Last couple months multiple things at personal front have kept me away from market activity.
Although, I kept checking what’s going on but did not have resources to be ready to carry out any buy/sell activity.
I think such detachment has made me realise few aspects and now I feel in between such periods maybe good.
One realization on checking my current portfolio value now is that over last few months, although my portfolio performed better than NIFTY/Sensex but could not beat the BSE Midcap index.
So, HDFC Midcap opportunities growth fund did really well and so would have all other midcap funds as well…
My portfolio specific - No great performances in this current bull run…some major events have been Trent entering Top 5 and United Spirits entering Top 10 at number 8 spot…
I cleaned up quite some trash from my Portfolio few months back when needed some capital for personal needs…Probably that also contributed to getting detatched feeling…
I dont know if this gradually getting detached from being too active is a part of my evolving Investor psyche or it is temporary…I need to really think what strategy & approach I should follow now as I do not feel putting incremental capital in existing names, do not like any new names & neither have inherent discipline within me to do an SIP in Mutual funds…
Even though I am way less experienced in markets than you, i figured that it will be difficult for me to generate benchmark beating returns over a period of time. However, the internet to understand businesses and the feeling of investing in businesses is something different.
This is the reason I decided to have most of my portfolio in MF’s(75-80%) and the remaining is what I will be investing in stocks. This makes me much more concentrated in whatever business I want to own and doesn’t require me to spend lot of time in analysing many companies.
Thanks for your comments, I think it doesn’t matter much on number of years of experience if you have seen couple of bull & bear cycles…then 5 years or 15 doesnt matter much…I have seen some people in this forum with much less experince than me but much more mature and generating excellent consistent returns!
I think maybe over last few years, I have completed the first stage of a long term portfolio construction. Now I just want to remove trash from it and let the winners grow…Want to weed out the good companies eventually and try to keep just the great ones…only time will differentiate between the two…
For new ideas, I want to keep it limited to one or two in an year…unlike the unnecessary need to diversify or keep adding more names etc.
I want to be very very selective in scaling up any new entrant and very very brutal in weeding out…well thats the idea now…lets see how it evolves…
Thanks, most of my portfolio is similar to what it used to be. Yes I weeded out some trash. Still have some left…approx 3% of portfolio…will keep weeding them out…
Remaining 97% looks somewhat like below. There are many at sub optimal percentage levels but could neither weed them out as I still like their business nor could scale them up at right time because of lack of required capital…
Company
Percentage
Holding Period
Tata Consumer
14.5
Long
ITC
12
Medium
Pidilite
8
Long
Marico
8
Long
Trent
7
Medium
HDFC Life
6.5
Long
Godrej Consumer
6.5
Long
Midcap IT (LTI, LTTS, OFS, Tata Elxsi & Mphasis)
6
Medium
United Spirits
4
Medium
Dabur
3
Long
Asian Paint
2.5
Medium
Nestle
2.5
Medium
Avenue Supermarts
2.5
Medium
Britannia
2.5
Long
HDFC AMC
2
Medium
SBI Life
2
Long
United Breweries
1.5
Medium
Johnson Controls Hitachi
1.5
Medium
Agro tech Foods
1.5
Long
3M India
1.5
Medium
Hitachi Energy
1.5
Medium
So, among all the turmoil in last few years, my Portfolio earlier used to be FMCG super heavy (still it is) but major changes that have survived the recent weeding out have been -
Gradual scale up of Tata Consumer
Addition of ITC
Addition of Midcap IT
Addition of Retail - Trent & Dmart
Addition of Consumer discretionary - United Spirits, United Breweries & Asian Paints
Some scale up of Financials (non lending) - HDFC Life, SBI Life & HDFC AMC
Disc: Invested & Biased. Not a buy/sell recommendation. Post only for academic purposes and learning. I can be wrong in all my assessments. Not eligible to give any advice.
Cudos to you, specially about Trent for having 7% allocation size. I am not able to gather courage to invest in Trent. I like the company , but with PE at such high level and also, if i recollect, Peter Lynch has advised against investing in companies which depend on youth tastes and fancies, which are very fleeting. Dont know if that applies to Trent. But not able to gather courage for Trent. If you could shed some light on your thesis about it, it will be very helpful to see it in correct light. Not an investment advice, just your way of thinking about Trent.
Thanks for kind words or if they sound a warning for me as well Trent has been one of my best investments in last few years in terms of price & allocation ( although wanted more allocation to begin with) Yesterday I was discussing its story in my case with someone close as my tryst with Trent dates back to 2012 although didnt invest then…will certainly reply back with this story to provide my perspective…
Great List, Having Tata Consumer as largest allocation in my family portfolio, i keep looking for anti-thesis on the same. So what according to you would be triggers where you would sell. I am planning to hold for long term so not worried for minor hiccups. Also if you dont mind could you share your average buy price.
Thanks, Good to know it is largest holding in your family portfolio. I think I hardly came across anyone having substantial part of portfolio in Tata Consumer…and there has been reasons…
I am invested & holding it since it was tata global beverages and went through lot of frustrating periods, test of patience and what not…will write a detailed note on Tata Consumer story some day…
To cut things short…
There are some companies where you need to look for lot of anti thesis and on lookout of triggers to sell…ever since Chandra came at helm of Tata group and with the group’s vision to make FMCG one of their main arm…I would say the story of Tata Consumer has only just begun… It found an excellent result oriented no non-sense CEO at the right time as well…
So, I do not actively look for any anti thesis at this stage of its growth and group’s vision. It only has but options to grow revenues, bridge the margin gaps, product innovations etc. etc.
At back of mind, one thing although I would keep looking at is capital allocation because in such big group with no dearth of resources, this aspect is very important…for now I am very impressed with the CEO who never acquires & expands just for the sake of increasing the top line…as that is anyways happening at decent pace…
Other thing is if suddenly the India focus changes that would be a put off…as with tata global beverages the main issue was global focus and less on India…so India focus is very very important to me in any company I would invest…unless its in export business…
Well this is very difficult to answer as I have bought it from 100 levels to all the way till 670…but based on rough estimate on ratio purchased at various levels, my average buy price should be somewhere around 300 as bulk of purchase happened at 100, 150 & 250 levels and then later at around 600 (I maybe wrong in this estimate)…
Can you tell me what percentage allocation it has in your family portfolio and your average buy price as well?
What antithesis and triggers to sell have you formed till now?
Disc: Invested & Biased. Not a buy/sell recommendation. Post only for academic purposes and learning. I can be wrong in all my assessments. Not eligible to give any advice.
The allocation in my personal and across family pf would be roughly 11%, I guess. Coming to the anti-thesis, i guess would be only if there is a structural drop in their base tea and coffee brands whether it is in volumes or margins. As it is the rest of businesses are in growth mode but to reach sizeable contribution of sales and profits would take at least 3-5 years. So, this is key monitorable for me. Another one would be what is the growth % of the rest of the portfolio.
I would also sell if Sunil left for any odd reason and they do not get a good replacement. My Buy is very recent so i guess around 760 is the average price at which i have bought.
Trent -A company with perennial super high valuations, difficult to catch…but excellent DNA
Around 2005 when I landed on my first job, I did not even know what a Dmat account is, what are shares or even what is investment. Untill next 4-5 years, did not even do a simple FD and spent all I had or money simply lying in savings account.
Trent was around Rs 50 during this time (hovering 30-90 during extreme bull and bear of 2005 to 2010)
Later got married, still had not seen much of Westside nor Star bazaar and neither knew existence of a silently growing retail giant…2012 to 2014
Trent was around Rs 100 during this time
All this time right from 2005 till 2012…the only giant in retail I knew of was Big Bazaar, Pantaloons, Brand Factory, even Central…so it was mostly the Big Bazaar group.
What brought my attention to Trent?
Surprisingly when I think back, it did not start with typical Peter Lynch theory that I admire and even follow - Buy what you see…Here it was more of Track what you read…why I say track is because all the way from 2014 till 2020 - I only tracked Trent!!!
It reminded me of one conversation I had with a close Gujarati friend who happened to be a qualified CA and active stock trader…He used to target stocks with deep value only, the kinds with hidden assets and undiscovered value and used to do really well in those unknown names…One day I mentioned about Trent to him in 2015 when it was still trading at PE of 100+ if I am not wrong. To my surprise he said to just go for it if I had been tracking it since an year…he somehow knew my extreme conservative style back then and my thought process also and hence the advice to take the plunge…
Trent was at Rs 100 back then…I did not take the plunge…
From 2015-16 onwards, I started to see the rise in business & presence of Westside & Star Bazaars…So, after seeing the business progress all the way from 2016 till 2019, it seems finally Track what you read became Buy what you see…if I am not wrong, I took first tracking position in 2019 … thats also because from 2015 - 2019 when Track what you read started transforming to buy what you see…the stock was not giving me any chance to buy as it galloped from 100 to 700+ peak just before Covid crash. I might have taken a tracking position at Rs 500 in 2019.
During the crash, I was very well read about the business, had seen the impacts of their strategy first hand… so made purchases from 2020-2022 at levels of mostly Rs 500 till Rs 1000. Average may be somewhere in between.
What I liked about Trent?
Tata Group - Long term vision & Ethics
Noel Tata - Chairman of Trent had a clear differentiated strategy of profitable expansion and not mindless expansion. Probably that’s why the stock was languishing at Rs 50 till 100 for such long time. Those who understood this long term strategy well must have loaded it back then and rest like me, who kind of understood but not confident & immature, would have tracked. Larger souls would have simply bought Page Industries instead.
Private Label focus without compromising on the quality of Private Labels. (Costco & other such US giants who focused on private labels survived retail cycles better)
Not only ZARA partnership but the ZARA (or eventually even better) of India - Inventory management in fashion is incomparable.
Near 2008-09, when many big retailers either perished or came close to perishing, Trent stick to its strategy and survived.
During Covid crash, when there was a big if on future of brick & mortar retail - Trent wildly expanded!
The power of unknown - With an excellent group like Tata, the power of unknown is probably on our stride rather than a risk. I would have never known the stupendous rise of Zudio. I am too small to judge that. I can but only trust the group. So, while not denying that unknown is and will always be a risk in investing but in case of Trent, only because of Tata group, it worked favorably so far…
Disc: Invested & Biased. Not a buy/sell recommendation. Post only for academic purposes and learning. I can be wrong in all my assessments. Not eligible to give any advice.
It was great reading about simple investing pick like Trent.
I would like to share my experience with same viewpoint.
So I started my career in markets around 2017. I am a Bachelors in financial Markets but never really explored about investing or trading. I think either you must have curiosity to explore in topics in the world or your need people around you involved in these kind of topics like Finance.
So as i started working in a broking firm i got to know what shares are how trading works and how investing works. The first company that still excites me is BATA. Bata because my family used to prefer buying leather sandals or footwears in short. So my this memory comes way back when i was in school & college. I always wear sandals from there stores because my mom used to buy that for me.
So I always had this assumption about Bata that they just sell leather footwear & sandals. Things changed when i myself saw BATA giving a fresh look and feel to there stores. The gave a separate section to men’s, women’s & Children’s. I think during 2018 or 2019ish where i saw all these changes. So they moved all old looks to new fresh color & style hiring young actors like Kirti Sanon & Kartik Aryan.
I never invested but learned lesson. With time we all must change or we will be left behind like what happened with Nokia.
My second observation was RADICO KHAITAN. I started drinking from 2017 when i joined corporate world. With time things went pretty bad i recommend “Drinking alcohol is injurious to health and your pocket” because at they end you are destroying your health & paying premium to insurance.
Its been 3 year i am haven’t touched alcohol apart from some 2 to 3 times and didn’t felt good so finally fully left drinking.
Now i want to share what i observed in this journey. When i joined the second broking firm during 2019. There i saw this company RADICO KHAITAN we were recommending this stock at 300 Levels. Not even one guy ask me about the fundamentals. Retailers want trading than investing i can see from where this is coming but when things doesn’t work one must change their strategy. Even i was not sure because i just read the companies business in one pager and checked website but kept eye because someone told me 2 industries Cigarette & Alcohol is always investable at all levels.
So i always had Radico in my mind. So when ever my friends & i used to go to get booze i used to look for brands of Radico. I got to know about “Magic Moments” Radico’s product then once i saw a bottle of “JAISALMER” Radico’s product displayed at a big Wine shop. At first i was shocked then i started reading about this company i got to know that the managements is young and they focus on there product and packaging like how there product will feel when there customer open the packaging.
So i never invested in these stock but i want to at good levels. Even the current levels are not bad but i have my own thesis. I need to get out of my mental models.
My reason to write this is to share my experience & how i discovered some companies from just a name in my watchlist.
Investing is simple you just have to observe the changes around you like Vijay Kedia Sir does recently in an interview he shared why he invested in Innovators Façade or Affordable Robotic & Automation. So these is something in underlying which supports the story. Like strong story that things are changing the affordability is changing, peoples preference is changing, people want more variety. Observing small things like this is what most retailers should focus on than running behind options & whipping out the capital
Just just took Vijay Kedia Sir name because i like the way he invests but you can choose your favorite investor or develop your way of investing.
Disc: Not Invested & Biased. Not a buy/sell recommendation. Post only for academic purposes and learning. I can be wrong in all my assessments. Not eligible to give any advice.
Good write up… But I didn’t get the pragraph above. What is the new company you are talking about here? There is no listed company called “Jaisalmer” or Magic Movement’ (by the way, there was a time, I used to like magic moment very much ) and Radico’ you already knew about! So?
If chances of bounce back of high qualities are low then which type will bounce back.I am not saying valuation doesn’t matter but chance r more to get our desired value in high qualities than in low mediocre ones.It is also not very easy to get high qualities at fair valuation.In this situation should we compromise with our circle of conference and move to lower in valuation?
Power of Independent Thinking - Short Story of Tata Investment Corporation
Had been wanting to jot down my thoughts on this topic since long but coudn’t get time…finally thought would jot down in few minutes whatever I can…
Well this is story of an investment company which is always available at big discount, has Nooperating income and its worth can easily be calculated as an NAV by adding up its constituent company/ies, the discount percentage range is eternally fixed and one can play a mean reversion as discount increases and sell as discount nears the upper limit of the eternal fixed range…
This is what I learned & acquired from books, forums, markets etc. and is the acquired thoughts, the acquired knowledge. It can certainly help me make good profits…
But the real game changer could have been the power of independent thinking
Investment companies may not be mere NAV products and mean reversal candidates. They may hold deep value. Many would say that the deep value may not be realized as they would never sell their constituents but for a company like TATA…the power of unlisted Tata Sons, Tata Digital, Tata technologies etc. could have been a game changer…not to mention the stupendous rise of its major constituents like Trent & Tata Consumer…
I had been tracking Tata Investment Corporation since almost a decade and gave it a miss thinking I already hold Tata Consumer & Trent and also because of above acquired knowledge. I ignored the power of my independent thinking of the tremendous value in unlisted companies it may hold and also any restructuring within holdings of Tata group companies that may positively surprise…and I paid a heavy opportunity cost so far in terms of both price appreciation & dividend yield!
With independent thinking we can build wealth in companies we are comfortable with to ride…and I missed riding this one so far…
EDIT: This story strongly corelates with one of my first story in this thread of a stock (Tata Communications) I liked, invested and sold early because of acquired knowledge and external noise.
Disc: Not invested in Tata Investment. Tracking it since a decade. Post only for academic purposes & learning. Not eligible for any advice. Not a buy/sell recommendation.
As usual my portfolio stocks did not move much today as neither they are momentum based nor the key economy facing nation building sectors.
It is on these very days that you get a feel that at least some part of the portfolio should be in momentum, in fancy sectors or economy facing ones.
The transition is not easy but ideally would have liked to have a 10% exposure to excellent businesses in such sectors, maybe 1-2 companies would suffice.
I had even chosen my top picks but failed to latch on to them in last year or so…
Meanwhile, my stocks are also doing fine, if not great…but thats the way they are meant to perform…slow and steady and hopefully they continue to do that…
Current portfolio looks like below. Have excluded some 1% picks which I may weed out gradually except maybe Spencer Retail…
Some minor changes to percentages might have happened because of run up of Trent and some selling of HDFC Life for need of funds.
Company
Percentage
Tata Consumer
15
ITC
11
Trent
9
Pidilite
8
Marico
7
Midcap IT
6.5
Godrej Consumer
6
HDFC Life
6
United Spirits
4
Nestle
3
Dabur
2.5
Avenue Supermarts
2.5
Asian paints
2.5
Britannia
2.5
HDFC AMC
2.5
SBI Life
2
United Breweries
2
Agro Tech Foods
2
Hitachi Energy
2
3M India
2
Disc: Invested & Biased. Not a buy/sell recommendation. Not eligible to give any advice. Post only for academic purposes and learning. I can be wrong in all my assessments.
Your current portfolio has all the hallmarks of a consistent compounder portfolio. Most of these are stocks with a long runway for growth, high ROE businesses, high PE businesses. Those holding these kind of portfolios need a special kind of mindset. They have a long holding period, usually 5-10 years and have the ability to go through temporary periods of underperformance and pain.
The current market is a typical risk on market, where companies which were earlier perceived to be “poor quality or inferior quality” , those with questionable pasts, with promoters with somewhat questionable reputations, which have not done anything till now, govt companies which had long been out of favour, (and other similar attributes) are those in focus. In such a scenario the consistent compounder kind of companies will not perform as well as the above mentioned kind of companies.
But nothing lasts for ever. Even above kind of high quality companies will someday have their day in the sun and start performing. These had a great run post the 2018 market correction when small and midcaps were decimated and these kind of high quality companies kept going up inspite of crazy valuations. Current period of time seems to be a period of rest for these kind of companies.
@Investor_No_1
It is difficult to have this kind of portfolio with steady compounders.
This is the portfolio of mature investor who can hold onto such high ROE, high PE businesses for a very long time.
For most of us, buying low to moderate PE stocks and Selling those once overvalued with time horizon of 2-3-4 years is the norm.
Your portfolio will not go up as as much as SENSEX/NIFTY as those are mostly Low Beta stocks (except HDFC AMC, SBI Life, Mid cap IT), but during massive downfalls they will protect your downside.
I believe in the long run, if you protect the downside well, you will do better than Index.
Trent has been one of my best investments in last few years in terms of price & allocation ( although wanted more allocation to begin with) Yesterday I was discussing its story in my case with someone close as my tryst with Trent dates back to 2012 although didnt invest then…will certainly reply back with this story to provide my perspective…
) and Radico’ you already knew about! So?