ValuePickr Forum

Varun 2020 portfolio - 2 strategies

Hi Everyone

I have been visiting this website for last two yrs and found it very very useful especially the conversations on various stocks and portfolios.

I have restarted my stock investing two yrs back and have learned hard way. Read books on Lynch, Buffet, read all Motilal oswal wealth creation studies, RJ style of investing and have also understood how various PE firms goes about investing in between while I am continuously been investing.

Have been partly influenced by Lynch principles of finding multibagger stocks, Buffet long term competitive advantage strategy, Motilal Oswal UU style of investing and Nalanda capital / RJ impeccable track record of acquiring chunk of stake in a company and thorough research.

Currently I plan to read Rita Mcgrath’s End of long term competitive advantage.

Through my continuous endeavor to perfect the portfolio construction I have devised 3 way strategy or lets say I have 3 simultaneously portfolios.

All combined giving me a overall profit of 35% including some dividends.

Portfolio-1 - I call it - WEALTH CREATION PLAN FOR 2020 - INSPIRED BY BUFFET AND LYNCH PRINCIPLES -

Rules - It has max 12-15 stocks, high consistentROE >20%, proven multibaggers in past wld be great, plan to invest in a stock for min 5 yrs, practically negligible debt, preferably old company with great management and focus on core competence.

I have so far 14 stocks here as listed below - Booked out earlier from ICICI, AXIS, Titan, with huge profits to concentrate on few stocks

1). Lupin @ 530

2). Biocon @ 272

3). Alembic pharma @ 51

4). Bayer crop science @ 1565

5). Rallis India @ 124

6). Zydus wellness @ 515

7). Yes bank @ 324

8). DHFL @ 164

9). VGuard @ 420

10). Cairn India @ 311

11). Persistent @ 404

12). Jyothy Lab @ 165

13). NRB Bearings @ 14

14). M&M Fin @ 238

Currently My eye is on TTK Prestige, P&G, Titan, Glaxo Consumer, pidilite, Bajaj corp in case any of them comes down substantially.

Portfolio-2 - I call it -FORTUNE MAKERFOR 2020 - FOCUSSING ON EMERGING/FUTURE THEMES AND BUSINESS - INSPIRED BY CHANGING TRENDS, PE stakes over 5% in a particular emerging business, MO UU style of investing

I have 5 stocks here currently - earlier booked out of Delta corp with huge profits

1). Lovable Lingerie @ 288 - Play on women’s innerwear branded, unorganized to organized with more working women this could see explosive growth

2). 8kmiles software @ 106 - SMAC

3). Specialty restaurants @ 179 - Fine dining and QSR theme

4). Prime Focus @ 47 - TV cloud and digital media supply chain solutions

5). TV18 - Media Broadcasting

Currently on my radar in this space is Max India, PVR, TCIL, Delta Corp, Kaveri seeds, if any of them come down heavily

I would request fellow boarders to comment and give their observations.

Thanks lot

2 Likes

I guess in terms of growth stocks instead of going for speciality restaurants and TV18 you can look at proven performers such as Kaveri Seed and Page Industries that are growing at rapid rate and have huge opportunity in front of them in terms of market to be captured. Any specific reason for reluctance to invest in these two?

I thought of investing in Kaveri when it was 1400 before the split happened. But I didn’t have enough cash. I had to choose between Bayer and Kaveri and I choose Bayer. From then Kaveri is right now art quite high valuations and similarly for Page Ind. There is not enough margin of safety here. In this growth stock portfolio the key is to have good margin of safety.

I agree that Speciality was not a good buy at 179 but then its a part of learning. Fundamentally I find them good people and they have good plans - if it goes below 100 and if I have surplus cash I will abg down. TV18 I wld advise you also invest if not already.

In this kind of thematic investing or “forest to trees” approach there are two things:

One is finding the forest or the theme. and Second is the tree (which can grow in any condition.) Growth in any business starts with demand and ends with production. The best business is the one with high demand and easy production(low capital constraint).

Keeping away with concepts, ROCE is your best friend in finding a tree.

QSR should be a superb theme to play on food industry. But I don’t think there isn’t any good tree there except Domino’s. But one thing is for sure takeaways are better than dine-in’s.

@ Surya - Thanks for your inputs - Yes QSR is a big opportunity - But fine dining is a niche experience where brand works - specialty has carved a niche here and who knows they might soon venture into QSR space as well

Continuing with my portfolio growth theme - I listed only those themes where I am invested but there are other themes as well falling under this category where I am not able to find any stock at right valuations

A. Logistics especially the ones having cold storages as well - They would be biggest beneficiary of GST reforms, dedicated freight corridors, pick up in GDP and more importantly with surge of e-commerce - QSR surge will require more cold storages

Here My eye is at TCIL and Blue dart

B. Exhibition - Looking for PVR or INOX

C. Casino and gaming along with stay facilities - Delta corp - earlier bought at 60 and sold at 115 - looking for dips to 80 lvls to invest for long term - Its a niche theme with very few players and with demographics advantage this space is nice

D. Vacation ownership - At very very nascent stages in India - but with new breed coming up -demographics advantage and people looking for and more travelling experience I guess this would be great opportunity going forward -

Here MHRL right now seems best - but then sterling holidays also needs to be studied

E. Healthy beverages and foods - May be green tea, Sugar free, Bio Oils etc - Here I am invested heavily in Zydus - Tata Global also looks ok - problem with Tata Global is very low ROE and traditional tea business

varun,

What is 8k miles into?

I read SMAC… couldnt make out much of that either?

hitesh.

Interesting portfolio strategy varun.

I think instead of yes bank and dhfl , you can include something like gruh or repco.

Zydus wellness is a few tricks pony. I cant see them doing too much with everyuth brand. Their only strength is sugarfree. I would prefer Hawkins if u have a view of more than 2-3 years. By that time they should definitely get their act together. :slight_smile:

Not too sure about quality of stocks of Portfolio 2 listed by you.

hitesh.

1 Like

DearHiteshbhai, in IT/Technology world SMAC means Social, Mobility, Analytics, and Cloud. All these are new emerging trend and are getting bigger.

As one of the boarders said SMAC means social, mobility, cloud and technology - its a very small IT company with niche carved in cloud technology, identity security and big data solutions. It is one of the Amazon web services premier services provider for 2013.

If you can provide me your email then I can email a report onto this by edelweiss. Its too large to be attached here.

Hai Varun,

I am new member into Valuepickr. I am interested in 8k miles.

I request you to mail edelweiss report. my email is viijayaragavan.1981@gmail.com

Quite a lot IT biggies are betting on SMAC. What is speacility about this company ? Can you through some light on this ?

rdgs,

Vijay

varun,

What is 8k miles into?

I read SMAC… couldnt make out much of that either?

hitesh.

Hitesh

Thanks for reviewing the portfolio and giving your valuable inputs.

I want my portfolio -1 to be interesting mix of proven stalwarts at low valuations and future stalwarts - Initially I bought both ICICI and Yes and at one time also AXIS. After lots of careful thought I finally booked profits from all of them instead of Yes and bought huge qty once it was below 300 for long term. Looking at long term story and deriving its success from past 7-8 yrs I believe Yes is best positioned to be another ICICI or HDFC by 2020 or so - I may go wrong but I have taken a calculated risk. Anyways I would like to have one good bank in my portfolio continuing on Warren buffet strategy of holding bank for long term.

DHFL seems better to me on all counts expect may be ROA and NPA. I have personally dealt with the staff couple of times. The valuation is dirt cheap. NPA will be little higher of course considering its size. The management is excellent quality and gives very good dividends. In repco there islittle margin of safety. I studied all of them - Gruh is terribily expensive - some day or other that thing will correct by itself - it cant stay there for ever.

Portfolio 2 is basically young companies. When Infosys was listed or was may be 5 yrs into the operations we would have same doubts over it as well. So yes all these are high risk categories stocks but very carefully chosen. Few of these might become stalwarts after 5-10 yrs. Plus the theme of investing is UU model - so I have to abide by it as well.

Look for your reply.

Hitesh

Regarding DHFL I just read an article on Aadhar housing finance on Smart Investor website -

Link below-

http://smartinvestor.business-standard.com/market/Marketnews-230396-Marketnewsdet-Aadhar_Housing_eyes_30_business_from_Gujarat_in_2_yrs.htm#.UxrSImfNvIU

@Varun

Very nice to see all the themes you have presented.

Logistics: As far as I know Logistics is a capital intensive business. And moreover logistics is reflection of economic activity. Works only in bull market. So I would not bet on these. Blue dart is worth looking at though.

Exhibition: PVR is good stock. As I told before It is good till it reaches 1000 screens. May be after it becomes highly discretionary. I think the PE ratio is OK for PVR but growth is constrained.

Casinos: No Idea.

Vacation Ownership: Travel is almost last on the consumer’s list. Why not look at consumer durables which is first on consumer’s list. The trend is high on consumer stocks I would definitely go there. Not into travel businesses.

But Yes of all the themes you have mentioned I would definitely agree that QSR is superb. I had been following QSR from last 1 year. Recently I started reading on McDonalds and Starbucks also. Because even indian chains are trying to maintain assembly line production. If proper business models come into scene I would steer towards QSR.

@ Surya Kanth

Yes consumer durables is an interesting space and I am already invested in Vguard there as you can see in my Portfolio-1. Earlier also I booked out of Titan due to cash constraints and good opportunity somewhere else. Currently looking at TTK Prestige, Titan Again, Even lovable where I am invested might qualify in this space only.

But then consumer durables is not an emerging theme based on UU model - its a good growth traditional theme so this forms part of my portfolio-1. Those themes were written based only on portfolio-2 strategy which is emerging themes for future - high risk and high returns.

Agree on logistics part but then how would you invest in Ecommerce surge in our country right now? Its just flying past our eyes.

Ecommerce is just the other side of logistics. I would not go there. In IT the trend is Analytics. I love Analytics because it is just mathematics and you don’t need lot of resources to do that. Mathematical Models remain the same though the data for different people will change. So Analytics breeds Product Companies and not solutions. The customer would look at easy deployment of analytics and quick time-to-market.Solution businesses cannot survive there. Analytics is a high-ROE high-growth space.

In Past few weeks added new stock in my portfolio-1 - Marico - Just added 250 shares at avg price of 204 - Did an extensive research - I believe it is present in categories which will grow substantially in coming times - Categories Like Oats, Livon Hair care are new ones

Also increased stakes In zydus wellness, M&M Finance and Bayer cropscience. Rest Remain unchanged.

hi, please sand any 4/5 stock to buy@cmp for long term to get big t)retun my mail id pramodjain99@yahoo.co.in mobile 9822302268…thanks

Hi

After a long hiatus I am poating once again my portfolio for everone’s review and comments. Have been in good spaces to get almost 150% unrealized gains on overall portfolio worth exceeding 40 lacs over last 2.5 yrs.

My current Portfolio in decreasing order of holding in terms of percentage of market value

1). Yes bank - 9% - (307.27 avg buying price)

2). Persistent systems - 8.6% - (492.3 avg buying price)

3). Alembic Pharma - 7.53% - (50.77 avg buying)

4). DHFL - 6.35% - (170.54)

5). United spirits - 6.07% - (2725.06)

6). Bayer crop Science - 6% - (1529.51)

7). Lupin - 5.87% - (531.67)

8). Biocon - 5.70% - (368.43)

9). Vguard - 4.87% - (430.48)

10). HSIL - 4.81% - (122.33)

11). Jyothy Labs - 4.3% - (167.58)

12). M&M Fin - 4.05% - (246)

13). Marico - 3.86% - (232.07)

14). Rallis India - 3.67% - (121.67)

15). Glaxo Consumer - 3.0% - (4900.4)

16.Tata Elxsi- 3.07% - (601.5)

17). Kaveri seeds - 3.0% - (801)

18). NRB Bearings - 2.66% - (40.4%)

19). Lovable Lingerie - 2.64% - (288.02)

20). TV18 broadcast - 2.31% - (27.98)

21). Agrotech - 2.29% - (612.12)

Starting to nibbling at South Indian bank which is close to its book value for long term. Also looking to hike stakes in MNC parentage firms which constitutes close to 18% holding in my portfolio. I do intend to take it to 25%. Some of the firms am looking are Merck, Sanofi India as new ones.

Most of the stocks are more than a yr old. Many of them are now 2 yrs old. Its a portfolio designed for atleast 2018-20. In 2014 I booked out of Zydus wellness with huge gains and bought kaveri seeds.

Regards

Varun. Hats off. I like yOur distributed PF since at last I have someone who thinks like me ( as against the 5 stock PF of most here)

Hi Kalyan

Thanks for appreciating the PF. Well even Warren Buffet holdsnear to20 stocks and he always have more or less. The key is to have high percentage of holding in few of them where you have super high conviction. I have first 10 holdings almost 65% of overall my holdings. Over a period of time few will rise more than others and top 5 or top 10 will have disproportionately high percentage.

Such a portfolio benefits from both diversification into various stocks/sectors as well as concentration due to high percentage holdings. To cite an example from my own PF alembic pharma used to be 2% of my 20 lac portfolio and now after a yr and half its close to9% of my 40 lac portfolio where in I have not added any further qty of alembic pharma. So sometimesallocating even a percentage in not very high conviction stock can be very fruitful. At that time I didn’t have super high conviction on it as I didn’thave too much info on it - but nowI have. Anyways we have so many good companies which one would always like to be part of in their growth story. So why chose only few.