Selva's Portfolio - Please guide

Q&A: Questions & Answers Portfolio Q&A
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Dear All,
I have been reading various threads in the Value Pickr for past 2 year. I should thank each and everyone for their insights. I have gained good knowledge after visiting the forum.

I have been a silent observer. I would like to show my portfolio and get feedback.
I mainly invest in Mutual fund (90%). I want to learn equity investment and manage my portfolio on own. Hence started with 5% allocation to direct equity and moved to around 10% now.
I started my investment in 2013 end. I didn’t have enough money to deploy. I started slow and steady. Got good profits. Sold few investment too soon after getting profits (Eicher, Britania etc). I regret those decision.
I usually sell companies if I felt valuation is high and book profits in it. Now I am changing that mentality and willing to Hold good companies longer.

This is my current portfolio. Please review and suggest me any changes.

AB Capital - 5%
Holding company of AMC, Insurance, NBFC etc. Expect it to perform better in long term. I felt I should have waited bit longer and entered the script.

Bajaj Auto - 5%
I like their brand and CEO. Felt the stock is undervalued. Holding for more than 4 years now. Expecting their commercial vehicle, Qute, Triumph partnership will bring good result. Good dividend yield.

Divis Labs - 5%
Holding it for more than 4 years. Impressed how they solved the USFDA issue, when other companies still struggling. Expect Pharma companies have long road ahead.

Equitas Holding-10%
I wanted to invest in Small finance bank. Their branding, how they operate etc impressed me. I have made a big allocation to this. I am not sure how it will evolve.

HDFC Life - 5%
Wanted to invest in the Life Insurance companies. Preferred HDFC instead of ICICI/SBI because of the Promoter.

ITC - 4%
Holding for more than 4 years. Not impressed by the EPS growth. They are entering into many segments in FMCG, which I am not comfortable. Thinking of exiting this script.

Infosys - 3%
Holding for more than 4 years. Exited partially during the recent run up.

JagranPrakashan - 2%
Bought Tracking position 1 yr back. Not convinced yet to add more.

Kotak Mahindra - 9%
I like their CEO and how they brand their Bank. I feel it will be good long term investment

Nilkamal - 4%
I like their consumer business. Entering into new segments is the key.

TCS - 5%
Holding for more than 4 years. Exited partially during the recent run up.

TML-D - 4
I guess this is a Hope trade of mine. It has gone terribly wrong. Felt valuation was low when I bought. Now its even lower. Not sure whether to add more or exit.

TTK Prestige - 11%
Wanted to play the consumer story. I like their product and how they are keep on expanding their product catalog. Like to hold for long term

TV TodayNetwork - 7%
Bought during 200 level and averaged again last year (its in loss now).

Tech Mahindra - 13%
Holding for more than 4 years. Exited partially during the recent run up.

Torrent Pharma - 4%
Holding it for more than 4 years. Expect Pharma companies have long road ahead.

Vodafone Idea - 5%
My assumption for this investment is, pricing power will come back to the mobile operators once JIO starts increasing price. This will increase the profitability and price of stock. I am not sure when it will happen.

Portfolio-Feb27
Portfolio-Feb272192×1102 649 KB

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Thank you for sharing your Portfolio Selva.

You have utilized a lot of the learnings from the Value picker forum in designing the portfolio. Kudos for that. :grin:

Portfolio allocation feedback:

  1. Reduce the number of stocks to 12-16, this is the optimal allocation for you in order to get sufficient protection via diversification and also high returns via meaningful allocation. This is considering that you are new to investing and have only 10% of your equity holding in your portfolio.

  2. Keep separate allocation % at buying cost & also at current market rate, this way you can stop avoiding the mistake of averaging down into a lost cause, and see things much more objectively.

  3. Have a goal for the portfolio and keep track of this goal and the factors affecting this number.
    Eg: 15%-20% CAGR over 4+ years.

Stock specific feedback:

AB Capital - 5%
Holding company of AMC, Insurance, NBFC etc. Expect it to perform better in long term. I felt I should have waited bit longer and entered the script.

-There is plenty of information about AB Capital in the Stock specific thread and it looks like a promising bet.

Bajaj Auto - 5%
I like their brand and CEO. Felt the stock is undervalued. Holding for more than 4 years now. Expecting their commercial vehicle, Qute, Triumph partnership will bring good result. Good dividend yield.

-Do a rough calculation of the incremental sales and profits expected from Qute and Triumph. Then see if it will be enough to increase the high base of the current sales and profit figures. They are facing stiff competition in domestic market and customers satisfaction is lacking (vehicles need lots of servicing). Export story is there, but I don’t know how much they can scale it on the high base.
Example: Qute + Triumph sales will makes bajaj + 1000 Cr profit in year 2022, resulting in + 15k Market Cap on Year 5.

Divis Labs - 5%
Holding it for more than 4 years. Impressed how they solved the USFDA issue, when other companies still struggling. Expect Pharma companies have long road ahead.

-Divi has a good Management. Promising bet.

Equitas Holding-10%
I wanted to invest in Small finance bank. Their branding, how they operate etc impressed me. I have made a big allocation to this. I am not sure how it will evolve.

-If you do not have high conviction, then I don’t recommend that you invest 10%. I would have rather invested the amount in 4-5 tranches.

HDFC Life - 5%
Wanted to invest in the Life Insurance companies. Preferred HDFC instead of ICICI/SBI because of the Promoter.

-Good Bet, but allocation seems to be low. Is the allocation low due to optically high valuation?

ITC - 4%
Holding for more than 4 years. Not impressed by the EPS growth. They are entering into many segments in FMCG, which I am not comfortable. Thinking of exiting this script.

-Each stock should have a meaningful role to contribute to the portfolio. Based on your comments, I feel that ITC does not have a meaningful role to play. Recommend exit.

Infosys - 3%
Holding for more than 4 years. Exited partially during the recent run up.

  • I don’t see anything attractive for this company in the visible future. I would recommend an exit and buy more of the top 5.

JagranPrakashan - 2%
Bought Tracking position 1 yr back. Not convinced yet to add more.

  • If you are not convinced, then why hold. I would recommend an exit and buy any of the top 5 holding instead.

Kotak Mahindra - 9%
I like their CEO and how they brand their Bank. I feel it will be good long term investment

  • Yes, this is a good pick in the banking space. India cannot grow without Banks.

Nilkamal - 4%
I like their consumer business. Entering into new segments is the key.

  • This is a good pick. Recommend increasing on dips upto 5%.

TCS - 5%
Holding for more than 4 years. Exited partially during the recent run up.

  • A stalwart performer so far. I am not certain if they can keep growing on their very high base. Recommend exit and replace with L&T or Tech Mahindra.

Tata Motors -DVR - 4%
I guess this is a Hope trade of mine. It has gone terribly wrong. Felt valuation was low when I bought. Now its even lower. Not sure whether to add more or exit.

  • Lot’s of moving parts. Future looks murky. Recommend to increase the holding to 5% on dips and hold for next 3 years.

TTK Prestige - 11%
Wanted to play the consumer story. I like their product and how they are keep on expanding their product catalog. Like to hold for long term

  • Excellent company, candidate for long term holding.

TV TodayNetwork - 7%
Bought during 200 level and averaged again last year (its in loss now).

  • Bad quality management = mediocre returns. Please exit.

Tech Mahindra - 13%
Holding for more than 4 years. Exited partially during the recent run up.

  • Great company, recommend to keep holding.

Torrent Pharma - 4%
Holding it for more than 4 years. Expect Pharma companies have long road ahead.

  • Lot’s of moving parts are there. Recommend to keep holding and keep track of news.

Vodafone Idea - 5%
My assumption for this investment is, pricing power will come back to the mobile operators once JIO starts increasing price. This will increase the profitability and price of stock. I am not sure when it will happen.

  • I feel this story is similar to TATA Motors DVR. Keep holding and see if story plays out for next 3-4 years. Sell if story fails.

Best wishes for the future Selva! :+1:

DISCLOSURE: I am not a SEBi registered Investment Advisor. I do not hold any of the above stocks in my current portfolio.

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Thanks Naveen for the detailed feedback. I will try to analyse the stocks based on that.

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Great Portfolio Selvaji.

You have done a great mix of Small, Medium and Large Caps. Also, have done a good mix of Sectors. Questions:

  1. Did you buy these in SIP mode?
  2. Did you acquire them based on FA research or TA or both?
  3. What is your Sales Strategy, regardless of when?
  4. Was this portfolio in a huge positive in 2018 and then it retreated?
  5. What is your criteria of adding a new name? FA based or TA based or just a Mix of two?

Again, you have done a good job, and hoping that some of the questions above are meant for you to think where you need to do some alteration, and NOT necessarily meant to challenge you or even answer it point by point in a reply.

I have those same questions that I go through myself every time I look at my portfolio of a large number of holdings and a large multi-decade holding timeframe or a widely diversified portfolio of S/M/L and all kinds of sectors, and then SIP Buying and also SIP Selling.

Will try to limit my replies to the above to avoid getting ‘moderated’.

Good luck.

KKP

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Dear KKP,
Thanks for your feedback. Please find my response below.

I don’t buy Stocks in SIP mode. I buy Mutual Funds in SIP mode. Stocks I buy on adhoc basis.
I try to analyse on my stocks may be once in Quarter. If it is undervalued/ less allocation % to my portfolio, then I try to add on to it.
Frankly telling, I am not able to outperform my mutual fund returns. So I am not convinced in my stock picking ability yet.

I do basic Fundamental Analysis like good Promoter, less Debt, High ROCE/ROE, Dividend Yield, PEG ratio etc.

I do not have any Sale strategy. If I feel some stocks have run up high, I try to book partial profit. If there is any scams or bad news about management, I try to sell.

If you see some stocks I hold more than 4 years. The Stocks which I bought last year was Kotak, TTK Prestige, AB capital, TML-D, Equitas Holding. Apart from Kotak and TTK (Both around 20% profit), others are loss making (>20%). I believe in their story, so waiting patiently.

Currently FA only. In future try to learn TA also. So I can get good Entry and Exit point.

I understand that :slight_smile: I posted my portfolio on the forum for the same.

Regards,
Selva

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Some of the stocks are turnaround and cyclicals. Also the pharma packs are risky due to regulatory influence. If you are having less than 10 years of market experience, go for less risky stocks which may have lesser returns but will compound. Return of capital is more important than return from capital. Avoid slow growers, turnarounds, cyclicals, and asset play. Go for stalwarts and you could have some amount of fast growers if you have circle of competence.

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Thanks Vijay for the feedback. I also felt that.
But most of the Stalwarts are expensive (in terms of PE or PEG). Hence I am confused whether to add them or wait for correction.
With respect to Slow growers, I have a question.
Say Eicher was growing tremendously for past 5 years. Now it is Slow. It has corrected a bit. I am not sure whether it will have the same growth or not. Whether I should avoid this or Buy?

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Not all stalwarts are expensive. At least today many sell at a fair price if not cheap ! You may have to estimate future growth for at least 10 years and decide the price you are willing to pay. If the target company is expensive, you can wait. But be reasonable. You cannot expect Britannia or Nestle to sell at 20 PE (TTM).

The definition of slow growth vs fast growth does not depend on past. It always refers to future growth. If you feel the target market is big enough, Eicher could be classified as a stalwart. If you feel they will be unable to grow due to many reasons like EV, competition from Jawa , etc. then you can classify it as a slow grower and avoid. You need to have circle of competence and may need to research on it. Since you are a potential consumer for this product, you can easily find out if their product can continue to sell.

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