Portfolio Update Aug 2024
Asset allocation:
Equity allocation is now tending towards my target of 60%, now at 57% (vs. last quarter at 49%). Half of the change has come due to equity run up in last 3 months and half due to sale of my debt mutual fund which i deployed in equity during election and budget dips. I was also able to trim my direct bond holdings wherever liquidity was available.
I beleive it will be very difficult for me to acheive 60% equity allocation target if market does not show a dip. Cash level (6%) is higher than last quarter due to some profit taking.
Stocks:
Before we get into my portfolio activity, let me acknowledge I felt very nervous about the heights. I am not able to ramp up the portfolio too much. However, if I look back, I ramp up my position only when price moves-up.
I evaluated each of my position on two conditions: 1. Look at each name to see if I will make investment today If I was buying the stock for the first time (its attractive or not). 2. Will I buy the stock if its down 20% or more.
Of the 20 positions, I have concluded to increase allocation on 13 positions. Some ramp up of allocations will be on dip, some on price increase (particulalry smaller positions). Only 6 had no change and only one trim (largely due to high allocation).
Having said that I am feeble and can change my view anytime.
All the rationale I share below is post facto analysis. Many of my decisions are in the flow, taken in split seconds and not planned properly. For example: I sold StarHealth immediately after results. However, concall was very good, management body language and guidance of tripling profit in 3 to 4 years was very positive. I had to re-enter the stock post concall. Hardly a thoughtful investor.
Exits/Trims: Many R&D stocks, Sandhar (trim), and Ami Organics (exit), NAM-India (exit) PB Fintech (trim), MapmyIndia (trim). Rategain (trim), Saregama (trim)
Trimmed many stocks due to recent sharp run up. While Saregama was trimmed as results were not upto the mark.
Ami Organics exit: normalised extrapolation puts business at 30+PE (assuming 150 crore profit in FY25 which is almost double of their best in recent years) so I am not so comfortable. I might be under-estimating the operating leverage in the business though. A price dip or earnings surprise I look forward to change my view. I would rather tread cautious at such market levels and keep cash for any opportune time.
NAM-India exit: sharp run up. Profits in FY25 might be suppressed due to esop cost. Market turn may result in pressure on market related firms. Also managed overall allocation to market related firms given I have large exposure to Nuvama, and likelihood of further rampup in 360One.
New Entries/Ramp ups: SJS Enterprises (new), Fino Pay (new), Medi Assist (new), Zaggle (new), Heritage foods (new), Nuvama (Rampup), Star Health (rampup), Goldiam (new), EFC ltd. (new), Strides Pharma (new), Updater Services (new).
SJS: I have ramped up this significantly to 8% of my portfolio within a quarter. A high margin business (EBITDA -25%, some peers exhibit similar margin so not an exception), low value (content of SJS products in a vehicle is less than 1%) but high impact (marketing/looks, asethetics), active management (few past acquisitions have been super helpful to fill gap or prodcuts/tech), and low or no debt.
Medi Assist: A proxy to India’s health insurance (mainly group). Most of the peers are not able to make profits (good enough) but Medi Assis makes 21-24% margins. Grows at 15-18% topline and likely to grow earnings in 20-25% range due to margin improvement. Acquires companies ( making low margins) and bring them to its own margin level within a year time.
EFC: Strong growth guidance (almost 100% this year and may be 40-40% in coming years). Tailing Sage One and hoping corp gov is ok. Management acknolwedges business does not have any differentiation. So a scale and integration is key to acheive efficiency and efficiency may be the differentiator as they scale up. lets see.
Updater Services: Available at 20x OCF. Topline to grow in mid teens and bottomline may grow in 20-25% range. On PE basis also ~20 PE current year.
|
Aug-24 |
May-24 |
Apr-24 |
Feb-24 |
Jan-24 |
Aug-23 |
Nov-23 |
| Total stocks |
20 |
21 |
11 |
16 |
21 |
23 |
22 |
| Top 5 allocation |
53% |
62% |
69% |
55% |
46% |
42% |
48% |
| Top 10 allocation |
80% |
87% |
97% |
87% |
74% |
71% |
78% |
| Average holding period |
1.3 |
1.0 |
1.2 |
1.1 |
2 |
2 |
1 |
Highlights: 360 One and Nuvama continue to deliver solid results. So minor ramp up in Nuvama. I look forward to ramp up 360 one as results were astounding.
PB Fintech grew its premium at scorching rate of 78% YoY. However, recent stock run up makes me bit nervous. My target when I entered PB was 75k crore mcap in FY27. This has been reached as of last trade on 16th August. So this will be on trim mode.
Re-entry in Tips industries proven highly beneficial.
Lowlights: Rash decisions (sold StarHealth without listening to concall).
Rategain: revenue grew below my expectations of 25%. Stock has not gone to new high desite strong market performance.
MapmyIndia: results were not upto the mark. Growth of just mid teens for a 80PE (TTM) is not at all acceptable. Though market did not react very unfavourably, a keen eye has to be kept on company’s execution.
Please note that: I am wrong in 47% of my stock pickings so please do not follow me.
Disclaimer: I am not a financial advisor and nor a SEBI registered Analyst. The content shared here is only for learning purpose. All the names mentioned here are for example purpose. I may buy more, exit or partly sell the stock/bonds without any prior intimation . I work for a investment advisory firm. My portfolio is not a recommendation for anyone. Some of these stocks might be in clients portfolio as well so please be aware of vested interest.
