If one buys Stride pharma share today will he get One source share or only holder on 1st April 2024 will get new dividon stock on demerger?
Posts in category Value Pickr
Va Tech Wabag (14-10-2024)
I have Wabag in my portfolio and it has 4xed. I dont have any plan to sell as the sector is under tailwinds and there is nothing wrong with the company. For selling, i need some strong reasons i,e a better and more attractive opuutunity to invest, unreasonable unsustainable valuation, business slowdown and absense of growth etc.
Great articles to read on the web (14-10-2024)
Words of Wisdom by Sir Prabhakar Kudva
Fund Manager Reveals How to Build a Winning Portfolio – Don’t Miss This!😱
Change of management.
Next generation coming which focuses on growth. Management quality comes from experience.
Doing QIP again n again is a red flag. Management is being opportunistic in this case, exploiting the market, so these stocks are bull market stocks, will only do good in this cycle and after that won’t be seen for years to come.
Key points to focus in concalls-
Whats the growth they see in medium term?
Look between the lines, about growth and market dynamics, they won’t quote real numbers but they may use different different words of English and indirectly tell you a lot.
They might directly not tell you “we will grow by 30-50%”, but use play of words.
Look for the management who are focused on long term and have clarity of though, for eg: Bajaj Finance management always telling we want to grow by this %, keeping the credit cost between x and y percentage points. Their goal is vert very clear. In the worst case also, you can see the downside. Compare it with other mocro Finance companies who are little jumbled up with all numbers.
Novice management may outperform the likes of Bajaj Finance for 2-3 years, invest in them but don’t give them the freedom to manipulate you, always remember they are mediocre. Track them closely, don’t get attached and give them chances to do mistakes. Keep your selling framework intact.
What do you do when TAM of a sector expands suddenly by good amount?
In this cycle, the TAM of power sector increased drastically. We were following the concalls and each management stated that this cycle is long and going to stay. Management of multiple companies from this sector said the same thing and this helped us build conviction. Due to expansion of TAM, the growth rate is continuing. And the high base which is set for last year is crossed by the company due to the expansion of TAM.
If TAM is big and the cycle is going to play for years to come, then we can tolerate a few soft quarters.
Position sizing- I assign 3-4% equal weightage to all portfolio companies. Playing the TAM of a theme, buy buying more stocks of the same sector rather than concentrating my bet on 1 or 2 companies. Can have 3-4 stocks of a sector.
Biggest gains are made when huge sectoral move happens, IT Boom of 2000, 2007- Infrastructure and real estate. Then consumption, private banks, then pharma and api during covid, after that Railway and Defense and PSUs. And then power and energy. Pick the sectoral trends right and the gains will be made rightly.
Never keep all your eggs in one basket. Diversify in 20-25 scripts.
Plus don’t do all sorts of work- QUALITY, VALUE, SME, MOMENTUM; choose any one and do it again and again.
When someone is a longterm investor, his exit strategy will be totally different. He will hold onto it 5-10 years and the delta of return will be 5-10x and the company would be grown in such a way that now it would be difficult for it to grow further 5x.
Whereas for intraday trader, he will have small loss and small profit kind of strategy.
Exit strategy totally depends upon what kind of game you are playing.
I typically ignore 1 quarter of soft results coz there can be some one off or n number of reasons for the same.
But then 2 quarters of bad results come back to back, it is an area of caution for me.
Or if played our the theme for 5-6 quarter and the TAM has now been limited plus the base is large for the preceding year then I take some profits off the table.
It does happen that after delivering 2 bad quarters, company comes up with blockbuster 3rd quarter result and the stock reached back to its ATH, covering that 20-25% drawdown in short period of time and you lose that 20-25% gain. And from thereon, the game of blockbuster quarter continoues. And you have lost 50% of the gain.
For me it’s okay, as I have 3% allocation per stock, 20% losing will have .75% drawdown on portfolio level. But if a person has 20% allocation in a particular stock, then For him the drawdown of 20% will be terrible.
It’s hard to have any perfect selling strategy. Just you can have clarity of thoughts.
Selling should be well matched to all their other criterias.
Be it postion sizing, timeframe, risk reward expectations.
Early momentum filter always excites me. If a stock started rally in last 1 to 3 months, do study these companies. Look for the catalyst such as earnings growth, future outlook.
Using price action to filter companies to study.
Apar was the greatest winner for us. 8-10 quarters back, all their cylinders started firing together be it cables, transformers and transformer oil. All the end user industry be it railways, power and transmission started blasting. And hearing the concalls that time, management seemed super bullish. Plus the valuation was at very very sweet spot that time. It was there at 15 PE and it was growing at 30-25%, plus there was longevity of growth and the power theme was fully ignored.
And then the entire sector started doing amazing on earnings.
It was a No Brainer for us. Had been 10-13x for us.
For us we had the limit of 3%, coz we manage public money. But for an individual investor this limit is not there.
All the checklist were at sweet spot in Apar be it valuations, growth and management.
Things that can turn around-
Consumables, textiles, soke of the consumer durables.
No need of new sector doing well, maybe an old known sector may start doing well again such as chemicals, private banks etc.
Vishnu Chemicals – Is Growth sustainable? (14-10-2024)
They are the promoters. They are the majority share holders. Obviously they should have power to “influence” decisions. Whats wrong with that? are you implying Mukesh Ambani shouldn’t have control over Reliance board? RK Damani shouldn’t influence Dmart board?
Va Tech Wabag (14-10-2024)
is it good to book profits partially , i have good amount in wabag and have done more than 2x. can you guys please share your views.
Smallcap momentum portfolio (14-10-2024)
I think, the correct comparison will not be with index. If we are running DIY momentum portfolios, then its better to compare them with Momentum mutual funds. That would be comparison of apple with apples.
Also I didnot get your point of when DIY gets 3-4% more than index , how will it compensate with 6-7% of STCG taxes drawdown???
Shakti Pumps – solar shakti (power)! (14-10-2024)
I don’t believe quality companies are at a very high valuations. Many high quality private banks, FMCG and large cap IT stocks are either trading around, at or below their historical valuations. If there is overvaluation in any pocket, it’s in small or midcaps.
Plus looking at company’s valuation purely from P/E perspective is wrong as you will be missing out on a lot of quality businesses. There is a whole lot of other factors that influence valuations. Lots of people wrote off Trent, Divis Lab, Zomato in 2022 citing very high valuations and they have turned out to be multibaggers.
If you are new to investing then my recommendation is don’t take too many risks with your capital. One thing I have learnt from Mr Buffett, in hard way, is “Rule #1: Never lose money. Rule #2: Never forget rule #1.”.
Your chances of protecting your capital are higher in a decently diversified portfolio of quality stocks. Even if you get valuation wrong, you will still make money in long run on portfolio basis.
But you chase high return or alpha too early in average or inferior businesses with no long term visibility, risk of losing your capital is very high and painful.
Also keep in mind that in Bull Markets, all businesses look good. Management commentary is good, order book is strong, narrative is promising. Only when the tide turns we come to know who is swimming without clothes. And thing with stock market is that tide always turns. There is always a bear market after bull market. We just don’t know when.
Cupid Ltd – Helping the world play safe! (14-10-2024)
Can anyone explain this transaction?
Why shareholders need to transfer unclaimed dividends and equity to IEPF?
Smallcap momentum portfolio (14-10-2024)
What my analysis tells me is that if DIY outperforms the corresponding index by 3-4% annualised, you will outperform the index even with a blended STCG cost of 6% on gains every year. Having said that, the outperformance is not that significant. Over a 15 year period, DIY with 20% CAGR will give you a 13x return on initial capital. Index fund with 16-17% CAGR will give you a 9-10x return on initial capital.
So in 15 years, 1 CR becomes 13 CR in DIY and 9-10CR by being in an index fund. The index fund will give you that return with 0 effort while DIY needs you to be disciplined with your effort over a 15 year period. I think the extra 3-4% return is only worth it if your effort is towards leveraged capital ( i mean if you are doing this on other people’s capital for a share of their profit as well ).