Journey of Equity investing learnings , growth and scaling

Investment Learning
1

Hello Everyone i have been a silent reader of Valuepickr for years since a decade or so. I started this post as i have learned from fellow valuepickrs , great investors , own mistakes i would pen down those to list my own thoughts and get back to them to keep learning curve and for others who may get some help with my learnings.

Please consider these as just views and my self learning ( no buy & sell recos ) .

My journey started in 2007 when i was too intrigued with markers and movement and i thought this is way to get rich quickly. My dad gave me some money and opened a demat account so i could explore my inertia. I started dabbling and some quick money gave me goosebump. In 2 years 2008 markets had a way of teaching lessons and i had a big pile of contracts and low networth than i started with.

Desire didnt die and i felt i needed to learn to get better i explored by talking to people taking tips and doing primary checks and investing . That didnt yield much as i wasnt fully aware about what i should have been looking at .

I remember i traded Suven pharma @ 20 rs for a 2 RS profit and i had averaged satyam post scam from 70 Rs to 10 Rs. Though i didnt hold enough to make money there.

My risk reward was not in place. I never looked at downside i always was too bullish on anything i bought.

Years passed capital was low and i did few good investments which yielded decent returns .

I started working and focus on equity was low but i was active with what was happening in markets.

I took decent size bet in Enkei wheels & Tejas network i averaged down from.300 rs to 100 rs didnt make anything in 1st one lost well in 2nd at that time tata taking stake was not announced telecon was not doing well and tejas was bleeding internal employees were selling . I lost patience and sold out .

My real journey to investing began post that in 2018

2 Likes
2

2017-2018 i inherited portfolio from my dad and it put a lot of responsibility on how to steer it. I coudnt go wrong was my no1 objective second was to compound it well. I got more so agreesive on learning read magazines read books on investing , started following some legendery investors samit vartak of sage one , vijay kedia ji & others.

2018 - 2020 was a lackluster period where quality did very well and mid and smallcap didnt do well . Luckily portfolio had companies like Colpal, HUL ,abbott hdfc bank , trent, castrol India which was doing fine. I used to check results follow the buisness and i felt comfortable as PF was growinng in double digits .

2020 hit and thats where transition of portfolio began for me. Fall was decent PF fell i guess around 30-40 % and being in quality names didnt bother much as i said they will come back eventually.

My first encounter to go into midcap and smallcap happened when i looked at Laurus labs @ 90rs in 2020 June . I started following business and i liked everything about business but was worried about market in generals and i missed it at 100 , then at 150 .

I took advisory in 2019 of Intelsense @basumallick and his reco on Laurus i missed .

I was too cautious to not loose money that i was in decision paralysis . I lost a 6 bagger in a year ( closely monitored & understood ). Mistake of omission.

Journey to midcap and smallcap started post that when i said to myself i will evaluate business and not let my past ( losses ) fear of lossing money come in way .

Dada helped and guided on psychological thoughts as i always used to ask dada how do i sell castrol and buy a midcap company. His handholding has helped a lot in my journey.

Next midcap idea was Elecon Engineering , i had dabbled in elecon in 2008 @ 180 and sold eventually @20 i knew the company and that past encounter helped me . My thoughts were this company has gone through worst but never closed. Story of margin expansion sales growth and debt reduction was visible to my eye . I loaded it @180 then @220 and then at 370 . Was a sizeable 5-7% size at cost. Recently exited around 1200 . That was first big win on large size allocation

1 Like
3

Elecon gave me the needed confidence now take some more risk as my idea was now i have some buffer i can take some risk .

2022 Gujarat fluoro and HBL were 2 ideas i loved both stories GFL aroudn 3300 & HBL around 95 .

HBL i added initial a 5% allocation and eventually scaled with improving business @ 250 & 270 . Here as well i tried to wait for numbers @130 rs when train accident happened and then HBL never stopped. I still hold my position and havent sold and this is now highest position for me in PF . GFL i sold at 10% loss which was also a 15% size .

Credits where due @basumallick @Anant . Anant detail post and his view on valuepickr had benefitted a lot . It helped to understand the business better as they didnt do any concall.

I have learned from @hitesh2710 @Anant concept of building big positions i am trying to get better as it comes with its own risk . Note - those are my learnings i have tried to pick up its my view not their thoughts which i am penning here .

Scaling a position is what i am trying to go to. Now after lot of practise i can scale upto 20% position . I generally averge up my position basis fundamental and charts . Even if i like story i will add and then wait for numbers / technical volume and price to play out to add further . I prefer cushion of my first entry to add more.

2 Likes
4

I have missed a few multibaggers in journey Waaree , Zen technologies as i was too biased on my idea of valuation . I am now trying to be flexible and add position where valuation could be higher ( perceived ) PE / P/B but buisness and scalability runway is higher .

I have other few bets i have taken in the process but not writing about all of them as they are small position and some have done better and some have not .

Reason i am.writing this post is because i got a portfolio to handle pretty early on when i wasnt prepared . Learning to sell your old winners ( i have trimmed or sold lot of my old holdings inherited ) and moved to new business. This helps to grow the portfolio better if done in a wise manner and can create huge wealth.

I always try to evaluate my risk reward when i buy a buisness .

I would say whats my downside whats my upside . If upside is huge downside is limited go for big allocatio . If downside is also 40% or more add decent position and then average up.

If its too risky bet take a started position and slowly evaluate.

I am still learning and my next learning implementation would be when i will be able to load up big position on business at initial stage when price and valuation are in lot of comfort .

Cheers to learning together and growing together. Have made some greats friends mentors in the process .

2 Likes
5

Most important thing in stock market is position sizing and capital allocation, stock allocated 20-30 % with 50 percent gain is better than having a 2% position going 2X-3X. Going forward, maximum sectors are in bear markets hence a portfolio with less number of stocks and concentrated with highest conviction bets with very high safety of margin will be able to sail through. My PF is always have top three bets allocation of 50%. Made a killing with Kalyan Jeweller with 20% allocation and growth of 7X in two years. Now position size is just 9% and will be reduced further as its in extreme expensive zone.

8 Likes
6

A concentrated portfolio is double edged sword. Idea about investing is to live another day . In the process we cannot afford to loose the amount of capital which could take years to get back.

Concentration of portfolio is a game which needs to be played at certain times with certain bets with comfort of valuation & expectation of amazing business run up ahead.

One bet with high allocation can change the wealth creation journey . Idea is how this can be made as a process to repeat it every couple of years.

2 Likes
7

Psychological ways to look at Equity Investing

I have always felt that Equity Investing is a Journey which give goosebumps . Its like you are in casino with chips chances of you keep on playing the rounds are much higher till night last .

Idea of creating wealth is also to enjoy the wealth you.create for comforts / luxuary . I feel it is very difficult for most people to sell equity to say buy a nice car or spend money on things they love .

The love was compounding stops the notion of spending . Eventually creating a second source of income through Dividends / bonds / swp / real estate / f.d helps to enjoy a static income.every month which gives a good cashflow .

This stage is once you have decent enough corpus to compound are done with or provided for responsibility ( education.goal or home.goal ) post which a certain corpus towards income.creation is how i would look to diversify .

ROL ( Retun on Life ) should be top priority .

ROI will anyways take place

2 Likes
8

Greetings from a Rookie ! Nice to know you’ve trudged through the swamps of 2008 and the wild ride of 2020—you must be a true market warhorse, yes bro ? Bahaha!

“I feel it is very difficult for most people to sell equity to buy a nice car or spend money on things they love.”

I feel you! I can totally relate. barely 2.6 years into the game, good rewards, but selling a stock feels like breaking up with a childhood crush.

Still clueless on how to avoid getting attached to these stock names and how to sell —got any “silver bullet” for this kind of emotional mush?

Quick queries:

  • Portfolio Size:
    *I started with 10 it quickly became 30. as soon as i reduce, it goes up 30+ again, but then 15 of them end up hogging 70% of PF. Total “bhulbhulaiya” strategy—no plan, only vibes! :monkey: :monkey: how to stay focused ?
  • Theme & Ideas for ‘24: What’s catching your eye? Ever studied Room ACs ?.. I’ve loaded up on KRN, hoping it’ll follow the PGEL trajectory (me no registered/certainly not qualified adviser etc.) … so far, it’s on PGEL’s hot trail! … T&D is all over place . Anything new and spicy on your radar?

Ok, I think I’ve ranted enough, so ill rest for now :face_with_peeking_eye:

1 Like
9

There is one. Time/Experience. In due time, you will find your way, as many investors do, or you will get accustomed to do what you do but get better at it, refine it. Usually it is the former - you will learn to let go, and you will focus on other opportunities.

You can use this forum to record your thoughts or can write a blog of your own, detailing your ins and outs of the stock. As is the case with most, you will be surprised how you have evolved.

To give an anecdote, I bought a couple of penny stocks when I started, and when I looked back a few years later, I was surprised at my own naivety of my early days for choosing such stocks, as I had developed some understanding in the next few years, which made me not choose even Asian Paints. All part of the journey, many pass through these phases. If you don’t have a particular destination, enjoy the ride with focus on the road.

1 Like
10

Untill you have concentrated bet, you wouldn’t be able to make it meaningful, there are risk associated with large bet hence valuation comes in picture, mostly turnaround, forgotten by markets or stocks sitting at cusp of growth triggers. You need some luck as well. Higest the safety of margin, higher the chances or capital protection if events not unfold as you thought.

I have done it repeatedly in last 7-8 years with 80% success rate. Its an art which requires lot of courage and patience, holding a rising large position is more problematic. I have done it with Vodafone Idea, Tata Motors, Shoppers stop, ABFRL, Latest Kalyan Jewellers, Started with 25K stocks in Nov 22 at 115, diluted 2K at 300, diluted 5K around 500, diluted 4K around 650, diluted 11K between 700- 750 as its too expensive for me now, holding 3K, will sell it again as Istock is discounting 2 year forward earnings and competition is heating up after entry of PN Gadgil, Novel Jewels, PC Jewel, Senco and other small IPO’s. This sector is avoid for me know.

Built up a large position in SAMHI hotels which is trading at 10 EV/EBIDTA own 90% of real state, discounted around 50% with marque brands like Merroit, IHG, Hyatt. Can’t lose much from here.

5 Likes
11

@Cshar - when you say large position - how much in terms of % of portfolio ?

12

How to sell a old holding is a challenge initially.

  1. There is a price comfort you bought at 100 it is 300 today u feel you will not loose from here as your cost is low.
  2. you dont bother much about its movement in price as its long term holding .
  3. The fear of loosing money in new idea gets to a decision paralysis

My take - Investing should be looked at as a pure business. Money is raw material , appreciation is profit , brokerage accounting cost and tax are expenses.

I started doing this with 1 old stock where i felt this will surely not go anywhere on upside ( it did though ) Castrol India. Business which didnt have much growth only dividend was a sweetner.

Try to sell 1 old stock replace with a good idea or 2 good ideas basis allocation. Track for year or 2 . If things work your way if markets proves us to be right dip your feet a little more and then a little more.

I still keep a track of old stocks which i sold what i bought in excel to know if my decision more or less is correct. I prefer to be 60% -70% right . You will go wrong on few ideas .

On portfolio -

I had a few concentrated bets in 2016-2017 winners take leading postion when you dont do much for decades and couple of tail .

PF was arpund.30-40 stocks .

I took 6 months and decided i will sell all stocks below 2-3% of PF so tail was out .

Now i prefer couple of them i dont have a count of stocks i want in portfolio. My smallest position is 3% starting position to begin with and i add eventually basis result and outlook. Largest i have gone upto 20% . Top 3-5 position would be 50% or more. Thats how i would prefer

On stocks - I have added couple of them as i sold elecon cash portion was huge chunck of it got deployed to Time techno ( bought it couple of months back ) Lately i have been looking and adding into comapny making GLP 1 pens and Geospatial space .

Disc - Added lately to sectors above hold position may add / reduce position without informing. Not a advise . Not a sebi registered advisor / not qualified to advise. Sharing views to help in the lonely journey of investing

5 Likes
13

Hi Amit, it should be around 20%.

1 Like
14

Endorse your views here, my 50% PF is concentrated in top 4-5 bets, maximum 12 stocks. Buy very small new positions and track them, sell it if any grey area is found else keep it. Increase in position while stock is rising is most scaring for me unless future growth is clearly visible.

1 Like
15

Very Nice…they are strong names…“geo spatial” also seem to be hot story…somehow ive all 3 names…if they are TT,shaily,Ceinsys.

16

Hi
Can you please tell glp-1 pen making company name? Really curious

17

Could be Shaily Engineering Plastic…
Discussion - Shaily Engineering Plastic

1 Like
18

Hi @Cshar

Happy new year.

How are you positioning your portfolio for 2025? Have you taken any new bets? Any sectors/companies look interesting ?

To me, 2025 is going to volatile year with uncertainty of trump’s tariffs & our gdp growth

Thanks

19

Whatever I sold in last few years, most of it was a wrong decision, and the stocks did well after I exited.
Whatever I kept long term, did well.
That’s why it’s very difficult for me to sell. Its almost like testing a hypotheses again and again.
I don’t quite understand the reason.

On position sizing and allocation, it’s crucial both ways. To make decent money as well as to safeguard money. To make money one has to not dilute the portfolio too much, but OTOH too much concentration is like a bet and you can loose handsomely.

One hopes that the portfolio size itself becomes big enough to have that 2% allocation count. 2% of 100 INR is 2 rupees but 2% of 10 Cr is 20 L.

20

Happy New Year Amit and all Value picker members

Year 2025 will test the real skills if equity investing. What i see as of now, one set of companies trading at exorbitant valuations and still rising, history has taught us PE ratio’s of 100,150, 250 are never sustainable and with time correction, investor lose lot of money. As a value investor, i will not even look into these companies, EMS companies PE ratio is between 8-15 worldwide. We know their is growth in india but no one knows what will transpire as its is regulated and will depend on Govt policies, good infra, cutting the red tape at lower levels, no one has discounted these factors, its a FOMO. Kaynas tech trades at 260 PE, what investors are expecting, out of syllabus.

FMCG is facing threat from new startups which are eating its market share. Valuations are still very expensive as this sector was assumed to be a stable growth sector.

Gems and jewellery has run its cycle, apart from senco, don’t find any new investment bet at current valuations.

Geospatial sector looks interesting seeing upcoming 3D mapping, Jal Jiven mission, river linking. Genesys and CeInsystech both looks interesting. Holding both.

Hotels, Travel is a sector can be bet on however you need to check valuations as it is cyclical sector. Supply is limited hence still cycle is up.

I am betting on turnaround or trigger based opportunities where safety if margin still persists, aim is not to lose much or go in time correction.

Sheela Foam, Ceinsystech, Genesys, Virtuoso opto are my new bets. Exited Kalyan Jewel with 7X gains.

Wickhardt is high conviction bet, ABFRL, ABCAP, Samhi Hotels, Force motors, LT Foods and Thomas cook are core portfolio stocks.

To be honest, expections are low for 2025 as any negatives on Govt capex and policy will takes many sectors down by 20-30%.

9 Likes