ValuePickr Forum

Troll's Portfolio

I am 25 years old and ~1 year old in terms of direct equity investing. Have been investing in mutual funds since mid-2018.
Have an economics/finance (masters in economics) background. Joined forum in may last year and have ~6d reading time on the forum.

Rationale/Expectation for posting here -

  1. To solicit feedback on the portfolio/philosophy. Specifically, every investment that I have made may not follow my written down philosophy due to lack of knowledge, setting up of wrong expectations and behavioural biases. any feedback along these lines will be awesome.
  2. Force me to solidify the process/philosophy of stock selection.
  3. To contribute back in a small (I know that I cannot add much value to already super-rich forum) way to the forum.

Goals for investing-

  1. Learn as much as possible about businesses. (this is vague, could not think of anything better)
  2. Generate some alpha over the market and avoid loss of capital. Will not be tracking returns in a very detailed manner.

Ideal Process (satellite portfolio) -

  1. Get an idea. Read as much as possible about it (forum/tijori/blogs/reports, etc.)
  2. Start with tracking position.
  3. Create/borrow key monitorables (KMs) and track accordingly. Currently in process of doing this for many stocks in my portfolio.

Some open-ended stock selecting/filtering ideas (at risk of sounding amateur) -

  1. Co. in process of brand building with a good track record of execution. e.g. ITC (FMCG brands), KRBL (India Gate to other related healthy food brands), Polycab (FMEG B2C initiatives)
  2. Niche tech. co. with some moat, eg. Indiamart (Network Effect)
  3. Tailwind sectors (mostly identified via forum)- Pharma (Laurus, Alembic)/Specialty chemical (Aarti)
  4. Diversify by adding leaders/well-managed co.s from multiple sectors. (Airtel, TCI Express, Heidelberg, HDFCLife, Bata, HDFC, Kotak)

Two broad philosophies, not very strict line differentiating them -
Core/Coffee Can - Minimal tracking, buy on dips depending on liquidity. No selling ad infinitum until something changes really fundamentally (if this happens, give <=3 quarters for explanation/resolution). A typical stable growth over value kind of portfolio.
Satellite - More actively managed, No selling until some KMs remain undelivered or something changes fundamentally at the company level (not at the sector level, broadly avoid typical cyclical/commodities), give <=1 quarters for the explanation/resolution. High growth at reasonable value, can try averaging up.
Portfolio as on today -

Instrument Avg. cost LTP Net chg. Percent (LTP basis) Comments
INDIAMART 2748 7450 171.1% 16.2% Network Effect Moat, Subscriber growth, Acquisitions/integrations
ALOKINDS 23.98 22.75 -5.1% 7.5% Turnaround, management commentary
POLYCAB 688.97 1246.4 80.9% 6.2% FMEG, B2C and exports
ITC 191.39 201.5 5.3% 4.7% FMCG - margins and market share, Capital allocation
ASTEC 1105.53 1278 15.6% 3.9% CRAMS, China +1, R&D, Promoters
KRBL 246.5 245.05 -0.6% 3.6% New FMCG brands, Export growth, legal cases
BATAINDIA 1290.95 1648.55 27.7% 3.6% Coffee Can
KSCL 565.72 535.15 -5.4% 3.4% Cash rich, diversified seed play
IDFCFIRSTB 31.3 44.4 41.9% 3.4% Retail banking (assets and liabilities) with advanced underwriting for the unbanked, good management
AARTIIND 960.58 1280.4 33.3% 3.3% Speciality chemical & Pharma tailwinds, Highly diversified, almost coffee can
TCIEXP 734.72 990 34.7% 3.2% Asset light logistics player - sectoral diversification bet
PIDILITIND 1460.36 1819.05 24.6% 3.2% Coffee Can
HDFCLIFE 573.97 716.75 24.9% 3.1% Coffee Can
APLLTD 924.33 1092.5 18.2% 3.1% Pharma tailwind, R&D, USFDA compliance
LAURUSLABS 291.41 353.6 21.3% 3.0% Pharma tailwind
HDFC 1525.1 2653.4 74.0% 2.9% Coffee Can
BHARTIARTL 553.44 540.25 -2.4% 2.7% Telecom - Sectoral diversification bet
GRANULES 376.68 367.3 -2.5% 2.6% Pharma tailwind
CHAMBLFERT 160.37 240 49.7% 2.6% Sectoral diversification bet
HAPPSTMNDS 328.87 345 4.9% 2.6% Digital focus, SaaS, a proxy for tech in education, travel, etc., quality promoter
CAPLIPOINT 374.75 499.95 33.4% 2.3% Injectables in the US, replication of high ROE/ROCE model in new EMs
IEX 193.59 223.05 15.2% 2.3% Regulated Monopoly with some tailwinds
KOTAKBANK 1259.16 1968.15 56.3% 2.1% Coffee Can
HDFCAMC 2176.98 3137.85 44.1% 2.1% Coffee Can
HEIDELBERG 212.26 235.55 11.0% 1.9% Cement - Sectoral diversification bet
ICICIGI 1164.59 1606.5 38.0% 1.8% Insurance - Sectoral diversification bet
INTELLECT 340.3 348 2.3% 1.5% Tracking
CUPID 213.42 239 12.0% 0.7% Tracking
NEULANDLAB 1102 1105.25 0.3% 0.2% Tracking
AXTEL 223.95 268.15 19.7% 0.2% Tracking
31.6%
  • Currently, too many companies, giving almost 2-3 hours daily for reading.
  • Some stocks do not adhere to above ideas like Alok, it is a turnaround, will be holding these kinds of stocks and monitoring the management-commentary/results closely.
  • I understand that most of the portfolio is green because of the bull run in the market, but even if half of these returns are sustainable will be more than happy.
  • Will start adding a bit more detailed rationales in some time.
  • Some ideas may be contradictory, incomplete or completely wrong, open to all kinds of suggestions/ideas.
  • Other investments - Mutual funds (SIPs), ESOPs, FD, PF etc. The above portfolio is ~20% of all investments

Disclaimer: This is not investment advice, only personal opinions.

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Congratulations for starting early.

Good idea. But since you are just starting up, make sure to allocate less to each satellite bets.

Your portfolio has some good stocks, some cyclical companies, some hot (& thus overvalued) companies. So, allocate accordingly. However, all depends on how much of your portfolio you are investing via direct equity.

I don’t understand the companies and so the high valuation accorded to Axtel, Happiest Minds and may be Indiamarts. You have very high allocation to Indiamarts, as you’ve entered before the run-up. Suggest you to be very careful and probably reduce allocation.

ALOKINDS is sure a turnaround bet, but the valuation accorded to it is huge which is probably completely unjustifiable. You should never allocate 7.5% of your portfolio to such bets. It has higher market cap than even Trident, Raymonds, KPR Mills etc. Do you think it is justified?

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Yes, I try to initially cap the allocation to 3-4 percent and have thought of averaging up as the idea continues to deliver across quarters.

True, the direct portfolio is around ~20% of total.

Axtel - yes that is true, was waiting for dip to add but recently it started running up
Happiest Mind - 100% Digital driven and blue chip promoter with diversified sources of revenue
IndiaMART - Good revenue visibility, govt. focus on improving MSME health, high value addition in a duopoly B2B e-commerce market (udaan). Future visibility - still ver large chunk of MSME have to come online, inorganic acquisitions for more value addition, etc. More details in the thread as well. Don’t think will be reducing the allocation anytime soon.
Alok - right, such high allocation to company which still hasn’t shown any improvement in numbers ( maybe because of covid) is not justfied. Actually Alok was a noob copying mistake I am stuck with, will mostly never be adding to this, will just try to follow along the revival story.
Thanks for the feedback

So, are you waiting for the ~5% loss to recover for you to exit? If so don’t bother. Move out as soon as you identify a mistake. Market may not give you another chance. If for some reason the script hits a LC next day, you will be staring at a bigger loss. 5% is nothing, although considering that you have bigger allocation, in absolute terms it is big sum. This is a kind of mental lock (price anchoring) every investor faces in his/her early years.

Actually, Alok has kind of consolidated in a small band, since so many months. So don’t think there is any more downside technically. But the mistake led me to study it in more depth. The only things which can play out are -

  1. Increased capacity utilisation, currently at ~25%, thus operating leverage can kick in to provide some profitability, this will depend on the management able to find end customers for there goods, which i am postively biased on.
  2. Balance sheet clean up, a lot balance sheet cleanup has been done since change of management, still a lot has to be done, considering company has been reporting losses since so many quarters.
  3. Revenues are inc. QoQ so, OL will kick in at some point and we will be able to see the profits.
    Overall, i think, like most turnaround cases this is a bet on new management. So i will keep some more patience and give more time to management.

Also have made considerable changes to my thought process. Will post soon.

Since the last post, my thought process has improved**, Now, I don’t think I want to manage Coffee can portfolio myself so will be moving that part to MFs and going forward would be tracking the ratio b/w the amount invested in PF and the amount invested in MFs will want this number to be 0.5. Also moved out of sectoral diversification bets as now I think you don’t need to expose your portfolio to all the sectors under the sun. This will also help me in reducing the number of Companies that I want to track to sub 15. Thus have got out of most of the companies as committed to me 4 months back.

Instrument Percent (LTP basis)
EMBASSY-RR 28.95%
INDIAMART 13.42%
POLYCAB 5.22%
INTELLECT 4.63%
LAURUSLABS 4.48%
HAPPSTMNDS 4.45%
ALOKTEXT 4.33%
ITC 4.29%
IDFCFIRSTB 4.16%
KRBL 3.80%
AARTIIND 3.70%
IEX 2.96%
GRANULES 2.16%
JUBLINGREA 2.12%
BATAINDIA 2.05%
NEULANDLAB 2.04%
MASTEK 2.04%
RACLGEAR 1.96%
ULTRAMAR 1.55%
DIGISPICE 1.08%
SAREGAMA 0.61%
  1. Have always wanted to have an RE exposure, read about REIT’s, considering the tax free yield (78% of ~6-6.5%) and that too from the best commercial properties of Bangalore, astute management (read the concall and presentation) with some capital appreciation so went ahead with Embassy
  2. Still reading more about Saregama and Ultramarine.
  3. Will get out of Bata (still think it is really undervalued as compared to pre-covid), Digispice (took a tracking bet good penetration but very low and unstable margin business prone to disruption).
  4. ALOK is very risky but has explained my rationale in the earlier post. KRBL risk has increased with the arrest of MD but here also downside is very limited. Anyways will never be adding to these stocks anymore.
  5. Converted Intellect and Neuland from tracking to core holding.
  6. New additions - Jubilant Ingrevia (huge CAPEX for spec. chem., better margins vs Laxmi, guidance for forward integrations), Mastek (a large number of deal wins globally, cross-sell with Evosys, new CEO from the US, etc.), Raclgear(EV readiness/disruption resilience, Export orientation, stable margin guidance)
  7. Coming to the bets where I will like to buy in dips, average up, etc. are all stocks other than mentioned in 2,3,4 points. So overall I will have 21-6=15 companies in my portfolio to invest actively in.

Disclaimer: This is not an investment advice, only personal opinions.

Updates to the portfolio -

  1. Got convinced for Saregama (thanks to the forum thread and some youtube videos) and increased the allocation, will have to track the quality/quantity of song-rights they acquire, the margins and any new capex in other segments like Caravaan and yoodlee, etc.
  2. Not convinced for Ultramarine fully yet (very large commodity segment and not comfortable with holding in Thirumalai and other capital allocation), not sure what to do with this, will most likely sell to reduce diversification
  3. Got out of Bata and reduced Digispice substantially. Also want to concentrate Pharma bets away from non-branded generics, so will get out of Granules.
  4. Got out of KRBL also (management is good in terms of running the company/ brand building but the legal overhangs will make the rerating (undervalued in my opinion) difficult), Alok remains as it is.
  5. As discussed in IDFC first bank thread, converted IDFC first bank to IDFC fully.
  6. Small additions to Neuland, Jubilant ingrevia, Indiamart and Raclgear
  7. New additions - Kilpest, Strides Pharma, still studying them.
  8. Overall will try to get out of Granules and Ultramarines and will be adding on dips to Intellect, IEX, IDFC, Neuland lab, and Jubliant ingrevia. Also as a sub theme to reduce diversification will identify stocks (digispice, ultramarine, granules, possibly itc, aarti) which I can let go to make the number of stocks sub 15 and invest the same capital in existing bets.
Instrument Percent (LTP basis)
EMBASSY 25.37%
INDIAMART 10.57%
POLYCAB 5.56%
SAREGAMA 4.93%
LAURUSLABS 4.93%
ALOKINDS 4.90%
HAPPSTMNDS 4.86%
INTELLECT 4.21%
NEULANDLAB 3.47%
IDFC 3.42%
AARTIIND 3.39%
ITC 3.37%
JUBLINGREA 3.10%
IEX 2.93%
KILPEST 2.38%
RACLGEAR 2.37%
STAR 2.37%
MASTEK 2.28%
ANGELBRKG 2.13%
GRANULES 1.61%
ULTRAMAR 1.28%
DIGISPICE 0.57%

Disclaimer: This is not an investment advice, only personal opinions.

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Some significant updates

  1. First, pruned the portfolio further to reduce low conviction bets, got out of Granules, Ultramarines, Digispice, ITC, and Aarti fully. Booked small profits in the process of pruning.

    • ITC - Did not want to remove ITC but as I have significant exposure to ITC via mutual funds also and I believe it is one of the companies for which one should ignore most of the news and stop tracking it daily/weekly/monthly
    • Granules, Ultramarine and Digispice - explained earlier
    • Aarti - Found Jubilant Ingrevia to better priced and also better placed wrt triggers like expansion in spec chemicals CDMO, Diketenes, agro subsidiary etc.
  2. The switch from IDFC First bank to IDFC has started playing, I think the AMC sale and demerger will further unlock the value for IDFC shareholders. Thanks a lot to forum members.

  3. New additions - Started tracking Fairchemor, still making up my thesis for Kilpest.

  4. Converted Strides Pharma from tracking to a permanent part of PF. Most imp triggers Stelis demerger (would like to own stelis after demerger also), entry into injectables, debt reduction etc. Again thanks to forum members.

  5. Increased allocations - IDFC, Intellect, Strides Pharma, Angel Broking, Jubilant Ingrevia, also smaller additions to other stocks.

  6. Now just tracking 17 + 1(Embassy) stocks -

Instrument Percent (LTP basis)
EMBASSY 22.35%
INDIAMART 9.10%
INTELLECT 5.99%
STAR 5.82%
JUBLINGREA 5.51%
IDFC 5.24%
HAPPSTMNDS 5.08%
POLYCAB 4.91%
SAREGAMA 4.63%
ALOKINDS 4.15%
LAURUSLABS 4.15%
ANGELBRKG 3.88%
NEULANDLAB 3.85%
RACLGEAR 3.40%
IEX 3.27%
KILPEST 3.21%
MASTEK 2.90%
FAIRCHEMOR 2.58%
  1. Results - Good to see resilience in the results of Indiamart, angelbroking, Mastek. Alok is testing patience like a true turnaround, still no growth in revenue and no profits.

Disclaimer: This is not an investment advice, only personal opinions.

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