ValuePickr Forum

Southern_Cross's Portfolio

Hi Mates,

I humbly request you to go through my portfolio and provide me your views so that I can learn and course correct my investing journey for better.

I also would like to take this opportunity to thank the VP admin team members and also the ones who developed screener.in. Kudos to you all for raising a platform like this where people like me can benefit a lot by going through the forums.

Behavioural Finance

I strongly believe everyone has to understand their investing style first to leverage their strengths. In my opinion, capitalizing on your strengths is more rewarding than spending more time to improve on your weakness.

My business chemistry is – 37% Pioneer and 35% Integrator. It reflects my investment style which is more biased towards narratives rather than numbers.

As a pioneer, I like to see the bigger picture first and then try to weave the different possibilities around it before marrying the story with numbers.

My investing decisions are mostly driven by options analysis(compared with FD, MF etc) and I try to look from portfolio perspective rather than stock specific as sectors move from tailwinds to headwinds and vice versa.

Portfolio

Sr. No Company Sector Capitalisation Allocation % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 9% Financialization theme
2 BSE Limited Financial Small Cap 9% Financialization theme
3 ABBOTT INDIA LIMITED Healthcare Mid Cap 8% Coffee Can
4 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 8% Promising sector for future
5 DR. LAL PATHLABS Limited Healthcare Mid Cap 6% Coffee Can
6 LAURUS LABS LIMITED Healthcare Mid Cap 5% Sector Tailwind
7 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 5% Coffee Can
8 HCL TECHNOLOGIES LIMITED Technology Large Cap 4% Coffee Can
9 Bharti Airtel Limited Communication Large Cap 3% Promising sector for future
10 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 3% Coffee Can
11 BANDHAN BANK LIMITED Financial Large Cap 3% Coffee Can
12 PSP PROJECTS LIMITED Construction Small Cap 3% Asset Light business in construction
13 NMDC LIMITED Metals Mid Cap 3% Almost monopoly, debt free, value
14 AVENUE SUPERMARTS LIMITED Services Large Cap 2% Long term retail play, debt free
15 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
16 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
17 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
18 LUPIN LIMITED Healthcare Large Cap 2% Coffee Can
19 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
20 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 2% Coffee Can
21 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 2% Growth
22 CUPID LIMITED Healthcare Small Cap 1% Value
23 TITAN COMPANY LIMITED Cons Durable Large Cap 1% Long term sector growth, debt free
24 RELIANCE INDUSTRIES LIMITED Energy Large Cap 1% Long term retail & telecom play
25 MANAPPURAM FINANCE LIMITED Financial Mid Cap 1% Sector Tailwind
Stocks
Top 5 39%
Top 10 60%
Top 20 83%
Top 25 90%
Sector Split
Financial 33%
Healthcare 23%
Communication 11%
Chemicals 6%
Services 5%
Engineering 5%
Technology 4%
Metals 3%
Construction 3%
Textiles 3%
Energy 1%
Cons Durable 1%
FMCG 1%
Market Cap
Large Cap 32%
Mid Cap 36%
Small Cap 32%
Sectors
Top 3 67%
Top 6 83%

I read Coffee Can Investing book written by Saurabh Mukherjea and his team. The coffee can stocks in my portfolio are bought based on this book to start the game with relative safety.

For all the other stocks, I have mentioned the rationale in short text but will expand if needed.

Here you can find the links to my analysis of top 2 holdings

HDFC AMC - HDFC Asset Management Company

BSE Limited - BSE (Bombay Stock Exchange)- Bet on Financialization?

The idea is to move towards a concentrated portfolio, in the sense that 90% of PF present in top 15 stocks. This is in progress and as my conviction increases, I would like to achieve the same.

I have 10% of my PF in stocks which are less than 1%. These are mostly for tracking and also the losers and value buys where conviction is not very much high.

Regarding the sector weightage, the percentages for financials are high and I am planning to bring it below 30. I would like to ride healthcare sector with higher weightage than normal(< 15%) as it has sector tailwind but not exceed more than 25%.

Investing Objectives –

  1. Return of Capital
  2. Beat BSE Sensex in terms of CAGR
  3. Beat FD returns
  4. Beat MF(direct) returns (16% CAGR so far)
  5. Reach 15% CAGR

So far, I am able to succeed in only first two objectives.

Looking forward to your views/suggestions.

Best Regards

9 Likes

You seem to be having a good set of stocks in your portfolio. Could you add some light on why you have higher allocation in BSE (9%) and Sterlite (8%)?

Background: Honestly I don’t have much idea about both of these companies but have a thought that BSE is losing share to NSE and Stelite is a cyclical business. So want to understand you views on them.

@Southern_Cross

Thanks for your message. Find enclosed my view on your portfolio.

  1. I would suggest if you can make your portfolio 15-20 companies. Currently, it appear very diversified and not sure how much time you have to track the companies. So one suggestion to streamline current company list and reduce same to 15-20 companies if possible at your end.
  2. You have nearly 33% weight to financial sector. I would suggest if you can look at reducing number there. In case of BSE, I just feel that they are lossing into there core business. All the blue and red graph in presentation (showing market share of BSE in segments) are at whims of other player. Moment NSE realise that business is catching up and they want to move forward, it would eliminate BSE from that business. For instance, in case of Insurance business, BSE star, what if NSE come with waiver of fees for 1-2 years? NSE has deeper cashflow pockets and BSE is raising money only from tiny monopoly business (unique listed companies and transaction fees). The only stack holder which are adversely affected are consumers. Not a very good situation in my view. Also, management charges are reasonably high given the performance in my view. HDFC AMC, please evaluate threat of index investing.
  3. In case sterlite, the management can provide more shocks to investor than what one can anticipate, going by past track record. Please also look at technology obsolence risk, while company is good, management can take very nasty decisions at time. Please check whether you are willing to take those shocks.
  4. Gold loan appear very consensus trade. While going its good, be prepared form cyclical turn in this industry and also likely increased competition from other players.

Other companies are good. Except, PSP (I do not have any understanding) in my view. My view may be biased and I have pathetic forecast record. Please keep that point while reading this message. Try to develop your investment framework and update same with new learning. For instance, my investment framework, free cash flow generating business growing at 15-20% for next 3-5 years, with limited debt and dividend paying, ethical managment and “REASONABLE” value.

Wish you all the best for future investment journey !!!
Discl: None of above companies are among my Core investment holding. (BSE I sold out in March 2020).

1 Like

Great, I would suggest to real all Peter Lynch books, specifically one up on wall street, to understand true essence of Coffee can (and various other) investing, if not already. Thanks and good luck!

Re-look at your sector allocations. you need not have to allocate in all sectors to diversify.
Even I did same mistake earlier where I lost heavily in sectors like Metals, Construction/Infra, Power, textiles etc. Then I realized its better to be in consumption based sectors or B2C companies or companies/sectors where I can easily understand.

Check if your story is still intact in companies like Sterlite, Cupid, BSE, NMDC, GATEWAY DISTRIPARKS LTD etc and if they still grow in the long term.? some may yield good dividend but they do not create long term wealth.

Hi,

Firstly the top 7-8 allocations are quite good. But among them, I would not put in stocks like bse (which has not demonstrated an inspiring track record till date), or sterlite tech (which is a bit iffy on management front and is some what of a cyclical)…

I would prefer to see a dominant name from pharma space, say something like alkem, or cipla or alembic etc.

You can also gradually scale up allocation to sector leaders like hdfc bank, page inds, titan, reliance etc as and when the tide turns for them post the impact of corona.

The 25 stocks you have selected are also a good bunch of companies and you can focus on 10-12 of them which have dominant business position and or good tailwinds.

3 Likes

For BSE, I have written my analysis here to start with.

It is a duopoly business and I got good margin of safety as I entered into the scrip when it is at its all-time low. Honestly speaking, I would not give it the highest weightage if not for the March carnage & extra ordinary situation we are currently in. The chance of me losing money on this in long term seems to be very less.

Sterlite Technologies - I would say it is one of the first scrips I followed closely. I think I almost followed all the quarterly con calls from last 2 years. I feel after their demerger from sterlite power, their focus has increased. I am clearly aware of their promoter being investor unfriendly.

I will write further about these two in this thread.

Hi Dhiraj,

Here are my answers.

  1. Agree. Like I mentioned in my original post, I would like to see it to 15 companies eventually and some tracking list. Among my coffee can list, Repco Housing Finance which is at the moment is decreased by 70% and so it did not even feature in the top 25 list & LIC Housing Finance is down by 50%. Abbott India gave well over 150% returns. The lesson I learnt is - the housing finance sector which was widely considered to be no risk play when faced with headwinds can go down drastically, especially when it is small cap. To move to a concentrated portfolio, I need to understand the business, have some margin of safety and build strong conviction. I am currently working on this… .

  2. Agree with respect to weightage and would like to consider decreasing it further. Actually, I want to have my Top 10 stocks to be sure that the chance of losing money in these to be very less. This is the reason why BSE ended with 9% weightage. Now why BSE is given this weightage - I have good margin of safety. and so my conviction is high. I completely agree with you on hike of management charges considering their performance so far.

Here is my analysis of BSE.

I think I have become biased in BSE and have to learn to think more objectively.

These are some other things I thought about BSE.

  • When NSE gets listed, people would definitely have to trade in BSE and this way it can help people to get accustomed to trade in BSE and some market share also increases in equity- NSE is valued between 40K to 50K Crores and I am sure there will be more float.
  • The chance of me losing money is very less here as the stock is trading below book value and also the value of BSE building is considered as some 35 cr in book value as against its market valuation of 800 cr which is done some years back
  • India INX value unlocking option - I think it is a hidden asset here. I see more value in monetizing this compared to BSE Star MF
  • The management is trying several things - gold mini options, BSE Ebix Insurance, direct user access which is mentioned during concall, monetizing BSE Star MF etc - I think they want to showcase it like an integrated e-commerce platform and may come with packaged pricing which can attract more traders.
  • SEBI enforcing “Best Price” in place of default NSE for brokers by August end. For example, in HDFC Securities NSE comes as default when I buy/sell a stock.This can change the game in this duopoly business. Need to see the results though.

Regarding HDFC AMC, I think there is some more penetration left for distributors. With Index investing, the fee for distributor will be almost nothing. My analysis about HDFC AMC is covered in the below threads in detail.


  1. I agree with you regarding shocks of Sterlite’s management. In fact, I took a calculated decision of buying it only after seeing their buyback price and investor presentations. I am seeing this more of a trading bet rather than portfolio stock even though the company has many good points after its demerger from Sterlite power in 2016.At the moment, the management cannot go for delisting below 150 as it is the buyback price determined by them.

  2. Agree. Hence, my position is also less here.

Thank you for taking time and sharing your investment framework. I am still working on improving my investment framework.

Cheers!!!

1 Like

Thanks Investor_No_1.

It is in my to-do list. I recently watched this video of him and it is very good.
Infact, I would like to see Peter Lynch kind of fund manager to join HDFC AMC :slight_smile:

2 Likes

Agree. We don’t need to allocate to all sectors for the sake of diversification. Investing on companies/sectors we can understand is certainly the way. Also, many of these cannot be considered portfolio stocks and rather value buys.

Sterlite - This is the company I followed the maximum and fortunately I am still in profit. I am closely following it as anything can happen due to promoter’s reputation. This cannot be portfolio stock though.

Cupid - The main problem here is the promoter’s(also CEO) age and they are still on the hunt for next CEO.from last 3 years. I am planning to take my initial money and keep the rest. Thanks to @dineshssairam for his extensive coverage on this scrip in valuepickr.

BSE - Here I have more conviction and also I have good margin of safety

NMDC - It is trading at very cheap valuation and you are literally getting their 3MTPA steel plant for free. This is very easy business to understand even though there is government interference. Ideally, they should make this wonderful free cash flow business like a crown jewel of PSUs but with unnecessary interest in building nagarnar steel plant, massive amount of money is lost.
See this article where NMDC’s cash equivalent to Market cap was 53% in 2016.

Gateway Distriparks - I recently entered this scrip when it slided below 100. I believe the logistics sector will eventually play out as it is needed for India to move to developed nations category. The recent news about dedicated freight corridor and current CEO investing in the scrip strengthens the conviction. Interestingly, even though the stock has fallen from the year 2015, not even one insider has sold so far.

2 Likes

Hi Hitesh,

I see some action in BSE of late. I got it more like a value buy but will closely track it whether it can deserve to be a portfolio stock. Regarding, the track record of the stock price, I understand the unhappiness of many investors. In fact, two individual investors turned up in last con call and giving suggestions on how to make this scrip better.

I mentioned my analysis in this thread

Regarding pharma, I am investing in DSP Healthcare fund from Dec-2018. Due to recent run up, pharma is at 24% of my overall (Equity + MF) portfolio already and so I am thinking about next promising sector like logistics, telecom etc

Yes. I want to scale up allocation to sector leaders like that.

I aim to eventually move to more concentrated portfolio like you suggested and also have dominant business position / tailwinds.

Thanks for your time and feedback.

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 9% Financialization theme
2 LAURUS LABS LIMITED Healthcare Mid Cap 6% Sector Tailwind
3 BSE Limited Financial Small Cap 6% Financialization theme
4 HCL TECHNOLOGIES LIMITED Technology Large Cap 6% Coffee Can
5 ABBOTT INDIA LIMITED Healthcare Mid Cap 6% Coffee Can
6 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
7 DR. LAL PATHLABS Limited Healthcare Mid Cap 6% Coffee Can
8 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 4% Coffee Can
9 AVENUE SUPERMARTS LIMITED Services Large Cap 4% Long-term retail play, debt free
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 4% Promising sector for future
11 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 3% Coffee Can
12 BANDHAN BANK LIMITED Financial Large Cap 3% Coffee Can
13 KAVERI SEED COMPANY LTD. FMCG Small Cap 3% Promising sector for future
14 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
15 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
16 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
17 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
18 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
19 LUPIN LIMITED Healthcare Large Cap 2% Coffee Can
20 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 2% Growth
21 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
22 JSW Steel Limited Metals Large Cap 2% Sector Tailwind
23 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
24 GRAPHITE INDIA LIMITED Engineering Small Cap 1% Cyclical play
25 RELIANCE INDUSTRIES LIMITED Energy Large Cap 1% Long-term retail & telecom play
Stocks
Top 5 34%
Top 10 58%
Top 20 81%
Top 25 88%
Market Cap
Large Cap 38%
Mid Cap 35%
Small Cap 27%
Sector Split
Financial 29%
Healthcare 22%
Communication 9%
Technology 7%
Chemicals 6%
Engineering 6%
Services 6%
Metals 4%
FMCG 3%
Textiles 3%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

  1. Return of Capital - :+1:
  2. Beat BSE Sensex in terms of CAGR :+1:
  3. Beat FD returns :handshake:
  4. Beat MF(direct) returns (15.5% CAGR so far) :-1:
  5. Reach 15% CAGR :-1:

Recent changes -

  1. I started working on reducing the weightage of Financials and increasing allocation to the scrips I have more conviction. The idea is to keep my top 10 holdings in a way that the chance of me losing my capital should be of least probability. Right now, apart from Airtel, all the other 9 shares are in positive

  2. Even though I found Sterlite to be one of the front runners in taking advantage of digital revolution, the promoter can’t be trusted. Hence, I pared down my stake when the stock was trading at 170 which brought down my buying price to below 60. I am comfortable with this margin of safety and the allocation percentage to this scrip.

  3. Increased allocation to Bharti Airtel as in Buy on dips strategy. Airtel certainly is not in very bad shape like Vodafone Idea. It has the backing of Singtel and operations in Africa which is a turn around story. Airtel Africa’s ARPU is 40% higher than in Airtel India. Right now, Airtel is below half of valuation of what Jio is commanding.

  1. Added more HCL Technologies shares after its recent Q2 results and positive outsourcing commentary from Accenture. Overall, the accelerating digital adoption and HCL’s focus on cloud/IM with positive cues on hiring and salary hikes.

  2. Doubled up Avenue Supermarts after recent results.D-Mart is expanding to B30 cities like Warangal and they have a huge runway left. Here in Australia where I stay, there are two supermarkets by name Coles & Woolworths. After capturing the market, they are having almost every product with in-house label. It starts with stacked chips(very similar to Pringles) to batteries to cheese/rice. Backed by a fantastic investor as promoter and with its operational efficiencies in offline retail, the conviction is high.

  3. Added more shares of NMDC after looking at global trends of iron ore price and traction in steel sector due to helicopter money, added to the comfort there is significant undervaluation of NMDC. However, soon the states started demands for more royalty and I sold the shares whatever I bought recently. Overall, the lost the profit I got in NMDC by way of dividends due to this.

  4. Added some shares of HEG & Graphite India. With so much of helicopter money spread across, there can be a chance of supply/demand mismatch for graphite electrode.

  5. After Cupid became 2X, I sold half of the shares and made the rest as zero cost. Promoter’s age is an overhang there.

  6. Added Kaveri Seed Company looking at the agri economy demand pick,annual report and reading valuepickr threads

1 Like

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 10% Financialization theme
2 LAURUS LABS LIMITED Healthcare Mid Cap 9% Growth
3 AVENUE SUPERMARTS LIMITED Services Large Cap 6% Long-term retail play, debt free
4 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
5 BSE Limited Financial Small Cap 6% Financialization theme
6 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 5% Coffee Can
7 DR. LAL PATHLABS Limited Healthcare Mid Cap 5% Coffee Can
8 ABBOTT INDIA LIMITED Healthcare Mid Cap 5% Coffee Can
9 HCL TECHNOLOGIES LIMITED Technology Large Cap 5% Coffee Can
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 3% Promising sector for future
11 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 3% Coffee Can
12 BANDHAN BANK LIMITED Financial Large Cap 3% Coffee Can
13 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
14 KAVERI SEED COMPANY LTD. FMCG Small Cap 2% Promising sector for future
15 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
16 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
17 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
18 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
19 JSW Steel Limited Metals Large Cap 1% Sector Tailwind
20 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 1% Promising sector for future
21 LUPIN LIMITED Healthcare Large Cap 1% Coffee Can
22 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
23 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 1% Growth
24 LIC HOUSING FINANCE LTD Financial Mid Cap 1% Coffee Can
25 TITAN COMPANY LIMITED Cons Durable Large Cap 1% Long-term retail play, debt free
Stocks
Top 5 38%
Top 10 62%
Top 15 75%
Top 20 84%
Market Cap
Large Cap 39%
Mid Cap 36%
Small Cap 24%
Sector Split
Financial 28%
Healthcare 23%
Communication 10%
Services 9%
Technology 6%
Chemicals 6%
Engineering 5%
Metals 4%
Textiles 3%
FMCG 2%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

  1. Return of Capital - :+1:
  2. Beat BSE Sensex in terms of CAGR :+1:
  3. Beat FD returns :+1:
  4. Beat MF(direct) returns (17.8% CAGR so far) :-1:
  5. Reach 15% CAGR :-1:

Recent changes -

  1. Added more shares of Laurus Labs in dips after checking Q2 FY21 results.
  2. Added some more shares of Avenue Supermarts at the same time.
  3. Cleared some tail which are less than 1%
  4. The top 15 stocks account for 75% of the portfolio. Eventually, I would like to move it to 90% but not so soon.
1 Like

Here is the latest portfolio.

Sr. No Company Sector Capitalisation Allocation Rationale
1 LAURUS LABS LIMITED Healthcare Mid Cap 10% Growth
2 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 10% Financialization theme
3 AVENUE SUPERMARTS LIMITED Services Large Cap 6% Long term retail play, debt free
4 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
5 BSE Limited Financial Small Cap 6% Financialization theme
6 HCL TECHNOLOGIES LIMITED Technology Large Cap 5% Coffee Can
7 ABBOTT INDIA LIMITED Healthcare Mid Cap 5% Coffee Can
8 DR. LAL PATHLABS Limited Healthcare Mid Cap 5% Coffee Can
9 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 5% Coffee Can
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 3% Promising sector for future
11 BANDHAN BANK LIMITED Financial Large Cap 3% Coffee Can
12 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 2% Coffee Can
13 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
14 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
15 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
16 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
17 KAVERI SEED COMPANY LTD. FMCG Small Cap 2% Promising sector for future
18 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
19 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
20 GRAPHITE INDIA LIMITED Engineering Small Cap 2% Cyclical play
21 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
22 JSW Steel Limited Metals Large Cap 1% Sector Tailwind
23 LUPIN LIMITED Healthcare Large Cap 1% Coffee Can
24 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 1% Growth
25 LIC HOUSING FINANCE LTD Financial Mid Cap 1% Coffee Can
Stocks
Top 5 39%
Top 10 62%
Top 15 74%
Top 20 83%
Market Cap
Large Cap 38%
Mid Cap 37%
Small Cap 25%
Sector Split
Financial 28%
Healthcare 24%
Communication 9%
Services 9%
Chemicals 6%
Engineering 6%
Technology 6%
Metals 4%
Textiles 3%
FMCG 2%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Beat MF(direct) returns (21.8% CAGR so far) :-1:
Reach 15% CAGR :-1:

  1. No changes in stocks addition from last portfolio update.
  2. Stopped MF SIPs
3 Likes

Happy New Year.

Here is the latest portfolio.

S. No. Company Sector Capitalisation Alloc. % Rationale
1 HDFC ASSET MANAGEMENT COMPANY LIMITED Financial Large Cap 11% Financialization theme
2 LAURUS LABS LIMITED Healthcare Mid Cap 10% Growth
3 AVENUE SUPERMARTS LIMITED Services Large Cap 7% Longterm retail play, debt free
4 Bharti Airtel Limited Communication Large Cap 6% Promising sector for future
5 BSE Limited Financial Small Cap 6% Financialization theme
6 HCL TECHNOLOGIES LIMITED Technology Large Cap 6% Coffee Can
7 ASTRAL POLY TECHNIK LIMITED Chemicals Mid Cap 5% Coffee Can
8 DR. LAL PATHLABS Limited Healthcare Mid Cap 5% Coffee Can
9 ABBOTT INDIA LIMITED Healthcare Mid Cap 4% Coffee Can
10 STERLITE TECHNOLOGIES LIMITED Communication Small Cap 3% Promising sector for future
11 BANDHAN BANK LIMITED Financial Large Cap 2% Coffee Can
12 NMDC LIMITED Metals Mid Cap 2% Almost monopoly, debt free
13 MUTHOOT CAPITAL SERVICES LIMITED Financial Small Cap 2% Coffee Can
14 GATEWAY DISTRIPARKS LTD. Services Small Cap 2% Promising sector for future
15 PAGE INDUSTRIES LIMITED Textiles Mid Cap 2% Coffee Can
16 HDFC BANK LIMITED Financial Large Cap 2% Coffee Can
17 KAVERI SEED COMPANY LTD. FMCG Small Cap 2% Promising sector for future
18 PSP PROJECTS LIMITED Construction Small Cap 2% Asset Light business in construction
19 L&T TECHNOLOGY SERVICES LIMITED Engineering Mid Cap 2% Promising sector for future
20 GRAPHITE INDIA LIMITED Engineering Small Cap 2% Cyclical play
21 AMARA RAJA BATTERIES LIMITED Engineering Mid Cap 1% Coffee Can
22 JSW Steel Limited Metals Large Cap 1% Sector Tailwind
23 LUPIN LIMITED Healthcare Large Cap 1% Coffee Can
24 LIC HOUSING FINANCE LTD Financial Mid Cap 1% Coffee Can
25 SBI CARDS AND PAYMENT SERVICES LIMITED Financial Large Cap 1% Growth
Stocks
Top 5 39%
Top 10 62%
Top 15 74%
Top 20 83%
Market Cap
Large Cap 40%
Mid Cap 36%
Small Cap 25%
Sector Split
Financial 28%
Healthcare 22%
Communication 10%
Services 9%
Engineering 6%
Chemicals 6%
Technology 6%
Metals 4%
Textiles 3%
FMCG 2%
Construction 2%
Energy 1%
Cons Durable 1%

Investing Objectives –

Return of Capital - :+1:
Beat BSE Sensex in terms of CAGR :+1:
Beat FD returns :+1:
Reach 15% CAGR :+1:
Beat MF(direct) returns (24.3% CAGR so far) :-1:

No changes to existing portfolio from last portfolio update and not planning to add any new companies for coming months.

What’s next? –

  1. Apart from tracking, I would like to spend time in learning about business cycles and global commodity cycles.
    Commodity and Cyclical Plays

  2. Read some books to enhance knowledge - right now, reading “Selfish Gene” by Richard Dawkins
    Thanks to the below thread and @phreakv6 , I find plenty here.
    Multi-Disciplinary Reading - Book Reviews

  3. Work on valuation models and define better exit strategy

Where did I lose money in my investments? - Bandhan Bank, HEG, 8K Miles, Olectra Greentech, Muthoot Capital Services, Repco Home Finance, Yes Bank

Why did I lose money?

Bandhan Bank - I actually bought Gruh Finance and as part of merger with Bandhan Bank, received equivalent shares of Bandhan Bank. Gruh is one of the consistent compounder and I never bothered about its valuation during my first entry as I just wanted to buy the Coffee Can Portfolio shares and observe whether the thesis of Coffee Can really plays out. The risk of MFI component (more than 60%)with Bandhan Bank and losing the brand of HDFC’s stable have a significant change of investment thesis. Original thesis is housing finance investment and now, housing finance component is just around 30% in Bandhan Bank. What I observed is the bias of supporting my investment and so started adding all the positives to it and never did I have really an exit strategy in place. This loss is close to 1% of my PF. Bandhan certainly is good company, I just need to identify when to enter and when to exit.

HEG - I was just looking at the cash generated by this cyclical company and all those traditional metrics like PE,CFO etc and never ever thought of what can go wrong with this company. The main lesson is - for a cyclical company, it usually is the case that we need to sell the company before it is trading in its lowest PE or it in other words, it is near its peak. I added some more shares of it few months back when I found the global cues are in favour of steel cycle based on my scuttlebutt. I am hoping this time I am playing the cycle right. However, my allocation is 1% here and this serves as learning. This loss accounts to 0.7% of PF.

8K Miles - One of my blunders and I kept some shares of it in my demat just to remind me of my foolishness. In fact, I was tracking from its price of 810 and entered only at 330 with around 10% of portfolio at that time. I sold 50% after it reached 100. The integrity of the promoter is so important and here it is missing. Like, 90%. It was itching to put another 5% when it has fallen continuously. I discussed with my wife and showed her my investment thesis. She told me to not allocate any further. Even though she is not in stock market and also not much knowledgeable in financial assets, I do this to remind myself that I am accountable and have someone to answer. This loss accounts to 1.5% of PF.

Olectra Greentech - I did very good research of this. I see big opportunity size and new promoter is among one of the top 50 richest persons in India and been a major player in infrastructure. This has best technology(BYD is the partner), money muscle of promoter and huge opportunity (Electric buses). Their Opex model of operating buses is also very good. However, it is B2G and there is China angle as the most important parts like battery etc comes from China. I exited with 55% loss. I still track this but with pandemic, my assumption is government will not keep aside cash for incentives like FAME. As it is B2G, the chance of success also becomes difficult. This loss accounts to 2% of PF.

Muthoot Capital Services - The company is certainly good. The management is very good. Only, thing bad is my timing of entering this stock. During the crisis, when the stock has fallen to sub 300, I averaged it. After the news of rural economy pick up and rise in auto sales, especially in 2W, I feel this is right investment. The comfort is it is consistent with its sales growth for 10 years and so it is part of coffee can. This loss accounts to 1.5% of PF.

Repco Home Finance - Bought this as part of Coffee Can stocks and it is small cap. The positive thing at this point of time is, there is some traction in housing market. I did not average it. Currently, at 50% loss. Allocation is less than 0.5% of PF.

Yes Bank - I invested in Yes bank for a buy price of 292 as part of tracking. Having seen the 8K miles and the touch of falling knife, I never wanted to put money in Yes bank but was tracking it where it can finally end. There were a couple of positive news like SBI and other banks providing support, Ravneet Gill’s comforting words but somehow I always had this doubt in my mind. How many people would like to put their FDs in a bank which has tarnished image even if they give higher interest? After institutions came on board, especially Amansa holdings invested some 4000 crores at 12 rupees per share, I found some interest and bought some shares at 11.2 rupees. The allocation is still less than 0.5% of PF.

3 Likes

Hi
Just my thoughts on your PF.
Stocks I like HDFC AMC,HCL Tech,Astral poly,Abbott india,Page ind,Hdfc bank,LTTS,PSP are great pick.
My comments :-
JSW steel,NMDC :- Metal until we know when to enter and when to exit its difficult to track and understand cycle. If strategy hold and sit tight long time then this kind of stock will derail returns.
Kaveri seeds,Graphite: This also look cynical. If allocation is less you can increase same on other company as 1 or 2% don’t feel much advantage.
Lupin: 1% with pharma side they constantly disappointed growth side last few years. You can increase Laurus or abbott instead of keeping one stock with 1% allocation.
SBI parents available cheap and any day SBI is PSU. SBI cards may look good but any policy change may come from govt and promoter is prone to govt intervention. In future sbi if need money they may need to dilute SBI life or SBI cards to cover NPA mess.
Exide I like much better than AMAR raja and again 1% allocation is kind of may not return PF return.
If you wish instead of BSE which going doldrums in volume of transaction, consider CDSL for financial theme. Most discount broker have CDSL and volume /transaction looks good. Bse losing market share gradually.
Instead of Muthoot,Bandhan stick with prominent player, since you have HDFC bank, how abt kotak? Why two small ant instead of having big elephant in portfolio and have great visibility with credible promotor.

its your wish but I will have minimum 5% single stock portfolio and instead of many 1-2% will sell in this market high time and increase allocation to top picks.

4 Likes

Hi Ranjith,

Thanks for the detailed comments. Here is my response.

Totally agree. I am closely tracking this sector and will not see this as buy and hold.

Right. These companies are cyclical and so will not fall under long term holding. We need to seize the opportunity and get out. I am actually doing the same. Regarding the allocation, I think I am still not that confident in playing cyclicals. Consider that I am in learning stage, trying to understand the game. Once I get a good hold of cyclicals, that’s where I think I can go for higher allocation.

For example, NMDC is going to give a very good Q3 result considering the fact that there is increase of both volumes and iron ore price. In December itself, NMDC hiked the price from Rs.4000 per ton to Rs.5700 per ton. The iron ore price was around Rs. 2600 per ton in March 2020. Most of the sales increase due to iron ore price increase is going to add to the bottom line as NMDC does not have any vendors to pass the price benefit.

Basically, I bought all these as part of Coffee Can. So, these were one of those 12 companies where sales have grown every year by some 10% consistently. From what I understand from Saurabh Mukherjea in the book - Coffee Can Portfolio, In a period of 10 years, not all years a stock can give positive returns. May be 4 or 5 times in 10 years they give and then there is sector rotation. I see coffee can stocks as a basket and so unless something extra-ordinary comes, may not sell any of the original allocations till 2028.

Yes, SBI is at a very cheap valuation. I was actually probing on why HDFC AMC funds were not performing. One of the big allocation companies is SBI. So, then I started reading about SBI and its subsidiaries and bought some shares at 183. SBI has fantastic subsidiaries(SBI cards, SBI Life, SBI Capital, SBI MF,SBI Pension funds etc) and also not many people know that SBI & by way of its subsidiary SBI Capital has around 8% stake in NSE which is hovering around 50,000 Crore market cap in unlisted form. However, based on the same rational you mentioned I sold SBI at 240. Eventually, I think I will also sell SBI cards. This is the reason why I did not add/average after IPO.

My rational for BSE is written here.

The current market cap is 2832 crores. The cash equivalents are 1843 cr as per screener.
BSE’s stake in CDSL(5500 crores market cap) is 20% - 1100 cr. Let’s give holding company discount of 50% - 550 cr. India Inx, which is its subsidiary at GIFT city was valued at 300 cr by ICICI. Currently, BSE has 90% stake.
BSE Star MF which is like a part of its business is commanding around 2000 cr as per below article. Let’s give 1000 cr as a lesser estimate.

Basically, what I would like to convey from these calculations is - there is very less chance of downside here. On the upside, it can give me disproportionate returns if India INX and Star MF clicks. Right now, I am at 50% profit which is giving me some valuation comfort.

Regarding opportunity cost, like why not invest in a consistent compounder like Abbott India? Or why not a B2C companies like Godrej Consumer products, Marico, Dabur, Nestle India, Britannia, HUL etc.? Yes, I do get these doubts time and again. the answer I get is I have to understand valuation and business cycles properly and that’s what I am going to do now.

Regarding allocation of minimum 5%, I completely agree and it is in progress.

Apologies in case of lengthy writing.