I am an NRI and just started my investing journey in India this year (from May 2023). My goal is to build a steady compounding portfolio with lowest churn possible.
Entry Strategy
I use a screener to find companies which have:
Good and consistent ROCE throughout the last few years
Decent and consistent growth throughout the last few years
Good valuations (Lower PE than the market)
This is coffee can investing. I really care about valuations (during entry) even if a lot of others care not to. I want to get double growth drivers to my holdings (earnings expansion, valuation multiple expansion).
Apart from quantitative criteria above, I do qualitative analysis to see if I understand:
-Basics about the business, whether it has potential to compound
-Management are trust worthy
Exit Strategy
None. I want to really avoid selling at any cost and I am OK even if some companies go to zero. I also am OK holding overvalued companies.
Portfolio considerations
I keep adding money to the account monthly/bi-monthly and divide it equally among all companies that satisfy the criteria during that time.
If some position in the portfolio doesnât satisfy the criteria, I will leave it as is and will not add any more money.
For new buys, I add as much as to meet the existing positions invested value.
If the money I add in a given month is not enough for all new positions to meet the existing positions invested value, I then sort it by valuations to pick companies to add.
**Portfolio
Symbol
% of my portfolio (Buy Value)
% of my portfolio (Present value)
MARKSANS PHARMA
4.39%
5.94%
AGARWAL INDUSTRIAL CORPORATION
4.35%
4.91%
VIKRAM THERMO
3.55%
4.52%
INDO BORAX
4.36%
4.29%
SWARAJ ENGINES
4.34%
4.16%
HCL TECH
4.37%
4.13%
INFOSYS
4.44%
4.02%
MAHANAGAR GAS
4.35%
3.92%
WPIL
4.31%
3.89%
GNA AXLES
4.38%
3.89%
DP WIRES
3.56%
3.80%
SATIA INDUSTRIES
4.39%
3.76%
AMARA RAJA
3.52%
3.57%
TRANSPEK
4.34%
3.57%
CGVAK
3.56%
3.22%
WIPRO
3.54%
3.06%
CAPLIN POINT
2.41%
3.02%
GRAVITA
1.97%
2.95%
PSP PROJECTS
2.93%
2.54%
20MICRONS
1.42%
2.19%
MAAN ALUMINIUM
1.41%
1.91%
TECH MAHINDRA
1.97%
1.84%
FIEM INDUSTRIES
1.91%
1.77%
DYNA CON
1.40%
1.57%
FAZE3
1.42%
1.57%
MOLD TECH
1.79%
1.55%
SRHHY POLTD
2.09%
1.52%
MPHASIS
1.41%
1.46%
PAKKA
1.59%
1.45%
VIMTA LABS
1.43%
1.23%
SHARDA CROP CHEM
1.44%
1.06%
BOMBAY BURMAH
0.59%
0.73%
ERIS
0.52%
0.67%
GRANULES
0.52%
0.63%
SURAJ PRODUCTS
0.24%
0.52%
B&A Packaging
0.52%
0.52%
HINDUSTAN ZINC
0.53%
0.48%
CIGNITI TECH
0.39%
0.47%
AVANTI FEEDS
0.51%
0.46%
MENON BEARINGS
0.51%
0.45%
IG PETROCHEM
0.53%
0.45%
SHRIRAM PISTONS
0.52%
0.44%
BALAJI AMINES
0.54%
0.43%
INDRAPRASTHA GAS
0.53%
0.38%
COROMANDEL
0.38%
0.38%
TALBROS ENGINEERING
0.42%
0.30%
MK EXIM
0.24%
0.26%
JK PAPER
0.15%
0.16%
Performance so far
16.36% up so far from May end (including new buys every month). Not sure how to evaluate performance with comparison to NIFTY or SENSEX index since I am adding new money every month.
I expect my portfolio to go up lesser than the index in a bull market but also go down lesser than the index in a bear market. This is because I really care about valuations when I am buying which I usually buy into low beta positions.
Looks like a very long list of stocks - over the last few years I have realized that with a large number of stocks its very hard to beat your benchmark index or Mutual funds e.g., HDFC Midcap, Quant Small cap. And a lot of these stocks are highly overvalued right now so you will have to churn your portfolio. Thoughts?
Since i have similar number of namesâŚ
1.Large numbers do become difficult to track & take convinced betsâŚhowever i found it okay so far in my short journeyâŚu may like to study more on ideal numbers ?
2.I did invest consistently for about an year on monthly weeekly basis without sellingâŚbut i realized it blured my visibility for individual names in PFâŚand i found i was like sprinkling for gardening purpose without a logic and qithout much to gainâŚso i found limited number of names can help us stop investing surplus without return visibility.
3.I would consider taking a loss is very very necessary âŚyou shall notice on this forum âtaking a loss is part of investing journeyâŚdo not get married to a particular nameâ
Stock_XIRR_Calc.xlsx (10.7 KB)
i use attached excel based XIRR calculation. each day buy(positive value) and sale(negative value) is added along with date, Current Total value (negative) is used in the end,
to computed XIRR.
I thought buy transaction is to be denoted as negative value and sell transaction to be denoted as positive value. This is how I have calculated my XIRRâŚ
Although I have a lot of holdings, my top 10 is close to 40% of my portfolio. The reason why I donât want to sell is, selling is really hard. There could be future 10-100 baggers which may be overvalued today, but will compound. Like Charlie Munger says âDonât interrupt compoundingâ. I donât think any of these are super overvalued. Can you point out which ones you think are overvalued, I am happy to re-evaluate the positions, likely I will still keep them though.
It is true that I have large number of stocks, however my top 10 is way bigger positions compared to my bottom 10. I stopped putting money into some positions when I learnt something bearish about the company or if itâs overvalued.
I want to sprinkle water in the garden, I donât want to sell for decades hopefully. This is the actual coffee can approach. I donât trust my selling process.
Again selling is hard, people donât sell well. Buying is just the start, holding onto names is what makes you rich. Take any good investor, they have held names for decades.
may I know when did you add gravita and Cigniti tech in your portfolio?
another question, kindly explain the cigniti buisness and how will it show growth ?
Good to know you are experienced investor although in US. Your strategy looks in good direction and intention.
Looking at stocks, many look small cap or small midcaps. I am not sure about US but have heard that quality of promoters & management is not that great an issue there as here. Considering that the companies and exit strategy need to match. I foresee that you may have to exit small caps and small midcaps in India considering aboveâŚI maybe wrongâŚ
Also sunce you are experienced investor in US it would be good if you can share your US experience, the kind of stocks you invested there, the timeframes and the returns & strategyâŚit would be good to learn fromâŚ
Bought some Cigniti in July end and some in early October. Bought Gravita in July. Cigniti, as noted above I have a very small position. Its a software testing company, management has aggressive goals to grow. Their ROCE and growth numbers look good so far. You can refer to Cigniti Technologies â Global Leader in Software Testing - #21 by keerthan_bs
Thanks for the feedback.
I actually donât mind small, mid or large caps, however I feel large caps in India look really expensive right now and I think there is not much room for growth. However I do think small cap names are relatively cheaper. 80% of my India portfolio is in small cap, definitely not for the faint hearted.
In US, there are a lot more regulations and corruption is lesser. I donât want to exit at any cost because small companies will grow to become bigger. But only very few of them will be multi-baggers, if I sell any I reduce the chances of having multi-baggers in the portfolio.
In USA, I work for one of the FAANGS. ~80% of my net worth is in US and rest is here in India. In USA, money is equally split between Index funds/ETFS (US, ex US developed markets and emerging markets), Stocks (mostly US) and cash.
I am very bullish on India compared to US, but I need to learn more regarding the Indian market and will slowly start investing here more.
TCS, which is and always been one of well known and relatively large cap in India since its IPO, has given 30X returns in 19 years. Titan, a well known Tata company and relatively large cap even 10 years back has given 12.5X in 10 years and a staggering 1400X in 20 yearsâŚ(approximate figures)
Will that qualify as a multibagger for you? or you expect even more from the unknown small caps, not for faint hearted, kind of companies?
I know you are very experienced investor, just trying to put a perspective of what well managed and decent promoter companies in India can do and even a large cap in India is a mere dot globally and with all these Indian companies having globe to conquorâŚare these really midcaps/large caps?
Yes thatâs right, large cap stocks can be good buys. You can see some on my list. ~15% is in large cap, a lot of large caps are on my shortlist, however they are overvalued IMO.
It says 72%, this is for a very short period of time (since mid May23). So I wonât get too excited by it. I will keep checking this and report after each time I invest.
Yes I did think about this. I may sell stocks at every 12 months and remove any small positions. some of the positions just went way up before I could add, those I will keep them as is but others I plan to sell.
âŚyou shall notice on this forum âtaking a loss is part of investing journeyâŚdo not get married to a particular nameâ