Masanobu Portfolio : Track,Learn,Review

Background: I entered direct investing during Dec 2017 with no knowledge of investing/anything related. Few of my friends have been investing, so started the journey thinking I would be able to generate decent money.
Due to my good luck, that I started to learn/accept the surprises from the beginning itself in less than 2 months, market started plunging starting end of Jan 2018, resulting in losses.
Also started following many investors on twitter to get a hang of investing/sector and my focus has always been long term investing/not to worry much about short term macros.

My investment theme: after going through whatever happening since Jan-2018, my strategy would to Buy Low Sell High, Be fearful when others are greedy and greedy when others are fearful - The quality/good management

Exit Strategy: Plan to sell 50% when doubles to get back invested amount

Portfolio:

Stock Sector Percentage
CENTRUM CAPITAL FINANCE - GENERAL 20.37
YES BANK BANKS 3.21
L&T FINANCE FINANCE - INVESTMENTS 12.28
MOTHERSONSUMI AUTO ANCILLARIES 3.85
ASHOK LEYLAND AUTO - LCVS & HCVS 5.14
TATA MOTORS AUTO - LCVS & HCVS 4.51
GODREJ AGROVET FMCG 15.51
GODREJ INDUSTRIES Cosmetics & Toiletries 5.15
VIP Industries Consumer durables 4.85
FUTURE CONSUMER FOOD PROCESSING 2.88
HSIL Ceramics and Allied 9.62
SEQUENT Scientific PHARMACEUTICALS 6.60
LT Foods (DAAWAT) FOOD PROCESSING 4.47
Meghmani PESTICIDES & AGRO CHEMICALS 1.57

Mutual Fund Holdings:

  1. PPFAS
  2. Mirae Asset Emerging Bluechip
  3. L&T Midcap
  4. Franklin India Smaller Companies
  5. Axis Long Term Equity

Centrum Capital - Centrum is a diversified financial services organization with deep experience in financial markets.Centrum Management capability lead by Jaspal Bindra. Many of their business are about to take off.These businesses are scalable.

Godrej Agrovet - I do see Godrej Agrovet transforming into a integrated behemoth from India over the next 10-15 years.
Given my long horizon, Im ok to have notional loss in short to medium period.

HSIL and VIP - Management with integrity & competence focusing on rural India,though HSIL has capex issues.

L&T finance - Excellent company promoted by L&T, run by high quality professionals.In a weak economic environment, banking and financial sectors have been usually hardest hit. Also they could be aspirants for a banking licence in the long run.

In essence,I’m still learning and bought most of the above stocks with no clear understanding/theme. Planning to exit LT foods,Meghmani,Future Consumer,Yes when the price reaches buy price. Remaining,planning to hold for long term as per the exit plan.

Currently my portfolio is ~30% down (good that all these happened in my early investment journey when market was down, that I do not get carried away during next bull run). As I do not have any immediate needs and as the focus has always been on long term with Quality ones, so not worried and curious learning whatever unfolding.
I have invested all my savings in Stocks/MF which I clearly know, that not a great idea and should always diversify. Planning to diversify down the line after few years.

Thank you all for keeping threads active here and sharing the knowledge across.

I do not think waiting for stock to reach your price before you sell it is a good idea if you have no clear understanding of the stock. If you stock selection is wrong then i believe those may not reach your buying price soon. I would rather sell it and invest in better ideas whenever market falls if you have better idea or a theme.

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Thanks Karthik for valuable feedback.

Im still not entirely clear on exits (not sure when I would :slight_smile: ) and also bit hesitant to book the loss unless the plunge is due to quality/management related issues. At this stage,Im ok with notional loss than permanent loss barring few exceptions stated earlier.

Hi @kvpjois

The general practice is that a Portfolio thread should contain short notes on why each investment was picked. Then, VPers will comment on whether those reasons are good or bad. It is also in the forum rules to start a PF thread with short notes on your picks.

So kindly edit your original post and include write ups on every one of your PF stocks. That should help you get more comments too.

All the best.

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Your exit strategy has a basic flaw.
You would exit winners at 50% gain but hold losers.Over time your portfolio will be containing losers only.
Kindly consider opportunity cost of holding non conviction bets. They can be value traps.
Price should not generally be a basis of exiting a stock. Keep some fundamental criteria or conviction level for exit.

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post was on draft, resurfacing with few additional observation.

@dineshssairam I have updated the original post with details.

@akash_das Thanks Akash for the direct feedback. Off late I realised that neither I have any understanding of stock market wrt conviction (looking at drastic price movement) other than few basic things like brand/products nor fundamental criteria. Hence planning to focus on work while continue learning market trends and investing in direct market only when there is a dramatic events leading to price correction.

As far recent corrections, its kind of awe moment when I see so much price correction, as I started direct equity investment during end of 2017,when the buzz word was ‘this (high price) is new trend from now on’.

I exited VIP,Sequent with small profit to initiate fresh buy on ITC.Currently ITC is 20% of the portfolio, due to attractive valuations/dividend/FMCG story.

Im fully invested into equities, currently direct portion of the portfolio is down ~52%,while MF investment is down ~15-20%. Also I plan to stick around with the strategy of buying only when there is a lot of correction while continue to invest in MF SIP during other time.

Bearish viewpoints on ITC

  1. Poor growth
    Check the sales and profit growth in screener.in. Check the stock price, it follows profit growth in 5Years and 10Years timeframe.
  2. High dividend payout
    Company pays high dividend to compensate for poor growth thereby reducing retention ratio. So inspite of having high roe its sustainable growth is low.
  3. Regulatory overhang
    Government increased tax rate on tobacco companies sometime back leading to hit in profitability and stock price. It can happen again.
  4. Industry headwinds
    Decline in smoking trend across the globe.
  5. Diworsification
    ITC diversified into multiple other industries two decades ago and it is has still not bore any fruit. It started an apparel company for advertising its cigarette. It had to close it recently.
  6. Large base
    You can’t expect ITC with such large cap to grow at the same rate as VST.
  7. Better alternatives
    You can get better alternatives in tobacco as well as FMCG at current valuation.
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Portfolio update - exited LT Foods, Meghmani Organics (have been hearing on the bad management, last thing want to hold stocks with bad management after Yes bank story) with loss to invest further in ITC, Agrovet. Im happy that the dividend that I am going to receive from ITC for this year, would cover the losses due to these sell off.

Sequent is more than double from my buy price, sold off too quickly with ~5% profit.

Have been investing regularly in SIP, with only Franklin smaller companies having negative returns and Axis/Mirae/PPFAS returning ~15% profit.

Overall direct equity portfolio is down ~33%.

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After seeing the RIL episodes, somehow I now feel bases, high or low, do not matter much…specially in a developing economy.

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I have realized that stock return over longer duration such as 5 to 10 years depends upon the profit growth of the company in that duration.
Pick 10 stocks and compare10 year return with its 10 year sales growth, profit growth and return on equity in screener.
If a large cap can grow at 20% for 10 years its price can also give 20% cagr. Its possible but difficult.
Reliance recent run up maybe an outlier. I won’t conclude anything from it.

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