I am very new to value investing and been here for sometime now.What is happening here is amazing and i try to participate in most of the discussion. I have learn a lot in how to go about investing.I am listing out my portfolio. I want most frank suggestion as it helps me better.
I have included the Invested Price(adjusted for split or bonus) for better understanding of when i had bought them.
As you can see from below i have spread it across 20 stocks and trying to consolidate or separate them into Long term and Medium term list. Also i don't have concentration on any stock of more than 9% which say my current conviction level :),i am learning daily and hope to improve my research on which my conviction will increase.
You have a portfolio with nice set of stocks. Majority of your stocks are worth having in one’s portfolio. I guess with this portfolio you should be able to get a market beating return.
The issue with it is, as you mentioned, way too many stock in your portfolio. You should try to concentrate to 10-12 stock, with portfolio allocation directly proportional to conviction level.
Experience tells us that diluted portfolio tends to give lesser return, as compared to concentrated stocks with well chosen stocks. Less stocks in your portfolio implies larger research effort per stock, and hence better decision on when to entry, when to exit, when to average, when to book profit.
Have heard there are investors with just 5 stocks portfolio (Mayur, Page, Titan, Hawkins, Prestige) in past and have made 7-8 times money in 3-4 year time frame. That is what concentration can do to your portfolio. Having said that, one should always remember the fact that having such concentrated portfolio requires much more experience in stock market, through understanding of stocks, and their fundamentals, and super deep faith with the stock backed by solid data driven research. For mere mortals like us sticking to 10-12 stocks seems to be a better option.
Yes i agree that a much more concentrated set of good business will give wonderful returns. I am a newbie with respect to investment ,i have been here only since start of 2011,even less time in Valuepickr . So i am trying to develop my own research and come up with increasing conviction on the exist stock and list and consolidate. I am learning the art of patience and hope to master it slowly, for that i will need more time.
Hence for now my main concerns is down side protection and hence this spread of risk.
I would be very much happy to invite more feedback and criticism from more experts like you in value pickr.
Portfolio update
Got ride of Balmer Lawrie & MCX and have included Arshiya International in that place.
Its a high risk bet which i am willing to play with 5% of my portfolio.
Reason for exits are low conviction on those 2 stocks.
regarding concentration of portfolio, one doesnt have to do it just for the sake of it. People have made tons of money even with diversified portfolio. e.g Lynch.
You are on the right track in investing, first developing higher conviction and then thinking about concentration.
My take is to go with your conviction.Relook at your portfolio and if you still believe that is what you want please go withit. As Hitesh said, PeterLynch had hundreds of stocks in his portfolio and indeed gave fabulous returns.
Risk and portfolio weigtagelook good for analysis. However, I think our humna brain far smarter than most of these statistical tools that rely on past data. It has its own way of finding things which most oftenis difficult toexplain.
My Bad, concentrated approach is just one of the many approach that you can have your portfolio. Each portfolio strategy do have their own plus/minus points, and one should choose a strategy based upon his experience/risk taking strategy.
Yesterday, We took the opportunity have a Delhi valuepickr meetup, so 3 of us (Rudra, Jagbir, myself) met up with Ayush/Pratyush, who had came to Delhi. One thing I learn from Ayush is that one can have a very diversified portfolio, and still can get pretty good returns years-after-years.
One of the main reason for me to subscribe for Concentrated portfolio is the amount of time spent on following up. I currently have about 18 stocks in my Portfolio but it becomes difficult to track and maintain the up to date details of the company with a Day time job in place.
So my thinking is to reduce this to 10 stock with high conviction and track it diligently .
Over the past month i have tried to make my portfolio more concentrated and try to reduce the no of stock i need to track. I have exited few stocks and loaded up on other.
Looking at few more stocks to exit at right time to hold cash or load up on others.
The concept of having cash as percentage of folio is still not gotten into me.I find it hard to wait which is primary thing in investing.Hope i will improve over the period.
Sold off cravatex as the question raised on confidence in management to deliver.With Cash added some more GRP and Yes Bank increasing its % in portfolio and also add on TV18 as medium term bet of 2-3 years.
Atul Auto (7)
13.02626
Yes Bank (7)
10.71346
GRP (5)
10.17058
Cholamandalam (5)
10.04322
Cera Sanitary (3)
9.241246
Mayur Uniquoter (4)
8.18574
TV18 Broadcast (3)
6.522085
Amara Raja Batt (2)
6.125276
RS Software (2)
5.818813
Shriram TransFi (4)
5.529066
Kaveri Seed
Co
5.090068
Astral Poly
Tec
5.016438
Arshiya Intl
4.517739
Now reading more on two stories(Kaveri Seed and Arshiya to improve conviction on them and add/sell them if needed)
1.Though there is license with fila for 30 years the execution from management so far has been poor. I had initially bought this story based on the Fila story. Though current outlook on rebook problems and fila gaining market share is there it doesn’t provide me enough conviction to stay here
2.Opportunity cost else where is also the reason.This is highly illquid and make difficult for exit.If the management cannot walk their talk(they didn’t for last year) it could be very difficult to cut your losses here
Arshiya International has been in LC for 2 days eroding about 40% .
The allegations put in by sacked employee are big and management has promptly come out with clarification and also conducted a con call today. Snippets from con call
1.All allegations are denied to be true.
2.All employees have been paid their salaries without any delays
3). Audit process is carried out twice as per sebi norms and there is no cooking in the books
4). FTWZ in Khurja has been stopped and it will not be started atleast for 6 month and until mumbai one is complete
5). Bank loan on for Khurja site was pulled out by a big bank at last minute without any clarification so far
6.Pledging of promoter(esp Ajay Mittal) is at 61% and it will be coming down to 56% in few months.
7.All Debt how has pledged share have informed they are not selling
8.See moderate to good growth in this year and very good long term prospects.
9.Rail road is completely operational in Khurja?? i did not get that properly!
The biggest problem here is point 5 which is about some big bank withdrawn from giving a loan. Ajay Mittal said there was no clarification given by the bank ,but no one asked more on it. Need to get more details about this from management.
Overall the 40% down fall is high i feel. But looking at the market it should be in down trend for some more time.I will wait for some clear picture and if possible buy more with cash in hand
I have exited of few stock to generate cash for other needs.I have few more that are to be exited in due course but these will be profit booking and not complete exist
Complete exit to generate cash
Tv18
Cera Sanityware
RS Software
Kaveri Seeds
exit strategy was based on conviction levels.Could not exit Arshiya fopr booking loss due to LC
Current portfolio
Atul Auto
Yes Bank
GRP
Cholamandalam
Mayur Uniquoter
Amara Raja Batt
Shriram TransFi
Astral Poly Tec
Arshiya Intl
Will exit from Arshiya based on developments if needed. And might book part profit in some of the stock in the portfolio based on the cash requirement.
I am back to rebuilding the portfolio. I am going to diversify my portfolio this time. I have decided to spend enough time on the business.
My plan is to have about 20-25 Stock portfolio with no single stock occupying more than 10%. Since most of it will be in Mid and Small cap ones i don't want any shock/mistake to wipe big chunk of my capital.
So far i have made token entries to below stock and have kept few under radar. Looks like its good time to be back as the Nifty is going down with depreciating Rupee and Fed stopping the Bond buying
Prabeesh,
Maybe you would’ve heard about Ramesh Damani(if not,then check him out) He rues the fact that he didn’t have a concentrated portfolio.Otherwise,he could have been a billionaire,just like RJ(Rakesh Jhunjhunwala) RJ’s portfolio is highly concentrated…the top 4-5 holdings constitute more than 50% of his portfolio(not possible if you assign less than =10% to each) There is an excellent discussion about this on Valuepickr: ‘Capital Allocation’.Hope that helps.
I agree a concentrated portfolio of right set of stock will give me much better chance of making big returns. The problem is with the words “right set of stocks”
If i have 3-4 stocks with about 50-70% of my money and there is one black swan among them i will lose more than 20-30% at a shot.Which is a risk i am not ready yet to take on.
May be my conviction will make one of the stock to push above the limit of 10% to 15-18% but nothing is going to be above 20%
Take the example of Titan no one could have read into the situation that they are in now.A small regulation puts the complete business model at risk. I am not saying Titan isn’t going to survive all i am saying is its main moat is robbed off. At present i am not comfortable with that risk.
Also it isn’t always true that a diversified portfolio cannot compete with concentrated one you can take peter lynch example.
