ValuePickr Forum

Seeking Feedback To Reduce My Portfolio Size

Hello Friends,

I am a new member of this forum. I’m also new to the world of investing, with 1-2 years of active Equity management and 4-5 years of in-active investing via MF’s.

My minimum expectations from my investment is to get better return than a bank FD and I aspire to do better then Index and MFs.

My portfolio has ~100 stocks (I know it’s a LOT) and I’d like to bring it down to less than 50 and hopefully with time to 20-30 stocks.

The highest allocation for my portfolio is towards API/CDMO/Chemicals followed by IT / Consumer Goods.

I bought these stocks basis my learnings from online forums, webinars, youtube videos about company prospects and common blue chip companies like Nestle, HUL (assuming they will continue to compound over the years and they may not as I learnt more about valuations and investment).

I have started to attend con calls and increase my reading about the sector and companies I have invested into and look into quarterly results but it’s difficult for me to assess valuations and future growth.

I am seeking feedback from this group on how I can reduce my portfolio size, which stocks should I exit and where I can increase my portfolio allocation taking into consideration current valuations and company’s future prospects and low valuations or if I should exit and hold cash (as of now I am fully invested minus the emergency fund + 2-5% cash in hand).

My investing timeline is 15-20 years.

As I am a new member I am unable to attach the portfolio excel sheet so I am pasting the data below and also adding a link to the uploaded file online - Here is the link

I can invest 1-2 hours a day towards improving my knowledge and becoming better at investing and I am also open to interact and learn by being part of any group discussions or individual discussions.

Company Name Average Cost Price Unrealized Profit/Loss % Percent Allocation by Value At Cost
NEULAND LABORATORIES LIMITED 2387 -11.15 4.59%
PRAJ INDUSTRIES LIMITED 277 21.79 2.83%
HIKAL LIMITED 392 0.56 2.53%
DISHMAN CARBOGEN AMCIS LIMITED 196 5.12 2.36%
DEEPAK NITRITE LIMITED 1709 4.5 2.03%
SYNGENE INTERNATIONAL LTD 554 5.48 1.88%
INDIAN ENERGY EXCHANGE LIMITED 367 -2.57 1.79%
LAURUS LABS LIMITED 399 31.39 1.73%
JUBILANT INGREVIA LIMITED 340 42.91 1.58%
ICICI BANK LIMITED 565 17.36 1.53%
ITC LIMITED 209 3.65 1.44%
TATA MOTORS LIMITED 194 64.36 1.43%
INFO EDGE (INDIA) LIMITED 4599 -5.52 1.41%
HDFC BANK LIMITED 1478 2.57 1.38%
NAVIN FLUORINE INTERNATIONAL L 2895 11.38 1.24%
JB CHEMICALS & PHARMACEUTICA 1336 8.56 1.21%
SEQUENT SCIENTIFIC LIMITED 248 11.77 1.15%
ASIAN PAINTS INDIA LTD 2462 20.96 1.15%
BATA INDIA LIMITED 1452 6.59 1.14%
AARTI INDUSTRIES LTD 1380 21.55 1.14%
NIPPON INDIA ETF BANK BEES 336 6.05 1.14%
SUVEN PHARMACEUTICALS LIMITED 518 -0.82 1.13%
NESTLE INDIA LIMITED 16773 5.5 1.12%
RELIANCE 1980 9.14 1.08%
BAJAJ FINANCE LIMITED 3001 87.51 1.08%
HOUSING DEVELOPMENT FINANCE CO 2503 1.99 1.07%
TATA CONSULTANCY SERVICES LTD 2481 27.33 1.06%
SBI CARDS AND PAYMENT SERV LTD 793 31.7 1.06%
HINDUSTAN UNILEVER LIMITED 2199 6.44 1.06%
JUBLPHARMA 864 1.08 1.05%
INFOSYS LTD 1353 3 1.00%
LUPIN LIMITED 1166 4.61 0.99%
IDFC FIRST BANK LIMITED 58 1.12 0.94%
TATA STEEL LIMITED 413 172.75 0.92%
DIVIS LABORATORIES LIMITED 3571 17.44 0.90%
BRITANNIA INDUSTRIES LTD 3466 -0.53 0.88%
SOLARA ACTIVE PHARMA SCIEN LTD 1429 23.04 0.88%
Indraprasth Gs Limited 435 21.3 0.87%
KOPRAN LTD 197 -4.75 0.87%
PVR LIMITED 1234 6.19 0.86%
P I INDUSTRIES LTD 2441 7.12 0.85%
DHARAMSI MORARJI CHEMICAL CO 317 5.36 0.79%
HDFC LIFE INSURANCE COM LTD 686 -2.95 0.79%
MOTHERSON SUMI SYSTEMS LIMITED 214 12.23 0.77%
HDFC ASSET MANAGEMENT CO LTD 2975 0.24 0.75%
TATA CONSUMER PRODUCTS LIMITED 652 1.75 0.75%
BIOCON LIMITED 397 -2.33 0.75%
BAJAJ FINSERV LIMITED 5086 132.12 0.75%
RELAXO FOOTWEARS LIMITED 899 26.3 0.74%
TATA ELXSI LIMITED 2933 24.21 0.74%
BOROSIL RENEWABLES LIMITED 261 3.3 0.66%
INDIAN RAIL CAT AND TOUR IRCTC 1548 22.99 0.62%
KOTAK MAHINDRA BANK LTD 1814 -0.34 0.60%
NBCC (INDIA) LIMITED 32 49.22 0.57%
L&T TECHNOLOGIES LIMITED 2783 -2.6 0.56%
DIXON TECHNOLOGIES INDIA LTD 3389 18.86 0.54%
ASTRAL LIMITED 1542 21.63 0.53%
TITAN COMPANY LIMITED 1484 7.57 0.51%
BOROSIL LIMITED 188 18.35 0.50%
LARSEN & TOUBRO INFOTECH LTD 3913 0.74 0.47%
ROUTE MOBILE LTD 1529 9.91 0.43%
SAREGAMA INDIA LIMITED 2267 13.93 0.42%
TATA POWER CO LTD 97 10.12 0.41%
YES BANK LIMITED 41 -67.04 0.40%
NATCO PHARMA LIMITED 963 9.1 0.40%
INDIAN RAILWAY FIN CORP LTD 25 -5.3 0.38%
MEDICAMEN BIOTECH LTD 521 6.25 0.37%
COMPUTER AGE MANAGEMENT SERV 2000 25.07 0.37%
INOX LEISURE LIMITED 276 12.44 0.37%
WESTLIFE DEVELOPMENT LTD 434 11.07 0.37%
HCL TECHNOLOGIES LIMITED 936 0.99 0.35%
SNOWMAN LOGISTICS LIMITED 52 0.67 0.35%
RAJRATAN GLOBAL WIRE LTD 1067 -5.13 0.34%
XPRO INDIA LTD 122 21.43 0.33%
MANAPPURAM FINANCE LIMITED 152 7.19 0.33%
INDOCO REMEDIES LIMITED 392 0.16 0.33%
CUPID LIMITED 241 -0.4 0.32%
RALLIS INDIA LTD 289 8.35 0.30%
PIDILITE INDUSTRIES LTD 1786 17.06 0.29%
AMARA RAJA BATTERIES LTD 856 -13.47 0.25%
AVANTI FEEDS LTD 539 10.62 0.24%
RELIANCE INDUSTRIES 2029 6.45 0.19%
SHIVALIK RASAYAN LIMITED 741 -3.41 0.19%
1 Like

Dude, I think your strategy of selection of stocks should be around the valuation and story of the company not the news.
As you are retail you can hold stocks longer without caring about the underperforming index.
My humble advice you to will be to trim your stocks to 10 stocks only so you can track stories. Stop having FOMO, you don’t need to catch every train even one stock can give you a better return than that many.

My advice to you on how you can trim your portfolio:

  1. Get rid of stocks like yes bank, overcoming the problem is tough. Don’t do wishful thinking.
  2. Get rid of ITC, ITC would be a good selection if you were having like 3 stocks in your portfolio and you are old. ITC business is already too diversified, there is no need to have it while you having a diversified portfolio.
  3. Don’t buy the company which you think wouldn’t exist after 10 year, tbh it’s not that tough to guess. Just ask yourself world would be needing those company products after 10 years?
  4. Stop paying anything for a good company, valuation matters. As i can noticed Most stocks you have at their high, mostly bcz they were in buzz. If you keep giving attention to the news then the news will keep changing after 6month or a year. for example year back no one wanted tata now people hoping for it to be multi-bagger, as I can remember last year people were fighting to own ion, now no one talking about it anymore.
  5. this is personal advice to a brother from another brother.

stop taking ideas from youtube videos and webinars, mostly they don’t know what they are doing. What they do is they make videos after stock already gave a good run, then they suddenly realize how impressively they were managing their capital, they were doing these things smartly. where they were when the company was doing those things? it’s easy to comment on the past but you going to earn on future performance.
6) your portfolio doesn’t has a soul, give it a soul. What I mean is it’s not a defensive portfolio, it’s not aggressive, it’s not a micro-cap portfolio, nor a large-cap. Not able to know what you are trying to do.
7) This is also a bit of important advice. Even don’t take my advice on just face value, just think and if it makes sense to you then act on it.

14 Likes

Hi,

I suggest, bucket all your stocks into Large, Mid and Small caps.
Put them into an excel sheet and pull data on the following parameters (you may use screener.in site for obtaining this data).

  1. PE
  2. BV
  3. EPS
  4. Debt/Equity ratio
  5. ROCE
  6. ROE
  7. Promoter holding %
  8. Dividend yield %
  9. Last 5 years revenue growth%
  10. Last 5 years PAT growth%

I expect you to do this homework and comeback. Thanks.

1 Like

Please go through this thread

1 Like

Thank you Gaurav for sharing your feedback. It’s a complex process, at times I think I should just sell everything and bag the profits and maybe do passive investing via index and MF’s.

But then I also enjoy the overall process, I am also eager to learn and I am trying to increase my awareness about it.

So, I am trying my best to take meaningful positions in companies I think can do well in the next 2-3 years and eliminating companies which I had simply bought.

I think it’s a good time, in a bull run you are sitting on some profits and it’s easy to make an exit.

I have one q’s on valuations, so let’s say when I look at Laurus Labs even though it has increase 4x from pre-covid levels the business still has room to grow and are growing into new businesses with higher margins.

Even though the market cap to sales is ~6X & Price to Book at 11 it still looks lower in valuations as compared to Divis at market cap to sales at 16 & Price to Book at 12.

I’ve listened to their con-calls, interviews from the MD, read the business updates and notes from value pickr and other sites. Is there anything else that I can do to research further before increasing my portfolio position in it?

1 Like

Thank you for sharing, will definitely go over it.

Thank you for your feedback, pls allow me sometime I’ll get back on this thread with the information.

Hi Sameer I have added the information in this trix Stocks Data - Google Sheets

As you have mentioned that you are putting in effort, why don’t you categorize your stocks? High conviction core stocks, satellite stocks etc?

The highest allocation you are talking about is relatively higher when compared to other companies in your PF. Except for 5 companies no other company is 2%.

So why don’t you start pruning from the bottom? What would 0.19% allocation for a stock do? It is tracking, buy a few shares and track it. Or is your PF huge? I presume it is not.

There are a lot of ways a PF can be constructed, some people can manage many stocks, some like it concentrated. But 83 stocks is definitely too much, even full time equity investors will not invest in so many stocks. If you are interested check the PF threads in the forum, perhaps you can like one that you can related to and invest that way.

Ask yourself why you have invested, have a small thesis consisting of all your thoughts, if there is no such thesis, then there is no point in investing so little in so many companies. If capital is your constraint, then you can slowly invest each month or quarter.

And this is all learning, there is a long way to go.

1 Like

Thank you for your feedback, for the blue chip companies no research was done. I presumed that blue chip companies like HDFC bank did well and will continue to do well. Similarly for CS companies like Nestle, HUL, Asian Paints etc

To be honest for most of the chemical companies also I got my understanding about their business from watching YouTube videos and now since I have started to listen to con-calls and reading about these companies I am increasing my exposure.

The other aspect was picking market leads with moat like IRCTC, Asian Paints, PVR / Inox available at low values due to pandemic etc.

CDMO industry business understanding through webinars so I invested in them as this appears to be a high margin business and can last going ahead.

So, the question is that I need to select at max 50 and exit from the others. I am doing so at present basis the stocks existing valuations, future growth parameters etc It’s not the best approach but I am trying to exit from where I do not have significant investment and valuations are high with no near term visible triggers for growth and at the same time trying to allocate more to stocks with high conviction.

Then create baskets, groups to which each company goes. Companies that need not be researched like HDFC Bank, Nestle, companies you are spending time on, companies with growth triggers, companies with low valuations etc.

As with most things in life, the answer lies with in us for stocks too. So if you cannot come up with a reason that can satisfy yourself, exit the stock.

If you are really interested in buying almost all the good names, there are many index funds and ETFs that cover much of the market. You can try that too.

This will be a lengthy process but start writing a thesis for each and every company that you own right now. And then categorize them. You can sell which you don’t want to hold and move the money to your high conviction bets.

The first step is acknowledging that you are making a mistake or on the wrong path. So you have started, which is what everyone does at their own pace.

1 Like

Hi Rahul,
Even 50 is way on the higher side. 80% of pf should comprise maximum upto 15 stocks. Even 15 is a debatable number. Remember that we are in a bull market, when the tide changes you won’t know which ones to sell and which ones to hold.
Few suggestions:
• Develop a particular style of investing. See what has worked for you in the past.
• Each marquee investor / people conducting webinars have their own style of investing. Not necessary that all styles suit us. Follow any 1 or 2 people & their investing styles.
• When you are buying a stock – write down your rationale / thesis of buying and when you plan to sell the same. Has worked very well personally.
• Respect valuations & margin of safety. Just because someone suggests – doesn’t mean we buy it the very next day. Can keep it on watchlist & wait for right opportunity. Don’t see that in stocks like Hikal, Rajratan, etc
• Avoid FOMO. To get multi-bagger returns – its equally important to let go of a few stocks rather than own everything and let portfolio drift to mediocrity.

Few thumbrules on which ones to sell. -
• Bucket the stocks into compounders, special situations, cyclicals, Dividend play, etc . Having too many in any one bucket is usually not advisable.
• Analyze them by noting down their growth %, PE, mcap /Sales, CFO, OPM %, Debt to Equity, Promoter holding, ROCE, ROE, dividend payout (since this is important). Rank them accordingly
• Very low allocation – less than 1% - question why you bought. And if you intend to make it a top 15 holding – If not sell.
• Check which ones are trading below 200 EMA & posted flat / weak results. They may be unlikely see any upmove in near term – if there are no triggers
• See which one you are able to justify better while writing down the rationale for each. The ones you are struggling to justify – can look to exit

Bull market is a good time to sell your mistakes of bear market. Hope this helps

3 Likes

I see you have given the % on the basis of cost, would make sense if you consider the current market value, as well. Then just working through and decide what you think will surely do well, and decide if you want to hold or sell. If you aren’t sure, cut it out or else allocate(you are going to see a few inevitable headlines on a big rally from something, but when you do just think if you had enough info to have allocated more…a 2k gain is almost insignificant in a 10L PF). This should reduce the numbers of the PF by quite a bit. Rest, you can slowly decide and reallocate. Most important thing is patience, don’t hurry into cutting things out, take your time and go one by one. I have been in this situation before. As you start researching on sectors, you want to add as well. Just remember to set allocation parameters and go by that. Have an end goal in mind-eg. 1L of investments, with min. 5% Max 10%.

For some it would make sense to hold through MF/ETF. Pre-pharma rally I wasn’t sure what would work and what wouldn’t and didn’t have time to research… So I just bought a lumpsum MF. Similarly for most large caps I hold through MF. And when I invest in a large cap I usually cross check if my MF PF has it.

Just suggestions, hope this helps

2 Likes

Sounds sensible, I don’t advice anyone to over research. By over researching you can doubt anything. Just have idea what you are trying to do. if you think your Laura’s labs makes sense then it is, and I can’t comment on it. Only thing I can say you sounds sensible and informed in your conviction. I think that’s enough for investing. Plus noone can be confirm that you are 100% right or wrong. So just take action that important to learn the art of investing.

Just curious do you real annual reports and forward looking statements? If don’t then it should be your first thing to do before buying any company.

Con call and interviews are really useful, but always remember even if something bad happening in company, still they are not going to disclose easily. Always be skeptical about your companies. Read between the lines.

Finally and most important makes it easy. Don’t make it look complicated just to be sounds perfectionist, because know one is that sure, so even you don’t have to be. It should be like this company makes this product and it’s requirement going to be remain in 4 year and this company will be to provide that. Nothing more.

  1. Recognizing you have an issue is 80% of the solution.
  2. Consolidate stocks that are in the same industry by getting to Screener.in and filtering based on fundamental and technical criteria you like.
  3. Best to find out if there are scripts near 1 year and 5 year highs, or are they near mid-point or lows, and based on this criteria you can also reduce (but that would be ‘technical’)
  4. Make sure the industry that you are invested in for the next 5 years are part of the favorable macro trend. For example, being invested in Real Estate, Cement, Infra, IT is great since they are definitely going to grow.
  5. Think about how you would feel about holding a stock at 1/2 the price of what it is today! If you can convince yourself that you would hold it even at 1/2 price, then it is the ultimate litmus test that you believe in the company and future for 10-15 years (your LT horizon).

Good luck.

KKP

1 Like

Hi rahul,

thanks for adding this thread. My suggestions looking at your stocks are following:

  1. Please spend some time on portfolio construction education. Many sources. Threads on VP, YT videos, books, whatever you prefer.
  2. Right now your PF is a khichadi of all vegetables found in market: “safe overvalued quality”, potential turn arounds, cyclicals, high growth stocks. Please ask yourself if you really want PF to be this way, and what do you want allocation to each bucket to be? These decisions influence eventual outcomes. safe quality will protect you in downturn but also be a drag on returns in upcycle. Decision of how much to allocate to safe quality should definitely be a conscious decision not something which is happening unconsciously.
  3. Look at your sectoral allocations. How much exposure do you want to each sector. Each sector has its own characteristics. While APi/CRAMS has good tailwinds (many ppl thing multi-decadal), commodities are cyclical and dont see more than 2-4 years of up-cycle. BFSI is a in a secular growh trend but does see down-cycles.
  4. anything less than 1% allocation (allocation, not CMP) could be removed because it cannot move the PF either way.
  5. Please develop an exit plan/strategy for each stock or group or stocks (if it is a basket). When or under what conditions will you sell? Knowing when to sell is as important as the buy decision.
  6. lastly since you only want to attain 15% returns i would suggest to keep discretionary PF small while you learn about the tricks of the game (using that 1-2 hours every day) and invest the rest in MF. over the next 2-3 years as your experience and skill and trust in your own skills increases you can increase allocation into discretionay picks by selling your MF units and investing in discretionary PF. I again say that it is dangerous to own direct stocks without tracking all info about them publicly available: concalls, investor presentations, annual reports, interviews, QIP documents, DRHPs and same for at least few competitors. This is an incredible amount of info to track, one can mess up, which is why it makes sense to crawl before one walks and to walk before one runs.

All the best :smiley:
Disc: none of this is investment advice. just sharing my opinion for educational purpose. Please consult financial advisor or do own due diligence before any buy or sell decisions.

2 Likes

Hello Folks,

Thank you for all the feedback.

I wanted to share my latest PF allocation on this thread.

90% of my PF is across 55 stocks at present (previously this was over 100+ stocks).

I also have tracking positions ~30 stocks that accounts for 10% of PF.

~40% of my PF allocation is into large caps or well established Mid caps to relatively less risky and should ideally have low downside. I intend to keep it around this percentage.

Sector wise data:

~40% of my PF is into API, CRAMS/CDMO & BioTech companies.

~10% is into Speciality Chemicals

~10% is into Banks and Financials

~5% in Platform companies and ~5% in FMCG companies

I am also trying to document all my learnings, thesis, entry and exit strategies into a document for the companies that I’ve invested into.

Please feel free to add to this document any notes that you may have about the management quality so that I can add it to my main document. Management is a very important aspect for the business to grow.

I’d also love to hear more feedback from the group about my current portfolio and how I can improve on it (I’d ideally want to allocate ~40% to safe bets where I am okay with lower returns but can expect a long runway and hopefully see the effects of compounding) and ~50% to other risky bets that needs more devoted time and evaluating performance every quarter.

My intent is to further reduce the PF, so any advise that can help me achieve this goal would be helpful.

Please let me know if I can provide any additional information that may be helpful.

Best,
Rahul