain nature of a lot of variables.
@Aniesh7 I dont track polymed.
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In theory the thesis of putting a stop loss at a level that disproves your hypothesis (takes some time to digest such complex stuff 
) looks good. Problem is how do you put such theories in practice.
The idea should be to seperate fundamental investing from technicals based investing in such cases. Or if you have a techno funda approach then there is a definite number or a definite zone which you need to follow for stop loss.
In volatile markets like we have had since past few weeks, its prudent to follow stop loss on a closing basis⌠And either daily or weekly closing as per your investment time frame. If the position is for a few days to few weeks, then daily close and if its few weeks to months to years, then weekly stop loss.
If the investment is for long term, then I have observed that the most sacrosanct level is the 200 day exponential moving average. Once that is conclusively broken and there are a couple of closes below that level, then one has to bite the bullet and take a call.
As for me, most of the times I invest in my long term picks based on techno funda patterns. Its either related to a breakout, or some pattern like flag/cup and handle or some such pattern. So for me, the stop loss application becomes more objective as the level at which the pattern is negated, becomes my stop loss.
Say a flag pattern has a high of 100 and a low of 85 over a period of 4-6 weeks within a falling channel, then a breakdown below 80 will in all probabilities negate the pattern. For me that level will become a stop loss and I would be out of the position⌠But if the stock were to reverse and go above 90 or say 100 and with good volumes and other good technical parameters and set ups, I would have no qualms in getting back in position if I have the cash to re enter.
As I mentioned before, selling is not my best part of investment. I often get caught on the wrong foot while selling. . Stuff that I sell often goes up and stuff that I hold stays range bound or often goes down⌠But for me, buy price has to be such that a lot of mistakes in selling are pardoned. Though the selling part is still a work in progress for me and I have no definite theory going. Unless I have a technical or a techno funda position where I am much more comfortable in my sell decisions.
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@hitesh2710 Ji
Do you see Jubilant Ingrevia value buy and good prospect ( and also in comparison with laxmi organic) for next 2-3 years horizon ? Would like to know ur views on jubilant pharmova if tracking. Thanks
Hello hitesh ji,
What is your view on Syngene international and HDFC amc
Thanking you
Manish patidar
@hitesh2710 I truly appreciate your humble and frank response. Although I have had my bit of mistakes in the past, it is very reassuring to see my overall learning from the market so far is pretty much on the same lines as you. Thank you!
Hitesh Bhai. Do you track liquor stocks viz. United Spirits and United Breweries. The erstwhile management is outsted and is run by Multinationals. Further, compared to global markets, the MC of these companies is small vis-a-vis, the young population our country has. Can these be long term contenders given the brand and no new entrants in this space.
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I used to track the liquor stocks esp united spirits and united breweries. But the regulatory overhang due to one after the other state govts coming out and announcing ban on liquor sales (bihar was an example) as a populist measure seems to be coming in the way of consistent growth for these companiesâŚ
There might be a case for these companies if one has a 10-15 year view. Maybe by that time something will click for these companiesâŚ
Not tracking syngene, jubilant ingrevia, or hdfc ltd.
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Hello Hitesh Sir,
With Covidâs second wave becoming prominent and Maharashtra standing at the gate of complete lockdown, how it is likely to impact the markets. The markets such as US and UK did not have much impact due to second wave in those geographies. But our markets have run up quite a lot since last yearâs low and impact to us might be different due to the nature of our economy. Your views will be very helpful!
@rupaniamit Sorry for butting in on this thread with unsolicited advice!!!
Whether you use intraday stop loss or daily or weekly depends on your time frame. If you are taking positional trades like the example you gave, ideally you would have a end of day or end of week stop loss. In a shorter term strategy, like where you are holding for a few days, it makes sense to have intraday stop loss.
Always remember that stop loss as a strategy will reduce your profits over time but will protect you from catastrophic losses once in a while.
Like @hitesh2710 uses 200 dma as a stop loss, you could use many other indicators like ATR or RSI or MACD etc. You could also use a combination of price and volume as a stop loss mechanism.
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Hi Basu Mallick,
Can Amitâs question, Hiteshâs and your responses be carved out into separate threads?
Your awesome responses will form a great guide for folks in understanding when to sell.
https://forum.valuepickr.com/t/vp-chintan-baithak-goa-2017-selling-decision is a candidate.
If not, an altogether new thread will be great as well. It can be pinned too.
Hitesh Bhai. What is your framework in dealing with risk associated with unknowns, which may not give any opportunity for a good exit. Like income tax raids at all locations, arrest of key persons in some economic offence etc.
These risks may be more in small and mid cap where no much information about the management is available as compared to large caps.
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We cannot have a fixed framework for dealing with unknown risks in small/midcaps. Because the risks come in different forms and often are unforeseen.
But in companies in the small and midcap space, we need better homework before investing if we think about multi year long term investment in the company. If its a short to medium term trading call its okay. For longer term consideration, its important to be comfortable with management/promoter quality. This comes from going through track record of the company, annual reports, other resources like concalls, presentations etc if possible. Wherever possible one can go and attend the AGM and have a few words with someone from management team. If the right questions are asked they are open to discussions.
Practically speaking, this helped me in my investment in Mayur uniquoters. I had bought it in 2009-10 when situation was very fluid after the global financial crisis and small midcaps had a lot of volatility because of a variety of newsflows. I began having interest in the company when I think Manav poddar bought shares from open market when stock price was around 100 or so. Low was around 20 prior to that. For him to add from the market when promoter holding was already 72 % then was what ignited my interest in the company. One of my friends attended the AGM and gave me feedback that this was a company which was for keeps and management was very good. Some time later there was issue raised about management having allotted themselves warrants at a cheap rate few years back and there was a lot of noise regarding that. But since I was confident about the management I had no problems holding on.
Another example was with respect to ajanta pharma. After around 1 year of holding there was news of income tax raids and stock price had corrected all of a sudden. Before this happened some guys from VP had met the management (and some other friends had attended AGM)and hence I asked their feedback regarding this. According to their feedback management quality was quite good and growth oriented and hence I kept holding the position. I think we have record of this on VP thread on ajanta too.
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