Here is the portfolio update for January 2022
| Sr. No | Company | Sector | Capitalisation | Alloc % | Rationale |
|---|---|---|---|---|---|
| 1 | HDFC ASSET MANAGEMENT COMPANY LIMITED (XNSE:HDFCAMC) | Financial | Large Cap | 10% | Financialization theme |
| 2 | BSE Limited (XNSE:BSE) | Financial | Small Cap | 8% | Financialization theme |
| 3 | AVENUE SUPERMARTS LIMITED (XNSE:DMART) | Services | Large Cap | 8% | Long-term retail play, debt free |
| 4 | HCL TECHNOLOGIES LIMITED (XNSE:HCLTECH) | Technology | Large Cap | 8% | Coffee Can |
| 5 | LAURUS LABS LIMITED (XNSE:LAURUSLABS) | Healthcare | Mid Cap | 7% | Growth |
| 6 | OLECTRA GREENTECH LIMITED (XNSE:OLECTRA) | Automobile | Small Cap | 7% | EV theme |
| 7 | DR. LAL PATHLABS Limited (XNSE:LALPATHLAB) | Healthcare | Mid Cap | 7% | Coffee Can |
| 8 | DEEPAK NITRITE LIMITED (XNSE:DEEPAKNTR) | Chemicals | Mid Cap | 6% | Growth |
| 9 | ASTRAL LIMITED (XNSE:ASTRAL) | Chemicals | Large Cap | 5% | Coffee Can |
| 10 | NAZARA TECHNOLOGIES LIMITED (XNSE:NAZARA) | Technology | Small Cap | 5% | Promising sector for future |
| 11 | ABBOTT INDIA LIMITED (XNSE:ABBOTINDIA) | Healthcare | Mid Cap | 4% | Coffee Can |
| 12 | PSP PROJECTS LIMITED (XNSE:PSPPROJECT) | Construction | Small Cap | 4% | Asset Light business in construction |
| 13 | TITAN COMPANY LIMITED (XNSE:TITAN) | Cons Durable | Large Cap | 4% | Long-term retail play, debt free |
| 14 | GATEWAY DISTRIPARKS LTD. (XNSE:GDL) | Services | Small Cap | 3% | Promising sector for future |
| 15 | JBM AUTO LIMITED (XBOM:532605) | Automobile | Small Cap | 3% | EV theme |
| 16 | PAGE INDUSTRIES LIMITED (XNSE:PAGEIND) | Textiles | Mid Cap | 2% | Coffee Can |
| 17 | INDIAN ENERGY EXCHANGE LIMITED (XNSE:IEX) | Services | Mid Cap | 2% | Growth |
| 18 | HDFC BANK LIMITED (XNSE:HDFCBANK) | Financial | Large Cap | 2% | Coffee Can |
| 19 | Fsn E-Commerce Ventures Ltd (XNSE:NYKAA) | Services | Large Cap | 1% | Growth |
| 20 | LUPIN LIMITED (XNSE:LUPIN) | Healthcare | Mid Cap | 1% | Coffee Can |
| Stocks | |
|---|---|
| Top 5 | 42% |
| Top 10 | 72% |
| Top 15 | 91% |
| Top 20 | 99% |
| Market Cap | |
|---|---|
| Large Cap | 38% |
| Mid Cap | 30% |
| Small Cap | 31% |
| Sector Split | |
|---|---|
| Financial | 21% |
| Healthcare | 19% |
| Services | 15% |
| Technology | 13% |
| Chemicals | 12% |
| Automobile | 10% |
| Cons Durable | 4% |
| Construction | 4% |
| Textiles | 2% |
Investing Objectives –
Return of Capital - 
Beat BSE Sensex in terms of CAGR
Beat FD returns
Reach 15% CAGR
Beat MF(direct) returns (25.4% Vs 23% CAGR) 
Changes -
- Increased allocation to Dr. Lalpath labs and a little to HDFC AMC, Olectra, Nazara, Nykaa and PSP Projects
- Added JBM Auto and with this Auto sector allocation comes to 10%
- Did some profit booking of BSE Limited
- Sold off majority of tracking positions
Notes -
-
The MF portfolio CAGR is down by 1.4 where as stock PF is down by 2.5
-
The defensives Pharma and Technology have fallen the most
- HCL Technologies, Dr Lalpath labs, Abbott India, Nykaa have fallen more than 10%
-
Read “The Warren Buffett Way” and really impressed with it - captured notes here
- The book explains about the 12 tenets Warren Buffett uses to select a business to invest
- The first principles are very important in investing and if we have them correct, much of the risk will be out of the way. The psychology of investing and value of patience are something as important as business analysis and valuation
- The book makes a case for focus investing and also how long-term thinking reduces the risk of losing money and does best for wealth creation. To be clear, this is not the only way to generate wealth.
- The efficient market theory says the stocks are valued perfectly and it is almost impossible to beat the market. If we translate this to individual investor case, System 1 thinking (Quick process based on intuition and general information) will not be sufficient to beat the market and to beat the market, you need to bet against the existing valuation which is possible with System 2 thinking(Slow process based on profound business analysis, connect the different mental models and should fall under investment category and not speculation). System 2 thinking needs one to dedicate more time to master the arts of valuation, patience, portfolio management, constant learning, investment psychology and lots of reading. So, if we cannot imbibe System 2 thinking, its better to go with index investing where your time is not much required and at the same time, you will be able to get satisfactory returns of 12-15% and if we can take advantage of some market corrections, can get 15% CAGR. In 30 years, it will translate to 66 times your capital. Now, with System 2 thinking, if we generate 18% CAGR, it gives you 142 times and for 20% CAGR, it gives you 237 times your capital. So, the incentive is there in System 2 thinking, whether you have the intent matters. As per Buffett and the author, you don’t need high IQ to beat the index but interest and hard work to beat the market.
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Charlie Munger compares investing to Parimutuel betting
- With a greater degree of certainty we can assume, Titan or HDFC Bank or Avenue Supermarts will generate 10-12% CAGR. However, the goal is to achieve15% or more. Hence, the need to take calculated risk in Mid and Small Caps. How can I reduce the risk? Understand more about the company and sector and enhance accounting skills, technical analysis and valuation.
Interesting Videos -
A thorough understanding of Indian diagnostic sector and Dr Lalpath Labs MD - Om Manchanda explains the business. If someone is holding Dr Lalpath labs, this gives a better understanding of their business model and moats. Saurabh Mukherjea has asked all the appropriate questions. The Return on Invested Capital(ROIC) is 90% for this business… and within a market of 80,000 Cr, the organised pathlabs like Dr. Lalpath labs are constituting only 6% market share.
Pranjal Kamra explains in this video about how things are going to change in metaverse world. It may or may not happen but there are cues on what else is possible in virtual world
In this video, Saurabh highlights the monopolist characteristics. Also,the incentive bias which differentiates a company which has higher technology, greater market reach losing to others inspite of great valuation comfort.