Do your own due diligence
Late big bull Rakesh J said so wisely Markets can be learnt not taught (his interview with Ramesh Damani on 60th birthday – one of the best of all time)
Any asset we buy for investment be it Gold, land, house, Bank deposits we don’t check price frequently but in equities this is very common which is not investing mindset. Almost all renowned investors say that minimum time horizon for investing is 3 years and more importantly alpha comes in decades and only a few stocks are needed.
Portfolio update -
Wonderful result by Sonalis (13 x earning growth H2 vs H1 and top line growth by more than 26X) but more importantly bold goals ahead of 1000 crore topline and 63 crore PAT in 3 years which is 24x from here.
Bondada (150% plus PAT growth, 10000 crore topline target by 2030 with similar margin and can achieve this earlier too
Insolation and Cosmic both H2 was disappointing but future looks very promising for next 4 years
AVP infracon 80% earnings growth and guidance of 1000 crore topline by FY 28
Ganesh Green, Kiri Industries (topline guidance double next year and 40x in 4 to 5 years) Srivari, K2 Infragen both failed to deliver which shows how difficult it is to walk the talk by management but will give them some time as commentary shows still hope.
Kore digital - excellent result 136% increase in EPS. Price has been hammered; the company went to declare quarterly results when it was not even needed then suddenly delayed the result this quarter but will give the company time as highly undervalued and potential is there.
Exits- Eco recycling exit as promoter’s conduct did not inspire any confidence. In good times, he was all gung-ho , one poor quarter and he forgets investor calls, no response to mails too but more importantly it looks that business has no inherent differentiation still it has been multibagger for me. In life as well as in investing people can be the biggest source of joy and headache both and have to reduce tolerance for anyone not with the right mindset or behaviour as more than the proceeds one wants to enjoy the process. Exited Tejas also as it has sharp fluctuations in topline and bottom-line with no guidance means mgt can’t be held accountable. Both of these have multibagger. V marc was trading bet and exited too.
Stocks have to keep performing as per guidance else will keep removing them.
| Name | PAT CAGR since entry for the next 5 years | PE 5 years | Avg price | Price by May 26 | Return by May 27 | FY 30 or longer |
|---|---|---|---|---|---|---|
| Insolation energy | 100% plus | 70+ | 31 | 700 | 40X | Can be 10x more |
| Bondada | 100% plus | 70+ | 59 | 1000 | 40X | |
| Kore digital | 100% plus | 50+ | 205 | 800 | 10X | Review |
| Sonalis Consumer | 200% plus | 40+ | 57 | 200 | 10X | Review |
| Max India | 20% plus | 60+ | 147 | 250 | 3X | Permanent |
| Cosmic CRF | 100% plus | 50+ | 384 | 2000 | 15X | Can be 10x more |
| K2 Infra | 0% | 30+ | 156 | Review 26 | Review | |
| SPML Infra | Turnaround | 50+ | 45 | 250 | 15X | Review |
| Cellecor | 80% plus | 50+ | 25 | 100 | 10X | Review |
| Srivari Spices | 0% | 30+ | 220 | Review 26 | ||
| Ganesh Green | 80% plus | 70+ | 462 | 700 | 5X | Can be 10x more |
| AVP infra | 80% plus | 40+ | 164 | 300 | 5X | |
| Kiri Industries | Turnaround | 30+ | 668 | 800 | 10x potential, review 27 |
I can hold stocks without return for mid-term too if I have confidence in mgt for huge value creation ahead like Sonalis. When Bondada and Insolation tanked by more than 50% in a few months last year it didn’t unnerve me at all as business remains robust and price will come but damaged business very difficult to come back.
Classic investing has been about compounding at 20 percent over decades meaning doubling every three year 100x in 20 years then every three-year doubling so 1000 times by 30 years so every decade one zero gets added. Now if we take 100% CAGR the same can happen in a decade too. Again we don’t have to get 1000 baggers three 10 baggers in sequence also can make (10x 10x 10x)
One need to find never ending trend and competent mgt hence the permanent holding is Max India
Many of the companies I am invested in are raising capital at a furious pace diluting EPS. Ideally growth has to come from internal accruals and the company shouldn’t be raising capital much.
One of the greatest investments of all time - Sees candies and it is in that rare group with pricing power and differentiation.
Another mega trend, most knowledge in five year can be done by AI and most things that are moved by Robots then the entire economy itself , business models will be different. It may have very few winners however have to remain focused not to get caught in vortex of AI and robotics in years ahead. US and Europe both are going to decline hence focus is on India and any company which is focused much outside is a no too.
“Market can remain irrational longer than you can remain insolvent” Keynes said, so I am going to take leverage which I can afford. But at the same time won’t hesitate for a big swing when the opportunity comes as Charlie Munger said before his death that his regret was not taking a bit of leverage or taking risk else he could have done much better.
If you want better returns then take a hard look at the person in the mirror. “You will sell winners too soon. You will hold losers too long. You will buy stocks you shouldn’t. Just don’t blame others. When you blame others, it proves you didn’t do the work you were supposed to do. Fully own your investment mistakes so you learn, grow, and move forward” - Ian cassel
https://microcapclub.com/no-one-to-blame/?s=09
Charlie Munger till his death shared his wisdom - the power of concentration and regretted also not taking bolder moves.
"The main trick that Berkshire shows is the power of what I call the Wooden effect. Wooden was the most famous basketball coach of the whole era. He concentrated about 90% of the playing time in seven players. That turned out to be a great system for winning at basketball; you learn by playing in a way you can never learn just by shooting practice baskets
Regrets - I’m not all that pleased. I basically screwed up. I could have done a lot better if I had been a little smarter, a little quicker. I might have had multiple trillions instead of multiple billions. I do think about what I missed by being just not quite smart enough or hard working enough. Berkshire could easily be worth twice what it is now. And the extra risk we would’ve taken would’ve been practically nothing. All we had to do is just a little more leverage that was easily available".
I keep reading and listening to many wise investors - Manish Chokhani, Madhusudan Kela, Gunavanth Vaid, Ian Cassel, Peter lynch, Rakesh J, Charlie Munger, Buffet and many more as our perspectives become better by their wisdom. Manish chokhani’s interview is very insightful
Markets can go down for various reasons and remain down for years too so horizon has to be mid term at least as all renowned investors convey however this is India’s time and am bullish for mid term.
Most have a mindset fixated on price and are unnerved by noise around when only two things matter - earnings and corporate governance. Patience is very difficult and it is rare to see a mindset of long term or focused on business. Price cracks and conviction evaporates for the most and so does the potential to have better returns also.
Be wary of influencers, media , even institutions (most of them come when a significant runway has already happened). With some basics anyone can avoid obvious mistakes. Imagine investing in Paytm (Berkshire erred too pre-IPO - where there was moat, cashflow or even differentiation), Tata Technologies, Ola electric and many others IPOs came at frothy valuation and many institutional investors took entry and they may never ever close to their IPO price. Almost the entire IT sector is in doldrums because of tremendous headwinds- geopolitical uncertainties , AI , automation , long term structural decline of Europe and US - how many will survive this churn is anyone’s guess as the new era will require deep expertise which many claim and a few have!
We need good luck too as great returns need great liquidity and a stable ecosystem. India is in a sweet spot despite many challenges. Good luck everyone.
PS- I would like to dedicate this edition of yearly blog to Late Surbhi Jain, Joint Secretary, Deptt of Economic Affairs, a dear colleague who was part of our foundation course in LBSNAA Mussoorie and later in NIFM Faridabad. She passed away a few days back and her family donated all vital organs also. My condolences are to all in her family.