Last month took a break from the job and hence got some time to complete SOIC course on Valuation and technical indicators(Part 3 and 4).
Few learnings
Whenever there is a lot of capex is going on we should value the company over the EV/EBITA.
Though we should have clear visibility how the capex would turn into profits.
Therefore hospital sectors should be valued on EV/EBITA.
Averaging the stock in the free fall is not the good idea based on probability
Therefore knew, why 52 weeks high makes more sense than 52 weeks low.
This is a reason why relative strength is a good parameter to screen stocks as stocks showing relative strength are more probable to hit the 52 weeks high.
Things that I have been practicing earlier
I have been practicing this in some form that I don’t average over maximum percentage that I can allocate to a stock at the Buy Price.
Example → I have averaged Alibaba but never made it more than 4% of my total investment at the Buy price.
Look into tailwinds while investing, finally understood the logic behind it.
Valuation comfort comes with tailwinds as current price is the discounted future price. Also tailwinds gives us margin of safety.
Invest in the company while looking at the growth prospects and position size it based how how likely it is to fail and make your money zero
Learnt that we should consider risks while position sizing not growth in the stocks.
Things that worked
Mutual fund based screener works as when I learnt that Syngene has been added by Edelweiss Small Cap Fund in February this year, I increased my stakes in the Syngene making it near to 20 percent of my total stocks portfolio and then the news of exports came and then the results.
Also added Equitas Bank in my father and sister portfolio based on fundamentals and as it was added by three top mutual funds in February.
Five stocks which was added in more than one top mutual fund house portfolio in February that I am tracking to see how it performs coming months. It looks like a solid portfolio screener at first look.
- Sona BLW Precision Forgings
- Mahindra CIE Automotive
- Kirloskar Oil Engines
4.Kajaria Ceramics
- Equitas Small Finance Bank
Planning to create a separate thread for explaining the approach if it seems to work.
Perfomance
Last month has been good for me as my indian investment in stocks hit 52 weeks high multiple times due to Syngene, Maharastra Scooters and Ksolves.
My returns in the US stocks has been in downfall mostly due to Amplitude. I have bought the Amplitude even though investing in loss making company breaks my initial framework of investment but I liked its business and learnings from the Peter Lynch book that we should invest in what we know.
Looking at the decision in the hindsight, I feel that I should look for the tailwinds and headwinds when investing in anything.
One more mistake is that I position sized it based on the growth than the risk.
The thing I did good is that I am not averaging it down.
After new tax laws on investment in the US equity market through mutual funds and TCS in direct stock investment, I am not planning to put money in the US equity market now.
Holdings Update
I did not increase the stakes in the Ksolves over the tracking position as it looked so risky for me after it gave a run in the stock price which makes the current price of the Ksolves unfavourable for me considering 30 percent future EBITA margins and the risk involved.
It is currently currently 4 percent of my total stocks portfolio due to 50% increase at my buy price at 460.
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