My Portfolio & Why I Bought & Sold A Stock

I hope nobody minds but I would like to use this spot as a record of my stock market activities. When I buy or sell a stock, I will write about it here. This will force me to think about what I am doing instead of acting impulsively. Also, hopefully, someone may add some helpful comment on whether I am on the right path. If I make mistakes, others can learn from it and avoid committing it themselves.

I am very unhappy at the state of my portfolio. I have 36 stocks in my portfolio. It is a highly fragmented portfolio with a little bit of everything, from almost all sectors.

I am determined to bring down the number of stocks to 25. This means that 11 stocks have to be sold and the money invested in the existing stocks.

There are five stocks in my immediate hit-list. I have suffered huge losses in these stocks. I have lost confidence in these stocks. By selling these stocks now, I can book the loss in the year ended 31.03.2015. The loss can be carried forward for 8 years for set-off against future short-term capital gains.

Today, I sold a bit of these five stocks.

Stock Quantity Rate

AVT Natural 2000 26.25
Bajaj Electricals 1000 213
Camson Bio-Tech 1000 94
Godavari Power 2000 98
Kwality 2000 37

In lieu of the sales, I bought 538 shares of MCX Ltd at Rs. 1170 each.

So, I have only switched from one security to the other. My money continues to be in the market.

My rationale for buying MCX is as follows:

(i) It has a strong and committed promoter in MCX;

(ii) The fact that SEBI and Forward Markets Commission will be merged suggests that the commodities derivatives market will be developed and opened up to foreign participants;

(iii) If so, volumes will shoot up. The excess revenue will flow into the profit & loss account because there are no incremental costs required to service the increased volumes;

(iv) A large number of knowledgeable investors like the Big Bull Rakesh Jhunjhunwala, R. K. Damani etc have huge holdings;

(v) The initiating coverage reports of HDFC Sec and Edelweiss also recommend a buy.

I have more holdings of the five stocks that I referred to above. I intend to gently deploy their sale proceeds into MCX (and other existing stocks).

 

Why fii will participate in Indian commodity market..?

 

Now Nymex crude price for one barrel is at 48.33 $ and in conversion, its around 3015.23 @9.30pm. MCX crude is trading at 3036/barrel on same time. So why an investor from us will buy crude from mcx rather than buying it from nymex ? ... I dont know my view is right or wrong..need clarification from u

 

Good question. I think FIIs and Hedge Funds will trade wherever there is an opportunity to do so. Globally, Hedge funds are very active in the currency market and commodities market and there is no reason why the trend will not extend to the Indian commodities market.

Edelweiss says "We believe the following regulatory changes can act as key triggers to boost volume growth in commodity exchanges .... Currently, regulations do not permit MFs, FIIs and banks to trade on commodity exchanges. If allowed, this may drive overall participation in the segment."

HDFC Sec says "As commodity exchanges will now be regulated by SEBI, MCX will be able to (1) launch new products such as options, indices, weather/currency/interest rate derivates (2) see participation from financial institutions (FI) and foreign portfolio investors (FPIs/FIIs)."

This also appears to be the premise on which the large investors have bought the stock. I am feeling reasonably confident that the stock will perform, especially now that Kotak is in charge as promoter.

 

Please share rest of the stocks and reasons why you bought them

Regards

 

Today was a day of carnage in the market. The Sensex plunged 710 points at one stage. It closed 654 points down. However, my portfolio out-performed because while the Sensex was down 2.33%, my portfolio was down only 0.48%. That's the advantage of having a widely diversified portfolio

Today was also a day of buying and selling for me. I sold more junk stocks and bought more quality stocks. Here is my summary of trades:

Stocks Bought

Stock Quantity Rate

Ashiana 106 235
CAPF 66 377
Centuryply 106 234
CERA 10 2469
HDFC Bank 25 1005
IndusInd Bank 29 859
MCX 551 1130
Repco Home 39 636
TV Today 124 200

Stocks Sold

Stock Quantity Rate

AVTNPL 2000 26.55
Bajaj Elec 1000 214
Camson Bio 1000 90
Kwality 2000 36
GPIL 2000 94

The purpose of my exercise is two-fold. One, I want to book losses before the stocks become long-term. Second, I want to have a portfolio of not more than 20-25 high conviction stocks. So, I am selling the low-conviction stocks and investing the proceeds in high-conviction stocks.

 

I continued the process of cleaning my portfolio and shifting from low-conviction to high-conviction stocks;

Stocks bought:

Stocks Qty Rate

AIA Engg 20 1229
Ajanta Pharma 20 1202
Amara Raja 30 813
Ashiana 106 234
CAPF 145 375
Century Ply 110 227
Cera 32 2505
HDFC Bank 55 1013
Indoco 160 345
IndusInd 28 872
JB Chem 278 197
Kajaria 32 777
MCX 22 1130
Phoenix Lamps 1142 88
Repco Home 39 630
TV Today 119 208

Stocks sold

Stock Qty Rate

AVTNPL 2000 26
Bajaj Elec 1000 218
Canson Bio 1000 88
GPIL 2000 94
Kwality 2000 35

I think it will take me a couple more sessions to clean up my portfolio. For some reason, I don't have the guts to do it in one shot. What could be the reason? Lack of conviction?

 

Hi Carl ,

Can you please Explain why ur Invested in 36 Different Companies.... Never extend ur Portfolio to more than 10-15 unless you have exorbitant amount of capital..... but still its risky......


quote author=Carl Icahn link=topic=76.msg214#msg214 date=1427367295]
Today was a day of carnage in the market. The Sensex plunged 710 points at one stage. It closed 654 points down. However, my portfolio out-performed because while the Sensex was down 2.33%, my portfolio was down only 0.48%. That's the advantage of having a widely diversified portfolio

Today was also a day of buying and selling for me. I sold more junk stocks and bought more quality stocks. Here is my summary of trades:

Stocks Bought

Stock Quantity Rate

Ashiana 106 235
CAPF 66 377
Centuryply 106 234
CERA 10 2469
HDFC Bank 25 1005
IndusInd Bank 29 859
MCX 551 1130
Repco Home 39 636
TV Today 124 200

Stocks Sold

Stock Quantity Rate

AVTNPL 2000 26.55
Bajaj Elec 1000 214
Camson Bio 1000 90
Kwality 2000 36
GPIL 2000 94

The purpose of my exercise is two-fold. One, I want to book losses before the stocks become long-term. Second, I want to have a portfolio of not more than 20-25 high conviction stocks. So, I am selling the low-conviction stocks and investing the proceeds in high-conviction stocks.

[/quote]

 

I would say that the reason I ended up with so many stocks is because I lacked conviction when I bought a stock. So, as a defensive mechanism, I buy a little of each in the hope that an error in one would be cancelled by a gain in the other.

Such a strategy is not "risky" IMHO. It is actually a "safe" strategy because it is like a mutual fund.

The problem with the strategy is when the market crashes. At that stage, you know that it is time to buy. But because there are such a large number of stocks in the portfolio, you can't decide which one to buy more of. This causes great frustration to me.

If I had a tight portfolio of a few high-conviction stocks, then I am not worried about a crash because I can nicely average in them.

 

My action of shifting from low-conviction to high-conviction stocks continued today. I am anxious to sell before 31st March and book the heavy losses to get a tax break:

Stocks sold

Stock Quantity Rate

AVTNPL 1000 26.40
Bajaj Elec 500 229
Camson Bio 500 90.2
Kwality 1000 37.15
GPIL 1000 95.80


Stocks Bought

Stock Quantity Rate

AIA 25 1247
Ajanta Pharma 24 1220
Indoco 77 360
JB Chem 150 199
CERA 10 2500
HDFC Bank 28 1037
IndusInd Bank 33 888
MCX 26 1138
Repco Home 46 652
Phoenix Lamps 329 92

 

can you explain prise target for your stocks..... :-\

 

It is not possible to determine a price target. These are stocks of good companies doing well. Hopefully, they will continue doing well. I have already held on for several years. Will continue to do so because every year the results are better.

My biggest problem is that I have too many stocks in the portfolio. I need to find a way to reduce the number to about 20.

If anybody has any ideas, please contribute. I am desperately looking for ways and means to do so.

 

I don't see 36 stocks in your portfolio ...but if you want to do so look at sector allocation, allocate 20-30% per sector...then narrow down to stocks 5-10% per stock...and you will find it easier to allocate money to the 20 stocks...I saw you had lot of money in small caps...putting a lot of money in small cap at one go is never a good idea...

 

the only stock that you have bought recently which i dont like is Phoenix lamps.

Reasons:
1.It is not run by the promoters,it is being run by PE fund called Actix who holds 66% in the company.They dont have the fire in the belly like a original promoter of the business.They are also planning to exit the company very soon.May be if the company lands in the hands of some smart people,it can provide good upside.Management should be highly motivated is one of the criteria for me to select the stocks.Good examples are Wimplast and Kajaria where the entry is limited,still these stocks turned out to be wealth creators for their shareholders,one of the reason is management.

2.Growth is directly linked with automobile sector growth with more revenues from OEM.Here they dont much pricing power.In the replacement market,there are a lot of competition.Hence we could bet on its strong relationship with the OEMs only which is a big entry barrier for new entrants or chinese players.

3.In this scorching bull market,when every stock is hitting new highs,this is heading to new lows.

These are my 2 cents.I could be wrong.