Myself Pankaj, Engineer by profession working in oil and gas sector. I started investing since last two years and saw market both soaring and bleeding in the last two years. I have a very concentrated portfolio with investment term of 2 years. Below are my picks-
NathBio Genes- The company is in the cotton seeds business, The company has developed some of the best bt cotton hybrid seeds in the market today. They invest heavily on the R&D, have dedicated more than 300 hectors of land only to RnD. Due to the royalty to be paid to mosanto there is lower domestic competition for nath. They sold 0.5 million packets in Fy-17-18 and 0.8 in 19-20 and they expect to sell 2million packets by FY-20-21. Company has reduced debt significantly in the one year.
Ganesh Housing- Though the real estate market is not doing really well. I have allocated 30% of my portfolio on Ganesh housing. The company is based out to Gujarat, ahmedabad and have high operative margins of approx 30%. However, the stock is in the bleeding since a while now and i used this as a opportunity to accumulate. Keeping in mind the affordable housing push by the government i believe Ganesh housing could turn out to be a gem.
Shilp Gravures- I have allocated 10 % of my porfolio to this company. I am not very sure about this company hence added in small quantity. The company is market leader in engraving business , leader in ceramic printing with electro mechanical engraving and is a prominent player in flexible packaging. The company has good OPM and has shown consistent profit and has reduced debt in the recent past.
I have been following this blog since a year now, and only now has got the courage to post. Request you to please share your opinion. I am still very new with stock analysis, hence need your guidance.
I’m not an expert in anyway and I don’t follow any of the stocks you own so can’t comment on them. But my opinion on the equity investing process is as follows:
2 years is too less a time period for equities. Give at least 5 years to whatever equity investment vehicle you choose - stocks, MF, anything. Avoid frequent churn.
Investing in small caps is not a good way for a newbie to start. In the hunt for multibaggers, retail investors take excessive risk of losing capital.
At the beginning, focus should be on proven business models (mid caps and large caps). These can be tracked reasonably well by retail investors. There is a lot of research by brokerages, concalls, decent annual reports, steady corporate governance, news followership. Following this has made me more confident in my stock selection process and has also guided me of potential pitfalls to avoid.
At the start, focus should be on learning how different businesses make money, how they operate, their expected runway. Learning isn’t possible in small caps/micro caps in my opinion. Or at least it’s better in the bigger companies.
Start looking at small caps only after you’ve gained a lot of experience in the market. Or you’re some sort of biggie whose calls the mgmt can’t ignore.
What the most basic thing I have observed is, you have very high concentration risk as you have not diversified well… And as other members told you… Avoid entering into small caps in the begining era… Also… Choose the bottom down approach for stock selection in the beginning… that way… you will play little safe comparatively.
Generally… one thing I have observed is… the portfolio which has generated alpha consistently… had always good weightage to trending sectors in their portfolio… like financial sector, automobile…
Also, I generally recommend people to add some hedge to their portfolio… In current scenario, I feel its IT and FMCG sector which could hedge against market… as it performs well even if overall market doesn’t…
NathBio Genes . i like the stock i have made two purchases on 31-10-2017 100@424.50 and 03-11-2017 100@414.20 but sold on 29-12-17 200@ 463 making 10% gain Last three years there is negative free cash flow and there is increase in share holder equity .so this is not a good sign .There is increase in inventory days so company is not able to sale the inventory and may be evaluating these at higher price .also the working capital when divided by the sales is continuously increasing .One may interpret the company is not able to control expenses .if i were you i would have been exiting and there are lots of good opportunities during recent melt down of market .
Ganesh Housing the company’s growth is slow as compare to it’s peers . Kolte Patil Developers Ltd which is expensive but seems to be belter bet in this sector
Shilp Gravures company in engraved copper rollers and printing plates i am not able to reach their website when searched on internet it throws exception .
small tips ( don’t follow these blindly )
My take at least minimum 5 to 8 stocks for diversification .
wealth creation is never so easy it need persistent efforts so the emphasis should be on protecting one’s capital . i have paid huge tuition fee to mr market.
when in doubt just exit
even if your are able to generate 8 to 9% on top of the FD return per year that would be wonderful that’s the power of compounding .
i have enter some of the best companies at vey high price ( entering at any price may prove to be fatal ) and sometimes I exited very good companies very soon . . ( Only thing you can do in share investment is to pay the OPTIMUM MINIMUM Price for the best VALUE offering company )
entering is very easy but difficult to exit from any scrip so it is best is to write down when you are going to exit the company .
Capital allocation and risk reward must be consider with utmost sincerity.
Don’t get carried away with experts view or research reports they may be biased and filled with hidden agenda. APKA PAISE APKI SOCH … BE YEDA … and Enjoy the PEDDA …
consider the bear case this happen with me in the initial years when i see every company looks very exciting
Do learn to value the company and on top of that in order to have some margin further give 10 to 15% margin for errors and decide at which price you will going to buy the share . i had made couple of times profit on HEG i only purchase when it come below 2000 even the experts are giving target more than 6000 but i exit when i made 30% profit.
Regards
disc: I am not any sebi research analyst. my views are personal and not any way these should be considered as investment advice one may do his or her own due diligence in purchasing shares
I would not suggest you to go to any financial advisory because then you would always be dependent on them. If you want to get good at investing you can do it only by reading more and getting your hands dirty just like any other profession. However since the learning comes only through losing money i would suggest you start with may be 10% or 5% of your capital or whatever you can afford to lose. You will have to go through one or 2 cycles of the market to increase your exposure to equity until then i would suggest you to limit your exposure. If you are not interested in learning then there is always mutual funds.
Thank you Youraj for taking time to share your thoughts. I really liked the tips provided.
Regarding Nathbio i purchased the stock @150 and then added on dips, since then the stock has more than doubled. Last year company issued QIP @468 and company now has a positive cash flow of 39 as of Mar 18 (as per screener). Also, could the increase in inventory days could it be due to the cyclic nature of the business?? as it is mostly dependent on monsoon? Also, as per the recent company investor presentation, the company is on the verge of huge export potential in Philippines as nathbio is the only company to receive approval for fusion BT seeds in Philippines.
Pankajbhai, hope you are doing deep research into each of these investments that may be future multi-baggers, but you have to faith, conviction, research, and on-going themes that you are seeing unfolding for holding just 3 stocks.
