Hello Ankit, thank you for your reply. I have been following your threads and writeups for some time now and it is really good to hear from you on this thread.
I think I’ve had several experiences where stocks I have selected have gone up even though I didn’t have a very clear thesis on them. Looking back, I have been lucky with several of such investments and I think that not having a clear thesis is one blindspot I want to overcome and that is why I’ve decided to put my portfolio out for review on a platform like VP.
I like the qualifiers that you use as they are very similar to the broad framework I have created for myself. After reading about the framework Rakesh Jhunjhunwala sir used in the later part of his career, I’ve come to appreciate several similarities that exist in his approach with mine too.
I think anybody who is as interested in the Indian Economy dynamics as I am because of my Undergrad in Economics would prefer a similar framework albeit I believe there are specific blindspots that I can appreciate myself here too.
The broad idea I use is below:
- Strong Tailwind in Industry: Industries that are bound to see greater demand in the because of either the policy environment or because of long term economic and demographic changes in the economy interest me. I don’t think it is an economic perspective that guides me here, I think in an Economy like India demand is never really an issue, it is the consolidation of supply that is much more instrumental to higher economic returns. But I get interested simply because I get excited by these plays and how the future can be different from the past.
So I have invested in a Senior Care Play, Invested with a company providing niche components for nuclear energy and space along with defence and have also been reading about the electronics value chain and what is happening there since the PLI introduction in 2021.
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Indication of Smart Money Cornering: There are a few investors I follow through the bulk deal data, if I am evaluating an industry and I see some evidence of their presence there, I double down on my efforts at studying the company. Some of these people are Kenneth Andrade sir, Matthew Cyriac, Zaki Abbas Naseer, Mukul Aggarwal. I also look to see if there is some sort of Preferential Allotment or any such corporate action happening at a company which could see sophisticated investors entering the picture. It is a confidence boosting measure which tells me that some kind of detailed due diligence would have been done on the firm, which I as an individual have limits to do myself.
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Build Up of Potential Operating Leverage: If there are several investments I see the company has been making which haven’t really yielded results, I get excited, simply because I feel like all that will only add to the benefits we get to.
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Execution: I try to see competitive advantages in a different light, I think that for smaller companies where I do invest, it makes a lot of sense to see if they have successfully been able to get themselves out of risks that a small business faces in scaling up. While increasing market share, stable margins do play a role, but I also tend to emphasise on experimenting with the markets and finding a way around the big players.
I will try to detail my portfolio in the next post just to give a better colour on how these decisions actually come to real life. I have been taking time with that post, simply because I do feel like there are still a few stocks in my portfolio which I don’t have a very good reason for keeping there, perhaps writing about them here would help me face my bad decisions.
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