Hi Everyone,
It is a great feeling to be part of VP forum. Undoubtedly this is the best archive of knowledge and the investor fraternity interactions are supremely value adding to own research.
To introduce myself i work in middle management of an MNC and have a great interests in business and its nuances.
My investment journey can be summarized as below:
2014-2016 : Not much investments, punts here and there but a lot of reading and listening to market content.
2016-2018 : Started investing significantly through Mutual Funds
2018-2019 : Started investing directly into stocks along with Mutual Funds
Sep’19 Onwards : Nil Mutual Funds, Direct stocks investing
Asset Allocation
Equity : 65%
Debt/Fixed/Retirals : 25%
Cash: 10%
This is the balance i strive to maintain, it does fluctuate depending on market situation.
Cash is largely into liquid funds. Debt has large component in PPF/NPS/FD and depending on expected yield, short or medium term debt fund may be included.
Now coming to equity portfolio which consumes bulk of my time and effort, my strategy and portfolio approach has been ever evolving, tried value, growth, mix and multiple combinations of large, mid, small cap. Learned my lesson and now i can say i have a broad understanding of what i am good at and which strategy suits my personality and behavior. I started with investing in large companies and then strayed into mid and small cap. Tried some sectoral bets and turnarounds, some worked some did not. My current portfolio approach is divided into 3 buckets:
Large Compounders -30%
Mid & Small Compounders - 40%
Big Bet : 30%
Large compounders are essentially companies which i expect to grow their earnings at 15% CAGR with least amount of volatility. It acts as an anchor to the portfolio specially in tumultous times.
Mid & Small compounders are companies which i expect to grow their earnings at 20% CAGR with some amount of volatility. It acts as growth engine for the portfolio.
Big Bet are essentially a bet at outsized returns, prefarably small cos. in very big market and deep discounted companies. It acts as a rocket booster to the portfolio but the risk is very high.
Due to the nature of companies in different baskets the number of companies varies, the high risk basket has more companies and hence lesser allocation per company to limit the risk exposure using diversification.
My vision for portfolio is to slowly increase my allocation to big bet basket as i gain more confidence and knowledge ofcouse i need to be comfortable and at peace with such allocation considering the risks involved. My plan is to be financially independent in next 7 years.
My investing gurus are Sunil Singhania(Abakkus) and Sumeet Nagar(Malabar) and ofcouse Howard Marks and Ray Dalio from US.
Portolio/Rationale/Performance
| Stock | Rationale | Allocation | Abs Return | CAGR |
|---|---|---|---|---|
| Large Compounder | ||||
| RELIANCE IND | Pivot to Digital & New Age business, building platforms & monopolies | 4% | 42% | 37% |
| LAURUS | Industry tailwind & Foray into biotech | 4% | 31% | 153% |
| ICICI LOMBARD | Low penetration of Motor, Health & PC, Excellent RR, Float Play, Yield Balance | 4% | 21% | 21% |
| TITAN | 9% organised gold retailing, entering new unorganized markets like Saree, affluence play | 3% | 52% | 63% |
| ASIAN PAINTS | Big expanding real estate market, big home improvement opportunity | 4% | 61% | 64% |
| L&T INFOTECH | Huge market potential, great cashflow, good growth and dividend | 4% | 113% | 97% |
| KOTAK BANK | Large established lender with trust and low cost of capital, value unlock potential | 4% | 4% | 5% |
| METROPOLIS | Low test to presciption ratio, large fragmented market possibility of consolidation | 3% | -3% | 0% |
| Subtotal | 38% | 63% | ||
| Mid & Small Compounder | ||||
| AFFLE | Great cashflow business and runway for growth, innovating new revenue stream | 4% | -7% | 0% |
| ROUTE MOBILE | Great cashflow business and runway for growth, innovating new revenue stream | 4% | 17% | 82% |
| AU SMALL FINANCE | Serving Large unbanked population | 4% | 21% | 75% |
| PRINCE PIPE | Expanding Real Estate market, good technical collaborations and capex | 4% | 33% | 105% |
| HIKAL | One among few complex APIs and CRAMS | 4% | 119% | 1248% |
| SOLARA | Diversified API player in human and animal health | 4% | 4% | 12% |
| BURGER KING | Excellent cashflow business, MNC brand, huge unorganized QSR market | 4% | 37% | 64% |
| MAHINDRA HOLIDAYS | Brilliant cashflow business, affluence play, asset light | 4% | -1% | 0% |
| Subtotal | 30% | 39% | ||
| Big Bet | ||||
| NEOGEN | One of very few bromine and Lithium chemistry player | 3% | 6% | 21% |
| BHANSALI ENGG | Play on consumer durable market, new capex to drive down material cost | 3% | 26% | 69% |
| INFOBEANS | Large market, inorganic expansion to acquire IP | 4% | 57% | 436% |
| ARVIND FASHION | Value play, one of largest brand collection | 3% | 98% | 828% |
| NEULAND | Complex APIs and CMS opportunity in niche therapeutic areas | 3% | -37% | 0% |
| HSIL | Value play, 2nd largest glass bottle manufacturer, improving building material financials | 2% | 16% | 68% |
| YASHO | High growing specialty chemical microcap | 3% | -6% | 0% |
| HINDUSTAN FOODS | Huge FMCG market with shift towards CM | 3% | -8% | 0% |
| Subtotal | 19% | 80% | ||
| Total Portfolio | 30% | 63% |
Few more name i am currently studying like Intellect Design, Meghmani Organics, Shaily Engg and Ester Industries.
The number of stocks may look large but that is what i am comfortable with currently more so because of the prevailing market/geoeconomic conditions.
Below are my past winners:
Adani Gas : 6X
GMM Pfaudler: 3X
Below are my mistakes:
Coal India : Tried hardcore value investing only to realise it is not for me, lost 30% capital
Jubilant Foods : Identified the great cashflow machine but got spooked by valuations and sold at 50% gain
LTTS : One of the first stock to put a large bet on, lost patience and sold off since growth was not as per expectation only to see it go 3X from my buy price.
DHFL yes DHFL 
: It was a noob choice in 2016 looking very cheap optically but made 2X(reduced from 4X post the fraud came to light), extremely lucky to sell that before total crash.
Your valuable suggestion/comments/counter thesis are most welcome. Keep learning, keep engaging and keep enjoying !