Sarang's portfolio

Hi All,

This is simply awesome forum. Looking at the knowledge flowing around, I am getting tempted to move my MF allocations into stocks! :slight_smile:

Following is my portfolio and some of the questions (in brackets) I have about specific holdings.

Would appreciate if you can comment on the queries!

Company Name Allocation

Astral Poly 20% (One of my best holdings in terms of returns and quality)
Cera 14% (One of my best holdings in terms of returns and quality)
Supreme Ind 12% (One of my best holdings in terms of returns and quality)
Bharti Tele 11% (Purchased when it tanked a couple of years back due to negative sentiment about the sector. Any suggestions for a better largecap opportunity?
Venus Remedies 8% (I love their patent portfolio but the promoter holding is pledged! This is one high risk holding because I am going more with gut feeling than numbers!)
Kaveri Seeds 7%
Mirza International 5% (Bought recently after the multiyear breakout on technical charts. Fundamentals look good. Would love to hear negatives?)
IndusInd Bank 4% (Old nominal token investment turned into 4% allocation due to multifold appreciation)
Mayur Uniquoters 4% (Want to shift some allocation from Bharti/Venus to this one - Any comments?)
WimPlast 3% (Looks to be a value buy right now but )

Token investment

Atul Auto 2% (If not for recent runup, would have invested more in this. Any comments on downside risk here?)
Poly Medicure 1%
Amara Raja 1% (If not for recent runup, would have invested more in this. Any comments on downside risk here?)
Hindustan Media 1%
Shilpa Medicare 1%
Indraprastha Medical 1%
Lumax Auto 1%

Dormant allocations (Old allocation lying around)

Reliance Ind 2%
Renuka Sugars 2%
Bilcare 1%

I have one query about Atul-Auto with respect to their recent results. Their capacity is 50,000 vehicles per year and they are already utilizing 42,000 out of this. Considering 20-25% growth rate, they will utilize full capacity by next year. However, there is not specific plan mentioned about capex. (they did mention that they are looking for land etc but no timelines) So I doubt if they will be able to expand before they run out of their capacity! Or is management expecting slowdown in sales and hence going slow on expansion? Any comments?

Few comments-

All the main stocks in your portfoilio look good except Venus Remedies (i am not sure what, but something looks fishy here to me, I was invested earlier but exited based on price movements). To me, Bharti is one of the best stocks currently in Large caps, wouldnt advice shifting to anything else.

Allocation to Astral and Cera seems a bit on higher side atleast on short/mid term. They are fav stocks in this forum, but lookbit overvalued. secondly all your top three cater broadly to similar market (housing), you may want to diversify to something like pharma or IT or anyone of your ‘token’ investments.

Myexperience is that the dormant allocations hardly pay off , would advice to sell even if it means booking substantial losses.

Atul: I do not have any specific knowledge but feel that it should not be too difficult to expand capacities. TIll dec, they have sold about 28000 vehicles only. Ithink 42000 is based on Dec sales of 3500+ unit, but they can manage by building inventories on non -peak months. Lel me know if Ihave wrong understanding.

lookbit

Myexperience Ithink Ihave wrong understanding.

Hi Gaurav,

Thanks for your comments.

Regarding Top3, I agree that i am running very high risk of having 45% allocation in 3 stocks of similar sector. The allocation is result of good returns over last 2 years timeframe. Original investment was not this high. And now I am finding it difficult to press sell button on the winning stocks (ownership bias?) especially considering their biz growth.

Need to push my willpower to break out of the bias and shift to some of my token investments.

Venus - Started selling. Probably I wanted to hear from someone else that I should go ahead and sell it! (fear of loosing gains from potential upside in future?) :slight_smile:

Mayur and Kaveri - Shifting from Venus to these two.

Atul - Thanks for clarification. Recent run up is still holding me back eventhough the valuations do not look stretched considering their growth.

AmaraRaja - same comment as Atul auto.

My latest portfolio - Timing was kind’a perfect (luck!) for move from Venus to Kaveri and Mayur!

Core Portfolio:

ASTRAL POLY TECHNIK LIMITED 23.47%
CERA SANITARYWARE LIMITED 13.24%
KAVERI SEED COMPANY LTD 11.37%
SUPREME INDUSTRIES LTD 10.22%
MAYUR UNIQUOTERS LTD 9.86%

Token Investment - Slowly moving few of these to core-portfolio

MIRZA INTERNATIONAL LIMITED 3.76%
SELAN EXPLORATION TECHNOLOGY L 3.56%
ATUL AUTO LIMITED 3.39%
AJANTA PHARMA LTD 2.57%
ALEMBIC PHARMACEUTICALS LIMITE 1.91%
POLY MEDICURE LTD 1.28%
AMARA RAJA BATTERIES LTD 1.18%
SHILPA MEDICARE LIMITED 1.10%
LIBERTY SHOES LTD 1.08%
GULSHAN POLYOLS LTD 0.92%

Dormant allocations

WIM PLAST LTD 2.71%
HINDUSTAN MEDIA VENTURES LIMIT 1.09%
INDUSIND BANK LIMITED 3.29%
VENUS REMEDIES LIMITED 3.99%

Immediate plan is to slowly accumulate Selan in next few days/weeks to make it part of core portfolio.
Any feedback?

Hi Sarang,

About Atul Auto, please note the following point from the recent conf call.

"The company increased capacity from 24K to 48K units at beginning of the year at capex of Rs 10 crore. Its working at 80% utilization. Has room for further 15-20% expansion in that plant."

**
**

This 15-20% extra is to be achieved from de-bottle-necking at the plant and on top of 48K. Which put’s the capacity at48K + (7.2K-9.6K) . i.e., 55.2-57.6K.

From the conf. call I got a feel, the management know’s what they are doing and is readying cash (internal accruals) for next phase of expansion (which will take between 12-18 months and can also come up in phases). I think they will time it properly to match arrival of demand greater than current capacity. We need to keep monitoring but i won’t lose my sleep on it, with this management team in place.

Hope this helps.

Rest your portfolio looks solid :slight_smile: I feel it’s hard to saywhetherit’s good or bad just looking at the allocation. It also depends on your life stages, how much you have already put in vis a vis how much more you are planning to put from your savings in future, your age profile, your job profileetc etc…

So best of Luck, keep your ears to the ground and with each passing day you will learn more about “financial self” and how you should structure your portfolio to reflect your taste & profile.

Hi Raj,

Thanks for inputs on Atul Auto. Definitely one stock I am buying slowly and intend to move to my core portfolio after Selan. Selan has not run up as much Atul has in last few months and Selan seems to be ‘almost ripe’ for purchase and hence a little higher priority than other stocks.

Regarding my profile… I am 32 and am purchasing these stocks for my retirement :slight_smile: So I keep pumping money at regular intervals… a decent portion of my monthly savings goes to equity but at present more in Equity MF. As and when I find good opportunities, I shift from MF to equity - a small portion at a time!

I presently hold 2:1 mix of MF (mostly equity) and equity. I don’t know how to allocate capital. Investing may be simple (not easy though) however I feel capital allocation doesn’t look simple nor easy!

My equity stocks portfolio beats MF portfolio 95% (and benchmark index 90%) of the time yet I continue to add capital 2X that of equity stocks every month.

What is your view on this? Should one hold significant MF portfolio despite under performance compared to my own stock picking capability? I would not mind not having stratospheric returns but day in and out it doesn’t look pretty when one portfolio performs better than the other. To add a caveat, doing this for the past one year only.

aswin,

i was in similar boat couple of years back, finally took the chillpill and converted my entire MF folio to equity portfolio and the results are awesome. in my view MF investment is for beginners and those who dont have time. not for anyone who is in the capital market for atleast 2 years.

I too sold my MF’s one year back, after doing direct equity investing for roughly 2 years. I don’t miss them any more :slight_smile:

I agree… MF should be avoided if you are actively participating in market. However, it depends on how much corpus you are allocating.

If the corpus to be invested is big percentage of your total savings, the diversification factor may come into play.

It may not be feasible for an individual to actively track 10+ stocks, specially if you belong to a non-financial industry. So putting a big percentage of your savings in these 10 stocks may ‘seem’ a bit risky w.r.t. MF investment!

So MF may provide that cushion (or at lease the psychological comfort!) in terms of diversification at the cost of low return. It also goes with your confidence level with direct investments! As the confidence increases, consciously or subconsciously the direct allocation will start going up!

ashwin,

your post itself provides you the answer. When you can comfortably beat MF returns why invest in MF at all… I feel if you can do even the minimum basic research or follow blogs like valuepickr and pick your stocks you can easily beat MF returns … Mental block you might be having is about lack of confidence or about handling a larger sum for your portfolio… Take a long hard look at your previous track record and then decide… I feel you should invest on your own without depending on MF guys.

regards

hitesh.

That’s correct Sarang, As the confidence increases direct allocation will start going up.

But the first step to confidence is committing yourself to higher returns and excellent businesses. Any matured investor should keep this mind. But first of all it is not easy to gain confidence on 25 stocks. Keep focusing on a maximum 5-10 stocks. Be very very curious about why some stocks win and some fail. Even if you can’t do this follow Peter Lynch: Steady compounders like HDFC bank, Emami etc can make you serious money. ANd that is always better than your returns in MF.

I agree but somehow I find it very difficult to convince myself to put money in HDFC Bank, Emami, Page etc at such high valuations! May be, this is just a bias/mental-block and not sound logic!

I fear that any negative trigger can bring the valuations down significantly (negative PE re-rating!)

Titan is one example in recent times. (though Titan can be considered a good buy right now from 5+ years timeframe!)

95% of the time Stocks don’t fall because of higher PE ratios. TITAN didn’t fall significantly. TITAN went down 20%. But such things if it happens to normal stocks then investors just flee away. And moreover TITAN gave 3 days time for people before it went down.

My latest portfolio - Any feedback is highly appreciated.

Core-1
)-------
Astral 20.72%
Cera 12.15%
Mayur Uni 10.71%
Kaveri Seeds 9.32%
Supreme Ind 9.04%
Selan 8.89%

Core-2
)-------
Alembic Pharma 4.66%
Shilpa 4.54%
Ajanta Pharma 3.80%
Mirza Int 3.66%
Atul Auto 3.63%

Hold
)-----
IndusInd 3.21% (Old token investment grew substantially)

Token
)------
Repco 1.28%
PolyMedicure 1.05%
AmaraRaja 0.96%
Hindustan Media 0.81%
Gulshan Polyols 0.80%
Liberty 0.78%

I am planning to infuse 15% more money into equity (from my Equity MF holding) but concerned if this is right time.

The MF is HDFC Balanced Fund and I am considering two options - either move half of the holding from this fund to HDFC Midcap Opportunities or move the same amount to direct equities. Any stock, preferably (not strictly though) out of the ones in my portfolio which would be better than the funds mentioned above.

I am in a bit of defensive mindset at present considering the recent run-up!

Sarang ,

I have one question around your comment on Mirza. You said that you saw a multi year breakout oncharts. I saw the chart for Mirza and it is closer to multi year breakout. but I think it has not materialized fully.

How did you notice this pattern? Did some software spot this pattern for you?

nani0507,

I am not into charts much - saw a post about breakout @ stateofthemarket.net

However, not that I bought just based on the post ! :slight_smile:

I had already looked at the fundamentals of the stock (and liked it) but still was sitting on sidelines due to the stock’s passive nature!

So the chart only brought me out of the ‘wait-mode’!

Would love to hear your points about technicals (and even fundamentals) of Mirza.

I started another thread in the forum on Mirza where I have shared my observations about the fundamentals.