Hi Sir, I hope you are doing well. In order to learn Forensic analysis of Financial Statements, which boom will help in learning the same…
Thanku sir I have ordered that…I just started porfolio for trial basis before putting all money and some of my stocks are already running quite good to 30%…is this what is called first luck 
or I have found something good…some stocks are Sharda motors (I felt undervalued when bought) , Likhita infrastructure , mahindra resor and club , netweb.
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Good Day @hitesh2710
A very broad question.
As a investor - I have done my study in Pharma, Chemical sectors and there are 3-4 companies that i know well in terms of business and steadily understanding the demand/supply cycle, market cycle, capex cycle much more.
Question is that :
Firstly : Pharma, Chemical sectors for past 2 year : Has done nothing due to excess supply pressure, destocking and pricing pressure : there was a headwind which was unanticipated and these stocks have no momentum in them.
Secondly : There are other stock in sectors that are doing pretty well but i have no knowledge of it : and they have run far too long.
So as a investor what best choice should one consider?
- Sit with the known ones.
- Jump off the fence to look for opportunities
FOMO is the big elephant : if considered to jump on opportunity look out, the known/read stocks will definitely jump for a run…
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Chemical stocks, most of them seem to be in bottoming out phase. Whether its for longer term or just a tradeable bounce is difficult to make out at this point of time. In the initial phase of a bull run move, there is a lot of to and fro movement, range bound movement, which is often frustrating to an investor/trader. The feeling is that there is no momentum. Once stock price rises strongly with big volumes and clears previous resistances convincingly, momentum will return.
It’s up to us whether to enter early and wait longer or enter late (but with slightly higher risk as if the move fails, you have to be nimble enough to get out) and be satisfied with lower returns.
In pharma sector its not possible to paint all stocks with same brush. Lot of large caps have crossed their all time highs. Some stocks esp the bulk drug companies are in bottoming phase.
Regarding the second group of stocks you mention, currently there is strong momentum still present in the fancied names and sectors. If you can catch the moves and exit in time, there is still money to be made. But one has to be mindful that once an upmove comes to an end and correction begins it is often painful.
Best choice for an investor would be to go for a combination of two approaches, which is keep riding momentum stocks and look out for suitable exits, plus look at stocks which are showing bottoming formations and offer low risk entry points. Often these latter stocks and sectors are the ones that could turn out to be fancied sectors of next bull run.
I have seen a lot of investors indulge in the endless (and often useless) debate of Nifty having gone up too much. It can still go higher from here. Predicting market levels in the short term is quite difficult and futile. These kind of investors are prime candidates for FOMO.
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Hiteshbhai,
Greetings from Kerala.
I am completely new to this group. In the last two day, I have gone through several posts in this group and am impressed with the details and quality of your response to so many questions. I wonder if you would be kind enough to share your thoughts on these two companies:
Netweb Technologies
Concord Control Systems
I look forward to your insights.
Regards,
James
Dear Hitesh Bhai ,
Please share your views on Wokhard LTD after recent devlopment.
Thank You In Advance.
Dear Hitesh Sir
I want to know how to find a reason why a strong fundamental stock with good valuation falls and sometimes correct 10-15 % from there high. How a retail investor should be cautious from these type of events.
Please share your views
Thanks
One should always be prepared for a 25 to 30 per cent fall even in the best of companies when the market corrects. A good company will bounce back.
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Wockhardt has been discussed extensively in the relevant thread on Valuepickr. You can go through it. I have nothing more to add.
@jmpullat I don’t track netweb or concord control.
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Stocks can correct on their own or with overall market corrections without any rhyme or reason by 10-15-20% and that’s how markets work. Sometimes there will be corrections in stocks post strong rallies. Other times it will be a range breakdown and is often followed by quick rebounds. Trying to figure out reason for each and every 10-15% drop is a futile effort and would lead to frustration. If I am expecting a stock to go up multiple times from my buy prices, I should be ready to suffer many such drawdowns over a period of time.
Simple reason for all these things is "For every buyer of a share, there is a seller and they both think they are smart. "
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Dear Hitesh ji,
Thank you for your valuable insights.
I have come across information from various sources indicating that market cap and the size of the opportunity are critical factors in identifying multibagger stocks. According to the Motilal Oswal study, it suggests that stocks achieving 100X returns typically have a initial market cap ranging between 500 and 1000 Crores.
I am curious about the role of market size in determining multibaggers. For example, Chola Investment, with a market cap of 1 lac crores, aims to expand its loan book tenfold over the next decade which may result in multifold returns. Given the significant market opportunity in the NBFC sector, how does the company’s large market cap impact its potential for achieving multibagger status? (I am not asking company specific inputs however, to understand the bearing of market cap on future return, I cited this example)
If initial market cap is indeed crucial for achieving multibagger returns, what would be the ideal range to target for investment?
Furthermore, I would greatly appreciate your insights on which sectors or industries you believe the next multibagger opportunities will emerge from. Your perspective would be highly valuable to us.
Thank you for your insights.
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Hi Hitesh Sir,
Do you invest in US stocks as well?
Didn’t find any threads in Valuepikr for the international stocks
Do we have any forum where investors discuss on the lines of Valuepikr for the international stocks?
Thanks in advance
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You are right in the assumption that market cap versus opportunity size is a very important factor in unravelling multibaggers. But it is only one of the important parameters to look at and consider. There are a host of other factors, most important among them being growth in sales and profits.
I tried decoding the multibagger mystery in the following video. https://youtu.be/-3BpExbdZ8A?si=0Ty-o_Reo9-yUiA9
Personally I think there is no fixed market cap limit to look at. If opportunity size is big enough, market cap will not matter much.
Coming to sectors that offer good chances for uncovering multibaggers, at the current elevated market levels, it makes sense to behave in a contra manner and try to look at sectors that have been in a corrective mode since long and are showing some signs of green shoots on fundamentals and or charts. Some of the stocks in cyclical sectors like chemicals, textiles, cement etc might be worth looking at.
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Hi Hitesh ji
I hope you’re doing well. I would like to get your opinion on the following situation:
One of the stocks in the portfolio has grown disproportionately compared to the others. It is a strong company with capable management, and both the sector and the stock still have significant growth potential. There’s a high confidence in it. However, the performance of this single stock now largely dictates the overall direction of the portfolio. The portfolio is somewhat diversified, but this sector is represented solely by this one stock.
In this scenario, should one consider trimming this high-potential stock for the sake of diversification, allocation, or balancing etc ?
Also would like to know if possible, what are the possible consequences of not taking any action.
Thanks.
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If you could tell the company name, you might get additional insights from Hitesh sir. And, most members of the forum will not buy it from your mentioning alone.
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In investing, when you are on a roll and end up owning multibaggers in the portfolio, you start facing problems of skewed portfolio weightages. While its a happy problem to have, it still remains a problem.
Usually in a concentrated portfolio, until.a stock’s weight crosses 30-35% , its not a big issue. But once it assumes weightage of more than 35-40%, things start getting tricky.
The main thing to look out for is whether the stock is running hard on numbers, or narratives. Or a combination of the two. If its only narrative, then position needs to be cut. If earnings continue and further triggers are lined, up a longer rope can be given.
Psychologically, its difficult to digest the portfolio value swings that are dictated by a single stock being hevay in portfolio. But riding one or two big multibaggers is all thats needed to overcome this bias.
At some point of time, a decision would have to be made and trigger have will have to be pulled… The key consideration will be how much upside is pending at that point of time. If the best case earnings for next 2-3 years are baked into prices, it makes sense to atleast trim if not exit fully.
For consequences of not taking action, recent example is of Laurus labs. There were folks including me who had heavy allocation to the stock. If we had not sold when we did, and kept holding on, portfolio growth would have taken a hit. I had put up technical and fundamental reasons for exits at that point of time.
At times, after you sell, stock will continue to go up and make you look dumb. But that has to be taken in your stride. Most investors, including the smartest of the lot go through this phenomenon off and on.
Hope this helps.
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Hiteshbhai,
In light of the ongoing bull market, what key factors do you consider when evaluating stock and sector rotation strategies? Do you think it is wise to put a time stop to fundamentally/technically attractive opportunities if stocks do not perform well within a specific timeframe? Additionally, how do you determine the appropriate exposure levels to maintain in the market during this phase?
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While evaluating any fundamentals based investment specifically in cyclical.sectors, the parameters remain the same irrespective of the market levels.
But a time stop is often advisable because if there is a sharp counter trend correction or an actual reversal and beginning of a major downtrend, sector rotation theme will have slim chances of working.
About allocations, nothing much changes. But allocation remains high where there is higher certainty of earnings growth. During sharp market correction, everything is hit, but if bull market is still on, the latter group will make a surer and quicker comeback.
At some point of time, when froth is clearly visible (we are somewhere near it, but mkts can continue to look frothy and still go up) certain amount of cash buffer can be created… Creating cash and then sitting patiently on it is also a difficult job psychologically…
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Thank you, Hitesh Ji, for your invaluable information and wisdom. These kinds of practical insights are rare to find in academics or books.
Often, you hear about investing mistakes such as not buying enough of a correctly identified stock or not holding it long enough. If you avoid these mistakes, you encounter other challenges, which can sometimes be contradictory. As you mentioned, the experience of holding one or two such stocks, along with guidance from experienced individuals like yourself, is invaluable.
Thank you for everything you are doing for the investor community.
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