An update after long. Have been tied up with work and travel over the past few months. And I have had so much to say but have been lazy to post
I have churned the portfolio quite a bit, some due to changes in certain industry structures, some because I found better opportunities. Will break this down into smaller posts for ease of consumption.
Scale-ups
Scaled up my positions in Valiant (3% of PF at about 600) and Newgen (4% of PF at about 400) in the last week of August.
I think Valiant’s business has bottomed out and most of the promotor selling done as well. The Gala’s now hold less than 2% share an they may or may not sell out, but it won’t be material. Meanwhile falling crude, restarting of their factory that was affected by the blast and improving realizations from chlorination should lead to increased topline and margin expansion over the rest of the year. Q2 may not be great but Q3 and Q4 should be materially better. Risk-reward at under 1.5 times sales was compelling.
Newgen is the only company in the small and mid cap IT pack that may not be affected as badly by the impending recession in the US and UK IMO. In fact low code/no code solution adoption may increase as companies look for less capital intensive options for efficiency improvements. Their last concall was encouraging. While the business bottom may be a quarter or two away, I think the stock price bottom may be in place already. It may fall if the entire IT pack continues to fall though, but I think it should do better than most mid and small cap IT companies. This is the only IT exposure I have at the moment.
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