Not sure if such a thread exists, but should be useful.
How to generate stock ideas?
Most of the valuepickr ideas are original, away from general market, hence cheap and did very well.
How do champions here generate these ideas - Hitesh/ Ayush/ Donald/ Mahesh ?
Hi Aggarwal,
When I started out actively investing in 2008/9, I found myself at a disadvantage to others already in the market for a number of years. So we developed our own screens - with queries like Sales less than 1000 cr, Sales growing at 25% every year for past 5 years, Profits growing 25% every year for past 5 years, ROE greater than 20%, pays some dividends - etc. 
- some screens did throw up good names for us like Manjushree technopack, Mayur Uniquoters, VST Tillers, Ador Fontech, Esab India and the like.
Today you can use Screener.in - a fabulous single-stop source for doing above based on the investment criteria you may be interested in. I would think the best screens are which in addition to quality criteria - look to spot accelerated growth over recent quarters or a turnaround situation in recent quarters, or a markedly improving operating margin trend over last few years, and things like that.
But you may soon realise like I did - that our best screens could surprise regular market participants like Ayush and Hitesh only 20% of the time. 80% of the time they already knew of these companies:)
Regularly reading business magazines, and dailies like Mint/Economic Times, reading popular investing websites and blogs, visiting forums like ValuePickr and EquityDesk and checking out ideas discussed - setting Google Alerts for areas you are interested in - today the avenues for ideas are endless. It’s becoming important to develop well-formed investment philosophy - so that one doesn’t drown in information overload.
At ValuePickr - Check out the Success Factors thread as well as Lessons from Mr Market and the Portfolio Q&A threads - you will get several inputs to develop your comments/thoughts on investing avenues that might interest you.
That may be more important while starting out - than the focus on generating good stock ideas. The individual threads at ValuePickr and other forums like Equitydesk are doing a good job of generating enough investment-worthy ideas - actually more than we are able to do justice at the moment:(. So check these out for more -80% is already there!
Hope this helps.
thanks Donald. you are always encouraging.
i already have a good portfolio which fits well with my weekend style portfolio mgmt, given tough job schedule. most of the ideas have been sourced from valuepickr, TED, couple of senior investors etc.
really like the idea of yours to see possible change in growth/ margins in recent quarters.
but am in awe of skills of hitesh, ayush, mahesh, yours in generating new undiscovered ideas… would like to experience that thrill myself !!
hitesh/ ayush/ mahesh - please share your views also…
Ayush and Hitesh are a class apart.
At any stage of the Market they can give you 5-6 ideas which are worth investigating more:)
But sustained work/reading goes behind that skill. You will be amazed at the amount of ARs they read every year.
Hope they will share more from their side.
hi
Coming to how to generate stock ideas, earlier I was almost an encyclopedia of most of listed stocks… Used to have idea about most of the stocks and what they did.
Nowadays, I limit myself to looking at fewer ideas… Things I see in specific stocks is balance sheet, past growth, possible triggers, management talk and walk, future prospects and so on.
Where the ideas come from is just what donald mentioned… mostly blogs, magazines, sometimes looking at quarterly figures and then looking further…, nowadays other friends and fellow investors too send some specific stocks to look at… Thats the easier part… Getting the motivation to look into more details is more important… For that to happen there has to more than figures to excite me.
Coming to all the parallels and comparisions drawn, I think I am still at a learning phase and the interaction at valuepickr helps a lot… reading books in between helps… and there are some guys at valuepickr whose comments i make it a point to read… Always insightful.
Sometimes you do harbour an idea for some time. … and then something triggers to make u more interested… e.g symphony… I was not new to it… I was always excited about it but attending the agm convinced me about the company… One only had to listen to Mr Achal Bakeri to get his bullishness on symphony transferred to you…
So basically getting an idea and taking it to next level is often difficult but something often triggers the thing and you get hooked on to the idea.
I have to credit donald to make my thinking more organised. about ayush, he’s a mine of investment ideas…
regards
hitesh.
thanks Hitesh. good to know your views. i think going through lot of companies helps in making mental models, which can later be used to screen new stocks.
i was thinking we have discussed and learnt a lot about 2nd and 3rd step of investing - how to research and how to make a portfolio. only 1st step - getting stocks to research - is untouched with VP style depth !
I used to be a newbie before, I used to search for unique opportunities for long. I felt comfortable only when none knows about the stock I hold. Now it doesn’t matter. Don’t actively search for stock and Let the ideas come to you.
Dont worry about new stock. Existing stocks (already discussed in this forum) itself can be good idea
@vishnu the focus is more on learning investing, while continuing to make money. getting fish is good, learning to catch fish is something which i want to learn. catching fish entails all steps 1,2,3
hi ash,
I would say you need to develop your own screen. This may happen over a period of time. You talked about the 3 stages of investing. Each of them equally matters a lot. Finding a new stock is not just about the thrill but gives one the early mover advantage.
All different ratios are available in the market and lot of data and a bit of mix and match. Try several of them sales, profit, promoter holding, dividend payout, profit margins etc. Try different sectors, future of different businesses, if it is not me too.
And last but not the least luck on your side.
Hi Hitesh/Donald, can I know any of the public screener names you created on screener.in
I think the key to finding new companies lies in the idea of inverting. Asking where would you die and not going there.
Make a list of attributes in a company that’s a strict no-no to you. For example high debt-equity ratio. Create a screens which exclude these attributes and now you have narrowed down the list.
Now from this list remove the companies that have bad management, as it is a qualitative aspect you might need to research a little bit. This final short list is the universe of stocks that might interest you. Also you can exclude companies from the sectors that you don’t understand or are not-interested (circle of competence)
In this short list I believe one needs to go through each company one-by-one. Ofcourse one will go through companies he doesn’t like but even that is not a wasted excercise coz it will help him in understanding the other company of the same industry/sector better.
I used to be the guy promoting stock screening heavily in 2008-10, when we introduced powerful stock screening tools for amateur investors in India. It is great for new folks to try out different investing hypothesis (form the Gurus) and what naturally appeals to yourself once you start forming your own concepts/comments after playing around a bit - putting your money where your mouth is! Every newcomer should dabble with stock screens - at a practical level - its is great learning aid. But one must take it seriously - it is only a tool - junk-in will mean junk-out! So before starting out its a good idea to familiarise yourself on basics of practical stock screening.
Practical Stock Screening(ValuePickr brief)
Creating Stock Screens that make practical sense(be patient, direct PDF download)
The above PDF is best-in-class literature on stock screens - all my screening I learnt from here and were able to create Enterprise Screeners that Institutions like Fidelity & Morgan Stanley (in India) were very impressed by in 2010.
Enough dabbling with stock screening - can help learners a lot - in forming/discarding your own investment hypothesis.
Remember that even the best designed screen is only a preliminary searchfor investments using a small set of quantitative factors.A complete in-depth analysis that explores both quantitative and qualitative factors MUST follow any screen.
Stock Screening is just one more way of creating investment-worthy shortlists, that’s all.
Having said all of above, I must also inform everyone that I haven’t touched a stock screen in the last 2+years.
Like Hitesh mentioned before, friends (investment circle) give you many more investment-worthy ideas, or investment shortlists. And I am most fortunate to have Hitesh and Ayush as my close friends :). The ideas that come through both these guys - are already screened for
a) Defects - in the sense, that they will not even bring up something for in-depth scrutiny, that has known (even if remote) flaws (read the Failure Patterns threads)
b) X-factor - their ideas will be with a difference, than run-of-mill
My practical experience shows these are the best 2 human screeners I will ever need. I haven’t needed stock screens, everafter. As it is, I can’t do justice to the backlog that is always with me - thrown up by these two (excluding many other ideas that come).
I don’t need to invest any time in generating new ideas. That has never been my strength. My strength is in going deeper into some of the ideas from above that excites me. I realise that and they do too. We have developed that teamwork where we respect complimentary strengths of each other.
ValuePickr community - if you participate strongly/energetically/showcase your extensive homework - gives you that opportunity to find others with complimentary skill-sets and form your own investing teams. After some time in the market, one must realise ones own limitations and associate with others that can help you to build on your strengths despite the limitations. One should try everything, but no one can be jack of all. You must identify and develop - what works for you.
Now on a related tangent - (to finding complimentary strength partners)
I can’t help noticing/and commenting - too much of pontificating - opinion-bazi - theorising does not lead you anywhere. Too much time by too many folks is spent on opinion-ating on others opinions :(. And too little on doing one’s own original homework and sharing back in the community, helping and learning with others through practical hard detailed work. Don’t excuse yourself from serious thinking/hard work digging on data/patterns citing I am a full time professional - where do I have the time.
The best way to find others with complimentary skills is to become OPEN and FLEXIBLE - is to do your own original hard work and respect those that do their own hard work. There are many many methods that work. It is important to form your own opinions, but be aware that can also become a big intellectual trap if you are not careful - you may just forever remain in the intellectual trap - (being aware even half-aware) - keep repeating the same opinions everywhere - and fail to do any serious legwork/homework on your own - even when you see evidence contrary to your deeply-held opinions. We see too many of them at ValuePickr. We see too little of serious workers in ValuePickr, but that’s Life and we are Okay with that. The hope is, some of those reading this. wake up!
I had a related question. Once we have used the screener (or got a recommendation) and done all the homework and due diligence, read 5 years annual reports etc, but the price is not right at the moment. Say there are many such stocks (> 40). How does one usually keep track of dips in stock prices. Does one check all of these everyday or every week? I ask this because everybody becomes aware of a general market dip (10-20%). But there are times when an otherwise good but obscure stock may go through a correction without it being reported. Just wanted to know if there are tools available that you people use?
Thanks
IPOs are an excellent source of new stock ideas. These are young and fast growing companies that are riding on emerging trends in the economy. Every year there are at least 30-50 IPOs hit the market (more during bull markets). All we need is to find 2-3 good ones. Here is a list of good IPOs that hit the market in last 5 years
2018
Bandhan Bank
ICICI Securities Limited
Amber Enterprises India Limited
2017
Avenue Supermarts Limited
Shankara Building Products Limited
PSP Projects Limited
Eris Lifesciences Limited
AU Small Finance Bank Limited
Salasar Techno Engineering Limited
Apex Frozen Foods Limited
Dixon Technologies (India) Limited
MAS Financial Services Limited
HDFC Standard Life Insurance Company Limited
2016
Mahanagar Gas Limited
Dilip Buildcon Limited
PNB Housing Finance Limited
Sheela Foam Limited
2015
InterGlobe Aviation Limited
Shree Pushkar Chemicals and Fertilisers Limited
Alkem Laboratories Limited
Dr. Lal PathLabs Limited
2014
Shemaroo Entertainment Limited
Sharda Cropchem Limited
Wonderla Holidays Limited
These are the ones I liked. You may like a different set. Key is to separate good ones from those that are just cashing in the rally. The advantage is that IPO prospectus is filled with useful information which helps us to separate wheat from the chaff and build conviction.
As market goes up, IPO pricing becomes aggressive but it also encourages more companies to go public so there is advantage and disadvantage too. 2017 saw a large number of good companies for the same reason. If the price is aggressive, you can add the company to your watchlist and buy it in a correction.
@Donald ,
The links are not working now , Would it be possible to share the pdf again please.
Screener also has a watchlist-ing function where you can track companies regularly with updates.
If your list is too long, I would suggest Money Control’s shortlist (On the App, preferably).
Hi @Yogesh_s ji,
It seems you have studied IndoStar Capital IPO, could you share your findings? Revenue is growing faster than profit, 42% of AUM is in RE, 11% unsecured loan, however positives are high NP margin, low NPA & priced at ~20PE. As per my findings, its a risky bet.
Apologies if you think I am hijacking the thread.
Upon further analysis, I don’t like IndoStar. My analysis is here Edited my earlier post to remove IndoStar.
Thanks @Yogesh_s for sharing the details! Very helpful!
