ValuePickr Forum

Portfolio for stable long term growth

  1. Companies which operate in good industries. Good industries are the one which keeps growing at decent space. If underlying industries keep growing, it’s very easy for good companies to maintain the growth momentum above industry average. (Many times, business momentum is more important than brilliance of the mgmt)

  2. Huge Market Size: If market size is large it can accommodate number of players. Margin pressures are less. In large markets dominant companies can keep growing even after industry matures at the expense of weak companies.

  3. Companies have track record of past performance; good RoE / RoCE. non cyclical. Moderate MCap.
    Possibly companies have triggers for Revenue , Margin, PE Expansion.

My portfolio is as below.
I am not overly worried on companies being expensive or portfolio being concentrated.

  1. Repco - 25%
  2. Granules - 25%
  3. Page - 20%
  4. PI Industries - 15%
  5. Torrent Pharma - 15% ( new entry to portfolio)

Over a period of time want to add one more company at 10-12% of portfolio by reducing 5% from Granules (weight has gone up due to recent price appreciation) and couple of percentage from others.

Current Portfolio:

  1. Repco - 25%
  2. Granules - 22%
  3. Page - 15%
  4. PI - 14%
  5. Ujjivan - 14%
  6. Torrent - 10%

Jumped on Microfinance theme couple of weeks back. And still learning, credit goes to excellent thread on this forum. While studying came across below interesting data point from Motilal report

“Strong real agri GDP growth would argu well for rural consumption, as witnessed in strong growth during FY10-12 for tractors (~21% CAGR), motorcycle (~20% CAGR), rural credit (MMFSL’s AUG CAGR of ~37%), cement (~7%) and FMCG.”

And seems market has started already factoring in that and many stocks in those sectors are at 52 week high.

Searching for one non cyclic mid cap for 7-10% allocation which is rural focused with the same three tenants mentioned in the first post.

investors should be wary of the micro-finance theme. the Religare report
shared elsewhere on this topic is an eye-opener.

all stocks in my portfolio too except sold page due to high vauations and tapering growth

@sanjay_agarwal : I agree with following report, “Page has a right to win”.


Page from single category has expanded into multiple categories and market size is huge. I may make less with Page for next 5 years but it will be stable growth company.

@Shivkumar
Suggest you to read again the Microfinance thread on forum. I was also hesitant but more i went through it, more i agreed that it’s time has come.

Few random thoughts

As per me there exist three phases in investors career

  1. Below 10 lakhs
  2. Below 100 lakhs
  3. Below 1000 lakhs

Learning of each phase is different and so should be strategies. In copying from others we miss on this important fact.

Warren or any other well known investor has long back passed these three stges and their current state, thinking, future outlook, risk taking capabilities are going to be completely different than one in say phase 1 of investing.

Quality of the stock, it’s weight in the portfolio, number of stocks and holding period is all should be function of the stage one in during his investment cycle and end goal of an individual.

It is becoming a fashion to say trading is injurious to portfolio, but then it’s only way to generate cash for investment. I miss 2006 2007 and 2008. Not sure if it returns I will be ready. Days of RNRL, Nagarjuna Construction, RPL, etc… Now Too much a dope of high quality and margin of safety currently.

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Till now I have never sold my portfolio to be in cash because:

With 15% correction and 30% in cash, it makes impact of only 4.5% on portfolio. And one needs to be right at the top and bottom which is toughest job.

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It all depends on which type of stocks you are holding. With the experience of last 3 - 4 corrections, while the main indices fall 15 - 20%, some of the even very good quality midcap counters correct 30 - 50% and the important thing is one would have courage to buy at that time only when one has some amount of cash. Ultimately, there is no right or wrong thing in the market, the best thing is what suits you.

As per me timing is incredibly tough. If someone have gift of timing, he/she should not waste it on individual stocks. (even for 5 stock portfolio it’s 10 calls to get right top and bottom) He should trade in F&O for index and sky is the limit.

For investors
Charlie Munger - The big money is not in the buying and selling … but in the waiting.

And even traders
Jesse Livermore - “Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.”

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Got tired of waiting in Torrent Pharma and sold it off; redistributed back in existing portfolio. Currently is stands at:

  1. Granules - 26%
  2. Repco - 24%
  3. PI - 18%
  4. Ujjivan - 17%
  5. Page - 15%

Will wait for Page results to make next level changes. Modinomics is for lower and lower middle class so needs to focus on that. Nothing yet decided.

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Currently portfolio stands as below:

Transferred a bit from Page and PI into Eicher. Portfolio balance is little off needs to work on it.
(Or market may)

Most of the share prices has under performed in the current bull market and Granules the most but dont see a reason to loose a sleep over it as company results were OK. It just that they were very richly valued (or not a current theme) and needed time correction is happening.

What gives u the courage to hold on to Granules…
I am thinking of moving out of it.

Courage !!! Why, where is the big problem? Or i missed anything?

Either one believe in management or doesn’t. As management has executed well for last so many years i don’t see why they can’t do it now. Pharama sector not in great shape but Granules is different story with almost (except one instance) clean record with FDA. It is always CAPEX driven and dilution is part and parcel of it. Real story is 12-18 months away but i am ready to wait.

They are targeting 20% revenue growth this year, margin expansion is anyway continuing and possible P/E expansion in 12-18 months makes it a great investment if all goes well. If all goes wrong i can max loose 20-30% from CMP.

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What is the reasoning behind exiting Granules?

Equity dilution is the reason.

Update after a long time on my portfolio:

PI, Granules are the star performers, Repco fallen hard, Ujjivan still not giving returns, but retained all.
Added few more names in last few months, years likes RITES, PSP, Canara Bank, HDFC AMC, Vedanta, GAIL.

Currently working more on developing portfolio framework than individual stocks. Could not decide yet on correct weight for each segment. Once portfolio sectors and allocation falls in place, filling the stocks, adding new, switching, exiting will be easy.

Current Stock Specific Plan:
If PI, Granules keeps running up and Avanti falls a bit more, plans to shift a bit to it.
Also planning to double on HDFC AMC over next 2 months.

Your views are welcome.

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Your thread is good but not updated for long.

Whats the latest portfolio looking like
whats your view on API cos like Granules n aarti drugs who hv come with soft nos

rgds

vivek

Portfolio continues to be similar with few reduction and few addition.

Export Focused - Granules, PI and Added a small portion of Laurus.
This is the biggest portfolio allocation and over last many years is the main driver of portfolio. My bet is it will continue to be a main driver in the future as well. Valuations are stretched currently, so will be interesting to see how things unfold.

Govt Spending / Govt Linked - Still hold RITES and removed GAIL. Wanted to get into Gas space but missed. Not much returns.

Private Spending - Still hold PSP while sold off Vedanta. Should have shifted to APL Apollo but missed the bus and it kept running. Not much returns in PSP.

Low Income: Ujjivan still continues but with much reduced weight and stock is down even more.

Lower Mid Income: ITC, Repco still in the portfolio. At similar level as last year.

Mid Income: Page continues. Sold off Eicher at wrong time.

High Income: Along with HDFC AMC added SBI Life. (I think they does not fit into high income. Need to find pure high income, luxury good stock.)

Shifted Canara Bank to SBI and added a bit more to SBI.

New additions are IEX, CDSL & Healthcare Global , overall gave good returns.

Many mistakes continues, missed the bus on Govt Spending theme for PLI, missed commodity stock rally. Stock selection is still an issue. Anchoring bias of old portfolio companies still continues. I think private spending is coming back. Need to study it a bit more.
Theme of digitalization seems doing well. IEX, CDSL, are part of and even Zomato and all others IPO in pipeline indicate the same. ( I stay away from IPO)

Actually my personal big learning is selecting right stock is overrated. Single factor which drives portfolio return is not the stocks selected but the weightage given to the selected stock.

I have seen many experts doing very well with large number of very good stocks and they do well with low concentration risk but I generally have few good and few not so good names so weight becomes important.

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