The Clockwork Portfolio

Q&A: Questions & Answers Portfolio Q&A
1

Dear All

Please find attached my portfolio .. I hope for guidance to my confusion..â

Company

#

Percentage

Avg Price

Eicher Motors

6

11.85%

6,283.32

La Opala

4

10.07%

978.38

Ajantha Pharma

6

9.74%

1,232.86

Atul Auto

4

9.34%

432.44

Shilpa Medicure

2

7.45%

485.68

Page Industries

4

7.18%

6,783.52

Avanti Feeds

2

6.96%

1,342.04

Anu Pharma

1

6.58%

354.00

Shriram

1

5.79%

1,605.00

Vinyl Chem

1

5.35%

29.00

Amara Raja

2

4.93%

406.43

Astral Poly

1

4.12%

678.00

Eclerx

1

3.98%

1,125.00

ITC

3

2.85%

324.97

Asian Paints

3

1.86%

491.96

TCS

1

1.43%

2,410.00

PSUBNKBEES

1

0.52%

298.11

Some Background..

I started about 4 years ago taking brokerage advice.. didnt really work out very well.. So I restarted again via Mutual funds moving into stocks again 1 1/2 years ago, reading up and then investing slowly. I ended up adding Asian Paints, Ajantha, TTK Prestige , Eicher, Page ( probably more luck then skill ). I discovered the ocean of VP a few months ago just when I started dispairing at how to pick up stocks at a reasonable rate. I am still trying to learn from all of you since it seems that VP is the forge in which I have to retrain my thought processes.

So some questions to those here far more experienced if you wouldnt mind:

Limiting my purchases: How do i limit my portfolio when i see growth possibilities in so many companies I have read limiting your portfolio increases your return but like the proverbial butterfly I fear flitting from new hot stock to new hot stock.

Choosing between High Cost Proven Performers:A company like Page has shown it's abilities but is currently off it's highs ( I overpaid ) should I pick up more or should i go with Eicher that keeps moving up .. both are long term performers, how do I choose between the two?

Choosing between High cost proven Performers and Low cost high potential companies: With markets pe numbers moving up fast, i have been scouting for lower PE companies ( while adding to my high PE stocks eg. Eicher). How do i capital allocate between the high cost proven high potential stock and the low cost high possibility stock? I have seen Donalds post on how, in some stocks, prices have captured the future earnings and that's when one ought to walk away. I am at a loss on how to do that.

Thanks in advance, Any and all comments will be welcome..

2

Thought I would try one more time :slight_smile:

Any suggestions on the portfolio?

Thanks!

Sanjay

3

One Clarification: Shriram refers to Shriram City Union… :slight_smile:

4

Most of your stocks are established ones with good earning visibility but very low probability of PE expansion as they are at very high PE multiples. if you are an active investor with a longer time horizon, you should create a portfolio where in you have stocks with possibilities of re-rating with decent earning growth. You have entered at good price in some of your stocks, you can keep them and see if you would like to reshuffle some of them.

5

**Aksh **, Any re-rating candidates which are on your watch list?

6

The idea of limiting your portfolio is that you can bet bigger and get a reasonably good returns with known risks as against spreading your bets into 10+ stocks with varying degree of risks and returns. One question you must ask is how serious are you about your stocks? If one is really serious then you tend to have 50%+ of your net worth (not including the house you live in). When I have that much of money put into equities I will go for fewer and surer bets it could even mean that the stock is discovered and trades at a high trailing PE. If a high quality stock trades at high PE it only becomes expensive over a period of time and that is what makes us money.

Choosing between two high cost performers: I would say it doesn’t matter provided both the companies are also high quality. Just go with the one that you understand better.

Choosing between High cost proven Performers and Low cost high potential companies: Do not look for lower PE companies. Look for lower market cap companies which has a huge scale of opportunity in front of it and is available at a reasonable valuation (it is unlikely they will be available for low PE), good RoE and honest owners.

1 Like
7

@aware,

I’m invested in RS Software, Mold-tek, HMVL, Premco Global, Munjal Showa, Avanti Feeds etc. all probable candidates of re-rating with decent growth prospects. Some of them have already moved significantly but they are still available at decent multiples.

I’m watching developments on PFS, Superhouse, KTIL, Next Mediaworks, Trigyn etc. which I think can show significant upside in the time to come if things turn out well.

I invest in them as a basket and believe in spreading my risk with good number of stocks in my portfolio. It doesn’t mean that I don’t know enough about my stocks. Market has seen significant upside as a whole, one has to be quite cautious about the stocks that they invest in. IMHO, one should only invest with longer time frame.

Disc: Pls do your due dilligence before investing as my view might be biased.

8

@aksh. What is the upside in RS(disc. Late entrant at 530). I am planning to add one more in auto segment. Muntjal Showa looks safe but ran off right before my entry. It looks like downside is low but upside is steady types. Pl suggest one in your invested list with the highest potential. On your watch list PFS ( disc. Late entrant in 40s) I see 70-80 in an year given the various things in play. Short term is of course dependent on coal saga

@ aware. You are not alone. This is normal for all. Very few can stay with small list. You have very good picks and decent prices. For one, who isn’t mature/ balanced investor myself, I am in no position to give advice except to say that I am trying to follow ‘buy right and sit tight’ for my core part of folio alone. In that core PF I have stocks like Eicher ( 3 year play in my opinion), Page ( volatility and high p/e bothers me but will ride it), Lupin, Amararaja, Relaxo, gruh, repco , HCL etc.

I have several ones like RS where I am going with flow. If someone sees RS’ max price chart, their head will spin. I assume that it was all before the current payment gateway foray.

In a nutshell , you are fine. Maybe, a few reraters will give you a boost and the way to avoid risk is by being aware, active. Even 1 bad stock can wipe gains and it happened to be during gitanjali saga. Even an active guy like me cd not do much since it dived to 40 days of UC. Moral of the story, dig deep. It is ok to avoid the glitter.

9

Correction 40 days LC

10

@Kalyan,

I don’t have any set target for RSS but believe it’s just a beginning of good times ahead. I’m sector agnostic so don’t look at sectors for my investment. I shortlisted munjal showa, munjal auto and igarashi and zeroed in on munjal showa because there was a quality company with good mgmt, balance sheet, return ratios and mouth watering valuations screaming for a buy. It’s done quite well for my portfolio. They all have run up quite a lot already but so is the case with most in the markets.