Greetings fellow investors,
I had posted about my portfolio a few weeks back but it was removed because of some inadequacies in my write up. So this is a modified version with more of my thesis on it. Please note that I am a newbie 17 year old investor with a small capital and have started just a 2.5 years back. (So I may not have solid answers to your questions due to my flawed research but I will try my best to answer them as per my understanding). I primarily draw my investing style from Charlie Munger, Peter Lynch and Mohnish Pabrai. Also please excuse the not-so-good presentation. Here are the stocks that I hold:
1 PCBL ltd:
Buy Price: 110
% of portfolio: 29%
2 Edelweiss Financial Services:
Buy Price: 38.3
% of portfolio: 21%
3 Vaibhav Global Ltd
Buy Price: 361
% of portfolio: 13.7%
4 Carysil Ltd
Buy Price: 620
% of portfolio: 12.2%
5 Rain Industries Ltd
Buy Price:160
% of portfolio: 10%
6 Iris Business Services Ltd
Buy Price: 136
% of portfolio: 2.2%
7 CASH
% of portfolio: 11 - 12%
THESIS
PCBL LTD:
- Company deals in Carbon Black and its derivatives (used predominantly in Tyre Industry).
- The company is a part of RPSG group and has a management of years in the sector. So the management checks out.
- It is sort of like an oligopoly company in world and duopoly in Asia.
- With that sort of leadership and market share, the valuation wasnt jusitfied.
- Also the company has strong clientel in tyre segment (which itself seemed to have good room for growth to me).
-The company struggled from the low profit margins so I was hoping that they also enter the specialty chemicals business (which has good margins). So the company did! It acquired another global player in water treatment for 3600cr just recently. - Though it remains to be seen how the growth story goes from here.
- Side note: Ashish kacholia owns 1.8% of the company acc to finology.
Edelweiss Financial Services
- I cloned the thesis from Mohnish Pabrai. It is a part of his spawner framework which includes companies like microsoft, tencent, amazon etc.
- In layman terms, spawner means a company which operates in multiple verticals under a common sector.
- Edelweiss operates in NBFC segments and has its footing in various verticals like broking, wealth management, asset reconstructing, insurance etc.
- The company went through a tough time after the 2018 crisis but saved itself from bankruptcy. The promoters also have a track record of building business with caution (as opposed to rapid development) and learning from their mistakes (as they have decreased their corporate loan book after 2018).
- The promoters have an aim of incubating various verticals one by one and list them on the exchanges to fund the growth of those verticals.
- I knew that the premerger wealth management company (now listed as Nuvama Wealth Mngmnt) could be worth almost as much as the entire company with the AUM it possesses. The only piece left in the puzzle was the demerger which did end up happening just recently.)
- Company may not have VERY favorable economics but i do believe in the management, the sector in which it operates, and the mispricing of its actual value.
Vaibhav Global
- An exporter and manufacturer of jewelry products in West.
- Most of the sales come from US and Uk. With dollar appreciating, it can also benefit the company.
- Inventory is not a problem as the value of its inventory only increases with time.
- The share price fell to almost 1/3rd its value (from all time high) just because of a bad financial result that was because of the fall in consumption due to interest rate hikes.
- I feel that when the demand picks up after cuts in rates, sales will be back to normal or will even increase.
- I think the stock was another victim of heavy beating down and has room for growth with its business model.
- Side note: Vijay Kedia is an investor in this stock and has increased his holdings in the recent quarter acc to finology
Carysil Ltd:
- The company is a player in the kitchen decor/appliance space and has carved out its niche in Quartz sinks.
- Quartz Sinks demand is set to grow and the company is one of the largest producer in that segment.
- The financial position of the company remains strong but it remains to be seen how, when and by what magnitude this demand of its product picks up.
- Financial metrics remain under control and healthy but a bad quarter can affect the stock price by a big magnitude (but the concalls assure that it will not be the case) so this isnt a stock of high conviction for me but i see that the company has decent growth prospects.
- Side note: Ashish Kacholia and abakkus funds own a stake in the company as per finology.
Rain Industries
- Company is an oligopoly manufacturer of Petroleum Coke and also has a footing in cement manufacturing.
- It is a special situation stock as it has sales of roughly 4 times its market cap and debt being at roughly twice of market cap.
- Debt was taken with a “heads I win, tails I dont lose much” type of risk management.
- You should watch the thesis of mohnish pabrai on youtube as the thesis remains the same.
- Company has managed to generate good amount of cash flow from operations.
- Stock should gain momentum once the debt reduction starts.
- The negative thing that i see that the cyclical nature, high debt levels and lack of determination of management to reduce debt.
Iris Business services
- A micro cap company in IT space. Its niche is that of Regtech. IRIS BSL is a RegTech SaaS company that helps enterprises, business registers, regulators, central banks, stock exchanges, BFSI, and other organizations meet their regulatory compliance requirements through technology-driven solutions like Artificial Intelligence, Machine Learning, and Robotic Process Automation.
- I have applied a simple framework that seems to have worked with other investors of micro cap in general:
1. Growing Sector/ Product utility
2. Decent management
3. Operating cashflow positive
4. ROE/ ROCE at decent level
5. Positive Sales Growth
6. Strong Clientele (here it is BSE. CDSL, SBIN, and other largecap companies) - Despite this, I have only gone for 20% of the total amount im willing to invest and will probably upward average it.
(Disc: Not investment advice. For educational purposes only)
I want your suggestions on my investment style and also flaws in my reasoning/thesis. Forever grateful to this great community of Investors.