Sameer’s portfolio+tracking: Requesting feedback

Dear all,

Firstly wishing you all a happy new year! As part of my New Year resolution I have decided to document my thoughts and process for investing into shares in India.

Background: During this pandemic with the lockdown, I found time to reignite my interest in investments. Since 2018, I’ve started my investing journey via mutual funds. But now I felt was a good time to start looking into equity investments. I went no further than ValuePickr to start off (had heard of it in 2011). Of course along with the classic reads. So far I’m done with the intelligent investor, one up on street and next is 5 rules for successful stock investing.
Being located in Germany, I was also lucky to have found the VP in Europe post (initiated by @rajanprabu and @harsh.beria93). After long struggle with banks during the pandemic, I finally have a Demat and trading account and now looking forward to turn theory and discussions into practice!

Current capital allocation:
Low risk (Cash and Gold): 35%
Medium risk (Mutual funds, mainly equity and some debt): 45%
High risk (Direct equities, India and ESOP in Germany): 20%
Target: low – 20%, medium – 35%, high – 45%. Here mainly looking to increase my holdings in Indian Equities.

As mentioned above I want to track my investing ideas, current investments and progress in Indian Equity Markets via this post. I really look forward to receiving your feedback!

Idea:
Buy 10-15 quality business with a long term view (3, 5, 10 year view depending on business). Not think about valuation too much as I am still very new (will develop this skill slowly)! Review holdings and ideas on quarterly basis (listen to calls, read annual reports and follow developments). Expectation is 12-15% CAGR. I understand 2021 could be a tricky year!

Current holding (started in November 2020):
ITC: 100% - mainly a “safe” buy as per discussions with few people. My personal conviction: a company with great know-how of running a business. Growing revenues and profit % in FMCG business. Cigarettes won’t go away anytime soon but FMCG (with great brands and market share) will expand. It is currently available at low PE and they pay good dividends too.

Tracking and looking to invest in the coming weeks:
Banking:
HDFC Bank: top private bank, good management, long way to go in Indian banking expansion
Kotak Mahindra Bank: good management and looking to expand business
NBFC:
Bajaj Finance: top NBFC today, good history and great prospects for the future. As an NRI, only NBFC where I found an FD option.
Finance + Housing:
HDFC: great company with wonderful holding companies (bank, amc and life. May be securities will get listed too?)
HDFC AMC: 2nd largest market share in an ever expanding industry. Long term growth expected as Indians invest more money into MFs. I myself hold few of their funds.
Nippon AMC: top 5 amongst the AMCs in India. Nippon is an international giant in Insurance and MF. Only other AMC listed today. Do not hold their MFs.
Personally feel Mirae Asset and Axis are solid companies. I will probably invest if they get listed.
IT:
Infosys: success of Indian IT industry, digitalization and Industry 4.0/IoT focus in the future.
TCS: same as Infosys.
I will look to zero in on more details and differences between the two. Appreciate any pointers.
Auto ancillaries:
Suprajit Engineering: highly competent management with good succession possibilities. Worth proven in cables and now expanding into lights. They have made international acquisitions as well. With a good relationship established with major 2/4 wheeler OEMs, entry with other products will be easier.
Pharma:
Firstly don’t understand the industry too well. Currently unsure, mainly because of the recent hoohaah! Everything seems hunky dory currently, hence do not want to get sucked into something which I might regret later. Will research and speak to more people in the coming days. Only buy if fully convinced.
Chemicals:
Vinati Organics: good management with strong technical know-how. Backward and horizontal integration of products. Recently expanded capacities. No threat from China instead supplies to China.
Pidilite: strong fundamental company. Very competent current MD (Mr. Bharat Puri). Great network in India. Will only grow further as Indians look to upgrade/renovate their homes. Currently expanding capacities.
FMCG:
ITC: 100%, one and only holding. Rationale mentioned above.
HUL: great company with amazing products. Expected to grow further. But even as an amateur I see it is extremely highly valued.
Nestle: same as HUL. Appreciate any pointers.
Telecom:
Firstly don’t understand the industry too well. Unsure between Bharti Airtel and Vodafone Idea. After not a great run in the last few years, should be a rise out of the ashes sort of story (maybe). Will research and speak to more people in the coming days. Only buy if fully convinced. Any pointers appreciated.
Insurance:
HDFC Life: insurance industry has a great potential in India. Very low market penetration. HDFC along with its good reach via Bank can sell this well.
LIC listing could also be very interesting next year.

Some of the pointers and conviction reasons might come across as immature currently, but I look forward to grow along with this thread, your comments and fruitful discussions!
Wishing you all a healthy wealth and wise 2021! :slight_smile:

Best regards,
Sameer

7 Likes

Great write up Sameer. One of the important things in market is not to buy things outside our circle of competence . You seem to have understood that really well.

It’s great to start with single stock and expand slowly. Also 45% return is very ambitious. Rarely do companies grow at such rates, even though the stock may deliver such a return.

I don’t understand Pharma fully and don’t buy Pharma :grinning:

I live in Germany too . Where do you live in Germany, btw

2 Likes

Hi @suryaprakashv73,
Thanks for you comments. Just a clarification, the 45% is capital allocation to equities (high risk). My expectation is 12-15% CAGR :slight_smile:
Although I am not great at valuations, I find the current state of the market really heated up! Difficult to point out my next buy. I need to be patient and not rush (got this advice today)
I am located in Munich, what about you?

Got it :grinning:
I too live in Munich . Guten Abend ! Will pm you my WhatsApp number.

Valuations are always a problem. I invest every month irrespective of the market . So this kind of solves the problem.

12-15% CAGR is reasonable expectation and I expect the same too .

Here’s a question since you are based out of Germany. Is there any reason to prefer Indian equities over EU or US ones? You have access to probably the best equity market - US : )

Hi @wexler,
well simple reason, my awareness (brands, consumption, history of companies etc.) of India as a market/country is higher as compared to EU or US, although I have lived here since 2013 :slight_smile: I guess goes in line with invest within your circle of competence.
However I have started speaking to some of my friends and colleagues in Germany about investment avenues. May be someday will start small here too.
Do you invest in EU or US markets?

2 Likes

Hi,
I am based in Netherlands and have been investing in Indian equities since 2007. Although I relocated to Netherlands only in 2017. I can relate with your view of having comfort in investing within one’s circle of competence. My concern and increasingly so has been about currency risks. The Indian currency has depreciated around 63% against the Euro in the last 15 years. Gives no indication of the future, but if one is looking to invest for long term and eventually looking to making a living in Europe, currency risks could be significant.

4 Likes

Yes, I understand this worry. I am still very new to this but the last few months have been similar.
The EUR/INR has gone from 75 to 90 in last 10 months itself. Although it made me happy to send more money back home and invest more, over a long run, it is not desirable.
especially as u mentioned, if one looks to settle in Europe.

1 Like

Update February 2021

After some deliberation, dipped my feet into the water. Purchased many companies on my list after small corrections in January. Additional to my tracking list, added small positions in Alembic pharma and Eid parry.
Current holding:

Company % allocation
Pidilite 24%
ITC 18%
HDFC bank 11%
Suprajit 9%
HDFC 8%
Infosys 7%
Vinati organics 5%
HDFC AMC 5%
HDFC life 4%
Nippon AMC 4%
Alebmic pharma 3%
Eid Parry 2%

Planning next set of additions in April 2021. Unless major corrections in very high quality companies.

1 Like

What made you choose Infosys from the IT pack over say, HCL Tech?
Thanks in advance.

In general as a new investor, I wanted to pursue time tested and proven IT Indian company bets of TCS or Infosys. I will expand my reading to HCL Tech soon.

From my reading, Infosys gets a lower valuation as compared to TCS. hence there is a chance this gap closes and more upward potential for Infosys.
Additionally since I am in Germany and this whole deal with Daimler is so great! I see a great potential for them to excel at these newer technologies in Automotive Sector.

1 Like

Update April 2021

Added ITC and HDFC in March dips. Will look to add ITC (mainly) and others at further. Many new companies added to tracking list based on reading online.
After completion of Pat Dorsey’s 5 rules, will create investment thesis documents for them and add tracking positions (depends on conviction)

Company % allocation
ITC 30%
PIDILITIND 16%
HDFC 14%
SUPRAJIT 8%
IEX 7%
HDFCBANK 7%
INFY 5%
VINATIORGA 4%
HDFCAMC 3%
HDFCLIFE 2%
NAM-INDIA 2%
APLLTD 2%
EIDPARRY 1%
100%
2 Likes