The stock markets are a beautiful place. Portfolio was down 5.5% yesterday, and is up 6.5% today Overall down close to 9% from ATH, while the nifty is down about 10% from ATH. Not bad, given that my portfolio is almost exclusively small and mid cap focused.
Like I have said before on this thread, I have been anticipating macro related drawdowns over the past few weeks. The Russia-Ukraine situation developing in the backdrop of the impending rate hikes and collapsing US tech - for me the writing was on the wall and so I decided to sell out of lowest return expectation positions and create some cash. Zeroed down on four stocks and sold them over the past two weeks when Nifty got close to 20 dma.
Sold Jubilant Ingrevia at 560 (low growth guidance, volatile acetic acid prices)
Sold Indiabulls Real Estate at 145 (got a feeling that I overpaid into the special situation hype)
Sold ITC at 225 (has always been cash, seemed like a good time to make the conversion)
Sold Solara (tracking position) at 975 (plain luck before the results)
Sold GoldBEES yesterday after the large spike as stocks looked more attractive
New / significant additions
As it turned out, earlier this week, Indiabulls real estate crashed on unrelated news and went close to 100. I got super tempted and at 105 I bought back the shares that I had sold. So effectively I had managed to bring my buy price down by about 40 bucks and now have a higher return expectation and margin of safety on the position. It is still a very small position, just about 2% of the PF.
And then Solara posted shocking results and the market absolutely thrashed the stock. On the second 20% lower circuit, I bought back the tracking position (got almost 50% more shares for the same amount).
Upped Ugro to 3.5% of PF - Super excited about the fact that co-lending is picking up big time and will pump up RoE. Low leverage leaves massive room for growth. Loved their latest concall. However, I will not increase stake beyond 5% as it is an untested business (even through the management is experienced), but the reward if they are able to execute is disproportionate.
Added HCG worth 2.5% of PF - Expecting operating leverage to kick in soon, super strong on charts. Considering it a 12 month swing trade
Added PDSL worth 2% of PF - still studying but the uniqueness of the business model, high growth prospects with tailwinds in textiles and reasonable valuations in spite of a run up were hard o ignore. Studying and will add to this if I get better prices
With the leftover cash that I had generated, I added to Globus, Tips, IDFC, Intellect, Kilpest, Neuland, Strides, Equitas, Indoco, Rain and NiftyETF on all big red days, and largely yesterday. Have about 3% cash now and the salary should come in on the weekend to take it up a notch.
The big drawdowns
Strides is down 50% for me, but I am adding to it at these prices. Yes I should have seen this drawdown coming and sold out after the results two quarters ago, but at the present juncture I think the business has bottomed and the Endo portfolio additions will come in partially in this quarter and completely from next quarter. Price erosion is also easing as per the latest concall and they are guiding for $250 million sales in the US in FY 23. If and when normalcy in pricing returns, and with the added Endo portfolio and 6-8 new launches per quarter, I am expecting 4k crore sales and minimum 600cr EBITDA available at 3k Mcap. The business itself looks like good risk reward, plus Stelis is free. Promotors are issuing equity warrants at 485 a share, almost 50% above the market price. That signals massive confidence.
Neuland is down 40% for me. I made the mistake of extrapolating the good performance of a few quarters and bought expensive. At 1.3cr Mcap and less than 1.5 times sales though, I think it offers great value. The product portfolio will improve over the next few years and whenever peptides work out, it should surprise on the upside. Patient and adding slowly.
The most resilient
In my entire watchlist of over 250 stocks, just one did not fall yesterday, and it happens to be my largest holding Sunteck. I have no idea why it did not fall, but gives me a lot of confidence to see such resiliance while the entire market collapsed. Also pleasantly surprised by the resilience of Apollo Finvest. They have posted excellent results yes, but the stock has stayed stable in spite of being extremely illiquid.
Have been adding Ark K, Ark G and KWEB consistently. Now have close to 10% of the PF in ETFs listed on Nasdaq. At present valuations, I am happy to raise it to 20%, but unfortunately India collects 5% Tax at source on all money transferred out of the country beyond a threshold in a year. I have exceeded that threshold and don’t want to pay such a large tax to just move money to the US. I will wait till April and if valuations are still favourable, I will build some cash and double the international holdings.
No changes in crypto yet. It is close to 3% of the PF. May take it up to 5% if there is some more crash. Like Etherium the most, followed by Bitcoin, Polygon, Polkadot and Cardano.