YourRaj's Portfolio

Q&A: Questions & Answers Portfolio Q&A
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Need your critical evaluation and remarks

Dear Forum members and VP’s

I am new to stock investing and hardly 6 months old in the field of active investment in the share securities I need your help to reconsturct my Portfolio

Most of the companies in my current portfolio are well documented and researched by the VP’s in this plateform and i don’t think they need any new rational and are not hidden gems .

My biggest problem is that i have book profits and exit very soon in the past 6 months i have purchase the following stocks but not able to stick to the stocks This leads to lots of churning of the portfolio
Past holding from which exited fully

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My specific question is : Do I need to restructure the current portfolio ? for the next two years
My Current portfolio

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DHFL : leading Housing Finace gaint with stong mangment and inovative sales teams having potential to cater niche sectors and targeting middle and low income quality clients with strong evaluation process in place

Rain industries : One of the Best in it’s own class ,It is a market leader in both pet coke calcining and coal tar distilling, which are best described as oligopolistic.

PI Industry,Ajanta Pharma ,Ambika Cotton ,Mayur Uni do not require any introduction

MPS is my speculators bet for the turnaround

NATCO : is the pharmacy on the move to create the complex formulations with global presence and the the pructs are in the tube at the final stage .This company is also doing the job work for the leafding pharam companies around the global

Kitex Garments "; The world is growing and populaion is growing Every Parents want the best products perticularlly for the infants They are ready to pay the price i am Very Very LONG for the company .Except a few political problems but that will be over (i am not Jyotishi but speculating )

HEG is also leads the team Graphide and will hold the front runner batton for atleast next two years

IDFC Ltd and IDFC Bank "i am long on these newbeeies the merger with capital First strengthen its
Network and the new mangment will be making super moves However i am 19% minus and 12% minus in these accounts

The Best in my opinion and i am stronglly bulish for the company is the Chaman lal setia : Low cost Rice trader turned a major exporter from North .The product mix is unique However the global lower prices of Rice will impact the margions .recenttly they have opened a packing facility in gujrat lowering the transportation cost 'It can be FuTuRE KRBL"

DIs: These are not stock recomendation Please do your own research before investing

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Besides writing down your rationale for buying a company, I think it is more important to write down rationale for selling a company. This will help you identify patterns in your decision making process that lead you to the sell decision. Once you identify these patterns you can prepare a short checklist that can be used in future before buying anything new. such a checklist will make sure you wont buy anything that you will soon end up selling (most likely at a loss) for all the same reasons. This will help you avoid the churn in your portfolio.

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Thanks @Yogesh_s ji I had booked profit on NOCIL @30% and switched to Avanti which is 16% down although there is increase in supply os shrimps and global reduction of prices but the company is exploring new opportunities in Japan Also found that Avanti Feeds has commenced commercial production of the additional capacity of 1,75,000 MT of shrimp feed plant at Bandapuram, West Godavari District, Andhra Pradesh (AP), on March 19, 2018. (Source ;ratestar)
so I think it is good for Entry in the Marine Queen’s Stock .Your seasoned advice is well taken and writing down the short checklist for exiting.Thank you for helping the newbies like me
Regards
YourRaj

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I would suggest you to find and study more about HEG. Over the last weekend I watched Deepak Kapur’s presentation on valuations in which he has shown how the graphite electrodes are really a cyclical play and how the story has already played out and in fact they are trading at ~4x the replacement cost and hence one should not get carried away by recent earnings.

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Thanks @rkatikam ji for the visiting the thread and for your pointers rergardng the graphide electrode’s fure there is two monthe sector analysis report which i would like to share with you .

http://content.icicidirect.com/mailimages/IDirect_Graphite_SectorUpdate_Jan18.pdf

it starts like
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It will be great if you can share the link of Deepak kapur’s presentation (Till this time frankkly speaking i don’t know Who is Deepak Kapur ? Please don’t feel offended)

I learnt from the forum that it is YOUR money and YOUR conviction which leads YOU to buy the stock and unless untill YOUR thesis is right with right data source in place .I would like to share that in my case i use ratestar / screener / reuters / SMC /morning star websites for raw data .
You are very rightly pointed out that the graphide is a cyclic player i am just learning and please point out if any mistakes .However i find out the first quater of companýs data is healthy and a strong bet for me to enter in HEG
Your review will be highlly appreciated
regards

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I am not telling you to get out of it. All I was trying to say is that since it is a cyclical play you need to keep assessing the risks involved. YOUR Money, YOUR conviction, YOUR thesis are all correct. But at the same time how do you develop or hold on to your conviction and thesis is what is more important Also it is always good to be open to see what the opposing views are. Whether the conviction/ thesis has to be changed comes from listening to the opposing views. BTW Deepak kapur’s presentation is a webinar available on https://indianinvestingconclave.com/. Usually many of them are paid webinars. But this one was free. If you register on the website, I think you will have access. Can you please try?
Also take a look at
https://twitter.com/darshanvmehta1/status/981428846846205953

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@rkatikam thanks for reply and with due respect and regard I welcome the opposing views and yo had provided excellent source which I was unaware about the webinar . When I try to locate the website it gave me following msg " welcome to nginx !" Can you please sort my query

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how can i see the Deepak kapur’s presentation

regards…

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@yourraj Can you try the link now?. I just changed www to https://
@chiragjain1976. Once you register on the website, I am guessing you should have acess

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Thanks @rkatikam
Chirag ji you can find the slides in second episode of the alpha series seminar .It is of 60 slides .Once you created your login which hardly takes 2 to 3 minutes you can access it .Regarding electrode you can directly go to slide number 32 onwards
Cheers and best wishes

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source: ICICI-Direct-Q4-Preview

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Thanks the talk is really good and enriching the knoweledge .base .My take from the Mr kapur talks is

Still has views that next two years the rally will continue but when the major player who is unlocking the potential via starting it’s closed unit there will be a rush of supply .

The company’s has lock in contract of raw material and finished products in this sector

i shared the ICICI Q4 review so i can say that For the next one or say one half year (i don’t want to be Jyotishi to predit the top of the GE industry ) will be good growth at the same time i am looking for red flag . Thanks again for your opposing view

Also made Portfolio change
Reason: Find better options and achive predefined profit in the existing stock

Existed (NOCIL profit 30% in 6 months ) and entered in Avanti feed with 8% portfolio @18-04-2018 and now up by now 10.5%

Thanks @hitesh2710 for helping me to create exit startegy however the profit tempted me to continue hold the NOCIL but the Pivot points and closely watching volume play help me to make decision .

Lesson learned

"Profit / Loss of Captial is what YOU booked not what is NOTIOnaL"
regards

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Update i feel little down to see my notional gains are eroding .I have realised handsome amount of profit during my six months on investing caree and ,as i mentioned before that
"Profit / Loss of Captial is what YOU booked not what is NOTIOnaL"

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My conviction in the stocks does not allow me to exit Because i am investing for long term .This may be my lack of proper exit policy . I had made STOP loss in the mind Not in the SYSTEM
so i re read and read agin the beautiful lines of wisdom from Jim O’Shaughnessy is Chairman, Chief Investment Officer, and Portfolio Manager at O’Shaughnessy Asset Management. A professional investor for over three decades, he recently shared his wisdom on Twitter over a thread of 26 tweets. In this dispassionate and non-judgmental delivery, he imparts some amazing insights and wisdom for investors. some of them been reproduced below

. I don’t know how the market will perform this year. Or the next year. I don’t know if stocks will be higher or lower in 5 years. Indeed, even though the probabilities favour a positive outcome, I don’t know if stocks will be higher in 10 years. On the other hand… I DO know that, according to Forbes, “since 1945…there have been 77 market drops between 5% and 10%, and 27 corrections between 10% and 20%”. I know that market corrections are a feature, not a bug, required to get good long-term performance. I know that during these corrections, there will be a host of “experts” on business television, blogs, magazines, podcasts and radio warning investors that THIS is the big one. That stocks are heading dramatically lower, and that they should get out now, while they still can. I know that given the way we are constructed, many investors will react emotionally and heed these warnings and sell their holdings, saying they will “wait until the smoke clears” before they return to the market. I know that over time, most of these investors will not return to the market until well after the bottom, usually when stocks have already dramatically increased in value. I think I know that, at least for U.S. investors, no matter how much stocks drop by, they will always come back and make new highs. That’s been the story in America since the late 1700s. I think I know that this cycle will repeat itself, with variations, for the rest of my life, and probably for my children’s and grandchildren’s lives as well.

So i have learned following lesson
Patience is KEY Place metal filters let Notional gain or loss ride your mind
Assess the stock price and evaluate properly Don’t pay EXTRA .Sooner or Later the fools and his money is invited everywhere
Dont judge from the price you paid for the stock for reevaluation start over from the current price .
There are no shortcuts to have success in stock market
I AM Down BUT not DIED …
Happy investing

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Its always better to set a loss percentage and exit if it crosses the number. I.did the mistake of holding BHEL long believing recovery and booked loss finally.

Also. once you feel stock reached price which is Over valued exit it . I did it in KVB.

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@yourraj, i have a couple of observations for your portfolio.

  1. From what I understand, pharma is a very complex area, which is also kind of commodified in India. Generic pharma is very fragmented and I do not think any of the Indian pharma company has a pricing power. R&D in pharma is not a child’s play as there are global pharma giants 100 times better than our Indian counterparts. My question is how confident are you that you can properly value a pharma company considering all the complexities.

  2. Some of your stocks in textile, chemical and commodities need a contrarian approach where the entry price is everything and even the management cannot accurately predict what’s in store for the next couple of years. Are you willing to sit on the sidelines patiently for a long time to taste the fruit which may or may not bear depending on your purchase price.

  3. I know nothing about hotel stocks other than the fact the whole sector have been the worst performers over the past decade. Again why hotel sector and do you have the specialization to accurately predict the value of the stock you are holding?

  4. Why IDFC Group? These two stocks appear in none of my screeners as they do not stand out in any of the metric. Even capital first has been dragged down due to merger with IDFC Bank. On top of this whole bank sector is in a very bad health.

You do not have to reply to my message. These would be just questions to ponder over. If you got convincing answers, then you should continue to hold your stocks as I am not claiming to be an expert and these could as well turn out to be big performers over the next few years.

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Over the year it is a great learning from mistake of mine and from others learned a lot from the presentation of seniors in Chintan Bethaks . I had reduced my transaction to a great extent. Presently my portfolio is bleeding like hell but This is my fault of my mental biases.
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Never never ever cross your rules if you have made rule of your own e.g risk reward 1: 2 say risk 15% and reward 30% make exit without emotionally attach to the stock . Take exit without hesitation . THIS TIME IT WILL BE DIFFERENT …. THIS may suck your Capital .and without capital you don’t have chance to play again . Second is the you are missing some really good stocks because you are under HOPIUM DRUG that your stock will bounce back … BUT only S**T will happen … I will demonstrate HOW

If you stock rise to 50% it will only take -33.33% to come back to original price

If you stock rise to 65% it will only take -39.39% to come back to original price

If you stock rise to 80% it will only take -44.44% to come back to original price

BUT

If you stock plunge to - 25% it will have to rise by +33.33% to come back to original price

If you stock plunge to - 60% it will have to rise by +150% to come back to original price

If you stock plunge to - 80% it will have to rise by +400% to come back to original price

If you stock plunge to - 85% it will have to rise by +566.67 % to come back to original price

CONROL THE CONTROLABLE is what that I learned after sleepless nights Some factor are out of your control But One must cautious enough to have a factor of margin for those when you are calculating the enterprise value IN MY CASE I HAVN”T TAKEN …. Another nail in my portfolio’s bad behaviour BUT I HAVE ONLY THAT MONEY WHICH I WILL NOT NEEDED in the next 5 Years So I have some margin … BUT the COBRA finding in the DHFL made huge dent in my Performance of Portfolio .

The BAN on the import of calcinated coke in case of RAIN is another nail . But in long run it will cure itself

Over the year I have reject several stock and try to sit on the lines ( BUT BARE HANDED as short of CASH Fully invested ) This is biggest mistake I have learned later that Mr WB has waited 3 full years and not invested any new equity This is amazing piece of patience

Loss Booking

I had existed the hotel stock as they are touching my stop loss trigger

Profit booking

Complete exit from PI industries as my target achieved and new opportunity seen in Maithan alloy which again I exited on booking profit

New addition

This year seems to be of Pharma and speciality chemicals ( NICHE FIELD only ) I had added small quantities each time it fall NGL Fine-chem (Betting on promotors and animal health, High an sustainable margins sound R&D Team targeting unorganised market ) & Parag Foods ( selling cow milk @120 rs which is commendable along with GO cheese of the company now seen almost in every store )

Missed / saved ( I keep track in virtual portfolio in economic times in watch list it will hel you to pay reasonable price based on your Risk appetite )

  • Bajaj Finance 5-12-17 it was 1705 and on 26/6/19 reach to 3629 rise 122%
  • Suven Life sciences 22-03-18 it was 170.7 and on 26/6/19 reach to 271.1 rise 58%
  • Aban offshore 28-12-17 it was 203.2 and on 26/6/19 reach to 38 Fall 81.3%
  • Indocount industries 11-10-2017 it was 112.5 and on 26/6/19 reach to 33 Fall 70.67%

Waiting

Add some Cyclic stock in watch list ( cement / sugar / metal )

What next

  • Learning learning learning and implementing with feedback loop
  • Exist early as soon as the trigger arise of stop loss …
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I do not know your experience in the market. But I would advise to take a step back. The first rule of investing is never to loose money. Time is a friend of only good businesses. Therefore I do not know how holding on to Rain at a high price would correct itself as you have mentioned. You need to be aware of the regulatory and cyclical risk the company is facing and it could well run in to losses and on top of it it has a huge debt.
My advise would be to have a relook at your portfolio and build conviction with secular growth stories first before moving to small caps and cyclicals. I would also stay away from pharma as it looks like a scary industry with very little moat for Indian pharma companies. If sun pharma, a giant can move from Rs1200 to Rs400, then all bets are off. Such wealth erosion by a large cap will be very hard to regain.
Also consider Mutual funds as expense ratio in a direct fund is just 0.85% which will take away a lot of pain. I am adapting 75% MF and 25% own investment mix where own investment I concentrate only on high quality four to 5 stocks with potential to double in 5 years.

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I think you need to learn to differentiate between cyclical and secular stories. Whenever you analyse a company try to ask yourself how many variables are there that are affecting the story. And how much do you understand about each of them.

If you know very little about the variables affecting the business then better leave the company alone.

e.g Some people kept posting the prices of shrimp and the volumes exported etc and all this while an important factor was the raw material prices. That was an important factor which affected margins and company did not have enough pricing power and market forces sometimes create such situations that its difficult to get away with price increases. Another very important risk factor which could affect the companies like avanti is risk of disease outbreak in shrimps. Yet another factor is floods which we learned some time back when there was massive flooding in Nellore which sent the company back by a quarter or two.

There will be many more such examples.

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Hi susindar, can you elaborate on this rule?
Never loose money is it possible at all?
I thought it was learning from losses which will add to your experience.

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@paresh.sarjani1, by never loosing money, I meant permanent loss of capital and negative returns over a couple of years.

We are in a very bad phase in investment right now where many amateur investors including myself have learnt some bad habits due to years of bull run. This could be a reason to ask whether it is possible at all to not loose money.

Not loosing money is not difficult as such if we follow basic investment rules like diversification, margin of safety, debt/equity allocation etc. we are in so much fear of missing out at the moment that we justify a margin of safety at any price, go after the fancy sectors throwing away diversification and no one is interested in the boring debt securities (I am guilty of doing these myself as well).

By keeping 50 percent in cash and choosing quality stocks at a sufficient margin of safety and enough diversification to protect from black swan events, it is definitely possible not to loose money.

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