Chins’ GARP Portfolio

Wanted to share where I am with my investment philosophy/portfolio approach, as a lot has changed from the start of the thread and this year in particular.

In the last two years, Strides has been my largest mistake, followed by Vaibhav Global and IOLCP in the family portfolio. There is a common reason behind these mistakes – I had assumed something was secular, only to find out quickly that I was oblivious to the underlying cycle.

• With Strides, it was the turn of the US generics cycle.
• With Vaibhav Global, it was the mean reversion of e-commerce traffic post covid and a few other headwinds.
• With IOLCP in 2020, it was capacity/supply coming in from BASF and a one off in pricing that they enjoyed.

Post these learnings, my approach to buying something has changed drastically, especially in the last 3-6 months. I’m finding a lot of comfort in owning cyclicals at the moment, and I’m looking to buy companies going through horrible headwinds and playing for eventual mean reversion. I feel even better if there is an additional optionality for free.

Most of my recent purchases fit this template: Headwinds, Valuation, Optionality.

• I now have a 6% position in Avanti Feeds.

• Headwinds: Soybean prices.

• Valuations: Favourable, even better taking the cash on hand into account.

• Optionality: Capex, and a reversal in the import alert.

I now have a 4% position in Globus Spirits

• Headwinds: Rice prices

• Valuations: Not at all time lows, but I think discovery has sent the bottom valuations higher.

• Optionality: Capex and new product launches.

I have made a 2% position in Godawari Power.

• Headwinds: Export duty

• Valuations: Since they’re now debt free, book value should be the bottom for the stock, at 257.

• Optionality: A reversal in the export duty, either in Q3, or Q4.

Along these thoughts, the next sector I’m interested in studying is in PVC pipes. With prices falling, Q3 should be horrible for most of them, giving me a couple of months to study the sector.

My three long term holdings continue to be Ugro Capital, Krsnaa Diagnostics and Shivalik Bimetals. They form 50% of the portfolio, and the remaining 50% is formed out of cyclicals, and those that I’d like to own for a shorter period of time.

In the last 30 days, I have scaled up my position in Punjab Chemicals to 7% of the portfolio.