I did have a very amateurish portfolio in the initial years, which I started in Nov 2016 and liquidated in 2017, after I feared that my random selection of stocks will be perilous. That time I invested in stocks by screening them on the basis of ratios without context, and some through borrowed convictions from social media, especially valuepickr… Few days back I was thinking of making a small experiment as to determine how that portfolio would’ve performed, had I not liquidated it and rather kept it in a coffee can.

At the time of liquidation, it had 82 stocks with almost equal weightage, mostly in small-mid cap. The time of the experimentation also seemed perfect because the smallcaps seemed to have undergone a complete cycle from 2017 upcycle to 2018-19 downcycle, to current upcycle.

The result in fact shocked me… I found that the portfolio yielded a CAGR of about 16.1% since inception. In the past 5 years the CAGR was 17.5% which means it would have beaten BSE 500 TRI return of 14% handsomely!! In fact, the return should actually be a bit greater as Value research portfolio software didn’t include some demergers properly.

This happened despite that portfolio containing DHFL, Vakrangee, Sintex Plastics, Talwalkers, SREI, Zee Learn etc.!!!

I found that the portfolio outperformed because the accidental good selections outgrew the losers.

This portfolio even outperformed the other experimental concentrated portfolio in 3 year basis. I feel that is mainly because in that portfolio the top 5 outperformers became almost 70% of the portfolio and their recent sluggish performance had caused that portfolio to underperform. In this portfolio top 10 stocks contributed 35% of portfolio weightage, and so underperformance of any hasn’t affected the portfolio significantly.

This portfolio has beaten my current portfolio by a massive margin in last 3 years.

Conclusions:

1. Even a randomly selected portfolio can perform decently if kept untouched.
2. Portfolio size doesn’t matter much if the coffee can is kept for a very long time.
3. Buy and hold works best in small-mid cap space.
4. Borrowed conviction from a good companion like Valuepickr helps even a noob to outperform market in buy and hold mode.

Lastlly, following are the list of stocks with weightage. This is strictly not an investment recommendation and is shared on academic interest. I do not hold many of these stocks in my current portfolio.

Government imposed anti dumping duty on Cold rolled sheets or steel…
WHO’s is leader in India in manufacturing of cold rolled sheet

Management has released a new investor presentation today, Please refer following link for details:

https://www.bseindia.com/xml-data/corpfiling/AttachLive/2d67ecef-e621-468d-ad74-40446a8c4284.pdf

Slide decks 44 to 53 has some interesting snippets about their new tech platform AGEasy and its future potential. This seems to be an interesting development for the Bizz.
D: Invested, Biased.

It is a very simple thing. Let’s say today the market or the stock you want to buy is at 100. You wait for it to come down to 80 before buying. There are essentially only three things that can happen.

1. It comes down to 80.
2. It falls but does not come down to 80 but maybe 85 and then reverses and goes up again to 120.
3. It does not fall at all and goes on to 120.

In cases 2 & 3, you will miss the boat completely.

In case 1, in the majority of cases, the discourse around the stock or the market will be so negative when it falls 20% that you may be scared to buy. You will then say let it stabilise and then I will buy. Then the stock suddenly reverses and runs up. Having seen the price at 70, you will find it difficult to buy it at 80-85-90 during the runup.

Asahi came out with an interesting press release.
Asahi.pdf (257.6 KB)

Asahi will use the proceeds of the land sale to reduce debt and capacity utilization of the plant has improved from 55% to 70%. The yellow line in Azo pigments has reached optimum utilization and a brownfield capex is being done to double the yellow line.
Along with this capex for the intermediates and api is ongoing. Overall management expects to reach 700-750cr turnover in next 2 years.

Aarti industries and Sudarshan Chemicals have both said in their conference call that the demand scenario for pigments is improving.

Asahi was struggling for the last two years after expanding capacities as the downcycle started. As demand improves margins should normalize and debt should reduce as there is no other capex plan.

Disclosure: invested