Om Shivaya Portfolio

Q&A: Questions & Answers Portfolio Q&A
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I have not been online much for a very long time in context of discussing investing with anyone. Self-made sabbatical I guess.

Anyway, a random click here and there while searching for something else brought me back here.

Glad to be here. Will try reading through the plethora of gems posted by everyone here (newbie and pros included) as much as time permits and learn as much as I can and will try sharing the comments of this amateur some times, for whatever little it’s worth.

So, here I post my portfolio just to keep a track on it publicly (ah, good old times). Not posting it for any feedback but anyone and everyone is free to comment on it…criticism and sugar-coated comments are both welcome, though I would much rather prefer the former.

Om Shivaya Portfolio (major components)-

Yes Bank: 63%
DCB Bank: 19%
HDFC Bank: 16%

Current Holding period: Medium-Long Term.
Planned Future Holding period: Long Term.

Well, that’s it. Thank you and take care everyone.

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It’s good to see another portfolio similar to mine ie. 100% financial stocks (although my portfolio has more stocks).

I also have Yes Bank which I find to be an excellent performer every quarter. I personally think RBL is better than DCB although valuation could be comforting in DCB.

Is there any specific reason you have only banks and a very concentrated portfolio?

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I had DCB much before RBL came into the market and I like DCB since its management doesn’t make too much noise and it isn’t afraid to take decisions which it sees is good for business but which can piss the equity market off. Yes Bank is enough for a “fire in the belly” stock. Rest I like to keep it less aggressive, just to balance things off.

Only Banks why? Bcoz they will grow if economy does well…simple compounders which make money over long term, one drop in the ocean at a time…not Big Bang fast multibaggers.

Concentrated why? That’s what I am comfortable with. If convinced, bet big and bet hard and keep track of the businesses like a obsessed lover and get out the moment there’s a whiff of a serious problem. Small portions in great companies makes no difference to ones portfolio…if keeping it so over long term.

Take care.

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If you know which of the 3 companies will do well should you not be investing 100% in that company? If you don’t isn’t that a case for diversification?

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In my opinion, 63% allocation to Yes Bank is way too high. The going has been good so far. But things can turn sour very quickly especially for a bank.

Yes Bank is known to be very aggressive (fire in the belly as you say) in their lending practises. And in banking, that is not a good quality. In the long term, it will bring the bank down!!

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Though I’m not so knowledgeable, I will try to share my thoughts on your query and anyone can use the info. as they see fit (or dump it) :wink:

Investing, like life, is all a game of probabilities. The idea of diversification is just to balance the risk. We are humans, not GODs and hence will not know with certainty anything ever. ANYTHING EVER!.

So, your premise that I COULD know which company will do well, is itself extremely faulty. But yes, I do have a higher level of confidence on some stocks compared to others and hence the higher allocation there but probability is not certainty as none of us are GODs.

Now, next point that comes up or probably that shall come up, is…just how much diversification is proper diversification and how do we balance between concentration and diversification. Well, therein lies each ones comfort factor and what one considers risky? You may find a 3-stock portfolio extremely risky but it could be like daily breathing to me…usual daily routine. It’s how you see 3-stock portfolio that matters…water filled glass…half empty or half full…Same stuff seen with different perspectives.

For me, 3 stocks making up the whole portfolio is concentrated…sure! For me, any stock taking up more than 20% of portfolio is concentrated. FOR ME!

So even by my standards, my portfolio is super concentrated. And hence, I have thrown in a bit of balance with two less-fiery managements. All the three business managements are talented and hopefully they can deliver the different stuff which I’m expecting out of each of them.

So, to answer your one line question: If you know which of the 3 companies will do well should you not be investing 100% in that company? If you don’t isn’t that a case for diversification?

My answer: no, I do not know which one will do well and hence the risk balancing by investing in three rather than one. Hence diversification. But therein lies the catch. Investing as I said at the start, is exactly like life. It’s not black and white…it could be grey…its not yes and no…it could be maybe…it’s not diversification or concentration…it could be diversification as a subset inside the superset concentration. I could be concentrating first and choosing my best stocks and then putting in two other to throw in a mix of diversification. When I say concentrated portfolio, I give you just the outer view of the superset…there could be subsets and who knows sub-subsets…just balancing the probabilities as much as I can…no certainty in life but only trying my bit to bring the odds in my favor while on the other hand trying not to lose out on the BIG wealth creation which comes from taking risks.

Investing is an art and not a science and hence no one should become so rigid so as to say that if it is this, it can’t be that and if it is that, it can’t be this. So, diversification and concentration can both go hand in hand. We should open our minds, don’t just speak what everyone speaks or don’t just speak what logic tells you…think out of the box…listen to something more than the brain…that’s where investing will start.

As I implied earlier, Investing is like Life. More Art, Less Science, Full of Grey and Bereft of Impossibilities…

If the above words help someone, good. If not, good.

Take care. :+1:t4:

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Well, Kashif, I’ve been with Yes Bank since 2006 so going has almost never been good, in the sense that Yes Bank has done pretty well delivering but market has almost always seen Yes Bank with a bit of skepticism…Yes Bank has managed risks much better than the best…tell me your favorite bank and compare it’s NPA to YES Bank’s…only ones which come close are HDFC Bank and maybe Indusind. And you say, Yes Bank is aggressive in its lending…Yes Bank has almost always proved the critics wrong not only on growth but most importantly on NPAs too. :blush:

I’m not saying Yes Bank can’t start delivering bad results tomorrow onwards, but it is true for almost everybody albeit HDFC Bank. But Yes Bank is slowly narrowing that gap and perception too with HDFC BANK…its CASA is fast inching towards 40%.

And when there will be no excuse left for the critics, they shall move towards the corporate governance angle and let me just say that by not providing a board seat to some family members and giving it to professionals who have years of not just experience but specialized experience, they have upheld corporate governance and the shareholders’ unanimous support to Rana and Yes Bank officials and Board can be seen from the resolutions that are passed in its AGM. Pls find some time out of your busy life and see the voting pattern of shareholders in the AGM and then post statements so that they may stand the test of facts.

NPAs, top class (even if current NPAs swell up, albeit temporarily, with the RBI’s current Review, I have a hunch the NPAs shall still be among the best and these too would be taken care of in a few quarters’ time).

Growth, top class.

Despite a so-called failed QIP of around 1 billion USD, within a few months the QIP is relaunched and lo and behold, it is subscribed within a few days…are so many people fools to not know about serious Corp. Goverance issues, if there were any?

So, where exactly is the issue?

The issue is most people will walk with the herd and not think out of the box and be original. A headline somewhere on aggressive lending practices, and that becomes the truth? We should enquire further to find out things beneath the surface, like credit appraisal processes, recovery processes etc.

Yes Bank can surely go down anyday…no guarantees in life, but it’s track record so far on NPA front is trustworthy…as trustworthy as the best banks you can think of. Sure, it can go down and so can the others :v:t3:too.

No case at all of singling YB out.

Take care :smiley:

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There appears to me so many logical flaws in your arguments and conclusions. I only wish that other investors do not get misguided into concentrated investing based on incorrect logical thinking and potentially lose their money. Mind you, I believe concentrated investing does have its place in the investing world, but in my opinion, the reasoning and the approach should be much more rigorous than your one line approach towards stock picking. For example you have invested in Yes Bank because it is a “fire in the belly” stock. While the words “fire in the belly” sound inspiring and good, that is no reason to invest in a stock let alone a significant portion of your money. Contrast this with reasons provided by Dr. Vijay Malik in his excellent blog on concentrated investing. i could point out many more flaws in your reasoning but I will stop here, again in the hope that future readers of this thread will contrast this with Dr. Vijay Malik’s blogs and approach to concentrated portfolios and follow the right method to investing.

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You say you follow Vijay Malik (I don’t know him but good luck to him and if he is good, I shall learn from him) BUT you made two Cardinal mistakes:

  1. you assumed I invested in yes bank primarily based on its fire in belly criteria!!! Really!!! Are you serious? You really assumed something like that :roll_eyes:

I mentioned fire in belly simply in answer to your first question to signify that they are more aggressive than the others, nothing more than that! .nothing wrong there too if it’s calculated aggression. Anyway, that’s another topic and I don’t want to go into that.

  1. you jumped to conclusions before even me having spoken anything on what different criteria I had chosen to choose Yes Bank…this the same way you learnt analysis of stocks too…quick surface analysis and not going even a millimeter deep?

As for Mr. Malik or anyone else, may the force be with them all. I’m an amateur, loads to learn for me from everyone, including amateurs and pros.

Teach me, bring on the flaws pls. I love criticism, as long as it is creative. waiting…

Take care :relieved:

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We are here to learn and share our learnings and my post was in that spirit. Obviously i dont have anything against Yes Bank. But being in the banking industry for the past six years, i too know a few things. I have not heard about aggressive lending practises from headlines, I have heard it from colleagues and clients who deal with Yes Bank.

I am a conservative investor and my focus is on the downside first and foremost before thinking about the upside. A bank is a complex organization and to understand all the risks is not easy. Indian Banks have been hiding NPAs from the investors and we have seen this in the media over the past month or so. Axis Bank and Yes Bank are prominently named in all these cases. Given the complexity of the bank and their way of working, it leaves a lot of discretion with the management in reporting the financials. Hence in case of a financial institution, you can do all analysis but still know little about the bank. The most crucial aspect of investing in a bank is the management. What has been their track record. The qualities which i admire in management is conservatism, humility, track record of fair treatment of all the stakeholders in addition to intelligence and focus.

Like Warren Buffet says - there are certain investment which go in the too-hard category. These are the investments where you know that you do not have the expertise or skills to understand the business. For the reasons cited above, Yes Bank would be in the too-hard category for me.

I hope you have thought through and understand the risks.

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Kashif, very nicely written. I am not from the banking sector so I don’t have your expertise as you say you are from banking industry. But I have heard a lot of what you said about other banks too. My first criteria in choosing any company’s stock is its management and Yes Bank has passed that test, through its past history…I can’t say about the future.

Yes, I think I have done some good bit of research and hence have been holding YB from 2006 without selling any major stake. I have not just thought thru the risks but have experienced the repercussions of the perceived risks in YB from 2006 till date. Still, nothing’s for sure and I can’t say for certain that everything would be well with YB…but that holds true for every company…

As for complexity, every company is complex…not just banks. Each one thinks their own is the most complex, but ask anyone in their sector and they’ll say the same about their own.

I apologize for having presumed that you made statements based on newspaper headlines. I should have asked you more…

I appreciate your inputs.

Thanks again. :v:️

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SELF NOTE:

Yes Bank, HDFC and DCB Bank results are all sub-par on the NPA front…But I am waiting to see the changes one year down the line…a quarter here and there is okay for me and even when HDFC Bank has slipped on NPA front more than it usually does, I am gonna give the other two one year…I am quite sure they will get out of it but still…let the data speak for itself 1 year down the line rather than me blab about it

For anyone interested, link is below to see what exactly is going on the RBI divergent NPA figure front…

http://www.bseindia.com/xml-data/corpfiling/AttachLive/20c81eaf-99e4-4a93-8a78-ce14cede852c.pdf

Some NPAs have been upgraded to standard account (as per RBI rules), some good recoveries have been made, some sale has been done to ARCs so the RBI divergence figure which has been finally classified as NPA as of September 2017 is pretty different. Still, it is better as investors, to always keep a vigil. There are no guarantees :smiley:

If anyone is interested, they can do their own homework from link above…Last page in the PDF doc. Take care.

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Om, i think you were there on TED and i remember you had a two or three stock portfolio for a long time.If you don’t mind can you share the returns that you have achieved with a concentrated portfolio in terms of stock and sector selection.To sit tight in times of extreme pessimism in the financial space especially during 2013 -14, must have been difficult. Do you keep a daily track of prices and news. With a diversified portfolio, one can miss out and still survive.

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Hello! Yes, same amateur here as TED.

First the word of caution for everyone including you…don’t repeat my style. You are unique and find what suits you. You may sleep well with a 10-stock portfolio, so pls don’t even let Buffett convince you otherwise…yes, learn from him but apply your own mind in the last.

So, now that the disclaimer is out of the way :laughing:, coming to your query.

I have varied a bit here and there…added 7-8 stocks in small amounts initially and over time, cut the weeds out and finally stuck with the current three in my portfolio. Yes Bank has almost always been my top holding and rest two are balancers to the concentrated portfolio.

I started investing first in 2006 I guess and from that initial seed capital, my full portfolio(excluding dividends) has grown around 22% compounded in around 10 years. The churn in portfolio has been minimal and something has been sold only when I find that the earnings of the company are under significant threat.

Well if you think 2013 was dificult, recheck…2008 was the great grandfather of 2013 and Yes Bank was punished hard then but I didn’t sell anything…just focused my mind on other matters in life…even though 2008 happened within 2 years of my entry into stock investing.

Did I feel the extreme pessimism in the market in those times…YES!
Was I pessimist? NO

I do keep track of my portfolio daily only in relation to some news on my portfolio stocks and not price wise.

I feel my stock count is almost perfect…FO ME ONLY

My ideal portfolio count is 5 stocks…that’s a work in progress for me.

Hope it helps…take care :+1:

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Yes bank has been one of my top holdings for a long time as well. What do you think of divergences? This is the second time they are caught under reporting. The only thing that separates ICICI and Yes Bank is the perceived NPA performance. Now that is dubious, shouldn’t it be valued in the lines of ICICI and Axis rather than Kotak and IndusInd?

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The NPA divergence issue is surely not good but I’m focusing on the next year to see what all Yes Bank does to resolve this mess. Lots of explanation expected from Yes Bank and hope they explain it properly and in a detailed manner… well, somehow I need more clarifications from yes bank and Rana before I can say YB is in the icici, axis camp and not in the Indusind,HDFC camp…

I am staying put in Yes Bank and watching it very carefully.

Everyone should use their own risk appetite to decide what they wanna do…my risk appetite may give someone else a heart attack :joy::+1:

And remember Susindar, no problem in life is so big that one cannot prevail over it…don’t let the noise of media and peer groups influence you. Always go by pure facts and take your own decision.

All the best to you…and me :wink:

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I think so too! I fully exited Yes Bank today not because I think the stock price won’t go up. But because I lost trust in the management and it seems too much of a risk. I am finding PNB Housing Finance and RBL Bank better. Any thoughts on these two stocks?

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I think RBL is better from what I’ve heard of them…pls still do your own due diligence.

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I hold a concentrated portfolio of 10 to 12 stocks. But when we hold such a concentrated portfolio, we need to know what is happening within the company on a daily or monthly basis. First sign of trouble, exit before others can exit. If for any reason we don’t have that advantage, it is better to balance the concentration in such a way that we won’t be wiped out of the market when the stock (permanently) falls significantly.

Often retail investors don’t have first hand information. So it may be prudent to keep the concentration at optimal levels, such that we can stay afloat when unexpected turn happens.

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Very rightly said Vijay. :+1: