Irrespective of how good the company is or how well it is expected to do; 37% in one company is not a good position to hold.
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I believe a concrete statement that 37% is not a good position to hold irrespective how good a company is not appropriate. It’s quite subjective. Buffet once said:
"Charlie and I operated mostly with five positions. If I were running 50, 100, 200 million, I would have 80 per cent in five positions, with 25 per cent for the largest. In 1964, I found a position I was willing to go heavier into, up to 40 per cent. I told investors they could pull their money out. None did. The position was American Express after the Salad Oil Scandal. In 1951, I put the bulk of my net worth into GEICO. Later in 1998, LTCM was in trouble. With the spread between the on-the-run versus off-the-run 30-year treasury bonds, I would have been willing to put 75 per cent of my portfolio into it. There were various times I would have gone up to 75 per cent, even in the past few years. If it’s your game and you really know your business, you can load up.”
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I do agree it is subjective. If one is at peace and is able to sleep well while holding such a position the it is absolutely okay.
Fact that @maheshkumar made a post here despite of sitting on a good profit means that he is not very comfortable with the position (I could be wrong, if he can clarify, and will stand corrected).
If I have 37% money in one company, I will have to make sure that out of all my time spent on stock research I have spent 37% time on that company to keep a strong conviction.
As for WB quote, most people are not WB. What worked for him may not work for us.
(In 2014, I had a concentrated portfolio of 3 stocks and while I made a lot of money, I was definitely restless during that time.)
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Yes of course, all are not WB and may be no one can. And that is the reason I say it’s quite subjective and a concrete statement isn’t appropriate(not saying it’s incorrect). It’s just an example that I have quoted there in support of my statement, I’m not being specific here. May be that’s a view point derived from your personal experience, and it need not be same for everyone in the same way as you said what worked for WB might not work for everyone.
I personally don’t let price gyrations affect the sell decision. I would sell when -
- Fundamentals of the business have deteriorated.
- Thesis which led to buy decision is not valid anymore.
- There is an alternate investment opportunity with ‘much - much’ better potential return than the existing position (especially when investor has limited investable surplus)
Disclosure: Manappuram is 45% of my stock portfolio. No intention to sell.
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I agree with @Vikrantydv and @KalyanKool on this. A stock shouldnt be sold just because the price has gone up.
Specifically for this case, in my opinion this is just the beginning. Manappuram is an excellent business franchise which has been plagued by temporary problems such as demonetisation and GST. There are multiple triggers in place for this business - a depressed valuation is just one of them. The growth prospects of gold loan business are bright as well. Even if the price of gold remains stable at these levels, organized players can take market share away from unorganized sector which still accounts for majority of the market. And if the price of gold starts going up, Manappuram will benefit disproportionately.
Although you have to build your own conviction, but if I was you I would not sell.
Disc: Invested and adding more.
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The recent breakout was on a speculation. So hold tight, there’s no reason to sell (as per me).
mangement response:
http://www.bseindia.com/xml-data/corpfiling/AttachLive/88060c38-e312-4c71-846e-3351e754e221.pdf
Disc: Invested
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I think the management has quickly clarified as the promoter has been buying from the market and maybe even looking to add more.
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Sorry, what does this chart mean? a 10 Yr breakout? what are the implications if yes?
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It’s basically a breakout of the stock’s price from a flat trading range (this makes better sense from a one-year perspective, during which period the stock has been trading roughly between 90 and 110). The breakout is probably a sign that the market is ready to bid up the stock higher (towards its fair value).
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KPMG report predicts that value of organised gold loan market in India will grow to Rs 310100 crore by 2020 at a three year compounded annual growth rate (CAGR) of 13.7 per cent.
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Shareholding pattern is out a while back and DSP Black Rock Micro Cap fund has increased stake from 1.38 to 2.22. Dolly Khanna’s stake remains unchanged.
AIM/Hedge funds have increased stake, Quinag increased and no. of shareholders declined by 3k. All point to further positive consolidation.
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Board meeting on 23rd to discuss investment proposals. Al though the disclosure doesn’t explicitly clarify on the term ‘investment proposals’. I am assuming it is related to someone buying a stake or taking over the company. Also the board meeting is happening in Mumbai rather than Kerala.
http://www.bseindia.com/xml-data/corpfiling/AttachLive/341b44bb-23de-46b5-8128-89a9e2d21c24.pdf
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The only problem is I am not clear if Manappuram going to invest or other way round? THere are some board meeting that day and prominent ones include Edelweiss and RBL. I think operationwise RBL is a perfect fit while Edelweiss has different client base compared with Mamnappuram.
Disc - Invested in Mana and Edel
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They said “investment proposals”. I think this will be some entities willing to invest in mana. Even i thought it cd be mana investing in some other company (inorganic), but more than one proposal makes me bend towards more than one company buying stake in mf. All speculative, and i can be completely wrong.
after denying any talks repeatedly, it will be a kind of somersault to announce being acquired. And the promoters clearly believe that the stock is undervalued. It looks likely that they are acquiring another company to deploy excess capital or some big investor (Piramal kind etc ) want to invest by taking large (~10-20%) stake. This could result in re-rating of the stock and eventual exit of the promoters later on. I have always believed that running a gold finance company is not easy. Just my side of speculation.
To me this seems to be the most likely scenario. They probably have some investment proposals from more than one entities, which they might be discussing and deciding over in the meeting on Tuesday. They might not be selling the controlling stake just yet but a small stake as you said.
Yes, mgmt has been denying the stake sale rumors but poeple mostly remain tight lipped till the deal is struck. If they are getting a good valuation, i think mgmt will be prudent.
Another possibility could be offloading part of business like micro finance to some bank considering latest structural development , deals n outlook