Documenting my hits, misses and thinking on each of the stock in my holdings as well as watchlist - mostly for my own future self, but if it helps anyone, very good.
A short note on portfolio structure and goals first. It is ambitious. Goal is to double holdings every 3 years, excluding capital infusions. Is that crazy? - I have no idea, but the thing is If you are trying to go high, might as well aim for the moon. That way, even if you do 50% you are halfway there. If all you are doing is climbing a tree, a 50% will hardly be a 100m high, even for a tall tree.
Also, this is not all of my funds. This is just the bit I am trying to get ambitious about and am willing to take a few falls in the process. A good bit is parked in mutual funds and SIPs, which also are undergoing a bit of restructuring. For one, I am moving to direct funds. Also changing the funds in question. I find I prefer multi cap funds. If I am trusting the fund manager, might as well trust them completely. Why handicap them with small cap/mid cap/large cap constraints. Let them pick and choose and manage risks. Hence no cap specific funds. Looking to have all of my MF/SIP portfolio into the following set:
- Quant active - Different approach to stock picking.
- Ppfas - Very respected, skin in the game. FANG exposure. I thought about US equity and decided that the only international equity I was interested in was the FANG set. So MOSL nasdaq/Edelweiss China FOFs got eliminated. Plus I honestly don’t like the governance model of China as a whole (national policy, international policy, relation with India, the party structure), so no China, thank you very much.
- IPru tech - I have low exposure to IT in the portfolio. The few picks are very recent. This is quite intentional. I intend to let the IT sector be handled by a fund manager. In stocks like nazara, info-edge - I really don’t understand how the cash burn method leads to good businesses; in Affle, Indiamart, Happiest Minds, I don’t understand the current valuations, nor entry points. Thus my approach here is to let the fund manager do all of that, while gauging various risks and returns, entry points, exists etc much better than I can, while returning significant returns. Going by history, IPru tech is doing just fine on the returns front. Of course I am willing to add to any IT stocks if I see this worthwhile for a long term/infinite holding period and that is why thyrocare is on my watchlist. Expect to add Thyrocare and Pharmeasy when it lists, and wait for the merger (which imho, will be inevitable - no point in having two listed related businesses for a single entity).
- Canara robeco equity hybrid - This is where I intend to park the funds which will be used for annual regular expenses. Insurance premiums etc. I am ok with a little risk, plus currently the India growth story is good, and the debt component provides some security. We’ll see how this plan goes.
- Goldbees - self-explanatory I would think.
Additional note about large caps/blue chips/respected midcaps - Given current valuations, all large caps and blue chips, even some mid-caps are very highly valued. My watchlist here is - LTI, Berger, Bajaj Finserv, Kotak, Honeywell, Divis, Deepak Nitrite, Alkyl amine, PIInd, Page, PolyCab, GMM Pfaudler. So the consistent compounder theory is at risk on several counts.
Potential growth rate - What rate will it grow?
Pricing - What price to buy? When is that price going to happen?
I have had thoughts about starting a second separate portfolio which addresses large caps and some of the better mid-caps, but that’s maybe for later. For now just concentrating on my current portfolio and the MF restructure at the moment. Both are still very much works-in-progress and looks like they will keep me occupied till end of FY22 at least.
With that said, on to my direct holdings -
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RPPL-SM - Rajshree Polypack
All info in the main thread provided generously by @Tar and @Sahil_vi.
Holding term - Indefinite, May increase based on results and after migration to main board, but for now, no further adds.
Mistake - Took too long to jump in. Could have gotten in lower.
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LAURUSLABS
Again, not much to day here. Will look to accumulate on every dip. Impeccable on all respects, performance, management, growth runway, execution.
Holding term - Indefinite.
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CDSL-BE
Got lucky here. Did not make the mistake of waiting too long. Did average up though, which is why current profit margin is relatively low. Hit 300% returns at one point. As of now, though I am wondering about whether to continue to hold or trim my position. While growth will be there, I am wondering about the quantum of growth given the crazy run-up.
Also a platform business.
Holding Term - Medium. Trimming looks likely. If prices get to the right point, will probably withdraw initial capital. Rest will be free and probably stay indefinitely.
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ITC
Best resource for understanding the rationale behind ITC is to go through @malkd’s portfolio thread. This is my bet for wealth creation, if not for me, then my kids for sure. It will probably be a drag on the overall portfolio but I am ok with that. Will be accumulating till I retire/as long as it is cheap. Except for hotels, am hoping that they don’t demerge out any other firms in the short term though like ITC infotech, ITC agritech etc. That would be a bummer.
Holding Term - Indefinite.
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RACLGEAR
Very good firm. Solidly placed. Main thread and @Sahil_vi’s post on the subject are the best resource. The key thing I liked about the firm is it spent a good number of years building a solid base without much noise. Agreed wholly with the approach and the philosophy there. Hoping to reap the fruits.
Mistakes - Got in at a good price, stock didn’t move much for a couple of months while others did. Gave up and moved out. Stock went on to cross 2x purchase price while I stood on the side-lines and kicked myself for being impatient. Thanks to the recent midcap meltdown, gave me another entry point. Jumped in and kept adding every time it dipped over a few days.
Learnings - Patience is a very important thing. Acting on own conviction vs borrowed. Understanding the company very well (basically it means make sure you understand what you are reading, instead of just skimming through). The initial investment was made in my early days, and while I had read through the thread and looked at the numbers, I hadn’t absorbed them really, absorbed enough to have own conviction. Without real conviction, you just cannot hold on to a stock when it doesn’t move, or goes down or you have a couple of quarters of bad numbers. If you are a long term investor, you won’t make it without the above ingredients.
Holding period - Indefinite, or at least, very long. Also will be adding on dips next couple years. Firm is just getting started.
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JUBLINGREA
Good firm. Well placed, Main issue is the Environmental aspect.
Mistake - Did not buy in early enough, Could have got in at 241 after the primary undervaluation post in VP. Bought in early 300s and averaged up.
Holding period - Long. Would have accumulated more, but am waiting to see how the environmental aspect turns out. Depending on valuations at that point, will make a decision.
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IDFC
IDFCFIRSTB
My primary financial bet. Planning to add to dips for next 2/3 years at least. Bank will need at least that much time to clean out its historical bad eggs and everyone (including me) is expecting the jockey (a very respected name) to actually follow through. Also the merger arbitrage exists which is why investment is split. Building a large cap country wide bank takes time. Current valuations don’t have much downside. Overall, for a patient investor, risk/reward ratio is very good.
Holding period: Indefinite. Am expecting this to end up another wealth creator and am willing to cut the stock a bit of slack.
Learnings : Patience really, about waiting for the right dips and buying in at right prices. IDFC I got a bit wrong and am trying to average down. IDFC First I got in at right price I think.
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HIL
This is my India infrastructure, consumption bet. Acrysil was the closest thematic competition. HIL wins on account of its more diverse nature of business and its pedigree. In addition, I think the market is still not doing full justice to the parador aspect of its business. Plus one should look at how they are trying to derisk themselves for the core cement oriented business, which has environmental fallouts. Thanks to @Phreakv6 for bringing this firm to my notice.
Holding period : Indefinite. Will be accumulating on every dip (funds permitting).
Learnings: I was staying away from scrips where the CMP is high. It was a fallacy. This helped clear it up.
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IEX
Monopolistic bet on Gas, energy and power. Also my choice on a platform business (See @sahil_vi’s post on platform businesses for better understanding). No matter where your power is coming from, this is where it will end up, given the way power sector is reforming. You have captive solar generation coming up in leaps and bound, you see PPAs getting phased out and slowly becoming a thing of the past, and in terms of percentage of total power generated vs percent through an exchange, the prospects are immense. There are crucial government actions which are getting formulated around this though - Market Coupling and MBED (market based economic despatch). Read this for better understanding Will market coupling destroy the IEX monopoly? – Candor Investing . Market Coupling only is bad for IEX. But MBED however, would be a game changer for IEX. In any case, I think both will come about, so an existing platform with 90pc+ market share has all the benefits of network effects, and creating competing power exchanges are not a trivial endeavor, and MBED, if it happens will really change the fortunes of IEX, even discounting for market coupling and competition. For now waiting to see how market coupling and MBED works out.
Holding Period : Indefinite. but am pretty sure will be accumulating at some point. Very very long runway here.
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PIXTRANS
Not much to say, Good business, got in at a decent price. Main VP thread is best resource. Will hold unless valuations go up excessively. Not planning to add more as I have other picks in the sector - RACL and Pricol.
Holding Period: Medium - Indefinite. One of my profit booking candidates in next 3-5 years based on Pricol. If Pricol works out, will shift holding there, else shift Pricol here and hold.
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FAIRCHEMOR
This is a complicated story. As of now, I think market has it undervalued, mainly because its history. The company has undergone multiple changes of form, structure, holding pattern and what not. So basically it looks like a classic case where the promoters are doing a lot more than focusing on growing the business, yet the business has been growing. It has core technology in its area, has long and extensive relationships with global and local giants, has several competitive advantages and is very well placed. Now if only the promoters would focus primarily on the business, that would make me very happy. Primary thread on Fairchem has all the details.
Holding Period : Unknown. Will be tracking this keenly, and based on events, will add more or exit. Based on pure business grounds though, this is an add more and hold long term type, but the history makes one uncertain.
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FLUOROCHEM
Similar to Fairchem, this is another complicated story. Specialty fluorine chemicals play. Multiple possibilities, and highly undervalued, with competitive advantages. Additionally could be a benefactor of any EV theme which comes up as fluorine based molecules are used significantly in battery and battery electrolytes, and this firm already has this as a product line. Again, check primary VP thread for details.
Holding Period : Unknown. Will be tracking this keenly, and based on events, will add more or exit. Based on pure business grounds though, this is an add more and hold long term type, but is very dependent on management execution and focus.
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INTELLECT
One of my few direct IT plays. A semi cloud SaaS company, which is not known as such. Well positioned and growing. Execution over the next couple of years is key to monitor.
Holding Period : Unknown. As of now will accumulate as long as stock stays at current levels.
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PRICOLLTD
My thesis on this is added to the Pricol thread. Based on quarterly results, and management execution against goals - namely debt reduction and handling of loss making subsidiaries - will accumulate.
Holding Period : Uncertain. If thesis plays out, will accumulate. Else will exit.
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BAJAJHCARE
Undervalued pharma company with international presence, good growth potential, with pedigreed management. Goal here is to hold until P/E matches up with peers. Will accumulate on dips till then.
Holding period: As mentioned, once P/E parity is achieved, will re-evaluate and decide on hold or exit.
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TATAPOWER
This is one of those firms which when you finally find out about, makes you wonder which rock you have living under for all this time. Its also remarkable that VP does NOT have a thread for this firm. I have been looking for a green energy, power, EV, solar play for quite a while. Dabbled for a while in Shakti Pumps, bought and sold Borosil, looked at Aegis for gas transportation, until I found this. You need to look at the numbers and the division lines for this firm. The stock has doubled in the last year. After doubling, its P/E is 28, its PEG is 0.12. It does thermal generation, renewable generation in wind, and solar, EPC, solar pumps, rooftop installations, power T&D, and power trading. Its backed by the Tata group, so corporate governance should never be a question. Jumped in when I found this. Will be adding as much as I can over the short term. This is like holding a basket of stocks for the price of one. Main sticking point is the high debt.
Holding period: Indefinite. Will definitely add more.
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KILPEST
This is not about Kilpest really, the agricultural based firm. That part is actually a drag on the business. This is about Black Burn biotech - the subsidiary - which provided 50% of consolidated revenue and 90% of profits. I found this firm independently and was evaluating it when @sahil_vi found out about it too and posted his analysis on the relevant thread. For a full understanding go through that. This firm has come nowhere close to its rightful valuations, the firm still has some management adjustments to make (hive off old agri business, reverse merge subsidiary and also show decent non-covid growth). But this remains one of the best plays on the health sector in India and the world and on molecular diagnostics in specific.
Holding Period: Indefinite. Will add on every dip, funds permitting.
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TEJASNET-BE
There are two threads on Tejas networks in VP. Worth going through both. And the recent developments in the firms operating environment, the ownership change, added to its fundamental business, puts the firm in a place where it can really take off. Telecom infrastructure in India and the globe will continue to be a big business and Tejas is very well placed to take advantage of all the tailwinds.
Holding Period: Indefinite, Will accumulate as much as I can. However, current price has run-up quite a bit recently so I am not really sure whether this is a good entry point or not. In any case, my plan is to average periodically irrespective of direction for now.
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SIS
This is one of the wait and watch ones. Firm has very good numbers for quite some time, but the future growth of the business is not really clear to me. As of now I am just going by the numbers, which makes valuations very reasonable, and will track over the quarters.
Holding period: Uncertain. Additions: Uncertain.
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VAIBHAVGBL
Firm is in an enviable low capex cost business. Has excellent numbers for quite some time. The possibilities in terms of penetrating new geographies are high. For now will accumulate on dips and monitor regularly.
Holding period: Medium (3 yrs), with periodic re-evaluations.
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DEEPAKFERT-BE
Firm is in a difficult business (from what I can find out), but management is making all the right moves. Related to Deepak Nitrite which has exemplary management. Recent backward integrations put the firm on a pretty solid footing for the future, and seems currently undervalued with good scope for growth. Also a wait and watch, but I’m bullish.
Holding period :Medium (3 yrs), with periodic re-evaluations.
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MASTEK
I actually missed Mastek when it was the right time to buy. Because of my decision to not look at IT firms directly. However, growth wise it is still very well poised, with string cash balance, good recent acquisitions (which has significant positive outcomes, and that’s showing in the numbers), great numbers for last few quarters, and very good outlook. Coupled with that its trading at PE of 27 with PEG of 0.37 when its peers are anywhere from 48 (Persistent) to 134 (Happiest). For an IT firm that makes it cheap. Even if P/E goes to average of its peers as shown on screener, that still make it 2.5x.
Holding Period: Medium. Looking for P/E expansion. May or may not exit at that point depending on multiple factors.
From watchlist, the main stock for me now is Thyrocare. Planning to buy, and also planning to buy Pharmeasy when it lists/IPOs (if I get lucky), and then wait for the merger which, imho, is bound to happen sooner or later. Others are in tracking mode, no particular decisions yet. At best may start tracking positions in Acrysil, Borosil Renewables, Saregama and then wait and watch. Acrysil I was invested at a good price, but I got impatient and sold out, and now it looks expensive from current numbers. Given their capex plans and future possibilities, It might be worth a plunge. Possibly also Saregama, but that’s also runup quite a bit and it looks like I’m late to the party. For Ugro, I’m not quite sure yet, willing to wait for a while to see how the story unfolds.
Notable Exits:
- TII India - Overvalued, and will take some time before the recent acquisitions they made starts showing results.
- Apl Apollo/Tricoat - Without the merger would have stayed invested in Tricoat. With the merger, long term growth is at consistent compounder rate at best. Although did get out a little too early.
- Digispice - This taught me a lot about a good business for the economy and the country vs a good business from shareholders perspective. It’s an excellent initiative, but not so great for shareholders. I’m still watching it though, since the pivot the promoters made from their existing business to this is an incredible one, and it’s not right to dismiss a management with that sort of ability outright. The only other management of this calibre that comes to mind is Garware Technical Fibres. It takes both vision and execution to pull off something like this.
- Alembic, KSCL, Tata consumer - Recommendation plays. Exited when I found out I didn’t like them all that much.
- Deepak Nitrite - Got in too late, money invested started looking like opportunity cost. Exited.
- Kpit Tech - Idiot exit. Didn’t have sufficient faith in my convictions at that point. Kick myself a bit now about it. Too expensive to get back in.
- Prince, OAL - Cant see significant future growth at the moment. Still like OAL as a company though. If you are ok with slow and consistent growth, pretty much a sure thing. Management history is to under-promise and over-deliver.
- GMM - Growth is stopped for the moment. Will get going again, once it consolidates its recent takeover of parent. Keeping track.
- PPL - Still gung ho about the business, but just can’t trust filed numbers because of promoter reputation.
Notable Avoids:
- Neuland Labs - Probably a very good company, Probably very good future, However, the incredible wild swings in price action is beyond my comfort range. Would not be able to sleep well at night. Thus avoided.
That’s it for the portfolio and investment plan. However, my post is not yet complete. Last but not least, it would be incomplete and ungrateful to end without acknowledging the contribution of VP in my journey.
So, many thanks to VP. It’s quite an incredible forum, really.
There’s a saying - don’t give a man a fish, teach him how to fish. VP goes one better, Starts off with giving you a bunch of fish, then a fishing line, and the hook, and the rope, and the bait, and then lets you sit beside some very experienced anglers and let you watch them by the day at their job, while answering idiotic questions you may have on the side. All they expect in return is you show effort and dedication.
I have always had decent hunches about stocks. I remember picking several winners over the years, (BHEL, Pantaloon etc.) but issue is, they were all in paper (not real life) and completely on gut feel. Last year, after the market meltdown, and considering my life stage, I decided it was finally time to actually start moving from paper to real life. The journey covered six months of studying, learning about fundamental vs technical, discovering screener, discovering PMS services like Purnartha and RJCapital, Marsellus, youtube videos - until one fine day one of the threads leading out from a google search landed me on a VP forum page.
A week on the various forum pages and I applied for membership. I devoured hours’ worth of portfolio questions, investment approaches, company analyses, fundamental and technical analysis, portfolio structuring, allocation and position sizing, mindset and what not.
Two weeks down I had my first new portfolio question.
There was a comment by @Tar on that thread - ‘the best day to start was yesterday, the next best was today’. This comment made me finally put my worries about overvalued markets, quash my waiting mode (for markets to catch up to economy or vice versa) and finally put my money where my mouth was.
There is really nothing that teaches you better about you and your investment style and comfort than putting in your money and then watching the reds and the greens. you learn what your profit/loss appetites are, what you can tolerate, what you cannot and what your real time frames are. It’s easy to say 5 years but putting your money in and seeing zero gains over 6 months, or seeing it go 25-40 percent down, or seeing it go up by 7 times and then deciding what to do now is a very different story. You learn about the difference between conviction of your own, and conviction based off a tip (even a deeply researched VP story). The difference between consistent compounder portfolios vs growth oriented ones. You learn about margin of safety in general, and the margin of safety you are comfortable with. You learn about valuations, its subjective nature and your own opinions/reactions to valuations. And in every one of these situations, whenever you have a problem, there is one VP thread or another which has invaluable shared experience or information on the same topic.
So once again VP, thank you very much.
Just listing some of those who have been very influential in my learning, thought process and mindset. Thanks for sharing your experience, your journey, your thought process, your efforts and your results. @Tar, @Malkd, @sahil_vi, @Hitesh2710, @dineshssairam @chins, @harsh.beria93, @phreakv6 (I really wonder why you don’t have a portfolio thread???), @Caution_Investor, @Investor_No_1 and many others whose posts I have read with great interest to great benefit.
That it really. Have tried to cover all bases. It’s been a long post, but it’s also been a few months in the making. If you have followed it till here, thank you. Hope it helps you some way.
Standard caveat: Not an advisor, Pretty new to the business of investing. All opinions about any stock are just that - my personal opinions and views at this point in time. May change my holdings or approaches at any point. Please do your own due diligence before investing.
