ValuePickr Forum

ML4TradingDoctor portfolio

I wanted to share details of my portfolio to get everyone’s thoughts and feedback. My portfolio construction philosophy is the following:

  • Have 2 accounts - one for my investment picks and another for picks based on subscribed smallcases. I use zerodha for my picks and upstox for the smallcase based picks. This post is for my zerodha picks

  • I am not a buy-and-hold-forever type of investor. My idea is to book at-least 1.5% of portfolio value as profits in a month. I have been doing this consistently over the last year. My logic is if I feel Mold-Tek is a good buy at 266 and around 3L INR is my target investment in the company, I will buy 3000 shares instead of 1000 and sell 2000 shares when it goes up 50%, lowering my cost and booking profits. I am sure you will not believe it works but I will be posting regular updates here and show when and how I do this

  • I will only invest in consistently compounding firms taking large positions and exiting partially at high valuations. So I am a buy-and-hold person but will continually reduce cost of ownership of my stocks.

  • I might buy cyclicals or companies like Neuland, Sequent etc but they will be for purely trading purpose to reduce the cost of my portfolio. I believe these are mean-reverting stocks. I have in the past bought Neuland around 900 and exited 50% around 2300 first and last week when it fell to 2050. Sequent I bought at 140 and exited at 270 and 240. I will be posting these updates on this thread regularly to show how I generate consistent trading income of 1.5%-2% monthly over the year.

  • I believe holding a stock is equivalent to buying at CMP

Instrument Qty. Avg. cost LTP Cur. val P&L Net chg. Day chg.
ABBOTINDIA 175 15,195.99 16,110.00 28,19,250.00 1,59,951.70 +6.01% -0.30%
BAYERCROP 320 5,310.60 5,417.85 17,33,712.00 34,319.40 +2.02% -1.28%
BIOCON 5700 390.75 388.95 22,17,015.00 -10,266.75 -0.46% +0.92%
COROMANDEL 700 720.00 769.75 5,38,825.00 34,825.00 +6.91% -0.19%
DCBBANK 4000 100.21 96.30 3,85,200.00 -15,654.70 -3.91% -4.08%
FINEORG 350 2,328.66 3,170.00 11,09,500.00 2,94,467.80 +36.13% -1.15%
GMMPFAUDLR 125 3,521.69 4,438.30 5,54,787.50 1,14,576.25 +26.03% -1.15%
GOLDBEES 20000 38.81 41.49 8,29,800.00 53,620.00 +6.91% +0.24%
HDFCLIFE T1: 500 0 666.75 670.75 3,35,375.00 2,000.00 +0.60% +0.30%
ITC 6400 192.42 212.35 13,59,040.00 1,27,550.00 +10.36% +4.45%
MCDOWELL-N 1250 519.00 565.30 7,06,625.00 57,875.00 +8.92% +1.05%
MOLDTKPAC 666 268.93 456.15 3,03,795.90 1,24,691.35 +69.62% -3.89%
NESTLEIND 50 15,923.47 17,224.15 8,61,207.50 65,034.25 +8.17% +3.03%
RELIANCE T1: 100 200 1,907.40 1,937.30 5,81,190.00 8,970.00 +1.57% +1.26%
SANOFI 200 7,723.09 7,750.10 15,50,020.00 5,401.25 +0.35% +0.01%
CASH/LIQUIDBEES - - - 42,00,000

Here is my rationale for the holdings:

  • Abbott. Purely India pharma play. They keep introducing several new products yearly and all of them are blockbuster drugs. They are highly regarded by doctors.
    This is a defensive bet. I will not sell this even if it runs up. The idea is that if the market crashes also, this will hold its value or increase. I won’t be surprised to see this go up 50% in a year where markets tank by 20%.

  • Bayer Crop. Similar to Abbott but in the agriculture play.

  • Biocon. The best Biologics play in Indian market. Ethical promoters. Great management. They hold a lot of Syngene also. So you indirectly hold Syngene. Syngene is more like IT services. Biocon is like IT products. They have a great R&D team and one more positive for stock is that the old CEO is back with the German CEO fired. It is available at dirt-cheap valuations now considering future potential. Biocon Biologics spin-off could be a huge play on the stock.One block-buster drug and I won’t be surprised to see this at 4X in 5 years.

  • Coromandel: Fertilizer and pesticide play. Indian fertilizer market is government controlled for nitrogen based fertilizers. The risk is mostly on input prices, where They also have done back-ward integration reducing raw material cost. There is a lot of reform happening on the fertilizer front. Coromandel operates in the P and K side of the fertilizer market. They have international presence in pesticide market also

  • DCB Bank: This is more of a ‘value play’. Company is trading at dirt-cheap valuations. There will be some point in the next 5 years when the market recognizes the value of the stock as 3X from here

  • Fine Organics: Consistent Compounder Coffee-can stock. One of the best plays in the chemicals sector

  • GMM Pfaudler: They bought out their parent company and by doing so, they now own the IP for their products. They also bought out their second largest competitior in an oligopolistic market. This is an earnings compounding machine

  • Goldbees: Hedge play. Some Gold in the portfolio is good

  • HDFC Life: The best play in the Life Insurance segment. Period

  • ITC: Dividend machine. Defensive stock. Value waiting to be unlocked. At some point, they will break into separate listed entities of hotels, FMCG and cigarettes. I know buying ITC is inviting criticism but I will hold and add at every opportunity. Hugely under-valued and waiting for Mr Market to recognize its value in the coming decade

  • McDowell: Alcohol is hugely taxed in India. As India gets more higher earning people, McDowell will become like FMCG. Alcohol consumption in India is very low

  • Mold-tek Packaging: They pack all the FMCG products and also revered Baba Ramdevji products. Huge upside from here. I reduced my position by 2/3rd at close to 480. So this is almost at cost for me or below

  • Nestle India: Compounding machine. Nothing to say more about Nestle. FMCG Giant

  • Reliance: Looking to add more of Reliance as it is Retail + Refineries + Telecom. FANG companies are not fools to invest in Reliance.

  • Sanofi: Like Abbot, this is a domestic pharma play. One more thing is that the dividends given are very good. I got almost 400 Rs per share dividend this year (375 Rs I think to be exact per share).

  • I am sitting on almost 25% cash that I hope to deploy in the coming weeks of this month. This has been a tough market for those trying to find good entry points into the market as the market keeps trending up especially quality stocks are being purchased at any price.

I have been able to generate consistently 1.5%+ from short term trading using my philosophy in the second bullet point from the top. I know this does not resonate with all but the only real money is the money in the bank. Booking periodic profits without exiting stock fully, gives me the happiness of having made real money

My upstox portfolio is different. Started recently. Again invested capital is around INR 1 crore equally among the following smallcases:

  1. Capital Mind Momentum Smallcase. Deepak Shenoy is a man of trust and principles. The site is hugely informative and educative
  2. Negen Smallcase: This is an Opportunistic smallcase where we top up as asked by Negen
  3. Momentum smallcase of Wright Research
  4. Benign Capital: Dual momentum smallcase

I plan to benchmark my performance over these 4 smallcases and also see which of these smallcases work for me.

Overall fully invested in equities and keep around INR 1 cr in IDFC Savings bank for their attractive 6% interest. If market crashes, this is contingent money to pull out

25 Likes

Among all the messages, post I have read on this forum till date . . . .

This message is the most transparent, audacious, upfront, clear, super spirited and applauding.

Best wishes . . .

5 Likes

Very nicely outlined investment philosophy- sound conviction. Good mix of Growth and value stocks.

Very interesting strategy and nice portfolio stocks. Can you pls let us know when you started this portfolio as it looks recent, based on buy prices, but guess you are much more experienced in markets…so would be good to know about your earlier portfolio and evolution as an investor as it will help us to learn from your immense experience!

I like your strong MNC pharma focus…they as you rightly mention are like FMCG…in actual FMCG you have only Nestle…my first thought…why be more invested in an Abbott + Sanofi and less in Nestle? Abbott is 50PE today and Nestle maybe 70 but is valuation only reason? As you mentioned these MNC pharma depend on blockbuster drugs introduction from parent ocassionally…why to make your portfolio dependent on that when you have a sure shot compounder in Nestle types available?
Second, have you considered another FMCG type MNC pharma …P&G health? It’s completely vitamin/supplement focussed portfolio…would be good to know your thoughts…

Thirdly, unlike many other big investors, I see you have only Biocon among pharma ( I am not considering MNC pharma here as that’s more brand/FMCG type)…why not any API leader like laurus, divis, solara etc and why you mentioned sequent as not a compounder story?

Fourth thought…is fine organics inspired by Marcellus? Curious why you consider it as a consistent compounder?

Lastly, why such low allocation to HDFC life…it being your only investment in this business…it seems an insignificant part in a solid franchisee … considering your overall portfolio size…

Thanks for sharing!!

1 Like

Updates:
Booked profits in Coromandel, Fine Organics, GMM Pfaudler, DCB
I did this to achieve the monthly target of 3-4 L profit. Plus the way Fine & GMM moved, they took out their 1 year price targets in 1 month. Hoping to re-enter these stocks at lower levels

Added more of Biocon given mouth-watering valuations

10.47L profit booked so far on an invested capital of 2 Crore INR. I am not complaining with 5% per month so far in FY21!!

This is how my portfolio looks. Sitting on huge amount of liquid bees and cash, waiting to deploy. Looking to re-enter exited stocks at lower levels.

Instrument Qty. Avg. cost LTP Cur. val P&L Net chg. Day chg.
ABBOTINDIA 175 15,195.99 16,151.00 28,26,425.00 1,67,126.70 +6.28% +0.46%
BAYERCROP 320 5,310.60 5,315.00 17,00,800.00 1,407.40 +0.08% +0.57%
BIOCON 7000 389.46 411.70 28,81,900.00 1,55,708.25 +5.71% +1.78%
GOLDBEES 20000 38.81 42.41 8,48,200.00 72,020.00 +9.28% -0.21%
HDFCLIFE 1000 663.63 689.25 6,89,250.00 25,625.00 +3.86% +0.64%
ITC EVENT 6400 192.42 210.35 13,46,240.00 1,14,750.00 +9.32% -1.01%
LIQUIDBEES 4004 N/A 999.99 40,03,959.96 2,287.93 +0.06% 0.00%
UNITDSPR 1250 519.00 643.30 8,04,125.00 1,55,375.00 +23.95% +1.53%
MOLDTEKPP-E1 6 45.00 365.90 2,195.40 1,925.40 +713.11% +3.89%
MOLDTKWARR 36 46.00 300.55 10,819.80 9,163.80 +553.37% -8.92%
MOLDTKPAC 666 268.93 498.30 3,31,867.80 1,52,763.25 +85.29% +2.27%
NESTLEIND 50 15,923.47 17,668.00 8,83,400.00 87,226.75 +10.96% +0.60%
RELIANCE EVENT 300 1,907.40 2,191.60 6,57,480.00 85,260.00 +14.90% +0.76%
SANOFI 200 7,723.09 7,737.10 15,47,420.00 2,801.25 +0.18% -0.01%
CASH 22,69,914

Above is my zerodha acount personally managed by me.

Additionally this is how Negen PMS, Benign Capital QPort Momentum, Capital Mind Momentum investments have performed for me in my upstox account
Benign Capital: +5.46%
Capital Mind Momentum: +7.13%
Negen PMS: +8.73%

Note that above include incremental investments made. When I don’t find opportunity in my universe of stocks, I just invest in one of the above 3 smallcases in upstox.

2 Likes

I feel very confident about my portfolio stocks even if there is a crash. Abbott, Bayer Crop, Biocon, ITC, Nestle, Sanofi are huge defensive plays. Even if market falls 20%, these will hold up well allowing me to deploy the extra cash and the idle Liquidbees

You have an interesting mix of stocks. However, I found some of your picks contradictory in nature. Can you elaborate a bit on your investment philosophy?
Why do you consider Biocon at mouth-watering valuation? This is a company trading at way higher than historical median P/E and the growth has also slowed down.
How does a stock like ITC fit into this portfolio, which is more of a tobacco-to-FMCG transition story and more of a buy-and-hold for at least couple of years?

Disclosure: I hold many of the non-pharma stocks in your portfolio including ITC.

Here is my rational
Biocon:

  • Trigger 1: holding company for Syngene and holding company discount. Biocon has not participated in rally while Syngene went up 2X. Biocon is a cheaper way to buy Syngene
  • Trigger 2: Impending Biocon Biologics IPO
  • Trigger 3: Company has leadership in Insulin and another blockbuster drug from them could result in huge value. Company is dream place to work for pharma scientists

Talking about ITC creates a lot of emotions in people. I think when we buy with a ‘value investing’ hat (which is what I & you hopefully did with ITC), we have to wait for market to recognize that value. It can take a decade or more. I have the patience to wait.

Booked profits in Reliance, McDowell and HDFC Life (I feel with an impending market correction, can get HDFC Life at lower prices). Keeping with the original post of booking profit income each month, the profits booked for this quarter are ~INR 13L. Clearly I have taken a cash call with ~40% of my portfolio in liquidbees/cash. I hate to time market via cash calls - let us see if my guess works. Here is the profit snapshot for the great quarter. Paid advance tax and so done my duty to Govt of India as a citizen.

Note that above returns for quarter are net of returns. There was a massive 350 INR per share dividend by Sanofi and other firms that added to the return but I am not counting dividends in return.

These are my holdings. I don’t usually touch holdings that are >10 L INR in value as they are core portfolio. I am waiting to re-deploy in exited firms GMM Pfaudler, Fine Organics and HDFC Life, bigger positions at more reasonable valuations

Instrument Qty. Avg. cost LTP Cur. val P&L Net chg. Day chg.
ABBOTINDIA 175 15,195.99 16,536.70 28,93,922.50 2,34,624.20 +8.82% +0.06%
BAYERCROP 320 5,310.60 5,582.10 17,86,272.00 86,879.40 +5.11% -1.52%
BIOCON 7000 389.46 399.15 27,94,050.00 67,858.25 +2.49% +0.10%
GOLDBEES 20000 38.81 40.98 8,19,600.00 43,420.00 +5.59% -0.87%
ITC 6400 192.42 204.60 13,09,440.00 77,950.00 +6.33% -0.44%
LIQUIDBEES 4006 N/A 1,000.01 40,06,040.06 4,154.00 +0.10% +0.00%
MOLDTEKPP 6 45.00 348.00 2,088.00 1,818.00 +673.33% -1.02%
MOLDTKPAC-W1 36 46.00 330.05 11,881.80 10,225.80 +617.50% 0.00%
MOLDTKPAC 666 268.93 479.90 3,19,613.40 1,40,508.85 +78.45% +0.15%
NESTLEIND 50 15,923.47 17,678.30 8,83,915.00 87,741.75 +11.02% -2.08%
SANOFI 200 7,723.09 7,628.65 15,25,730.00 -18,888.75 -1.22% -1.58%
CASH 44,00,000

Around 84L INR set aside to invest at lower valuations. More money is lost waiting for crash than in crash. But a small correction even 5-10% will be bought into by me as I am uncomfortable sitting on such huge cash position

Now I will analyze the financial performance of my portfolio companies

  • ROCE
    Except Biocon, all companies in portfolio have top notch ROCEs way above Cost of capital. This is for both 3Y and 5Y periods. RoCE is a metric best looked at over 3 years or 5 years
  • Sales Growth
    Sanofi has been struggling to grow sales but the margins have been expanding. Sanofi’s top five brands (Lantus, Combiflam, Allegra, Amaryl, Clexane)\ together posted revenue CAGR of 11.5% and are increasing their contribution to sales. Note that four core brands (Lantus, Amaryl, Clexane, Avil) are under price control. I think the trigger for Sanofi could be removal of price control OR global launches from parent R&D like the anti-diabetic Touje. Sanofi has been struggling with decline in Sales. But management is good and I see this as an accumulation opportunity. They have been improving margins as seen in double digit growth in margins
    Decline in sales growth of Bayer crop was due to pricing pressure and lower sales of high margin corn seeds. This should correct in near future
    ITC clearly struggling to grow margins. But it is a long term FMCG play that hires top grads from IIMs and has really top notch talent. De-merger could be value-unlocking as well.

Abbott has been great but has hit the FII holding limit putting pressure on the price

Overall, all of these stocks are long-term plays. WIll be looking to deploy the cash at lower levels to buy long-term plays or opportunistic plays to ensure 2% return per month.