Large Cap investing

Strategy

*Buy Growth Large Caps, select midcaps, with EPS growth of atleast 10% over a long term.

*Allocate 5% of PF size to each stock.

Exit at 20% gain. Flat out.

Thesis:

*Buy only those stocks that readily touch all time highs, which is a function of the underlying growth in the business.

*Entry is made near 200 Day Ema. Generally.
But, if the stock is a great one then near 50 Day Ema, like Asian, Pidilite, Dr.Lalpath, Havells.
If growth is slower, then waiting for 200 Weekly Ema for entry is also wise.

*Exit could be 10% for low beta stock like HuL, Shreeram, Icicigi, Gold where 20% feels like a stretch.

Pros:

*Simple to execute.
*Quality of stocks in the portfolio is top notch.
*Diversified Portfolio
*Very little room to go wrong.

Cons:
*Gains are limited to 20%, so any follow up rally one would miss.

And that’s not too bad, because over the longer term a Large Cap PF is not likely to give better returns.

I am going to start posting the trades. Will start with a couple of recent ones.

4 Likes

Bought Auropharma at 740. (Actually 700)
At weekly 200 ema.

Although, growth is good but this stock tends to swing. So, 200 W-EMA, also pharma sector was being sold into so I waited for 700 for entry.

I wish to place the exit at it’s all time high. But that’ll depend. Will decide when 20% touches.

Simple.

Bought Shreecem at 26400
Target 10%.

Just like that I will be seeking opportunities.

I will be careful as to not to over-allocate to single sector, like Pharma and Banks currently.

Current holding:

Auropharma
Whirlpool
Manappuram
Amara Raja
Kotak
Hdfcbank
HoneyWell Auto

Tracking:

PGHL
VST Inds
Cochin Shipyard
City Union
Bayer Crop Science
Maruti

Given that the Market is HOT right now, waiting for a 500 pt correction in Nifty to see where these stand, before taking a position.

Exit criteria is not well defined. Will there be any stop loss or time based exit? Otherwise only losers will form the portfolio after some time.

1 Like

Isn’t Amararaja risky at this stage?

This strategy doesn’t apply to every stock on the board. The stocks that we will enter are growth stocks. So, yes, there could be a time that we end up holding laggards, but they are all expected to give returns within the year.

20% Annual return target on the overall PF should remain intact.

Currently, I have allocated only 30% of my total cash position to this strategy. Only after seeing a bear market through will I be more confident.

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Yes. Therefore a small position of 1.5% of PF has been taken. Whereas, non-cyclical linear stories get a full allocation of 5%…like IciciGI, HuL, Britannia, Shreecem

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Please let us know the price you bought.

New Trade: Honeywell Auto

Given full allocation of 5% at 40000

I prefer Nifty 50/100 stocks. Ones in Futures. But, Honeywell is an exceptional business. I am going to have a tough time selling it.

Similarly, another good business Whirlpool. Had allocated 4% of PF to it at 2000 and still holding. Target is All Time High.

1 Like