Portfolio crying for re-structuring

Q&A: Questions & Answers
1

Hello All,

I've been trying to building a portfolio for long term, mostly with steady compounding stocks since past few years. But current fall in stock made me go crazy and ended up picking a lot of stock in same sectors esp banking, now my portfolio list has bcome quite big and i feel its time to exit few stocks - and maybe enter into some sectors that never caught my attention. Im kinda passive investor and planning to hold shares for 5-10 yrs (even more if company is still doing well - Since im 26 now i dont think i need to reduce my exposure im equity for now).

Request comment and guidance! Please feel free to suggest some replacements also. I like STFC & Bajaj Corp but been avoiding it bcos of messy list of stocks.

Thanks for your help in advance!

Regards,

Augustine

Stock Price invested % Holding
IndusInd Bank 370 4
South Indian Bank 6.3 4
ICICI Bank 980 6
HDFC Bank 590 3
YES Bank 310 4
PNB 530 3
Federal Bank 350 2
GRUH 195 2
Sun Pharma 440 3
Lupin 371 8
Torrent 392 5
Ipca 601 2
Tech Mahindra 970 4
HCL Tech 495 6
ITC 350 2
Marico 66 8
Page 2749 3
Cummins 421 2
Amara Raja 259 3
M&M 513 6
Tata Motors 311 4
United Spirits 1550 2
Jet Airways 410 1
DB Corp 280 1
ENIL 268 1
ITNL 219 2
Cairn 298 3
Bluedart 2500 2
Cash 4
2

Hi Augustine,
Though the stocks you have chosen are decent,you certainly have a lot of 'em.If I were you,I would keep IndusInd,HDFC Bk,Gruh,Page,Bluedart,Amara Raja,HCL Tech,Tech Mahindra,Sun Pharma,Ipca(you can look at Alembic Pharma too)
Tata Motors is more of a global player,JLR is giving them great traction in overseas markets while M&M is more of a domestic play(Ssangyong will happen later) Though SUV sales may not do anything spectacular,M&M’s tractor biz should do very well in FY14.So,you can choose btw these two.
You can use the cash to increase allocation in the stocks you own.
Also,make sure you read the **‘Capital Allocation’ **thread on ValuePickr.

3

I keep near 10% of of my salary towards new investment towards my portfolio.

4

No need to look at new names. I would sell ENIL, ITNL, Cairn, DB Corp, Jet Airways and add to existing ones. Among banks, sell South Indian Bank, ICICI, Yes Bank, PNB and Federal and add to existing banks and financial stocks.

5

You can reduce the no. of stocks. Sell all other banks and consolidate into HDFC Bank, Indusind Bank & Gruh. Similarly merge pharma stocks into 2 good pharma stocks like Sun/Lupin, Unichem/Ipca. Sell all small holdings and increase your allocation to ITC, Page and Blue Dart. Exit ENIL, ITNL, DB Corp, Jet & Tata Motors.

6

An advice you ( and many others here) may not like but should seriously consider. Please do not do anything. The very idea of concentrating just for the sake of it is valid only for very active investors. You have a very good set of stocks and plan to be passive. A bit of overdiversification in such case is more of a advantage then disadvantage. Just keep adding to some of the stocks based on your own conviction when you have more money.

7

Good one Gaurav. I would rather say listen to all but follow the one which suits you.

8

Thanks Guys for your kind advice! As of now Iâm not planning to reduce portfolio size to 10 stocks but I seriously think it has to be fewer than 20 (Now I have more than 28 stocks and I just canât keep track of developments/ results/ ARs/ brokerage reports on all these stocks)

I had kinda set my mind of selling South Indian bank, Federal, ENIL, and Cairn â so I will exit them soon.

Coming to** DB Corp** â With good monsoon, state polls in few of DB corps key state and parliament election within 6-9 months â should it be good to hold on to DB Corp until then? Bcos everyday we see some or other political/ inauguration/ new project announcements ad in newspaper. Also, festive season ahead may again result in better ad revenue for print media? So eventually exit within 1 yr.

Wrt Tata Motor/ M&M â Iâm in process of partially exiting M&M, had bought down holding from 12% to current 6% - I may nt fully exit for now bcos +ve turnaround of ssangyong n centuro launch giving me hope that even 2 wheeler space would eventually turn black. âve is no product launch until FY16 is big concern as M&M is facing tremendous pressue in UV space.

Jet Airways )- is just a gamble J May exit little after Etihad picking up stake in Jet.

ITNL â should I wait some more time for better valuation?

Sagar/ Manish )- just wondering why do you think exiting/ replacing Lupin & Torrent are better idea? Is it bcos valuation of Lupin or Alembic/Unichem is better story (never tracked Alembic or Unichem) or just bcos too many pharma stocks and would be better to have 1 large lap and 1 medium/small cap?

I see Lupin/ Torrent have a lot of approved but yet to launch ANDA and quite lot pending ANDA with USFDA â shouldnât this give revenue visibility for future?

PNB )- I had entered bcos of depressed valuation, it was trading below half the book value so my thinking was even if NPA rise - shouldnt there a margin of safety?

**ICICI/ YES **i’m yet to decide on these! But sure firing would be after federal bank and SIB!

I will surely read capital allocation section, going though i realise i have many intresting sections in valuepickr i have been not visiting - including valuepickr portfolio and scorecard!

Thanks Again!

Regards,

Augustine

9

errr missed to add one point on PNB, is good idea to book loss n invest in hdfc bank / gruh or should I wait till PSB valuation normalize- book profit n move on( I’m nt fan of PSB bcos of over govt controls on them)

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Coming toDB Corp â months…Also,

**That seems a good idea,but since your buy price is already high,it won’t be easily recovered…DB Corp being a midcap(the move was on the back of very good Q1 results which generally builds a mini ‘euphoria’ around a stock)
If you want a play on Monsoon,go with Kaveri Seeds at lower levels.However,if you wanna stick to DBC,I would suggest you bring your acquisition cost down.**Iâm

**You are completely missing M&M’s tractor biz…they are doing excellent on that front.Still,of course,YOUR choice.**Sagar/ Manish )-

**Yes.My idea behind Sun/Alembic was the large-/mid- cap play.Alembic P. is one excellent company available at pretty cheap valuations(check ‘Not-so-Hidden Gems’)The problem with Torrent,for me,is,it doesn’t go much beyond 14-15X,so re-rating is ruled out(the stock has been around for a decent while) Regarding Sun,the stock is one of the most consistent & greatest wealth creators on our exchanges & its still not showing ANY signs of slowing.They enjoy huge margins…(you would know the rest!)****You said you want compounders,on that basis,Sun P. maybe a better idea.**Lupin too is great,so if you find it more attractive,sure,go with it.Actually,it won’t be bad if you keep both of 'em!

**Finally,I suggest you always buy stocks on corrections/consolidation(this holds for Large caps,‘identified’ stories.No need to wait if you are getting a good quality, cheap midcap!) Generally,even Hot sectors/stocks go into hiding quiet consistently.E.g.: The whole Tech pack had cooled off drastically after Infy’s poor Q4 show(even though HCL,TCS had done great)Lupin stayed in a range of 580-615,Ipca couldn’t cross 525,for many months,etc.

(As a diversion:)This is one of the best sites to learn more about stocks & the seniors are all VERY co-operative.So feel free to question & give your opinion(s)

Cheers.**

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Hi Augustine

Happy you have got into Lupin early :-)…

You have almost all the top banks in your portfolio… Exposure is more…

There are reports that real estate bubble may burst…Have held this view from 2-3yrs… Whenever i raise it my dear ones think i have gone nuts:-)…

Feel when the bubble bursts it will spill over to other sectors, especially financial institutions with exposure to real estate/infrastructure…

You can go slow on your future exposure to financial institutions or you canchoose only the best among them…

Some of the banks will have to deleverage their balance sheets…__I find it difficult to completely understand banking & other financial institutions… But feel they are yet to come out of the woods…

RBI has taken measures on teaser home rates and some innovative/risky housing schemes… If RBI lets its guard down we may be in deep trouble…

(Real estate prices have corrected by 5-10% near my place in the last few months)

Regards

mallikarjun

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Sagar/ Manish )-

To track too many companies is difficult and hence better go for 2 good pharma companies that too one large and one small/med company. You should visit the threads of Unichem/Alembic for better understanding of the company.

PNB)-

PSU Banks have witnessed rising NPA issue. This will continue as we are into the election year. If you compare the net NPA value with the Net profit, it is sizeable.

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Thanks Sagar,

If you want a play on Monsoon,go with Kaveri Seeds at lower levels. However,if you wanna stick to DBC,I would suggest you bring your acquisition cost down.

**For now I would like to stick with DB Corp, I understand Kaveri Seeds is a good company but I have read about kaveri only days back n havenat really understood company. What level you say is good level for entry? I heard Q2 is generally weak for kaveri seeds? If yes, should I wait till Q2 for lower entry levels? **

You are completely missing M&M’s tractor biz…they are doing excellent on that front.Still,of course,YOUR choice.

I had reduced M&M bcos of my considerable % holding in M&M and slowdown in UV market, yeh, I actually missed mentioning tractor biz along with ssangyong, n 2 wheeler even though it was in my mind but then I feel slowdown in UV market is sharp that tractor biz + ssangyong maynt be able to absorb it completely (I donno maybe my assumptions maybe wrong). Also, I felt JLR storyinteresting with new launch pipeline including JLR’s plan to enter new segments and cross overs so i did partialswitchto tata motors.

Regarding pharma a I would like to keep Lupin & Sun Ph :-), Iam holding Lupin for a while and is one of my fav and Sun Pharma is one of the best compounders & more over they have solid looking pipeline so I would love to keep both of them for now.

I will surely read more about Unichem and Alembic in anot so hidden gema section, maybe after this i will decide about torrent.

Finally,I suggest you always buy stocks on corrections/consolidation(this holds for Large caps,‘identified’ stories.No need to wait if you are getting a good quality, cheap midcap!) Generally,even Hot sectors/stocks go into hiding quiet consistently.E.g.: The whole Tech pack had cooled off drastically after Infy’s poor Q4 show(even though HCL,TCS had done great)Lupin stayed in a range of 580-615,Ipca couldn’t cross 525,for many months,etc.

Any sectors/ stocks you would like to recommend for now in above category? :wink:

(As a diversion****This is one of the best sites to learn more about stocks & the seniors are all VERY co-operative.So feel free to question & give your opinion(s)

Yeh, I totally agree you. Here, in few days im using this site I have bcome admirer of peoples knowledge, willingness to share it, co-operation & transparency surely a great place to learn!

**
**

Thank you again!

Augustine

14

Thank youmallikarjun,

Happy you have got into Lupin early

Hehe I entered Lupin 3 yrs back without knowing any company background/ Analysis - just bought bcos my broker had recommended:P

Feel when the bubble bursts it will spill over to other sectors, especially financial institutions with exposure to real estate/infrastructure.

**Iam seriously looking at exiting some financials like south indian bank (this was one of best performing stock in my portfolio), Federal Bank and concentrate on HDFC Bank, GRUH and maybe IndusInd a I entered these stocks now during the crash. When I bought these I had plans to exist my older financial holding but then I was confused to sell older holding bcos of the returns it had given me in the past! **

Here in Kochin, kerala too real estate (not referring to apt but commercial properties & land) prices have cooled off drastically bcos there is no buying appetite.

Regards,

Augustine

15

Thanks Manish,

To track too many companies is difficult and hence better go for 2 good pharma companies that too one large and one small/med company. You should visit the threads of Unichem/Alembic for better understanding of the company.

For now I would like to hold Sun P and Lupin among large cap â Sun P is one of the best stories in any sector and Lupin is my personal fav bcos returns/ and way it transformed â both still looks good with solid product/launch pipeline â for now I may hold both bcos my main problem is I donno which one to opt out J

Among Midcap/ small cap I will surely read more about Alembic/ Unichem and surely consolidate.

PSU Banks have witnessed rising NPA issue. This will continue as we are into the election year. If you compare the net NPA value with the Net profit, it is sizeable.

I partially exited PNB and now % holding is less than 1 - may exit completely shortly.

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**

Any ;))

**
Sorry for being repetitive,but Alembic P. fits the bill on being ‘quiet’(Unichem does too,but I don’t understand the story here)
Go to Moneycontrol.com & check APL’s management interviews after your analysis of the co.

Disc.: Have big positions in APL.**

**

17

thanks sagar, Sure I will read abt alembic pharma shortly! Quick check I see both alembic n alembic pharma, looks like both are pharma company- u referring to one listed as alembic pharmacy right?

18

Alembic Pharma is the one you should look at.

19

augustine

You seem to have a good portfolio of stocks… Why tinker with it if it has worked well till now?

At the most I feel you could reduce the number of banks in your portfolio and get into a couple of good quality ones like hdfc bank etc.

One thing u need to do is dont get caught by your buy price… in any stock… focus on current price and then analyse prospects of price appreciation based on that and the company in question’s prospects…

regards

hitesh.

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Thanks Hitesh for your valuable input, I will work on it!