Advise on my portfolio

My Portfolio

Pharma 15% (Sun pharma, Lupin, Ajanta, Alembic, Dr Reddy, Granule)
Private Sector Bank 20% (Yes, Axis, ICICI, HDFC, Kotak, DCB, Indusindia, IDFC)
HFC 15% (Dewan, Repco, LIC, Indiabulls)
Auto 10%(Maruti, Eicher, AshoK Leyland, Tata Motors)
IT 10% (Infosys, Persistent, Mindtree, TCS, Tech Mahindra)
Capital Good/Power 10% (Larsen, Voltas, Power Grid, NTPC)
Others (SKS Micro, Amar Raja, Cummins, Bharat Forge, Brittania, HUL, MCX, Snowman Logistics)

What you have to say about my portfolio. As you can see that some of the stocks are trading at very high PE ratio, am I too much carried away with the popularity, as it is said that in short term market is a popularity machine and in long term a quality machine. Do you see any stock which is of low quality and should be got rid off. Or should I change my weight-age across sectors. I have invested in these stocks effectively 6-12 months back (averaged in a short period) and sitting on some gains. I plan to invest for very long term. Your suggestions will be highly appreciated.

 

My guess is that if you have started investing into these stocks 12-6 months from now, may be you might have bought all of these at their peak, same happened to be i started building my portfolio from Nov 2014 and by bought everything by march 15, and saw the markets going down which makes my stocks bought at higher valuations, hope u had averaged some of these at lower prices. I can see from your stock picks that you have all the stocks that have done well, my method was also same but I realized that I haven't picked any stocks that are small and medium cap and have a potential to become large caps in future, this is something you can also look into. Thanks for sharing your portfolio.

 

Thanks for your review. You are right. Valuations were high when I bought these stocks. However, there are still some 15-20% gains. Regarding mid and small cap, I try to do some research but really not able to get conviction to put sizable portion into them. I think mid caps which are leader in there field can be looked at or the ones which are expanding rapidly (high ROE and sales growth). However, the valuations are pretty high. Actually I have to speculate a lot into future (prices are as per 2-3 yrs forward earnings). As it is said, know what you don't know, I see a lot of uncertainties ahead especially when there is no margin of safety (Gati, Hawkins). I hope I can get some mid cap stocks at reasonable valuations. Again thanks for your suggestions.

 

You may add ashiana housing and poddar developers in ur portfolio... Both are small cap housing stocks which has set huge growth targets for next 2 yrs...

 

Thanks man for your suggestions. I will surely look into these stocks.

 

To add a few pointers here, companies are not bought on future growth targets alone.

Most of the companies tend to set ambitious targets (Aim for the moon. Even if you don't hit it, at least you will land among the stars !)

Companies are bought on factors like Management, Past performance of RoE, RoC, NP etc, Pricing power, competitive edge, current undervalution of the company due to some problem which can be corrected in future etc

 

One more point to add, it is very easy to get influenced by recommendations given on TV or reports generated by brokerage firms. Due to herd mentality, the efficient market theory is not relevant at these time. The market, more often than not, misjudge the actual value of a business. The quality of a stock is just a perceived one until researched thoroughly by an individual, which is very difficult for a retail investor given limited access to the company management and other operating environmental factors. For the given reasons, I would like my portfolio to be biased towards large cap stocks.

 

@Abhishek bansal
Congratulations on your stock picking. You do have an amazing collection of companies. Each of the companies that you hold have a very strong underlying business. You also have some quality midcap names like Indusind Bank, Repco, Amara Raja, Snowman,Cummins etc. In short terms there would be ups and down in the market and that would reflect in your stock as well. I actually can't see any bad in your portfolio. I would recommend you reading research reports and annual reports of the mid cap companies which seem to interest you.Specially the stock initiation report of a particular stock as it has all the details and business models and working of that particular company. I agree it is easy to get influenced by reccomendations on TV or reports but don't follow these reports or recommendations of these reports blindly but instead consider it as a tool in studying the underlying company and business more deeply and then take a rational call according to your judgement.
You do have a nice judgement in picking up stocks. I am sure after reading those reports and other materials you would make better judgements in choosing midcap stocks too. Good luck for your future investments.
Happy Investing

 

You have total 38 companies in your portfolio. It is like a mutual fund. I don't think it can outperform boarder index.

I think you should have bought 6 to 8 only where you have high conviction. If you put all your retirement money then max 20 stocks.

All well-known company rarely give best return. It can be safe bet on security wise. Still i saw Larsen & Tubro correct to 20-30%. So, risk is there in stock market we cannot completely avoid. So, I like to increase my earning with minimum risks or known risks.

 

You have too many stocks in your portfolio and it appears that you've blindly bought blue chips or brand names stocks without considering the price. Your portfolio in all likelihood will perform at the same level that the Index performs. You could have just bought an Index based Mutual Fund instead.

 

Thank you for your suggestions. You have made a very valid point. I was just wondering if it is possible for you to share your high conviction stocks (6-8 stocks). It would be highly beneficial for all of us.

 

Thank you for your review. It would be of great help if you can suggest me stocks to remove from my portfolio to have a more concentration on high quality stocks. Also please suggest any other stocks to add if you wish to.

 

Dear Abhishek bansal ,
I am appreciating your Portfolio , very few investors are think about portfolio quality and restructure portfolio

It is good but remember one thing in my experience , for Long Term Investors ,every 6 months he should review their portfolio strength and weakness according to review if need change their portfolio ...

I want to suggest some point to you .....

1. Don't buy so many stocks in a sector
naturally we want to buy all good stocks because of temptation...
2.Portfolio should not exceed 30 stocks maximum because watching and maintaining is difficult
3.each sector select maximum 3 stocks only

Pharma : 15 %
1.Sun Pharma
2.Lupin
3.Allembic Pharma

Banks (Private) : 15 %
4. ICICI BANK
5.Indusind Bank

Housing Finance : 5%
6.LIC Housing

Auto : 10 %
7.Eicher
8.Maruti

IT Sector : 10 %
9.TCS
10.Tech Mahindra

Capital Goods / Power : 10 %
11.Larsen & Tubro
12.NTPC

Consumer Goods: 10 %
13.Britania
14.HUL

Metals : 10 %
15.NMDC

Other stocks :15 %
16.Cummins
17.Bharat Forg
18.MCX

Note : I am adding "NMDC " stock in Metal sector

ALL THE BEST BROTHER

 

EXCELLENT ADVICE. SHOULD be followed by one and all.

 

Very valuable insight.. All your points will be highly helpful for me...Thanks a lot...