Chins’ Portfolio

I want to highlight my journey in 2022, and what’s driven me to the 50/50 approach in my portfolio.

At the beginning of the year, my “low churn / long term” portfolio looked like this (post from Jan):

Had I not actively managed my portfolio, and taken the call to remain passive, the year would have ended in disaster, at -6% returns, despite the unrealised returns looking really good at the time.

As a model shown below,

This is not an argument that passive investing doesn’t work, it’s just that this particular portfolio would have been the wrong one to construct.

However, I became a better investor over the year, and changes to my style were for the better:

I subsequently sold most of my highest conviction/allocation ideas from the start of the year after realising the holes in the thesis, or the unsustainability of earnings. Laurus was sold in July at around 525 per share, Deepak Fert was sold at around 920 per share, and PDS was sold recently.

All of their earnings still look good, but price action suggests the market expects softening in the quarters to come.

Ugro, which still remains my highest conviction investment had a horrible 2022:

Using market volatility, and booking profits with a high churn has helped generate returns where my two largest allocations have significantly underperformed the market: Ugro is possibly the only financial stock that has not participated in the rally over the last 3 months. Krsnaa has taken a beating along with the other diagnostics companies.

There are 80 companies above 800 Cr. market cap that have generated >100% returns YTD, but there are 200 companies that have generated >20% returns in the last 3 months. In other words, smaller movements in price happen more often, and are much easier to find.

If in the 50% of my portfolio that I allocate towards cyclical recovery, mispricing and swings I can generate a minimum of 30% returns, that will assure 15% returns in a year regardless of how my longer term ideas perform.

The more such plays one can successfully execute in a year, the higher these returns will be. My approach here is to categorise companies that I study/track into the quarter where I expect earnings to improve.

Also, having a cash position has helped me to deploy when there are fears on the market, and getting a really good price is half the work done. Purchases made last Friday are up between 12-23%. I have been harping about this approach in recent posts, but it’s where I’ve found most success till date, and suits my style.

Thanks for sharing. I do track valiant, and have taken up a position.

Hope everyone has a great 2023. Thanks for sharing your insights with me and helping me improve.

I think from here on out, I’ll only write update the thread quarterly, and when I’ve found candidates for the long term half of the portfolio.