ValuePickr Forum

Hitesh portfolio

Hi Hitesh sir, how do you know which particular sector is trending? Do you look at which sector has given the most return in last 1 week, 2 week or 1 month or is there any other way of identifying this?

Also do you look at individual stocks or sector indexes?

Thank you in advance for all your guidance :slight_smile:

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Hi Hiteshji,

I have taken a small opportunistic bet on cement sector ( basket of kcp,orient, Birla, ultra) with a view of recovery.

Do you think it wise to exit opportunistic beers and stay in cash?

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@dilesh_nair

I too had issues of spreading myself thin in terms of portfolio allocation. And ended up having close to 20-25 positions… If this kind of situation happens because I have taken a basket approach in a 2-3 or more sectors, then its okay. But otherwise I often do not feel comfortable with so many stocks.

One filter I brought in was that I took position in a stock only if I felt confident about minimum 5% allocation and preferably 10% allocation. This has led to refinement in filter process and the filters over a period of time became more stringent. This often cuts both ways. We tend to miss some big winners but I look at portfolio returns rather than individual stock returns and that helps in dealing with such misses.

I think allocation strategy is one of the most under rated strategy in investment. I recently had a chat with a very good investor friend of mine about his strategy. He is much more experienced than me and probably has got higher strike rate. But when I asked about his position size, I was surprised to see his positions were very low as compared to mine. As for myself I have most of my networth in equities since a long time now. There was a lot of pain during March 2020 crash in portfolio, but having dealt with corrections earlier, and the severity of the fall we witnessed, I was quite confident that once the correction was over we were in for good times. ( Not the crazy good times we have had, but my expectations were about reasonably good times. ) So I had allocated nearly all my capital and surplus funds once I got a feel that market had digested all bad news. And I got that conviction in May-June 2020 long after the bottom was made .

Regarding buying in lots versus single shot, most of the times I buy in big lots over short periods of time but there are no general rules. Sometimes due to fund crunch, position building is staggered. Other times its quick.

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Hitesh ji
Can you pls suggest views on Praj Industries

Thanks and regards

This entire reply completely vindicates my current approach to the markets at the moment. I am a complete novice who reads little. Hearing this from someone like Dr Hitesh has made feel like I may just be learning from the ValuePickr forum. Thank you.

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Namaste Bhai,
How do you assess companies which doesn’t hold concalls and hardly interact with the shareholders?

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I started out as a value investor as it sounded logical but after reading a bit more and following Hitesh sir here + current market conditions, I am actually doing mostly momentum and breakout trading/investing i.e. buy stocks which are in strong uptrends in the 3 / 6 month periods and which are breaking out into new highs after some consolidation/pullback… Results are significantly better. I sold stocks which were value bets for me earlier such as ITC, Jagran, some PSUs etc. and invested in momentum stocks and results have been significantly better.

One problem I am facing now is that I have got stuck in Adani Total gas. I had allocated slightly over 10% of my pf to this and it is everyday at lower circuit since last week. So, my stop loss got missed…

@hitesh2710 Do you also face such issues? Or since you also look at fundamentals, you would never enter a scrip like Adani :slight_smile:
Please advise…

Also, is my position sizing off? I am allocating 5-10% of my pf for every buy I find with less than 10% stop loss.

Another problem is I am buying stocks I don’t know much about. I just have a long shortlist of stocks with good momentum or with stories on VP which I like and then when they breakout (i,e. > 3/4% movement post 10 am in the morning), I just look at the chart and buy. I am strictly cutting losses and booking profits on the upmove…

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@Rudresh

Its tough to track companies which do not hold concalls or give out presentations or any details on annual reports. Many a times I rely on VP forum where nearly every company is discussed in details and if I find someone who has dont exemplary work, try contacting him/her on private message and try to get a better idea about the company.

Other option is to contact the network of investor friends I have made over the years to see if anybody else tracks it or if anybody hails from the place where company is located, and get a better picture.

AGM is the best platform to get details about the company. Often annual report, company website and a call to someone at the company handling investor affairs also helps. While calling the company we have to be ready to hear rejections a few times but if we try to impress them with knowledge about their company they are often forthcoming.

@Ajjugattu Last I saw, neuland labs had formed a bearish head and shoulders pattern in the short term daily charts. Need to see for a few more days whether the pattern is playing out or not.

@ganesh_bastwadkar Praj remains one of the biggest beneficiaries of the new ethanol fancy. How much is priced in at current prices is a call an investor has to take.

@Shankar With opportunistic bets, we have to have a clear idea what our stop loss and our targets are, besides our time frame. You can take a call based on above assumptions which you can arrive at by looking at fundamentals and technicals of the company in question.

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@alexander Glad to see you doing well. I feel there are times to do momentum investing and times to follow the value approach. The current rally looks good for momentum investing.

Regarding stock selection, as you rightly pointed out, I preferred to avoid adani group shares because of my personal bias. (and missed a few big winners in the process :grinning: but I am okay with that)

Your position sizing is okay. Keep a part of your portfolio for momentum strategy and once you are comfortable with the process and develop an appropriate temperament for it, you can increase total allocation to momentum portfolio according to your comfort levels.

The important thing to do is to plan the trade in advance. So the effort needs to be done before market opens up. During market hours, we tend to get swayed with movements in stock prices. So better to plan in advance and execute if necessary conditions are met.

I usually prefer short to medium and often long term trades and hence look at weekly or monthly charts and take a call. So I am not too much influenced with daily or intraday movements of stock prices. Plus I always try to look at fundamentals and if I find anything discomforting, I avoid that pick.

Regarding buying stocks you don’t know much about, better avoid buying them. Or if that’s not possible, then keep the allocation low so that the trade does not hurt you.

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@hitesh2710
Pls share ur views on GIC HOUSING ?

Thanks

Hitesh Bhai, Any veiws on EVS ?

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Sir, does it mean the current market is in frenzy ?
Charts show that majority of stocks are yet to emerge from bigger timeframe(i.e. 5-7 years) corrections. Most stocks haven’t even started their run.

Hitesh ji
Sugar stock has already taken a good run up
Which is better approach to invest at current valuation- basket approach or individual stock
Any link for stock analysis at present valuation and future prospects

Hitesh sir can you review my portfolio please

Hi Hitesh bhai, would love to know your thoughts regarding the following:

  1. You mentioned in one of the posts that froth is clearly visible in the market, is it possible to mention the sectors/names of the companies where this is the case?
    Are the valuations pricey only among the industry leaders due to scarcity premium like Aarti Industries/Navin etc. or is this true for small/midcaps too?

  2. Banking stocks (HDFC Bank, Kotak) have not seen much movement in the past few months and are available roughly at pre-covid prices (and at a 10% discount compared to ATH)
    What are your views on these? Can this be an opportune time to buy these when a lot of people are worried about the possibility of increase in NPAs due to covid or are these headwinds real for these businesses? (Even from a 3-5 year perspective)

  3. Specifically for Kotak, which has always traded at a premium when seen on Book value, if and when the subsidiaries like AMC, Insurance etc. get listed separately in the medium-term, how do you see their impact on Kotak Bank stock?

Thanks in advance, always a pleasure to get to know your thoughts :slight_smile:

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@Kuldeepjadeja

GIC housing is a company I am invested in. It looked like a value pick based on the discount to book value some time back. I had a similar experience few years back in Canfin when it used to quote at discount to book value. Though at that time, Canfin was a growth stock with negligible NPA available at discount to book value. Here, there are uncertainties related to NPA because of Covid issues. But despite that, I felt that such a huge discount was unwarranted.

Yesterday company gave very good results and it seems profitability seems to be on track. Now it needs to start showing growth in its business. Till that time, my minimum expectation is that the stock price reaches its book value atleast.

Technically above 130, it had formed a very good breakout pattern from a cup and handle.

@Kailasa_Tiwari I do not know exactly what is meant by EVS. If its Electric vehicles, I dont track it too closely as there are few ways to play the theme in Indian markets.

@virtualmanish I have expressed my views on sugar stocks in the past too. Personally I made my exits with decent returns, but I think I underestimated the strength of the rally in sugar stocks.

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@Ansh_Gupta

  1. Maximum froth usually happens in the sector in fancy in any bull market. The speciality chemicals sector has undergone some serious re rating due to market fancy in that sector. Stocks from the sector have gone up multifold in a short period of time. In this backdrop, its not unusual for some excesses to happen. I think in some speciality chem stocks there does seem to be froth and valuations have been pushed to limits. A lot of smaller names with special niches are enjoying lofty valuations. Lets see how things pan out from hereon.

  2. I think within banking space, there could be a change in leadership. My view is Axis/ICICI could outperform compared to hdfc bk/kotak bank. Its just an observation of the way prices are moving and difficult to justify with data points. But if I were to buy private banks, I would prefer axis/icici to hdfc bk/kotak. For someone who does not want to go through too much brainstorming, bank bees like products also make a lot of sense. Or go for a basket approach with 2-3 bigger banks and 2-3 smaller banks.

  3. Kotak subsidiaries do have a lot of value, but I think part of it is captured in valuations. Plus all these assume more value when management takes concrete steps to list them seperately.

I think in banks both PSU and private, there are pockets of undervaluation which could be exploited. Some decent banks have been punished in view of expected Covid related problems. Sometimes this punishment is out of proportion to the problems that these banks might face. That’s where opportunities could prevail.

I will not be naming any picks from these sectors, but anyone wanting to do some digging and getting their hands dirty will find some gems.

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Hiteshbhai - I wanted some help to better understand Gap Filling concept. Can you please share what your understanding is of Gap Filling and how you use it for decision making?

I will share an example with daily chart of ETSY (Nasdaq listed) which has made me curious:

It had a gap down opening on 6th May 2021 with heavy volume. Then consolidation for about a month and half. In 3 trading sessions from 22nd to 24th, most of the gap got filled really quickly. And as soon as the gap got filled, up-move got even stronger and quickly gave a 10% move in about 3 trading sessions on decent volume.

As per my basic understanding, in this case of ETSY, the gap would become resistance in a way. And as soon as resistance is broken (after filling gap) there is suddenly more force joining hands to push it higher. Opposite would be true that a stock would correct after gap is filled for something that had gap-up opening and traded higher for a while. Is my understanding correct? Or its just one-off, very short period, too random and I am thinking too much out of this.

Thanks!

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Hiteshbhai your view on THIRUMALAI CHEM as
1.it is valued below 2X sales
2.new plant went just online after long time

Rerating possible or am I missing something for lower valuations?

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Hitesh bhai, I use a channel breakout strategy buying near all time high and increasing position after the breakout and the results have been astounding. But now a days, the screener is overflowing and the market has been euphoric.

The question is whether we need to show caution and concentrate on preservation of capital or we need to keep dancing as long as the music is playing thinking net net the winners will take care of the losers?

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